Thursday, May 26, 2022

FAT Brands Inc. (FAT)
A Tuck-in Acquisition to Improve Factory Utilization and Expand Market Share

FAT Brands (NASDAQ: FAT) is a leading global franchising company that strategically acquires, markets, and develops fast casual, quick-service, casual dining, and polished casual dining concepts around the world. The Company currently owns 17 restaurant brands: Round Table Pizza, Fatburger, Marble Slab Creamery, Johnny Rockets, Fazoli’s, Twin Peaks, Great American Cookies, Hot Dog on a Stick, Buffalo’s Cafe & Express, Hurricane Grill & Wings, Pretzelmaker, Elevation Burger, Native Grill & Wings, Yalla Mediterranean and Ponderosa and Bonanza Steakhouses, and franchises and owns over 2,300 units worldwide. For more information on FAT Brands, please visit www.fatbrands.com.

Joe Gomes, Senior Research Analyst, Noble Capital Markets, Inc.

Joshua Zoepfel, Research Associate, Noble Capital Markets, Inc.

Refer to the full report for the price target, fundamental analysis, and rating.

Acquisition. Yesterday, FAT Brands announced that it agreed to acquire the franchised chain of stores known as Nestlé Toll House Café by Chip from Crest Foods, Inc. While the acquisition increases the Company’s presence in the cookie segment, we believe the driving force to be the opportunity to increase the capacity utilization of the manufacturing business, which currently manufactures cookie dough and pretzel mix for FAT Brands, as well as conducts distribution services for other products used in those operations. Recall, the factory is currently operating at roughly one-third of capacity. At full capacity, the factory could more than double its EBITDA contribution.

Who, and What, Is Nestlé Toll House Café by Chip from Crest Foods, Inc.? While terms of the acquisition were not released, Nestle Toll House Café currently franchises approximately 85 cafés across the U.S., with a concentration in Texas. The very first Nestle Toll House Café by Chip opened in August 2000, in Frisco, Texas and the brand touches over 60 million customers per year. Cafes are commonly found in shopping malls or shopping centers….

This Company Sponsored Research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).

*Analyst certification and important disclosures included in the full report. NOTE: investment decisions should not be based upon the content of this research summary. Proper due diligence is required before making any investment decision.