Deal will add five additional restaurant concepts to FAT’s franchise portfolio
FAT Brands Inc. – an acronym for Fresh. Authentic. Tasty. – has cemented plans to acquire Global Franchise Group from Lion Capital LLP and Serruya Private Equity Inc. by the end of July. Global Franchise Group franchises and operates the quick service restaurants Great American Cookies, Hot Dog on a Stick, Marble Slab Creamery, Pretzelmaker and Round Table Pizza. The price tag is $442.5 million in cash and stock.
When the deal closes, FAT Brands will have more than 2,000 franchised and company-owned restaurants in 16 countries (with nearly 90 percent of the locations in the United States). Combined annual sales total about $1.4 billion. Those restaurants are Bonanza Steakhouse, Buffalo’s Cafe, Buffalo’s Express, Elevation Burger, Fatburger, Hurricane Grill & Wings, Johnny Rockets, Ponderosa Steakhouse and Yalla Mediterranean.
A milestone for FAT Brands
FAT Brands President and CEO Andy Wiederhorn said the “acquisition is a key strategic milestone for FAT Brands,” and that it is part of his company’s plan “to add strong and growing restaurant brands to our portfolio. Now that the economy is emerging from Covid-19 and restaurants are rapidly recovering, we are pleased to have reached this agreement.”
Wiederhorn also said “the five new restaurant concepts have been very resilient coming out of the pandemic and will complement our existing brands.” He added that FAT Brands will benefit from owning GFG’s manufacturing operations, which will “provide greater efficiencies and incremental revenue opportunities to our company.”
Michael Serruya, managing director at Serruya Private Equity and chairman of the board of Global Franchise Group, said, “This is truly a transformative deal for both FAT Brands and GFG. Andy has an exciting vision for FAT Brands. Through his recent acquisitions, he has been able to create brand synergies within the portfolio while maintaining an asset-light business model…. I look forward to our continued involvement with GFG through our company’s support of FAT Brands from an equity and strategic perspective.”
Lion Capital managing partner Lyndon Lea praised Global Franchise Group’s management team for its “incessant focus on building a great business and culture while successfully navigating an unprecedented period amidst Covid-19. We wish FAT Brands and GFG the best in the next phase of their journey.”
The transaction will be made in cash and stock with the cash portion financed by a newly issued series of notes and cash on hand. FAT Brands also will issue the sellers $25 million in common stock and $67.5 million in Series B cumulative preferred stock.
FAT Brands recently has been raising capital for acquisitions and in 2020 merged with the company’s controlling stockholder Fog Cutter Capital Group in order to boost its buying power. Wiederhorn has said he anticipates one or two additional acquisitions by the end of the year.
For several years FAT Brands has accumulated quick-service and casual-dining brands, starting with the purchase of Buffalo’s Café in 2011 and the subsequent creation of Buffalo’s Express in 2012. FAT Brands bought Bonanza and Ponderosa Steakhouses for $10.5 million in 2017.