Since the IPO in October 2024, we have added 61 properties and increased the initial asset base by nearly 30%. Starting this quarter and going forward, to help you better understand our real estate strategy, we will highlight one quarterly acquisition on the cover of our investor presentation and briefly discuss it during our calls. This quarter, we are highlighting a Seven Brew in Jacksonville, Florida. Seven Brew is a rapidly growing drive-through coffee chain founded in 2017, known for its high-energy, d ...

Core Viewpoint - FAT Brands and its affiliates, including Twin Hospitality, have filed for Chapter 11 bankruptcy due to significant liabilities and liquidity issues [1] Group 1: Bankruptcy Filing Details - The bankruptcy filing estimates both liabilities and assets in the range of $1 to $10 billion and requests joint administration of all FAT Brands affiliates [2] - The filing includes brands such as Fazoli's, Round Table Pizza, Johnny Rockets, Smokey Bones, Fatburger, and Fog Cutter Capital [2] Group 2: Strategic Decisions and Financial Context - FAT Brands sought strategic alternatives, including restructuring options, and determined that bankruptcy protection was in the best interest of stakeholders [3] - The filing follows a lawsuit from the largest bondholder, Investor 352 Fund, for $109 million related to Class B Common stock tied to Twin Peaks [3] - Last November, FAT Brands owed $1.26 billion to debtors, which was declared immediately due, and the company indicated it lacked the liquidity to repay these loans [4] Group 3: Leadership and Future Plans - CEO Andy Wiederhorn mentioned that the debt is not guaranteed by the parent company and has been in discussions with bondholders for restructuring [4] - The company’s acquisition strategy in 2022 and the spinoff of Twin Peaks were aimed at reducing debt costs [4] - A federal criminal investigation into Wiederhorn for fraud and money laundering, which ended favorably for him, further strained the company's financial resources [5] Group 4: Bankruptcy Process Goals - In a letter to franchisees, Wiederhorn stated that the bankruptcy process will be used to optimize capital structure, reduce debt obligations, and enhance financial flexibility for future growth [6] - The company will continue to collect and pay royalties and advertising payments during the bankruptcy process [6]

Financial Data and Key Metrics Changes - The company reported a cautious but cautiously optimistic consumer environment, with recent weeks showing significant sales improvements [5] - Same-store sales were down approximately 3% to 3.5% across all 18 brands, which is considered manageable in the current environment [28] - The company has sold around 200 new franchise units and opened over 70 new stores, with plans to open another 100 this year [28] Business Line Data and Key Metrics Changes - The company has expanded its portfolio to 18 brands, including high-growth brands like Fatburger, Johnny Rockets, and Round Table Pizza [4][7] - The manufacturing operation, which produces cookie dough and pretzel mix, has increased its capacity utilization from 30% to 45%, generating approximately $15 million in annual EBITDA [11][12] Market Data and Key Metrics Changes - The company has seen a shift towards cautious consumer spending, but there are signs of improving consumer confidence due to factors like refund checks [5] - The development pipeline indicates strong franchisee confidence, with existing franchisees purchasing more units [6] Company Strategy and Development Direction - The company focuses on co-branded and multi-branded locations, which are expected to generate 10% to 20% higher revenues compared to standalone units [8] - The strategy includes converting select Smokey Bones locations into Twin Peaks, which has shown a potential to double sales in converted units [18][21] Management's Comments on Operating Environment and Future Outlook - Management acknowledges the challenges posed by rising interest rates and a difficult equity market, but emphasizes the strength of the brand portfolio and the potential for restructuring debt [24][25] - The company aims to restructure its debt to make it more manageable, as the current debt is non-recourse to FAT Brands and secured at the brand level [23][24] Other Important Information - The company has faced significant costs related to a government investigation, amounting to $75 million, which has impacted cash flow [25] - The management team is focused on maintaining brand health and leveraging the manufacturing business for additional growth opportunities [29] Q&A Session Summary Question: What is the current state of the consumer? - Management noted a cautious but cautiously optimistic consumer environment, with recent sales improvements [5] Question: How is the development pipeline looking? - The company has sold a couple hundred incremental franchise units in recent years, indicating strong franchisee confidence [6] Question: What are the growth opportunities in non-traditional locations? - Non-traditional locations can be lucrative if they have good traffic flow, and the company is exploring opportunities in places like universities and airports [10] Question: How does the manufacturing operation fit into the long-term strategy? - The manufacturing facility is expected to utilize excess capacity and generate high margins, contributing to overall profitability [11][12] Question: What is the strategy for Twin Peaks and Smokey Bones? - The company is converting select Smokey Bones into Twin Peaks, which has shown promising sales increases [18][21] Question: How is the company addressing its financial position? - Management is in discussions to restructure debt and is looking for practical solutions to improve the financial situation [26][27]