FAT Brands(FAT) - 2026 FY - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported a cautious but cautiously optimistic consumer environment, with recent weeks showing improved sales [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 positive shift in consumer behavior, with sales improving significantly in recent weeks [5] - Franchisee confidence is indicated by the sale of several hundred incremental franchise units over the past few years, with 213 units sold recently [6] Company Strategy and Development Direction - The company focuses on co-branded and multi-branded locations, expecting 10%-20% higher revenues from these formats [8] - The strategy includes converting select Smoky Bones locations into Twin Peaks, which has shown a potential to double sales in converted locations [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][28] - The company aims to restructure its debt to make it more manageable, with ongoing discussions with noteholders [26][27] Other Important Information - The company has a unique manufacturing operation that complements its restaurant portfolio, providing high-margin products to franchisees [11] - The spinout of Twin Peaks into a publicly traded company was a strategic move to raise equity and pay down debt [14][15] 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, 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 these opportunities [10] Question: How does the manufacturing operation fit into the long-term strategy? - The manufacturing facility is seen as a significant opportunity, currently running at 45% capacity and generating high margins [11][12] Question: What is the outlook for Twin Peaks and Smoky Bones? - The company is converting some Smoky Bones into Twin Peaks, which has shown promising sales increases [18][21]