On March 7, 2024, FAT Brands Inc. (FAT, Financial) released its 8-K filing, detailing the fiscal fourth quarter and full fiscal year 2023 financial results. The company, a multi-brand restaurant franchising entity, operates 18 iconic brands with a global presence. FAT Brands generates revenue primarily through franchise fees and royalties, while also directly owning and operating certain restaurant locations.
The fourth quarter saw a significant revenue increase to $158.6 million, a 52.8% jump from the previous year's quarter. This growth was driven by a 10.4% increase in royalties and an 80.5% surge in company-owned restaurant revenues, bolstered by new openings and the acquisition of Smokey Bones. However, the quarter also experienced a slight system-wide same-store sales decline of 0.6%.
Despite the revenue uptick, FAT Brands faced operational challenges, reporting a loss from operations of $3.1 million, which is an improvement from the $32.6 million loss in Q4 2022. The net loss also improved significantly to $26.2 million, or $1.68 per diluted share, compared to a net loss of $70.8 million, or $4.39 per diluted share, in the same quarter of the previous year.
For the full fiscal year 2023, FAT Brands Inc. reported an 18.0% increase in total revenue, reaching $480.5 million. The company also saw a system-wide sales growth of 6.9% and a same-store sales growth of 0.8%. The income from operations turned positive at $22.3 million, contrasting with the previous year's operational loss. However, the net loss for the year stood at $90.1 million, or $5.85 per diluted share, showing an improvement from the $126.2 million net loss in 2022.
Adjusted EBITDA for the quarter was $27.0 million, up from $19.6 million in Q4 2022, indicating a stronger underlying business performance. The adjusted net loss was also reduced to $17.3 million, or $1.15 per diluted share, compared to $43.0 million, or $2.70 per diluted share, in the prior year's quarter.
Andy Wiederhorn, Chairman of FAT Brands, expressed optimism about the company's growth trajectory, citing the potential for over 50% EBITDA growth in the coming years. Co-CEOs Ken Kuick and Rob Rosen highlighted the expansion of Twin Peaks and the integration of Smokey Bones as key strategic moves.
"We are seeing strong franchisee interest in development opportunities, having signed more than 225 development agreements in 2023, bringing our total pipeline to 1,100 units. This represents the potential for over 50% EBITDA growth over the next several years," said Andy Wiederhorn.
The company's financial achievements, particularly the growth in revenue and adjusted EBITDA, are significant for FAT Brands and the restaurant industry, as they reflect the company's ability to scale and manage a diverse portfolio of restaurant concepts effectively, even in the face of operational losses.
Key financial metrics from the income statement include a 10.0% increase in factory revenues and a reduction in general and administrative expenses by 22.6%, primarily due to a non-cash reserve adjustment. The balance sheet and cash flow statements were not provided in the summary, but the improvements in operational income and adjusted EBITDA suggest a positive trend in the company's financial management.
While FAT Brands Inc. (FAT, Financial) has demonstrated resilience in revenue growth and expansion, the operational losses and net loss indicate ongoing challenges. The company's strategic focus on brand integration and franchise development, along with a seasoned leadership team, positions it for potential future growth and balance sheet deleveraging.
Investors and stakeholders will be watching closely to see if the company's efforts to grow its brand portfolio and streamline operations will lead to improved profitability in the coming fiscal periods.
For more detailed information, you can access the full earnings release and financial tables on the FAT Brands website or through the SEC's EDGAR database.
Investor Relations and Media Relations contacts are available for further inquiries and clarifications regarding FAT Brands Inc.'s financial performance and strategic initiatives.
Explore the complete 8-K earnings release (here) from FAT Brands Inc for further details.
