Saying he wanted to eliminate the distraction of a federal investigation tied to his family, Fat Brands CEO Andy Wiederhorn on Monday said he will step down in May and will become a strategic advisor to the Los Angeles-based restaurant chain operator.
He will remain on the Fat Brands board, and his family office, Fog Cutter Holdings, will remain the company’s controlling shareholder. The company said Wiederhorn will focus on Fat Brands’ “long-term strategy and capital allocation plans.”
Fat Brands, which owns Fatburger, Twin Peaks, Fazoli’s and 14 other concepts, did not name an interim CEO, saying it would do so before Wiederhorn transitions to the new role.
In its announcement, the company said that Wiederhorn “seeks to eliminate the distraction of the previously announced government investigation tied to him and allow senior management to focus on continuing to drive shareholder value.”
Fat Brands last year acknowledged that its CEO and founder was under investigation after the Los Angeles Times reported that federal agents raided the home of his son, Thayer, and sought a search warrant for Wiederhorn’s Beverly Hills home.
The investigation raised questions about Wiederhorn’s past, which has followed him from the day he started using Fatburger as a vehicle to acquire other brands. Wiederhorn pleaded guilty to tax evasion in 2004 and agreed to pay a $2 million fine. He spent 16 months in prison.
But Fog Cutter, which was publicly traded at the time, paid Wiederhorn $4.6 million while he was in prison.
Wiederhorn, however, has remained a public figure, routinely talking about the company and acknowledging his past. He has publicly said that his past has made him a “target” of federal investigators.
Wiederhorn kept his ownership of Fatburger while in prison. In 2017, he used a Regulation A+ IPO, or “mini-IPO,” to take Fat Brands public while he acquired Ponderosa and Bonanza. Fat Brands then made numerous other acquisitions, most of them small, struggling concepts that could be had for low prices.
That changed in 2020, after Wiederhorn merged Fat Brands with Fog Cutter and began using whole business securitizations to finance larger deals—essentially using debt from the companies being acquired to fund the acquisitions. The company made nearly $1 billion in deals that year and now operates 17 concepts with $2.2 billion in annual system sales.
Fat Brands has been sued various times over the years. Shareholders in 2021 sued the company over the Fog Cutter merger. Allegations in that lawsuit were believed to be the impetus for the federal investigation that led to last year’s raid.
Last year, Fat Brands agreed to pay $2.5 million to settle a shareholder lawsuit over issues related to the disclosure of the investigation.
Wiederhorn did not respond to a request for comment. But in a statement, he said he would “continue to support the growth and evolution of Fat Brands, including championing our talented executive team.” Fat Brands last year gave its CFO, Ken Kuick, a $200,000 retention bonus if he stayed through the first quarter of this year.
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