FAT BRANDS, INC IPO Filings,Withdrawn,Pricings, Calendar, Market Details-2017

Company Description
FAT Brands is a leading multi-brand restaurant franchising company that
develops, markets, and acquires predominantly fast casual restaurant concepts
around the world. As a franchisor, we generally do not own or operate restaurant
locations, but rather generate revenue by charging franchisees an initial
franchise fee as well as ongoing royalties. This asset light franchisor model
provides the opportunity for strong profit margins and an attractive free cash
flow profile while minimizing restaurant operating company risk, such as
long-term real estate commitments or capital investments. Our scalable
management platform enables us to add new stores and restaurant concepts to our
portfolio with minimal incremental corporate overhead cost, while taking
advantage of significant corporate overhead synergies. The acquisition of
additional brands and restaurant concepts as well as expansion of our existing
brands are key elements of our growth strategy.
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FAT Brands Inc., was incorporated as a Delaware corporation on March 21, 2017.
Our corporate headquarters are located at 9720 Wilshire Blvd., Suite 500, 
Beverly Hills, California 90212. Our main telephone number is (310) 402-0600. 
Our principal Internet website address is www.fatbrands.com

Proposed Symbols: FAT

Market: NASDAQ Capital

CIK: 0001705012

Address: 9720 WILSHIRE BLVD.,

City, State, Zip: BEVERLY HILLS ,CA 90212

Telephone: 310-406-0600

CEO: Andrew A. Wiederhorn

Employee Count: 30

Fiscal Year: 12/21

URL: www.fatbrands.com

 

Deal Data
Status: Filed

Share Price: $12.00

Shares Offered: 2,000,000

Offer Amount:

Total Expenses:

Shares Over Alloted: 0

Shareholder Shares Offered:

Shares Outstanding: 10,000,000

Lockup Period / Expiration:

Quiet Period Expiration:
 Financials
Revenue: $4,275,578.00

Net Income: $1,708,739.00

Total Assets: $22,322,756.00

Total Liabilities: $6,900,131.00

Stockholders’ Equity: $15,422,625.00
 Advisors

Lead Underwriter(s): 
Tripoint Global Equities, LLC

Underwriter(s) :

Company Counsel :
Loeb and Loeb LLP
Underwriter Counsel :
Hunter Taubman Fischer & Li LLC
Auditor :
Hutchinson and Bloodgood LLP
Transfer Agent :
VStock Transfer, LLC

Description of Business
FAT Brands is a leading multi-brand restaurant franchising company that
develops, markets, and acquires predominantly fast casual restaurant concepts
around the world. As a franchisor, we generally do not own or operate restaurant
locations, but rather generate revenue by charging franchisees an initial
franchise fee as well as ongoing royalties. This asset light franchisor model
provides the opportunity for strong profit margins and an attractive free cash
flow profile while minimizing restaurant operating company risk, such as
long-term real estate commitments or capital investments. Our scalable
management platform enables us to add new stores and restaurant concepts to our
portfolio with minimal incremental corporate overhead cost, while taking
advantage of significant corporate overhead synergies. The acquisition of
additional brands and restaurant concepts as well as expansion of our existing
brands are key elements of our growth strategy. 
We currently operate the Fatburger, Buffalo’s Cafe and Buffalo’s Express
restaurant concepts, with 176 total locations across seven states and 18
countries as of June 25, 2017. While our existing footprint covers 18 countries
in which we have franchised restaurants open and operational as of June 25,
2017, our overall footprint (including development agreements for proposed
stores in new markets and nine countries where our brands previously had a
presence that we intend to resell to new franchisees) covers 32 countries. For
each of our current restaurant brands and those that we will seek to acquire,
the ability to expand the overall concept footprint, both domestically and
internationally, is of critical importance and a primary acquisition evaluation
criterion. We believe that our restaurant concepts have meaningful growth
potential and appeal to a broad base of consumers globally. 
Fatburger. Founded in Los Angeles, California in 1947, Fatburger (The Last Great
Hamburger Stand™) has, throughout its history, maintained its reputation as an
iconic, all-American, Hollywood favorite hamburger restaurant serving a variety
of freshly made-to-order, customizable, big, juicy, and tasty Fatburgers,
Turkeyburgers, Chicken Sandwiches, Veggieburgers, French fries, onion rings,
soft-drinks and milkshakes. With a legacy spanning over 70 years, Fatburger’s
dedication to superior quality inspires robust loyalty amongst its customer base
and has long appealed to American cultural and social leaders. We have counted
many celebrities and athletes as past franchisees and customers, and we believe
this prestige has been a principal driver of the brand’s strong growth.
Fatburger offers a premier dining experience, demonstrating the same dedication
to serving gourmet, homemade, custom-built burgers as it has since 1947. As of
June 25, 2017, there were 157 franchised and sub-franchised Fatburger locations
across five states and 18 countries. Fatburger is one of the fastest growing
hamburger restaurant franchises, with 8.2% new store growth in 2016. 



Buffalo’s Cafe. Established in Roswell, Georgia in 1985, Buffalo’s Cafe (Where
Everyone is Family™) is a family-themed casual dining concept known for its
chicken wings and 13 distinctive homemade wing sauces, burgers, wraps, steaks,
salads, and other classic American cuisine. Featuring a full bar and table
service, Buffalo’s Cafe offers a distinctive dining experience affording friends
and family the flexibility to share an intimate dinner together or to casually
watch sporting events while enjoying extensive menu offerings. After acquiring
the Buffalo’s Cafe brand in 2011, we developed and launched Buffalo’s Express, a
fast-casual, smaller footprint variant of Buffalo’s Cafe offering a limited
version of the full menu with an emphasis on chicken wings, wraps and salads.
Current Buffalo’s Express outlets are co-branded with Fatburger locations,
providing our franchisees with complementary concepts that share kitchen space
and result in a higher average check (compared to stand-alone Fatburger
locations). As of June 25, 2017, there were 19 franchised Buffalo’s Cafe and 68
co-branded Fatburger / Buffalo’s Express locations globally. Buffalo’s Cafe
achieved 10.0% new store growth in 2016.
Ponderosa & Bonanza Steakhouse. In March 2017, our parent company, Fog Cutter
Capital Group, Inc., entered into a definitive agreement to acquire the
franchisor of the Ponderosa Steakhouse (which we refer to as “Ponderosa”) and
Bonanza Steakhouse (which we refer to as “Bonanza”) restaurants, and intends to
complete the acquisitions and contribute Ponderosa and Bonanza to us, including
one company-owned restaurant, concurrently with the consummation of this
Offering. Ponderosa and Bonanza offer the quintessential American steakhouse
experience, for which there is strong and growing demand in international
markets, particularly in Asia, the Middle East, Europe and Central America.
Ponderosa and Bonanza were established in 1965 and 1963, respectively, and as of
June 25, 2017, there were 100 Ponderosa and 20 Bonanza restaurants operating
under franchise and sub-franchise agreements in 19 states in the United States,
Canada, Puerto Rico, the United Arab Emirates, Egypt, Qatar, Taiwan, and one
company-owned Ponderosa restaurant in the United States. The acquisition and
contribution to us of Ponderosa and Bonanza is not a condition to completing
this Offering. 
Beyond our current brand portfolio and the Ponderosa and Bonanza acquisitions,
we intend to acquire restaurant concepts that will allow us to offer additional
food categories and expand our geographic footprint. In evaluating potential
acquisitions, we specifically seek concepts with the following characteristics: 
. established, widely-recognized brands;
. steady cash flows;
. track records of long-term, sustainable operating performance;
. good relationships with franchisees;
. sustainable operating performance;
. geographic diversification; and
. growth potential, both geographically and through co-branding initiatives
across our portfolio. 
We approach acquisitions from a value perspective, targeting valuations of
approximately 6.0x-8.0x 12-month leading cash flow to ensure that acquisitions
are immediately accretive to our earnings. Leveraging our scalable management
platform, we expect to achieve cost synergies post-acquisition by reducing the
corporate overhead of the acquired company – most notably in the legal,
accounting and finance functions. Adjusted for these cost synergies, we believe
that we will have the opportunity to acquire complementary restaurant brands at
a valuation multiple materially below 6.0x-8.0x 12-month leading cash flow. We
also plan to grow the top line revenues of newly acquired brands through support
from our management and systems platform, including public relations, marketing
and advertising, supply chain assistance, site selection analysis, staff
training and operational oversight and support.



Including Ponderosa and Bonanza, our experienced and diversified franchisee base
consisted of 149 franchisees as of June 25, 2017, 116 of which are located in
North America and 47 of which operate multiple locations. With the completion of
the Ponderosa and Bonanza acquisitions, our franchisees operated more than 300
restaurants as of December 26, 2016 (239 of which were located in North
America), with system-wide store level sales in excess of $300 million in 2016.
Including Ponderosa and Bonanza, as of June 25, 2017, we had a total of 316 new
unit development commitments (140 located in North America), 43 of which have
been developed and opened, and 273 of which remain to be completed (126 in North
America).
Since converting to a franchisor model in 2011, we have improved store-level
operations and maintained positive same-store sales growth in our traditional
domestic market over each of the last five years while operating less than 1% of
total units. Over the same time period, our concepts have also experienced
significant growth in total number of locations. As a result, between 2012 and
2016, unadjusted for the acquisition of Ponderosa and Bonanza, the company
achieved compound annual growth rates in net revenue, net income, and EBITDA of
9.9%, 40.0% and 35.3%, respectively, reflecting consistent yearly growth over
this period. By providing multiple support services that promote the financial
and operational health of our franchisees – our direct customers – we believe
that we will continue to enable our franchisees to increase their same-store
sales and grow their store counts, thereby driving our sustained strong
financial performance.
The FAT Brands Difference – Fresh. Authentic. Tasty. 
Our name represents the values that we embrace as a company and the food that we
provide to customers – Fresh. Authentic. Tasty (which we refer to as “FAT”). The
success of our franchisor model is tied to consistent delivery by our restaurant
operators of freshly prepared, made-to-order food that our customers desire.
With the input of our customers and franchisees, we continually strive to keep a
fresh perspective on our brands by enhancing our existing menu offerings and
introducing appealing new menu items. When enhancing our offerings, we ensure
that any changes are consistent with the core identity and attributes of our
brands, although we do not intend to adapt our brands to be all things to all
people. In conjunction with our restaurant operators (which means the
individuals who manage and/or own our franchised restaurants), we are committed
to delivering authentic, consistent brand experiences that have strong brand
identity with customers. Ultimately, we understand that we are only as good as
the last meal served, and we are dedicated to having our franchisees
consistently deliver tasty, high-quality food and positive guest experiences in
their restaurants.
In pursuing acquisitions and entering new restaurant segments, we are committed
to instilling our FAT Brands values into new restaurant concepts. As our
restaurant portfolio continues to grow, we believe that both our franchisees and
diners will recognize and value this ongoing commitment as they enjoy a wider
concept offering.
---
FAT Brands Inc., was incorporated as a Delaware corporation on March 21, 2017.
Our corporate headquarters are located at 9720 Wilshire Blvd., Suite 500, 
Beverly Hills, California 90212. Our main telephone number is (310) 402-0600. 
Our principal Internet website address is www.fatbrands.com.

 

Use of Proceeds
We estimate that the net proceeds to us of the sale of the maximum shares of
Common Stock that we are offering will be approximately $21,200,000, assuming an
initial public offering price of $12.00 per share, and after deducting the
estimated cash Selling Agent fees of $1,780,800 and estimated Offering expenses
of $1,019,200. However, there is no minimum number of shares that must be sold
by us for the Offering to proceed.
We intend to use the net proceeds that we receive from this Offering as follows:
(i) $10,550,000 to fund the acquisition of Homestyle Dining LLC by FCCG, which
will immediately contribute Ponderosa Franchising Company and Bonanza Restaurant
Company (including related intellectual property) to us as new operating
subsidiaries, and (ii) $9,500,000 to repay a portion of the $30,000,000 in
Related Party Debt owed by us to FCCG. FCCG will immediately use the $9,500,000
payment of the Related Party Debt to repay indebtedness owed to a third party 
that FCCG incurred in acquiring Buffalo’s Franchise Concepts, Inc. 
These amounts assume that at least $20,050,000 in net proceeds is raised in the
Offering. We will use any net proceeds in excess of $20,050,000 for our general
corporate purposes. If less than $20,050,000 is raised in the Offering, the
repayment of Related Party Debt would be reduced first, and FCCG would then
repay the balance of its third party indebtedness from other sources. If less
than $10,550,000 in net proceeds is raised in the Offering, we would first use
the net amount raised to fund the purchase of Homestyle Dining LLC by FCCG, and
FCCG would then fund the balance from other sources and immediately contribute
Ponderosa and Bonanza to us. In that case, the $30,000,000 in Related Party Debt
owed by us to FCCG would increase by the amount that FCCG contributes towards
the purchase of Homestyle Dining LLC. This would cause an increase in note
payable on our balance sheet, a corresponding decrease in retained earnings, and
an increase in our interest expense in future periods. 
The Related Party Debt will be unsecured, bear interest at a rate of 10.0% per
annum, and mature in five years. We intend to repay the Related Party Debt with
a combination of future cash flow, borrowings under a proposed new credit
facility and/or by issuing new equity securities, including preferred stock if
available on terms satisfactory to us. 
Our director and Chief Executive Officer, Andrew Wiederhorn, is also Chairman
and Chief Executive Officer of FCCG. The stockholders of FCCG, including Mr.
Wiederhorn, will indirectly benefit from the proceeds of this Offering.

 

Competition / Competitors
As a franchisor, our most important customers are our franchisees, who own and
operate FAT Brands restaurants. Our direct competitors for franchisees include
well-established national, regional or local franchisors with franchises in the
geographies or restaurant segments in which we operate or in which we intend to
operate. 
Our franchisees compete in the fast casual and casual dining segments of the
restaurant industry, a highly competitive industry in terms of price, service,
location, and food quality. The restaurant industry is often affected by changes
in consumer trends, economic conditions, demographics, traffic patterns, and
concern about the nutritional content of fast casual foods. Furthermore, there
are many well-established competitors with substantially greater financial
resources, including a number of national, regional, and local fast casual,
casual dining, and convenience stores. The restaurant industry also has few
barriers to entry and new competitors may emerge at any time.



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