How FAT Brands Became One of Franchising’s Best Bets
CEO Andy Wiederhorn tells 1851 Franchise how the restaurant franchisor grew from a single burger chain to a multi-brand powerhouse.
1851 Franchise: Tell us about the history of FAT Brands.
Andy Wiederhorn: We acquired Fatburger in 2003. At that time, the chain was half corporate-owned stores and half franchisee-owned. Originally, it was just a financing deal; they were looking for a buy-out, and I thought it was a good opportunity. But the more I got involved in the business, the more potential I saw for it to scale, particularly through franchising. So we took on an equity ownership role and converted the chain into a full franchise model.
We quickly saw tremendous growth with the franchise-exclusive model, and we realized that was a reliable way to scale multiple brands. So we established FAT Brands as a way to replicate Fatburger’s growth across multiple new restaurant franchise acquisitions. Our first acquisition was Buffalo’s Cafe in 2011. Since then, we’ve continued to acquire and grow new brands. In 2017, we took FAT Brands public and really ramped up our acquisition strategy. Today, we have 17 fast casual, QSR, casual and polished casual restaurant brands under the FAT Brands umbrella.
1851: What void does FAT Brands fill in the marketplace?
Wiederhorn: We offer franchisees the unique competitive advantage of being able to grow a thriving portfolio of complementary brands in a single market, with a single management team and a single franchisor. Most brands will hit capacity in a market before the franchisee is ready to stop growing, which means they either have to move to another market — which can disrupt or complicate operations — or they have to join another franchisor. Our brands are best in class in a range of different categories, so owners can scale quickly and seamlessly with a diverse portfolio and without having to set up operations in different markets.
1851: What are some of FAT Brands’ key differentiators?
Wiederhorn: One of the things I’m most proud of is our leadership team, which is so much stronger than any other franchisors out there. One of the great advantages of acquiring so many great brands is taking on their management teams, each of which has experts in a range of segments. When someone at any level of any of our brands runs into a challenge, we have a leader who knows exactly how to address it.
1851: What are some of the key milestones FAT Brands has hit in recent years?
Wiederhorn: Taking the company public in 2017 was a big one. Around the same time, we also started using capital markets, which allowed us to raise capital to acquire more brands, and that was a critical step forward for us. We’ve grown by 600% just since 2020. No other franchisor can say that.
1851: Why is now the time for franchisees to join FAT Brands?
Wiederhorn: Since FAT Brands’ founding, and over the past five years especially, we have acquired a diverse and complementary portfolio of brands that have made us one of the strongest franchisors in the industry. Today, we have $600 million in purchasing power and are expected to have $2.2 billion in sales in 2022. It is hard to overstate the advantage that foundation gives to franchisees. They get the marketing muscle, distribution, vendor relationships, leadership and resources of a company far larger than any of our individual brands or the vast majority of franchise brands out there. It’s an incredibly compelling financial proposition for savvy entrepreneurs.