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Fat Brands, Inc (FAT)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 delivered mixed results: revenue fell 2.3% year over year to $140.0M and adjusted EBITDA slipped to $13.1M; GAAP net loss widened to $58.2M ($3.39 per share) due to higher interest, store closure and impairment costs .
  • Both top-line and EPS missed Wall Street consensus: revenue of $140.0M vs $144.9M consensus and adjusted EPS of -$2.67 vs -$1.96 consensus; drivers included Smokey Bones closures/conversions and continued SSS pressure, partly offset by new Twin Peaks lodges .
  • Management highlighted positive momentum: casual dining SSS up 3.9%, SSS declines narrowed to -3.5% from -3.9% in Q2, and co-branding success with Round Table Pizza + Fatburger doubling weekly sales and transactions; manufacturing partnership with Virtual Dining Concepts (Chuck E. Cheese) is scaling dough output .
  • Balance sheet actions remain the core near-term catalyst: dividend pause (preserving $35–$40M annually), active debt restructuring talks, and a planned $75–$100M equity raise at Twin Hospitality Group to reduce debt and fund unit development .

What Went Well and What Went Wrong

What Went Well

  • Casual dining segment strength: “same-store sales growth of 3.9%,” marking best performance year-to-date as SSS declines narrowed quarter-over-quarter .
  • Co-branding proof point: first dual-branded Round Table Pizza + Fatburger in California “more than doubled weekly sales and transactions” vs standalone format; ~50 additional co-branded units in pipeline .
  • Manufacturing scale-up: Georgia facility drove $9.6M sales and $3.8M adjusted EBITDA (39.6% margin) in Q3; VDC partnership broadened Great American Cookies via Chuck E. Cheese with 450+ locations live and ~500 more targeted by year-end .

What Went Wrong

  • Consensus misses: revenue $140.0M vs $144.9M and adjusted EPS -$2.67 vs -$1.96; headwinds included Smokey Bones closures, temporary conversions to Twin Peaks, and lower SSS .
  • Profitability pressure: negative EBITDA of -$7.7M as interest expense rose to $41.5M and G&A increased on store closure reserves and share-based comp; adjusted EBITDA fell to $13.1M from $14.1M YoY .
  • System-wide sales/SSS softness: system-wide sales down 5.5% YoY; SSS -3.5% system-wide, despite improvements from Q2 .

Financial Results

Income Statement Snapshot

MetricQ3 2024Q1 2025Q2 2025Q3 2025
Total Revenue ($USD Millions)$143.365 $142.019 $146.836 $140.009
Net Loss Attributable to FAT Brands ($USD Millions)$(44.755) $(45.969) $(54.188) $(58.219)
GAAP EPS ($)$(2.74) $(2.73) $(3.17) $(3.39)
Adjusted EBITDA ($USD Millions)$14.059 $11.069 $15.695 $13.117
Adjusted Net Loss per Share ($)$(2.34) $(2.32) $(2.88) $(2.67)

Actual vs Wall Street Consensus

MetricQ1 2025Q2 2025Q3 2025
Revenue Consensus Mean ($USD Millions)148.55*146.60*144.90*
Revenue Actual ($USD Millions)142.019 146.836 140.009
Primary EPS Consensus Mean ($)-2.04*-2.18*-1.955*
Adjusted EPS Actual ($)-2.32 -2.88 -2.67

Values retrieved from S&P Global.*

Profitability and Margins

MetricQ1 2025Q2 2025Q3 2025
EBITDA ($USD Millions)$2.053 $(5.980) $(7.691)
Adjusted EBITDA ($USD Millions)$11.069 $15.695 $13.117
EBITDA Margin %1.29%*-4.88%*-5.75%*

Values retrieved from S&P Global.*

Segment/Revenue Components (Q3 YoY)

Revenue Component ($USD Thousands)Q3 2024Q3 2025
Royalties$22,353 $21,582
Restaurant Sales$99,238 $96,643
Advertising Fees$9,708 $9,143
Factory Revenues$9,490 $9,649
Franchise Fees$2,576 $1,503
Other Revenue$— $1,489
Total Revenue$143,365 $140,009

KPIs

KPIQ1 2025Q2 2025Q3 2025
System-wide Sales YoY Change (%)-1.8% -3.7% -5.5%
System-wide Same-Store Sales YoY Change (%)-3.4% -3.9% -3.5%
New Store Openings (#)23 18 13
KPIQ3 2024Q3 2025
System-wide Sales ($USD Millions)$600.7 $567.5

Drivers and context: revenue decline primarily from closure of 11 underperforming Smokey Bones, temporary closure of two for Twin Peaks conversions, and lower SSS, partially offset by new Twin Peaks lodges .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
New Store Openings (Total)FY 2025“>100 openings” target ~80 openings Lowered
Dividend Policy (Common)FY 2025Historically $0.14/quarter in 2024 Dividend pause; preserves $35–$40M/yr cash flow Maintained pause
Debt RestructuringNear-termN/AActively negotiating; hopeful for resolution this quarter, contingent on government reopening for Twin Peaks equity raise In progress
Twin Hospitality Equity RaiseNear-termN/A$75–$100M planned to reduce debt and fund unit development Announced
Adjusted EBITDA Growth Drivers2025N/A~$10M from new stores; ~$5M from factory Newly quantified
Fazoli’s Refranchising (57 company-owned)2025Planned refranchising Evaluating proposals; progressing In progress

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2)Current Period (Q3)Trend
Balance Sheet & DebtConverted amortizing bonds to interest-only; refinancing silos ahead of 2026 Active debt restructuring underway; aiming for resolution this quarter Execution progressing
DividendIndenture-related dividend pause; preserving ~$36–$40M annually Pause maintained; preserves $35–$40M annually Stable pause
Unit Development Pace~1,000 signed deals; >100 openings targeted Target trimmed to ~80 for 2025 due to franchisee delays Slower pace
Co-branding StrategyEarly examples (Round Table + Marble Slab) Round Table + Fatburger doubled weekly sales/transactions; ~50 co-branded pipeline Positive expansion
Manufacturing ScaleFirst third-party contract; capacity expansion focus Georgia facility: $9.6M sales, $3.8M adj. EBITDA (39.6%); VDC + Chuck E. Cheese rollout 450+ live, ~500 more targeted Scaling volume
Legal/RegulatoryDOJ dismissed charges vs CEO/company CEO reinstated; governance stabilized Overhang removed
SSS & DigitalSSS declines persisted; digital initiatives growing SSS decline narrowed to -3.5%; digital sales up 19% QoQ portfolio-wide Improving
RefranchisingPlan to refranchise 57 Fazoli’s Evaluating proposals; continued progress Advancing
Twin Peaks ConversionsInitial conversions underway Conversions from Smokey Bones “double sales/profits” where feasible; margin focus Positive unit economics

Management Commentary

  • “We delivered strong results across multiple areas… our casual dining segment posted same-store sales growth of 3.9%” — Andy Wiederhorn, CEO .
  • “Dividend pause remains in effect, preserving $35–$40 million… advancing plans for a $75–$100 million equity raise at Twin Hospitality Group Inc.” — Ken Kuick, CFO .
  • “First dual-branded Round Table Pizza and Fatburger… more than doubled weekly sales and transactions” — Andy Wiederhorn .
  • “Georgia production facility… $9.6M sales and $3.8M adjusted EBITDA (39.6% margin)… operating at ~45% of capacity” — Andy Wiederhorn .
  • “Hopeful that during this quarter, we’ll come to a resolution on restructuring” — Andy Wiederhorn (Q&A) .

Q&A Highlights

  • Debt restructuring timeline: Management “hopeful… this quarter,” with Twin Peaks equity raise dependent on government reopening; majority of proceeds to noteholder debt reduction .
  • Smokey Bones closures/conversions: 11 underperformers closed and reserved; additional actions tied to master lease outcomes; conversions to Twin Peaks yield doubled sales/profits where feasible .
  • Refranchising Fazoli’s: “material progress” with proposals under evaluation; process ongoing .
  • Store opening pace and SG&A: 2025 openings target cut to ~80 due to franchisee delays; >$10M SG&A reductions across staffing, offices, shared services; additional savings possible depending on conditions .
  • Segment dynamics: Casual dining strength driven by guest experience value; QSR demand more tied to discount value propositions .

Estimates Context

  • Q3 2025 revenue missed consensus: $140.0M actual vs $144.9M consensus; adjusted EPS missed: -$2.67 vs -$1.96 consensus .
  • Q2 2025 saw a slight revenue beat ($146.8M vs $146.6M) but EPS miss (-$2.88 vs -$2.18); Q1 2025 missed on both revenue ($142.0M vs $148.6M) and EPS (-$2.32 vs -$2.04). Values retrieved from S&P Global.*
  • Estimate revisions likely to trend lower on EPS given persistent interest expense and closure costs, while revenue trajectory depends on pace of openings and SSS stabilization .

Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Near-term stock narrative hinges on balance sheet catalysts: debt restructuring and Twin Hospitality equity raise ($75–$100M) to alleviate interest burden and fund growth; monitor timing signals and government reopening dependency .
  • Operating momentum is improving in select areas: casual dining SSS +3.9%, SSS declines narrowing, and co-branded formats delivering outsized lift; these can support adjusted EBITDA despite macro softness .
  • Profitability remains pressured by interest expense ($41.5M in Q3), closure and impairment costs; adjusted EBITDA declined YoY, and EBITDA remained negative; watch actions that reduce leverage and SG&A .
  • 2025 openings target reset to ~80 (from >100) reflects execution timing; development delays weigh on royalties and system-wide sales trajectory near term .
  • Manufacturing is a quiet growth lever: Georgia facility at ~45% capacity and VDC/Chuck E. Cheese partnership expanding distribution; incremental EBITDA opportunity ~$5M targeted for factory per strategy .
  • Refranchising of Fazoli’s (57 units) and Smokey Bones-to-Twin Peaks conversions can unlock margin/value; conversions have doubled sales/profits where viable, but capital pacing matters .
  • Risk-monitoring: SSS and system sales remain soft (-3.5% SSS; -5.5% system sales); continued macro pressure and franchisee timing are key variables for H2/H1 next year trajectory .

Appendix: Source References

  • Q3 2025 8-K and Exhibit 99.1, 99.2: financials, KPIs, reconciliations .
  • Q3 2025 earnings call transcript: strategic updates, manufacturing, Q&A detail .
  • Q3 press release: highlights, narrative .
  • Prior quarters press releases: Q2 2025 ; Q1 2025 .
  • VDC partnership (manufacturing scale): .
  • DOJ dismissal, CEO reinstatement: .