Executive Summary

Q1 2025 was soft: revenue fell 6.5% year over year to $142.0M, adjusted EBITDA declined to $11.1M, and net loss widened to $46.0M; same-store sales were down 3.4% system-wide and system-wide sales slipped 1.8% .
Results missed Wall Street consensus: revenue ($142.0M vs $148.6M*), EPS (-$2.73 vs -$2.04*), and EBITDA ($2.1M vs $17.8M*) were below expectations; magnitude of EBITDA miss reflects interest expense and weaker same-store sales, plus Smokey Bones conversions temporarily reducing sales .
Management emphasized a robust development pipeline (≈1,000 signed agreements) and opened 23 new locations in Q1 (+37% YoY), with expectations for ~25 more openings in Q2 and 100+ in 2025, anchoring medium-term growth .
Key near-term catalysts: refranchising 57 company-operated Fazoli’s (enabled by April securitization amendment), a Q2 execution of a third-party factory contract to lift utilization to 60–70% from ~40–45%, and progress on Twin Hospitality (TWNP) refinancing/equity raise; common dividend is paused until a $25M indenture principal reduction is met, which affects investor income expectations .

What Went Well and What Went Wrong

What Went Well

Development momentum and co-branding: “We started 2025 with strong momentum, opening 23 new locations in the first quarter, a 37% increase over last year’s quarter… our first Round Table Pizza and Marble Slab Creamery pairing” .
International expansion: New Fatburger agreement for 30 France units over three years and 10 Buffalo’s Café fast casual locations with first 3 units by 2026, strengthening non-U.S. growth .
Factory economics and pipeline: Factory generated $8.8M sales and $3.1M adjusted EBITDA (~35% margin) in Q1; management expects a third-party contract in Q2 and targets 60–70% utilization, supporting cash generation and potential deleveraging options later .

What Went Wrong

Top-line and comps pressure: Total revenue fell 6.5% and system-wide same-store sales declined 3.4%; restaurant sales decreased amid Smokey Bones conversions and lower same-store sales .
Profitability headwinds: Interest expense rose to $36.0M in total other expense (incl. $35.9M interest) and adjusted EBITDA fell to $11.1M from $18.2M; G&A increased to $33.0M (+10.1%) driven by higher professional fees for pending litigation .
Dividend pause and financing delay: Common dividend paused and preferred dividend accruing per November 2024 indenture until a $25M principal reduction; management noted volatile markets delayed the first equity tranche but still expects to complete the annual target over 12 months .

Financial Results

Consolidated Summary vs Prior Quarters (oldest → newest)

Metric	Q3 2024	Q4 2024	Q1 2025
Total Revenue ($USD Millions)	$143.4	$145.3	$142.0
System-wide Sales ($USD Millions)	$600.7	$580.2	$571.1
System-wide SSS Change (%)	-2.6%	-1.6%	-3.4%
EBITDA ($USD Millions)	$1.7	$(30.7)	$2.1
Adjusted EBITDA ($USD Millions)	$14.1	$14.4	$11.1
Net Loss ($USD Millions)	$(44.8)	$(67.4)	$(46.3)
Loss per Share (Basic & Diluted)	$(2.74)	$(4.06)	$(2.73)
Adjusted Net Loss ($USD Millions)	$(38.0)	$(29.9)	$(38.7)
Adjusted Loss per Share	$(2.34)	$(1.87)	$(2.32)

Revenue Components (Q1 2024 vs Q1 2025)

Component ($USD Thousands)	Q1 2024	Q1 2025
Royalties	$21,947	$21,773
Restaurant Sales	$105,938	$99,415
Advertising Fees	$9,796	$9,764
Factory Revenues	$9,474	$8,811
Franchise Fees	$1,481	$1,190
Other Revenue	$3,331	$1,066
Total Revenue	$151,967	$142,019

Selected Operating Expense Items (Q1 2024 vs Q1 2025)

Metric ($USD Thousands)	Q1 2024	Q1 2025
G&A Expense	$30,005	$33,043
Cost of Restaurant & Factory Revenues	$99,050	$96,097
Advertising Expense	$12,592	$11,076
Total Other Expense, net	$33,410	$35,976

Margins (Calculated from reported figures)

Margin (%)	Q3 2024	Q4 2024	Q1 2025
Net Income Margin %	-31.2%	-46.4%	-32.3%
Adjusted EBITDA Margin %	9.8%	9.9%	7.8%

Note: Margins are calculated from the cited revenues and net loss/adjusted EBITDA figures in the filings .

KPI Snapshot

KPI	Q3 2024	Q4 2024	Q1 2025
New Store Openings	22	30	23
Factory Sales ($USD Millions)	$9.5	$9.35	$8.81
Factory Adj. EBITDA ($USD Millions)	$3.5	N/A	$3.1

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
New Openings	FY 2025	Expect >100 openings	“On track” for 100+; ~25 in Q2	Maintained
Dividend Policy	2025	Expected to pay Q1 common dividend after $25M debt reduction	Common dividend paused; Series B preferred accruing until $25M principal reduction under TWNP indenture	Lowered/Suspended
Fazoli’s Refranchising	2025–2026	Plan to refranchise 57 units	Enabled by securitization amendment; proceed with refranchising	Maintained; de-risked
Smokey Bones Conversions to Twin Peaks	2025–2026	Majority conversions in next ~24 months	Conversions continue; 2 opened in Q1; more underway	Maintained
Factory Third-Party Contract	Q2 2025	Large national test underway; rollout expected	Expect execution in Q2; target 60–70% utilization	Raised specificity
Twin Hospitality Equity Raise	2025	First tranche by late April	Delayed by markets; confident to achieve annual target over next 12 months	Delayed

Earnings Call Themes & Trends

Topic	Previous Mentions (Q3 2024)	Previous Mentions (Q4 2024)	Current Period (Q1 2025)	Trend
Digital/Technology Initiatives	New co-branded digital platform (Olo/3D cake builder); loyalty/app improvements	Continued digital traction; comps improving late in year	Round Table digital sales +5% QoQ; Great American Cookies/Marble Slab app +8% sales, +17.6% avg check	Improving
Supply Chain/Construction/Tariffs	—	Debt refi plans; capex on conversions	Conversions slowed by high rates, construction costs, equipment tariffs	Headwinds persist
Macro/Consumer Value	—	Value and traffic focus; weather impacts Q1	Consumers “apprehensive”; value via experience over deep discounting	Mixed demand; value emphasis
Manufacturing (Factory)	40–45% utilization; $3.5M adj. EBITDA	~$38M annual sales, ~$15M profit at ~40% utilization	$8.8M Q1 sales; $3.1M adj. EBITDA; Q2 third-party contract; 60–70% utilization target	Scaling
Regulatory/Legal	Litigation costs elevated	Expect insurance recovery; hope bulk resolves in 2025	Litigation costs up Q1; mgmt expects “end… in Q2”	Resolution near-term (mgmt view)
Development/Pipeline	22 opens Q3; pipeline ~1,000	92 opens FY; >100 expected in 2025	23 opens Q1; ~25 expected Q2; >100 in 2025	Strong
Dividends/Financing	Twin Peaks IPO/spin prep	TWNP spin; $50M stock dividend; refi Twin Peaks; common paused until $25M payment	Common paused; preferred accruing; refi other silos before Jul-2026	Income suspended; deleveraging focus

Management Commentary

Strategic focus: “We are expanding our existing brand presence… evaluating highly strategic acquisitions… enhancing our production capabilities at our Georgia facility” .
Dividend/financing update: “Temporarily paused FAT's common dividend and started to accrue… preferred dividend… until we reduce principal… by the $25 million payment threshold” .
Factory opportunity: “Goal is to increase EBITDA at that facility from about $15 million a year to $25 million a year… asset that could generate $300+ million in proceeds for debt reduction at some point” .
Value positioning: “It’s creating great food and a great experience to justify the price… consumers… still want… a great experience” .
Refranchising and cost savings: Refranchising Fazoli’s 57 corporate stores plus Twin Hospitality spin reduces corporate-owned footprint and saves ~$2.5M per year .

Q&A Highlights

Factory utilization/EBITDA: Management targets 60–70% utilization and $25M annual EBITDA at the facility over time; third-party contract expected in Q2 .
Consumer tone and value: Demand is event-driven and price-sensitive; strategy is to deliver value via experience rather than heavy discounting .
Financing timing: First equity tranche at Twin Hospitality delayed by market volatility; no immediate indenture deadline pressure; refinancing of other securitization silos targeted in Q2–Q3 .
Smokey Bones impact: Revenue and EBITDA pressure from closures/conversions; ~30 of ~60 locations expected to convert over 24 months; conversions save time and cost vs ground-up .
Refranchising proceeds: Expected ~$20–$25M for Fazoli’s refranchising (4–6x multiple), with $2.5–$3.5M overhead savings .

Estimates Context

Q1 2025 vs Wall Street consensus (S&P Global):
- Revenue: $142.019M actual vs $148.550M estimate* → bold miss .
- EPS: -$2.73 actual vs -$2.04 estimate* → bold miss .
- EBITDA: $2.053M actual vs $17.800M estimate* → bold miss .
- Number of covering estimates: 2 for EPS and revenue*.

Values retrieved from S&P Global.*

Metric	Q1 2025 Estimate*	Q1 2025 Actual
Revenue ($USD Millions)	148.55*	142.02
Primary EPS ($USD)	-2.04*	-2.73
EBITDA ($USD Millions)	17.80*	2.05

Drivers of the misses: lower same-store sales, temporary sales declines from Smokey Bones closures during conversions, higher G&A tied to litigation, and elevated interest expense .

Key Takeaways for Investors

Deleveraging path is central: watch execution on Twin Hospitality refinancing/equity raise, factory utilization ramp, and Fazoli’s refranchising proceeds; these are the most direct levers to reduce interest burden and restore dividend capacity .
Near-term trading lens: dividend pause is an overhang; progress toward the $25M indenture reduction and any insurance recovery on litigation could improve sentiment, while execution on Q2 openings (~25 units) provides operational momentum .
Factory is a valuable asset: Q2 third-party contract and utilization toward 60–70% can lift EBITDA and strengthen optionality for a future liquidity event, a potential medium-term catalyst .
Conversions and refranchising: faster Smokey Bones→Twin Peaks conversions and refranchising of Fazoli’s should improve mix away from lower-margin company-operated units and reduce overhead, supporting margin recovery over time .
Demand/tone: consumer value sensitivity persists; brands leaning into experience-driven value (Round Table digital growth, Cookies/Marble Slab app) are outperforming, implying portfolio heterogeneity in comps recovery .
Estimate resets likely: given Q1 misses and continued deleveraging/transformation, consensus may adjust lower on EBITDA/EPS until factory scale, litigation resolution, and conversion timing become clearer*.