Financial Data and Key Metrics Changes - Total revenues for Q3 2025 were $140 million, a 2.3% decrease from $143.4 million in the same quarter last year, primarily due to the closure of 11 underperforming Smokey Bones locations and lower same-store sales [16] - Adjusted EBITDA for the quarter was $13.1 million, compared to $14.1 million in the year-ago quarter [18] - Net loss attributable to FAT Brands was $58.2 million, or $3.39 per diluted share, compared to a net loss of $44.8 million, or $2.74 per diluted share in the prior year quarter [18] Business Line Data and Key Metrics Changes - Same-store sales performance improved, with a decline narrowed to 3.5% from 4.2% in the second quarter, marking the strongest quarterly performance this year [8] - The casual dining segment showed strong results with same-store sales growth of 3.9% [8] - The company opened 13 new locations during the third quarter and 60 locations year-to-date, with a target of 80 new openings for the year [8] Market Data and Key Metrics Changes - The restaurant industry continues to face headwinds, but the company is focused on strategic execution and enhancing shareholder value [7] - The company secured over 190 franchise development agreements year-to-date, contributing to approximately 900 committed locations scheduled to open over the next five to seven years [9] Company Strategy and Development Direction - The company is advancing plans for a $75-$100 million equity raise at Twin Peaks to pay down debt and fund new unit development [7] - The strategic pillars include organic expansion, targeted acquisitions, and manufacturing scale-up, particularly in cookie dough and dry mix production [8][9] - The company is focused on strengthening its financial position and capital structure while actively negotiating a debt restructuring with noteholders [7] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges in the restaurant industry, describing it as a "restaurant recessionary environment" but noted that the decline is manageable [23] - The company is optimistic about achieving positive cash flow in the coming quarters and reducing debt [7] - Management emphasized the importance of enhancing the guest experience in casual dining to justify pricing amidst rising labor and food costs [25][26] Other Important Information - The company has resolved various legal matters, including the dismissal of charges by the U.S. Department of Justice and the resolution of derivative cases, which are expected to save at least $30 million annually [5][7] - The FAT Brands Foundation has awarded 42 grants and provided over $170,000 in funding this year, promoting employee well-being and community support [14][15] Q&A Session Summary Question: Timing on debt restructuring negotiations - Management is hopeful for a resolution during the current quarter, pending government reopening [19] Question: Status of underperforming Smokey Bones closures - All planned closures have been completed, with some additional closures expected as part of a master lease review [20] Question: Update on Fazoli's refranchising efforts - Material progress has been made, with proposals under evaluation [21] Question: Target for new store openings - The target has been adjusted from 100 to 80 new stores due to slower franchisee openings [21] Question: Details on SG&A reduction - Reductions have come from staff and executive cuts, as well as consolidating operations [22] Question: Same-store sales growth in casual dining - Several brands, including Hurricane Grill & Wings and Ponderosa & Bonanza, are performing well in this category [25] Question: Future opening program for Twin Peaks - Active development is ongoing, with both corporate and franchise locations planned [27]

Financial Data and Key Metrics Changes - Total revenue for Q2 2026 was $6.8 million, an increase from $6.4 million in the same period last year [24] - Product sales rose to $5.2 million from $4.9 million year-over-year, while franchise and royalty fees increased to $1.6 million from $1.5 million [24] - The total product and retail gross profit was negative $33,000, reflecting year-over-year comparability factors and timing of inventory adjustments [24] - The net loss was $0.7 million, or negative $0.09 per share, compared to a net loss of $0.7 million or negative $0.11 per share in Q2 2025 [24] Business Line Data and Key Metrics Changes - The company is focusing on franchise growth and operational improvements, with a new VP of Operations implementing cost-saving strategies [5][6] - The franchise development momentum is building, with renewed interest from existing and prospective operators [8][11] Market Data and Key Metrics Changes - The company is expanding its geographic footprint and exploring new markets, including areas with historically little presence [9] - The acquisition of a store in Camarillo, California, is expected to enhance market presence and profitability [17][18] Company Strategy and Development Direction - The company is transitioning from transformational planning to transformational performance, aiming for disciplined execution and long-term value creation [4][22] - A rebranding initiative is underway, modernizing customer touchpoints and enhancing the overall brand experience [11][12] - The company is focused on quality over quantity in franchise recruitment, targeting well-capitalized operators in high-traffic markets [11] Management's Comments on Operating Environment and Future Outlook - Management acknowledges ongoing operational challenges but is optimistic about returning to historic levels of profitability [5][21] - The company is well-positioned for the holiday season, with improved logistics and inventory management [20][21] - Management emphasizes a cultural shift towards a more accountable and results-oriented organization [20][22] Other Important Information - The company has made significant investments in technology and automation while maintaining its handcrafted legacy [7] - A new loyalty program is set to launch, aimed at enhancing customer engagement and understanding purchasing behavior [15][16] Q&A Session Summary Question: Background of the new Chief Operating Officer - The new COO, Luis Burgos, has over 30 years of experience in manufacturing and operations, including roles at Kimberly Clark [28] Question: Targets for new store openings in 2026 and 2027 - The company aims for net positive store growth annually, exceeding closures with new openings [29] Question: Discussion on owned versus franchised stores - The company believes owning stores helps them be better franchisors and plans to strategically acquire more stores for testing and development [30][32] Question: Cash burn and potential need for equity financing - The company does not expect to continue burning cash for the next 12 months, with Q3 and Q4 historically being stronger periods [33][35] Question: Increase in franchise demand beyond visual aspects - The company offers a low labor model and defined costs for new store builds, making it attractive for franchisees [40] Question: Changes in factory operations impacting costs - The new VP of Operations is implementing changes that are still being tested for best practices [42] Question: Impact of easing cocoa prices on margins - Cocoa prices have decreased significantly, which is expected to improve margins as chocolate constitutes 40% of raw material costs [44]

Core Insights - Nathan's Famous, Inc. (NATH) has seen a 0.4% stock gain over the past three months, outperforming the industry decline of 2.8% but underperforming the S&P 500's gains of 9.6% [1][2] - The company reported strong top-line growth in its first-quarter fiscal 2026 results, although bottom-line performance was disappointing [2][3] - Management highlighted strengths in the Branded Product Program and franchise operations, while noting challenges from weather-related issues at company-owned restaurants [3][8] Financial Performance - The Branded Product Program showed notable sales growth due to higher average selling prices and volumes, despite rising beef costs [9][10] - Franchise restaurant sales increased year-over-year, with eight new franchised locations opened, contributing to asset-light revenue streams [11] - Nathan's Famous maintains stable profitability with consistent EBITDA performance, allowing for investment in growth despite cost pressures [12] Challenges - The company faces concentration risk due to its reliance on Smithfield Foods for supply and licensing revenues [13] - Inflationary pressures and volatility in commodity costs, along with rising labor expenses, present ongoing margin risks [13] Valuation - Nathan's Famous has a trailing 12-month EV/Sales ratio of 2.9X, lower than the industry average of 4.6X but higher than its five-year median of 2.7X [14][16] - Comparatively, peers Ark Restaurants and Flanigan's Enterprises have trailing EV/Sales ratios of 0.1X and 0.3X, respectively [16] Investment Outlook - The company exhibits strong core business strength and financial stability, making it an attractive option for both existing and new investors [17][18] - The current valuation suggests potential for growth if performance aligns more closely with the overall market [18]

Core Viewpoint - Yum China Holdings, Inc. (YUMC) has experienced a 10.8% stock price increase over the past three months, outperforming the industry average of 3.6%, driven by unit expansion, menu innovation, and digitalization efforts, despite concerns regarding an uncertain macro environment [1] Group 1: Growth Drivers - The company is focused on aggressive unit growth, having opened 534 net new stores in Q4 2024, bringing the total to 16,395, with KFC and Pizza Hut showing strong performance and quick payback periods of two to three years [2] - Yum China is optimistic about long-term growth in China, targeting underserved areas and enhancing accessibility through customized store formats, aiming for a franchise proportion of 40-50% for KFC and 20-30% for Pizza Hut in the coming years [3] - Menu innovation plays a crucial role, with KFC and Pizza Hut regularly introducing new items that cater to evolving consumer preferences, maintaining transaction growth while broadening the customer base [4] Group 2: Digitalization and Sales - The company has significantly invested in digitization, with digital sales reaching $9.6 billion in 2024, accounting for approximately 90% of total sales, supported by automation and AI to enhance customer experience [5] Group 3: Cost Concerns - Yum China faces high structural costs related to labor and rentals, with total costs and expenses rising to $2.44 billion in Q4 2024 from $2.38 billion in the previous year, and anticipates a 5.4% increase in restaurant expenses to $9.5 billion in 2025 due to wage inflation [7]