FAT Brands CEO dismisses fraud allegations and looks forward to growth

Andy Wiederhorn said his lawyers will prove his innocence and that FAT Brands is going strong.

Andy Wiederhorn, CEO of FAT Brands Inc., the parent company of Fatburger and 16 other restaurant brands, told investors Monday there was little cause for concern regarding pending court cases and FBI investigations into allegations of securities and wire fraud, money laundering and tax attempts give dodge. He denied all allegations and said he looks forward to his legal team showing “that all transactions have been properly documented, verified, approved and disclosed”.

Although the LA times Breaking news of the inquiry last month, citing the government’s affidavit, Wiederhorn said it should not have been made public as it was the subject of the sealed court order. The CEO who spent 15 months in prison after pleading guilty in 2005 Allegations of paying an illegal benefit to an employee and filing a false tax return indicated that the company was not being investigated. Instead, the United States Attorney’s Office focused on Wiederhorn and his family.

“Being a public company and a public figure attracts your share of visibility,” Wiederhorn said during a conference call in which he reviewed the company’s financial results for the fourth quarter of 2021 for the 13-week period ended Dec. 26 2021 discussed. “Given my personal history, I am not surprised that the government will investigate the allegations made in the follow-up lawsuit,” said Wiederhorn, who has publicly denied that in connection with his guilty plea that led to his imprisonment, intentionally violated the law.”The LA Times article, which published characterizations of the government’s position, contains many factual errors and conflates the various entities and my family as if they were (one).”

A shareholder has filed a lawsuit however, against FAT Brands and Fog Cutter Capital Group, alleging that Fog Cutter used funds borrowed from FAT Brands to generate $27 million in cash advances over a number of years. It claimed Fog Cutter owed FAT Brands $38.7 million, but said the company forgave pre-merger loans to Wiederhorn. In January, a Delaware judge ruled the lawsuit could go ahead, but Wiederhorn claims no wrongdoing.

“While these legal matters are certainly a distraction personally, our team is focused on running our business and integrating the newly acquired brands into the FAT family brands,” said Wiederhorn.

These brands included Twin Peaks, which FAT bought for $300 million, as well as Fazoli’s, which cost the brand $130 million, and Native Grill & Wings, which was acquired for $20 million. Wiederhorn estimated that the 2021 acquisitions would result in incremental post-COVID normalized EBITDA of $45 million to $50 million in 2022.

“We are extremely pleased with the performance of the brands we acquired in 2021, which if included would have brought our same-store sales growth to 8.5% in the fourth quarter of 2021 versus 2019,” he said.

Wiederhorn was pleased with the rest of the company’s fourth-quarter results, saying that revenue was up 1,042% and Adjusted EBITDA was up 500% from the year-ago quarter.

“FAT Brands is truly unique in that we have a scalable platform that gives us the ability to synergistically integrate new concepts with minimal additional overhead to the business,” he said of the pipeline, which gives us potential growth of 33% over the next few years % of units and 50% of EBITDA growth.”

The company reported same-store sales growth of 5.6% and system-wide sales growth of 353% for the fourth quarter of 2021 compared to 2019.

By the end of the year, the company will open 120 locations and expects system-wide sales to grow to over $2.3 billion, resulting in an estimated normalized post-COVID EBITDA run rate of nearly $90-95 million. dollars for 2022. is no longer the focus.

“We have size and scope now, but we don’t need to acquire additional brands,” Wiederhorn said. “We already have so many great ones with so much organic growth already committed and paid for.”

That doesn’t mean all acquisitions are off the table, however.

“Actually, we’re currently considering a few, but our focus this year has to be to digest what we’ve already acquired to realize the synergies,” said Wiederhorn. “In addition, as noted, within our 17-brand portfolio, there are significant cross-selling opportunities in the franchise community.”

Virginia C. Taylor