Fat Brands, which has made a habit of buying small or struggling restaurant brands, has acquired another concept in Elevation Burger in a $10 million deal, the company announced Thursday.
Los Angeles-based Fat Brands, which owns Fatburger and Ponderosa, among other chains, is paying a combination of cash and a “seller’s note” to buy Arlington, Va.-based Elevation Burger.
In providing Fat Brands with a seller’s note, Elevation Burger is lending the company money to buy the chain.
Hans Hess founded Elevation Burger in 2002 as a healthier burger concept. The company franchises 44 locations in the U.S. and internationally and focuses on a menu of sustainably prepared food with grass-fed beef and fries cooked in olive oil.
System sales declined 6% last year, however, to $25.1 million, while average unit volumes declined by 1.6%, according to Technomic Ignite data.
Andy Wiederhorn, CEO of Fat Brands, said Elevation Burger’s ingredients-based focus aligns well with Fat Brands’ strategies.
Fat Brands has made several acquisitions since it was taken public in a mini IPO in 2017, including Ponderosa and Bonanza steakhouses, Hurricane Grill & Wings and Yalla Mediterranean. The company’s chains now operate more than 400 restaurants and have $400 million in system sales.
“We continue to believe there is massive opportunity to consolidate franchise brands onto the Fat Brands platform,” Wiederhorn told analysts in May, according to a transcript on financial services site Sentieo.
But Fat Brands has been struggling to get financing and earlier this year took on a short-term loan from a hedge fund owned by the CEO of Biglari Holdings, Sardar Biglari.
The company’s chains generated a 1.3% decline in same-store sales in the first quarter as the steakhouses both reported steep declines while Fatburger’s same-store sales rose 1.8% and Hurricane’s 4.2%.
Fat Brands is using a strategy of cross-selling its brands to existing operators to fuel the respective brands’ growth. “We have a very strong network of franchisees around the world who are eager for growth,” Wiederhorn said.