QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||||||||
Large accelerated filer | o | Accelerated filer | o | ||||||||
x | Smaller reporting company | ||||||||||
Emerging growth company |
June 30, 2024 | December 31, 2023 | ||||||||||
Audited | |||||||||||
Assets | |||||||||||
Current assets | |||||||||||
Cash | $ | $ | |||||||||
Restricted cash | |||||||||||
Accounts receivable, net | |||||||||||
Inventory | |||||||||||
Assets classified as held-for-sale | |||||||||||
Other current assets | |||||||||||
Total current assets | |||||||||||
Non-current restricted cash | |||||||||||
Operating lease right-of-use assets | |||||||||||
Goodwill | |||||||||||
Other intangible assets, net | |||||||||||
Property and equipment, net | |||||||||||
Other assets | |||||||||||
Total assets | $ | $ | |||||||||
Liabilities and Stockholders’ Deficit | |||||||||||
Liabilities | |||||||||||
Current liabilities | |||||||||||
Accounts payable | $ | $ | |||||||||
Accrued expenses and other liabilities | |||||||||||
Deferred income, current portion | |||||||||||
Accrued advertising | |||||||||||
Accrued interest payable | |||||||||||
Dividend payable on preferred shares | |||||||||||
Liabilities related to assets classified as held-for-sale | |||||||||||
Operating lease liability, current portion | |||||||||||
Redeemable preferred stock | |||||||||||
Long-term debt, current portion | |||||||||||
Acquisition purchase price payable | |||||||||||
Total current liabilities | |||||||||||
Deferred income, net of current portion | |||||||||||
Deferred income tax liabilities, net | |||||||||||
Operating lease liability, net of current portion | |||||||||||
Long-term debt, net of current portion | |||||||||||
Other liabilities | |||||||||||
Total liabilities | |||||||||||
Commitments and contingencies (Note 14) | |||||||||||
Stockholders’ deficit | |||||||||||
Preferred stock and additional paid-in-capital, $ | |||||||||||
Class A common stock and Class B common stock and additional paid-in capital as of June 30, 2024: $ | ( | ( | |||||||||
Accumulated deficit | ( | ( | |||||||||
Total stockholders’ deficit | ( | ( | |||||||||
Total liabilities and stockholders’ deficit | $ | $ |
Thirteen Weeks Ended | Twenty-Six Weeks Ended | ||||||||||||||||||||||
June 30, 2024 | June 25, 2023 | June 30, 2024 | June 25, 2023 | ||||||||||||||||||||
Revenue | |||||||||||||||||||||||
Royalties | $ | $ | $ | $ | |||||||||||||||||||
Restaurant sales | |||||||||||||||||||||||
Advertising fees | |||||||||||||||||||||||
Factory revenues | |||||||||||||||||||||||
Franchise fees | |||||||||||||||||||||||
Other revenue | |||||||||||||||||||||||
Total revenue | |||||||||||||||||||||||
Costs and expenses | |||||||||||||||||||||||
General and administrative expense | |||||||||||||||||||||||
Cost of restaurant and factory revenues | |||||||||||||||||||||||
Depreciation and amortization | |||||||||||||||||||||||
Refranchising loss | |||||||||||||||||||||||
Advertising fees | |||||||||||||||||||||||
Total costs and expenses | |||||||||||||||||||||||
(Loss) income from operations | ( | ( | |||||||||||||||||||||
Other (expense) income, net | |||||||||||||||||||||||
Interest expense | ( | ( | ( | ( | |||||||||||||||||||
Interest expense related to preferred shares | ( | ( | ( | ( | |||||||||||||||||||
Net gain on extinguishment of debt | |||||||||||||||||||||||
Other (expense) income, net | ( | ( | |||||||||||||||||||||
Total other expense, net | ( | ( | ( | ( | |||||||||||||||||||
Loss before income tax provision | ( | ( | ( | ( | |||||||||||||||||||
Income tax provision | ( | ( | ( | ( | |||||||||||||||||||
Net loss | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
Net loss | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
Dividends on preferred shares | ( | ( | ( | ( | |||||||||||||||||||
$ | ( | $ | ( | $ | ( | $ | ( | ||||||||||||||||
Basic and diluted loss per common share | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
Basic and diluted weighted average shares outstanding | |||||||||||||||||||||||
Cash dividends declared per common share | $ | $ | $ | $ |
Common Stock | Preferred Stock | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Class A Shares | Class B Shares | Class A Par Value | Class B Par Value | Additional Paid-In Capital | Total Common Stock | Shares | Par Value | Additional Paid-In Capital | Total Preferred Stock | Accumulated Deficit | Total | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at December 31, 2023 | $ | $ | $ | ( | $ | ( | $ | $ | $ | $ | ( | $ | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net loss | — | — | — | — | — | — | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Issuance of common and preferred stock | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based compensation | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Dividends paid on common stock | — | — | — | — | ( | ( | — | — | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Dividends paid on Series B preferred stock | — | — | — | — | — | — | — | — | ( | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at June 30, 2024 | $ | $ | $ | ( | $ | ( | $ | $ | $ | $ | ( | $ | ( |
Common Stock | Preferred Stock | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Class A Shares | Class B Shares | Class A Par Value | Class B Par Value | Additional Paid-In Capital | Total Common Stock | Shares | Par Value | Additional Paid-In Capital | Total Preferred Stock | Accumulated Deficit | Total | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at December 25, 2022 | $ | $ | $ | ( | $ | ( | $ | $ | $ | $ | ( | $ | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net loss | — | — | — | — | — | — | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Issuance of common and preferred stock | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based compensation | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Dividends paid on common stock | — | — | — | — | ( | ( | — | — | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Dividends paid on Series B preferred stock | — | — | — | — | — | — | — | — | ( | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at June 25, 2023 | $ | $ | $ | ( | $ | ( | $ | $ | $ | $ | ( | $ | ( |
Common Stock | Preferred Stock | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Class A Shares | Class B Shares | Class A Par Value | Class B Par Value | Additional Paid-In Capital | Total Common Stock | Shares | Par Value | Additional Paid-In Capital | Total Preferred Stock | Accumulated Deficit | Total | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at March 31, 2024 | $ | $ | $ | ( | $ | ( | $ | $ | $ | $ | ( | $ | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net loss | — | — | — | — | — | — | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Issuance of common and preferred stock | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based compensation | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Dividends paid on common stock | — | — | — | — | ( | ( | — | — | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Dividends paid on Series B preferred stock | — | — | — | — | — | — | — | — | ( | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at June 30, 2024 | $ | $ | $ | ( | $ | ( | $ | $ | $ | $ | $ | ( | $ | ( |
Common Stock | Preferred Stock | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Class A Shares | Class B Shares | Class A Par Value | Class B Par Value | Additional Paid-In Capital | Total Common Stock | Shares | Par Value | Additional Paid-In Capital | Total Preferred Stock | Accumulated Deficit | Total | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at March 26, 2023 | $ | $ | $ | ( | $ | ( | $ | $ | $ | $ | ( | $ | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net loss | — | — | — | — | — | — | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Issuance of common and preferred stock | ( | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based compensation | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Dividends paid on common stock | — | — | — | — | ( | ( | — | — | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Dividends paid on Series B preferred stock | — | — | — | — | — | — | — | — | ( | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at June 25, 2023 | $ | $ | $ | ( | $ | ( | $ | $ | $ | $ | ( | $ | ( |
2024 | 2023 | ||||||||||
Cash flows from operating activities: | |||||||||||
Net loss | $ | ( | $ | ( | |||||||
Adjustments to reconcile net loss to net cash used in operating activities: | |||||||||||
Deferred income taxes | |||||||||||
Depreciation and amortization | |||||||||||
Share-based compensation | |||||||||||
Accretion of loan fees and interest | |||||||||||
Loss on disposal of fixed assets | |||||||||||
Net gain on extinguishment of debt | ( | ||||||||||
Provision for bad debts | ( | ( | |||||||||
Change in: | |||||||||||
Accounts receivable | |||||||||||
Inventory | |||||||||||
Other current and noncurrent assets | ( | ( | |||||||||
Operating lease assets and liabilities | |||||||||||
Deferred income | |||||||||||
Accounts payable | ( | ( | |||||||||
Accrued expenses and other liabilities | ( | ||||||||||
Accrued advertising | ( | ( | |||||||||
Accrued interest payable | |||||||||||
Other current and noncurrent liabilities | ( | ( | |||||||||
Total adjustments | |||||||||||
Net cash used in operating activities | ( | ( | |||||||||
Cash flows from investing activities: | |||||||||||
Purchases of property and equipment | ( | ( | |||||||||
Payments received on notes receivable | |||||||||||
Payment of acquisition purchase price payable | ( | ||||||||||
Net cash used in investing activities | ( | ( | |||||||||
Cash flows from financing activities: | |||||||||||
Proceeds from borrowings, net of issuance costs | |||||||||||
Repayments of borrowings | ( | ( | |||||||||
Proceeds from issuance of common and preferred shares | |||||||||||
Dividends paid on common shares | ( | ( | |||||||||
Dividends paid on preferred shares | ( | ( | |||||||||
Net cash provided by financing activities | |||||||||||
Net (decrease) increase in cash and restricted cash | ( | ||||||||||
Cash and restricted cash at beginning of the period | |||||||||||
Cash and restricted cash at end of the period | $ | $ | |||||||||
Supplemental disclosures of cash flow information: | |||||||||||
Cash paid for interest | $ | $ | |||||||||
Cash paid for income taxes | $ | $ | |||||||||
Cash | $ | |||||||
Accounts receivable, net of allowance | ||||||||
Inventory | ||||||||
Prepaids and other current assets | ||||||||
Other intangible assets, net | ||||||||
Goodwill | ||||||||
Operating lease right-of-use assets | ||||||||
Other assets | ||||||||
Property and equipment, net | ||||||||
Below market leases | ||||||||
Accounts payable | ( | |||||||
Accrued expenses and other liabilities | ( | |||||||
Operating lease liability, current portion | ( | |||||||
Operating lease liability, net of current portion | ( | |||||||
Other liabilities | ( | |||||||
Total net identifiable assets | $ |
Thirteen Weeks Ended | Twenty-Six Weeks Ended | ||||||||||
June 25, 2023 | |||||||||||
Revenue | $ | $ | |||||||||
Net loss | $ | ( | $ | ( |
June 30, 2024 | December 31, 2023 | ||||||||||
Property and equipment | $ | $ | |||||||||
Operating lease right-of-use assets | |||||||||||
Total | $ | $ |
Thirteen Weeks Ended | Twenty-Six Weeks Ended | ||||||||||||||||||||||
June 30, 2024 | June 25, 2023 | June 30, 2024 | June 25, 2023 | ||||||||||||||||||||
Restaurant costs and expenses, net of revenue | $ | ( | $ | $ | $ | ||||||||||||||||||
Loss (gain) on store sales or closures | ( | ||||||||||||||||||||||
Refranchising loss | $ | $ | $ | $ |
June 30, 2024 | December 31, 2023 | ||||||||||
Real estate | $ | $ | |||||||||
Equipment | |||||||||||
Accumulated depreciation | ( | ( | |||||||||
Property and equipment, net | $ | $ |
Amortizing Intangible Assets | Non-Amortizing Intangible Assets | ||||||||||||||||
Goodwill | Trademarks | ||||||||||||||||
December 31, 2023 | $ | $ | $ | ||||||||||||||
Amortization | ( | — | — | ||||||||||||||
June 30, 2024 | $ | $ | $ |
June 30, 2024 | December 31, 2023 | |||||||||||||||||||||||||||||||||||||
Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | |||||||||||||||||||||||||||||||||
Amortizing intangible assets | ||||||||||||||||||||||||||||||||||||||
Franchise agreements | $ | $ | ( | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||||
Customer relationships | ( | ( | ||||||||||||||||||||||||||||||||||||
Other | ( | ( | ||||||||||||||||||||||||||||||||||||
$ | $ | ( | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||||
Non-amortizing intangible assets | ||||||||||||||||||||||||||||||||||||||
Trademarks | ||||||||||||||||||||||||||||||||||||||
Total amortizing and non-amortizing intangible assets, net | $ | $ |
Fiscal Year: | |||||
Remainder of 2024 | $ | ||||
2025 | |||||
2026 | |||||
2027 | |||||
2028 | |||||
Thereafter | |||||
Total | $ |
Thirteen Weeks Ended | Twenty-Six Weeks Ended | |||||||||||||||||||||||||
June 30, 2024 | June 25, 2023 | June 30, 2024 | June 25, 2023 | |||||||||||||||||||||||
Provision for income taxes | $ | ( | $ | ( | $ | ( | $ | ( | ||||||||||||||||||
Effective tax rate | % | % | % | % |
June 30, 2024 | December 31, 2023 | ||||||||||
Operating lease right-of-use assets | $ | $ | |||||||||
Right-of-use assets classified as held-for-sale | |||||||||||
$ | $ | ||||||||||
Operating lease liabilities | $ | $ | |||||||||
Lease liabilities related to assets held-for-sale | |||||||||||
Total operating lease liabilities | $ | $ |
Fiscal year: | |||||
Remainder of 2024 | $ | ||||
2025 | |||||
2026 | |||||
2027 | |||||
2028 | |||||
Thereafter | |||||
Total lease payments | $ | ||||
Less: imputed interest | ( | ||||
Total | $ |
Twenty-Six Weeks Ended | |||||||||||
June 30, 2024 | June 25, 2023 | ||||||||||
Cash paid for amounts included in the measurement of operating lease liabilities: | |||||||||||
Operating cash flows from operating leases | $ | $ |
June 30, 2024 | December 31, 2023 | ||||||||||||||||||||||||||||||||||
Final Maturity | Anticipated Call Date | Rate | Face Value | Book Value | Book Value | ||||||||||||||||||||||||||||||
Senior Debt | |||||||||||||||||||||||||||||||||||
FB Royalty Securitization | 4/25/2051 | 7/25/2026 | % | $ | $ | $ | |||||||||||||||||||||||||||||
GFG Royalty Securitization | 7/25/2051 | 7/25/2026 | % | ||||||||||||||||||||||||||||||||
Twin Peaks Securitization | 7/25/2051 | 1/25/2025 | % | ||||||||||||||||||||||||||||||||
Fazoli's/Native Securitization | 7/25/2051 | 1/25/2025 | % | ||||||||||||||||||||||||||||||||
FB Resid Securitization | 7/25/2027 | % | |||||||||||||||||||||||||||||||||
Senior Subordinated Debt | |||||||||||||||||||||||||||||||||||
FB Royalty Securitization | 4/25/2051 | 7/25/2026 | % | ||||||||||||||||||||||||||||||||
GFG Royalty Securitization | 7/25/2051 | 7/25/2026 | % | ||||||||||||||||||||||||||||||||
Twin Peaks Securitization | 7/25/2051 | 1/25/2025 | % | ||||||||||||||||||||||||||||||||
Fazoli's/Native Securitization | 7/25/2051 | 1/25/2025 | % | ||||||||||||||||||||||||||||||||
FB Resid Securitization | 7/25/2027 | % | |||||||||||||||||||||||||||||||||
Subordinated Debt | |||||||||||||||||||||||||||||||||||
FB Royalty Securitization | 4/25/2051 | 7/25/2026 | % | ||||||||||||||||||||||||||||||||
GFG Royalty Securitization | 7/25/2051 | 7/25/2026 | % | ||||||||||||||||||||||||||||||||
Twin Peaks Securitization | 7/25/2051 | 1/25/2025 | % | ||||||||||||||||||||||||||||||||
Fazoli's/Native Securitization | 7/25/2051 | 1/25/2025 | % | ||||||||||||||||||||||||||||||||
Total Securitized Debt | |||||||||||||||||||||||||||||||||||
Elevation Note | 7/19/2026 | N/A | % | ||||||||||||||||||||||||||||||||
Equipment Notes | 12/16/2025 to 3/7/2029 | N/A | |||||||||||||||||||||||||||||||||
Twin Peaks Construction Loan III | 12/28/2024 | N/A | Prime + | ||||||||||||||||||||||||||||||||
Twin Peaks Promissory Note | 10/4/2024 | N/A | % | ||||||||||||||||||||||||||||||||
Total Debt | $ | ||||||||||||||||||||||||||||||||||
Current portion of long-term debt | ( | ( | |||||||||||||||||||||||||||||||||
Long-term Debt | $ | $ |
Number of Shares | Weighted Average Exercise Price | Weighted Average Remaining Contractual Life (Years) | |||||||||||||||
Warrants exercisable at December 31, 2023 | $ | ||||||||||||||||
Exercised | ( | $ | |||||||||||||||
Warrants outstanding and exercisable at June 30, 2024 | $ |
Thirteen Weeks Ended | Twenty-Six Weeks Ended | ||||||||||||||||||||||
June 30, 2024 | June 25, 2023 | June 30, 2024 | June 25, 2023 | ||||||||||||||||||||
United States | $ | $ | $ | $ | |||||||||||||||||||
Other countries | |||||||||||||||||||||||
Total revenue | $ | $ | $ | $ |
Thirteen Weeks Ended | Twenty-Six Weeks Ended | ||||||||||||||||||||||
June 30, 2024 | June 25, 2023 | June 30, 2024 | June 25, 2023 | ||||||||||||||||||||
Statements of Operations Data: | |||||||||||||||||||||||
Revenue | |||||||||||||||||||||||
Royalties | $ | 23,318 | $ | 22,751 | $ | 45,265 | $ | 45,236 | |||||||||||||||
Restaurant sales | 107,410 | 62,778 | 213,348 | 125,379 | |||||||||||||||||||
Advertising fees | 10,065 | 9,668 | 19,861 | 19,019 | |||||||||||||||||||
Factory revenues | 9,636 | 9,686 | 19,110 | 18,851 | |||||||||||||||||||
Franchise fees | 1,113 | 763 | 2,594 | 1,565 | |||||||||||||||||||
Other revenue | 498 | 1,118 | 3,829 | 2,405 | |||||||||||||||||||
Total revenue | 152,040 | 106,764 | 304,007 | 212,455 | |||||||||||||||||||
Costs and expenses | |||||||||||||||||||||||
General and administrative expense | 29,558 | 9,947 | 59,563 | 38,362 | |||||||||||||||||||
Cost of restaurant and factory revenues | 100,113 | 59,502 | 199,163 | 118,589 | |||||||||||||||||||
Depreciation and amortization | 10,246 | 7,061 | 20,440 | 14,177 | |||||||||||||||||||
Refranchising loss | 175 | 179 | 1,683 | 338 | |||||||||||||||||||
Advertising fees | 14,651 | 11,610 | 27,243 | 22,137 | |||||||||||||||||||
Total costs and expenses | 154,743 | 88,299 | 308,092 | 193,603 | |||||||||||||||||||
(Loss) income from operations | (2,703) | 18,465 | (4,085) | 18,852 | |||||||||||||||||||
Total other expense, net | (34,755) | (24,210) | (68,165) | (54,187) | |||||||||||||||||||
Loss before income tax provision | (37,458) | (5,745) | (72,250) | (35,335) | |||||||||||||||||||
Income tax provision | (1,901) | (1,346) | (5,425) | (3,882) | |||||||||||||||||||
Net loss | $ | (39,359) | $ | (7,091) | $ | (77,675) | $ | (39,217) |
June 30, 2024 | June 25, 2023 | ||||||||||
Net cash used in operating activities | $ | (42.6) | $ | (21.2) | |||||||
Net cash used in investing activities | (18.2) | (6.9) | |||||||||
Net cash provided by financing activities | 42.0 | 31.2 | |||||||||
Net cash flows | $ | (18.8) | $ | 3.1 |
Incorporated By Reference to | Filed Herewith | |||||||||||||||||||||||||||||||
Description | Form | Exhibit | Filing Date | |||||||||||||||||||||||||||||
10.1 | 8-K | 10.1 | 7/19/2024 | |||||||||||||||||||||||||||||
31.1 | X | |||||||||||||||||||||||||||||||
31.2 | X | |||||||||||||||||||||||||||||||
32.1 | X | |||||||||||||||||||||||||||||||
101.INS | Inline XBRL Instance Document | X (Furnished) | ||||||||||||||||||||||||||||||
101.SCH | Inline XBRL Taxonomy Extension Schema Document | X (Furnished) | ||||||||||||||||||||||||||||||
101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | X (Furnished) | ||||||||||||||||||||||||||||||
101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | X (Furnished) | ||||||||||||||||||||||||||||||
101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | X (Furnished) | ||||||||||||||||||||||||||||||
101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | X (Furnished) |
FAT BRANDS INC. | ||||||||
August 1, 2024 | By | /s/ Kenneth J. Kuick | ||||||
Kenneth J. Kuick | ||||||||
Co-Chief Executive Officer and Chief Financial Officer | ||||||||
(Principal Financial Officer and duly authorized signatory for the registrant) |
Date: August 1, 2024 | /s/ Kenneth J. Kuick | ||||
Kenneth J. Kuick | |||||
Co-Chief Executive Officer and Chief Financial Officer | |||||
(Principal Executive and Financial Officer) |
Date: August 1, 2024 | /s/ Robert G. Rosen | ||||
Robert G. Rosen | |||||
Co-Chief Executive Officer | |||||
(Principal Executive Officer) |
Date: August 1, 2024 | By | /s/ Kenneth J. Kuick | ||||||
Kenneth J. Kuick | ||||||||
Co-Chief Executive Officer and Chief Financial Officer | ||||||||
(Principal Executive, Financial and Accounting Officer) | ||||||||
Date: August 1, 2024 | By | /s/ Robert G. Rosen | ||||||
Robert G. Rosen | ||||||||
Co-Chief Executive Officer | ||||||||
(Principal Executive Officer) |
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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2024 |
Jun. 25, 2023 |
Jun. 30, 2024 |
Jun. 25, 2023 |
|
Revenue | ||||
Total revenue | $ 152,040 | $ 106,764 | $ 304,007 | $ 212,455 |
Costs and expenses | ||||
General and administrative expense | 29,558 | 9,947 | 59,563 | 38,362 |
Cost of restaurant and factory revenues | 100,113 | 59,502 | 199,163 | 118,589 |
Depreciation and amortization | 10,246 | 7,061 | 20,440 | 14,177 |
Refranchising loss | 175 | 179 | 1,683 | 338 |
Advertising fees | 14,651 | 11,610 | 27,243 | 22,137 |
Total costs and expenses | 154,743 | 88,299 | 308,092 | 193,603 |
(Loss) income from operations | (2,703) | 18,465 | (4,085) | 18,852 |
Other (expense) income, net | ||||
Interest expense | (29,586) | (20,008) | (59,209) | (45,098) |
Interest expense related to preferred shares | (4,417) | (4,311) | (8,835) | (9,354) |
Net gain on extinguishment of debt | 0 | 0 | 427 | 0 |
Other (expense) income, net | (752) | 109 | (548) | 265 |
Total other expense, net | (34,755) | (24,210) | (68,165) | (54,187) |
Loss before income tax provision | (37,458) | (5,745) | (72,250) | (35,335) |
Income tax provision | (1,901) | (1,346) | (5,425) | (3,882) |
Net loss | (39,359) | (7,091) | (77,675) | (39,217) |
Dividends on preferred shares | (1,920) | (1,615) | (3,801) | (3,381) |
Net loss available to common stockholders, basic | (41,279) | (8,706) | (81,476) | (42,598) |
Net loss available to common stockholders, diluted | $ (41,279) | $ (8,706) | $ (81,476) | $ (42,598) |
Basic loss per common share (in dollars per share) | $ (2.43) | $ (0.53) | $ (4.80) | $ (2.58) |
Diluted loss per common share (in dollars per share) | $ (2.43) | $ (0.53) | $ (4.80) | $ (2.58) |
Basic weighted average shares outstanding (in shares) | 17,007,352 | 16,522,379 | 16,977,376 | 16,521,590 |
Diluted weighted average shares outstanding (in shares) | 17,007,352 | 16,522,379 | 16,977,376 | 16,521,590 |
Cash dividends declared per common share (in dollars per share) | $ 0.14 | $ 0.14 | $ 0.28 | $ 0.28 |
Royalties | ||||
Revenue | ||||
Total revenue | $ 23,318 | $ 22,751 | $ 45,265 | $ 45,236 |
Restaurant sales | ||||
Revenue | ||||
Total revenue | 107,410 | 62,778 | 213,348 | 125,379 |
Advertising fees | ||||
Revenue | ||||
Total revenue | 10,065 | 9,668 | 19,861 | 19,019 |
Factory revenues | ||||
Revenue | ||||
Total revenue | 9,636 | 9,686 | 19,110 | 18,851 |
Franchise fees | ||||
Revenue | ||||
Total revenue | 1,113 | 763 | 2,594 | 1,565 |
Other revenue | ||||
Revenue | ||||
Total revenue | $ 498 | $ 1,118 | $ 3,829 | $ 2,405 |
ORGANIZATION AND RELATIONSHIPS |
6 Months Ended |
---|---|
Jun. 30, 2024 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
ORGANIZATION AND RELATIONSHIPS | ORGANIZATION AND RELATIONSHIPS Organization and Nature of Business FAT Brands Inc. (the "Company" or "FAT") is a leading multi-brand restaurant company that develops, markets, acquires and manages quick-service, fast casual, casual dining and polished casual dining restaurant concepts around the world. As of June 30, 2024, the Company owned eighteen restaurant brands: Round Table Pizza, Fatburger, Marble Slab Creamery, Johnny Rockets, Fazoli's, Twin Peaks, Smokey Bones, 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. As of June 30, 2024, the Company had approximately 2,300 locations open and under construction, of which approximately 92% were franchised. Each franchising subsidiary licenses the right to use its brand name and provides franchisees with operating procedures and methods of merchandising. Upon signing a franchise agreement, the franchisor is committed to provide training, some supervision and assistance and access to operations manuals. As needed, the franchisor will also provide advice and written materials concerning techniques of managing and operating the restaurants. The Company's operations have historically been comprised primarily of franchising a growing portfolio of restaurant brands. This growth strategy is centered on expanding the footprint of existing brands and acquiring new brands through a centralized management organization which provides substantially all executive leadership, marketing, training and accounting services. As part of these ongoing franchising efforts, the Company will, from time to time, make opportunistic acquisitions of operating restaurants and may convert them to franchise locations. During the refranchising period the Company may operate the restaurants and classifies the operational activities as refranchising gains or losses and the assets and associated liabilities as held-for sale. Through recent acquisitions, the Company also operates "company-owned" restaurant locations of certain brands. Liquidity The Company recognized loss from operations of $4.1 million during the twenty-six weeks ended June 30, 2024 and income from operations of $18.9 million during the twenty-six weeks ended June 25, 2023. The Company has a history of net losses and an accumulated deficit of $346.5 million as of June 30, 2024. Additionally, the Company had negative working capital of $170.8 million. Of this amount, $91.8 million represents redeemable preferred stock as discussed in Note 10. Since the Company did not deliver the applicable cash proceeds at the related due dates, the amount accrues interest until the payments are completed. The Company had $16.6 million of unrestricted cash at June 30, 2024 and plans on the combination of cash flows from operations, cash on hand, $75.6 million of issued but not sold aggregate principal amount of fixed rate secured notes and $104.7 million aggregate principal amount of repurchased but not re-sold fixed rate secured notes (see Note 9) to be sufficient to cover any working capital requirements for the next twelve months from the date of this report. If the Company does not achieve its operating plan, additional forms of financing may be required through the issuance of debt or equity. Although management believes it will have access to financing, no assurances can be given that such financing will be available on acceptable terms, in a timely manner or at all.
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
6 Months Ended |
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Jun. 30, 2024 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of presentation – The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and its subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. Our revenues are derived primarily from two sales channels, franchised restaurants and company-owned locations, which we operate as one reportable segment. The accompanying unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America (“GAAP”) for complete financial statements. In the opinion of the Company, all adjustments considered necessary for the fair presentation of the Company’s results of operations, financial position and cash flows for the periods presented have been included and are of a normal, recurring nature. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company's 2023 Annual Report on Form 10-K for the fiscal year ended December 31, 2023 filed with the SEC on March 12, 2024. Nature of operations – The Company operates on a 52-week calendar and its fiscal year ends on the last Sunday of the calendar year. Consistent with industry practice, the Company measures its stores’ performance based upon 7-day work weeks. Using the 52-week cycle ensures consistent weekly reporting for operations and ensures that each week has the same days since certain days are more profitable than others. The use of this fiscal year means a 53rd week is added to the fiscal year every 5 or 6 years. In a 52-week year, all four quarters are comprised of 13 weeks. In a 53-week year, one extra week is added to the fourth quarter. Fiscal year 2023 was a 53-week year and 2024 is a 52-week year. Employee Retention Tax Credits - On March 27, 2020, the U.S. government enacted the Coronavirus Aid Relief and Security Act (the "CARES Act") to provide certain relief as a result of the COVID-19 pandemic. The CARES Act provides tax relief, along with other stimulus measures, including a provision for an Employee Retention Credit ("ERC"). As there is no authoritative guidance under U.S. GAAP on accounting for government assistance to for-profit business entities, the Company accounts for the ERC by analogy to International Accounting Standard, Accounting for Government Grants and Disclosure of Government Assistance ("IAS 20"). During the thirteen weeks ended June 30, 2024 and June 25, 2023, the Company received and recognized $2.1 million and $12.7 million, respectively of ERCs recorded within general and administrative expense on the consolidated statements of operations. Use of estimates in the preparation of the condensed consolidated financial statements – The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements. Significant estimates include the determination of fair values of goodwill and other intangible assets, allowances for uncollectible notes receivable and accounts receivable, and the valuation allowance related to deferred tax assets. Estimates and assumptions also affect the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Recently Issued Accounting Standards Not Yet Adopted In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. The amendments improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. The amendments require that a public entity disclose, on an annual and interim basis, an amount for other segment items by reportable segment and a description of its composition. The other segment items category is the difference between segment revenue less the segment expenses disclosed under the significant expense principle and each reported measure of segment profit or loss. The amendments improve financial reporting by requiring disclosure of incremental segment information on an annual and interim basis for all public entities. The amendments are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. A public entity should apply the amendments retrospectively to all prior periods presented in the financial statements. Upon transition, the segment expense categories and amounts disclosed in the prior periods should be based on the significant segment expense categories identified and disclosed in the period of adoption. The Company is currently evaluating the impact the adoption of this standard will have on its consolidated financial statements. In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The amendments require that public business entities on an annual basis disclose specific categories in the rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold. The amendments also require that all entities disclose on an annual basis the income taxes paid disaggregated by jurisdiction. The amendments eliminate the requirement for all entities to disclose the nature and estimate of the range of the reasonably possible change in the unrecognized tax benefits balance in the next 12 months or make a statement that an estimate of the range cannot be made. The amendments are effective for annual periods beginning after December 15, 2024. Early adoption is permitted. The amendments should be applied on a prospective basis. Retrospective application is permitted. The Company is currently evaluating the impact the adoption of this standard will have on its consolidated financial statements.
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MERGERS AND ACQUISITIONS |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Combination, Asset Acquisition, and Joint Venture Formation [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
MERGERS AND ACQUISITIONS | MERGERS AND ACQUISITIONS Acquisition of Barbeque Integrated, Inc. On September 25, 2023, the Company completed the acquisition of Barbeque Integrated, Inc. from Barbeque Holding LLC. Barbeque Integrated Inc. ("Smokey Bones") is the operator of a chain of barbeque restaurants located in the Eastern and Midwest United States. The net purchase price was $31.3 million after final working capital adjustments. The preliminary assessment of the fair value of the net assets and liabilities acquired by the Company through the transaction was $31.3 million. The allocation of the consideration to the net tangible and intangible assets acquired is presented in the table below (in millions):
The identifiable intangible assets acquired in connection with the transaction are based on valuations performed by management and third-party experts. Identifiable intangible assets totaled $8.8 million in trademarks. Pro Forma Information The table below presents the combined pro forma revenue and net loss of the Company and Barbeque Integrated Inc. for the thirteen and twenty-six weeks ended June 25, 2023, respectively, assuming the acquisition had occurred on December 27, 2022 (the beginning of the Company’s 2023 fiscal year) (in millions). This pro forma information does not purport to represent what the actual results of operations of the Company would have been had the acquisition of Barbeque Integrated Inc. occurred on this date nor does it purport to predict the results of operations for future periods.
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REFRANCHISING |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Refranchising | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
REFRANCHISING | REFRANCHISING As part of its ongoing franchising efforts, the Company may, from time to time, sell operating restaurants built or acquired by the Company in order to convert them to franchise locations or acquire existing franchised locations to resell them to another franchisee across all of its brands. The following assets used in the operation of certain restaurants meet all of the criteria requiring that they be classified as held-for-sale, and have been classified accordingly in the accompanying condensed consolidated balance sheets as of June 30, 2024 and December 31, 2023 (in millions):
Operating lease liabilities related to the assets classified as held-for-sale in the amount of $0.4 million and $3.4 million have been classified as current liabilities in the accompanying condensed consolidated balance sheets as of June 30, 2024 and December 31, 2023, respectively. The following table highlights the operating results of the Company's refranchising program (in millions):
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PROPERTY AND EQUIPMENT, NET |
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Jun. 30, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
PROPERTY AND EQUIPMENT, NET | PROPERTY AND EQUIPMENT, NET Property and equipment, net consists of the following (in millions):
Depreciation expense during the thirteen weeks ended June 30, 2024 and June 25, 2023 was $5.1 million and $3.3 million, respectively. Depreciation expense during the twenty-six weeks ended June 30, 2024 and June 25, 2023 was $11.6 million and $6.7 million, respectively. Upon retirement or other disposal of property and equipment, the cost and related amounts of accumulated depreciation are eliminated from the asset and accumulated depreciation accounts, respectively. The difference, if any, between the net asset value and the proceeds, is recorded in earnings. Loss on disposals during the twenty-six weeks ended June 30, 2024 and June 25, 2023 was $0.2 million and $0, respectively.
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Goodwill and Intangible Assets Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
GOODWILL AND OTHER INTANGIBLE ASSETS, NET | GOODWILL AND OTHER INTANGIBLE ASSETS, NET Changes in Carrying Value of Goodwill and Other Intangible Assets (in millions)
Gross Carrying Value and Accumulated Amortization of Other Intangible Assets (in millions)
Amortization expense for the thirteen weeks ended June 30, 2024 and June 25, 2023 was $3.9 million and $3.8 million, respectively. Amortization expense for the twenty-six weeks ended June 30, 2024 and June 25, 2023 was $7.8 million and $7.5 million, respectively. The expected future amortization of definite-life intangible assets by fiscal year (in millions):
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INCOME TAXES |
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Income Tax Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
INCOME TAXES | INCOME TAXES The following table presents the Company’s provision for income taxes (in millions):
The difference between the statutory tax rate of 21% and the effective tax rates of 5.1% and 7.5% in the thirteen and twenty-six weeks ended June 30, 2024, respectively, was primarily due to increases in the valuation allowance, nondeductible expenses and the impact of state income taxes. The difference between the statutory tax rate of 21% and the effective tax rates of 23.4% and 11.0% in the thirteen and twenty-six weeks ended June 25, 2023, respectively, was primarily due to increases in the valuation allowance, nondeductible expenses and the impact of state income taxes.
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LEASES |
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Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
LEASES | LEASES The Company recognized lease expense of $7.9 million and $4.7 million for the thirteen weeks ended June 30, 2024 and June 25, 2023, respectively. The Company recognized lease expense of $16.1 million and $9.5 million for the twenty-six weeks ended June 30, 2024 and June 25, 2023, respectively. Operating lease right-of-use assets and operating lease liabilities relating to the operating leases are as follows (in millions):
The contractual future maturities of the Company’s operating lease liabilities as of June 30, 2024, including anticipated lease extensions, are as follows (in millions):
The current portion of the operating lease liability as of June 30, 2024 was $17.3 million. Supplemental cash flow information for the twenty-six weeks ended June 30, 2024 related to leases was as follows (in millions):
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DEBT |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
DEBT | DEBT Long-term debt consisted of the following (in millions):
Terms of Outstanding Debt FB Royalty Securitization On April 26, 2021, FAT Brands Royalty I, LLC ("FB Royalty"), a special purpose, wholly-owned subsidiary of FAT Brands Inc., completed the issuance and sale of three tranches of fixed rate secured notes with a total aggregate principal amount of $144.5 million. On July 6, 2022, FB Royalty issued an additional $76.5 million aggregate principal amount of three tranches of fixed rate secured notes. Of the $76.5 million aggregate principal amount, $30.0 million was sold privately during the third quarter of 2022, resulting in net proceeds of $27.1 million (net of debt offering costs of $0.6 million and original issue discount of $2.3 million). The remaining $46.5 million in aggregate principal was sold privately on October 21, 2022, when the Company entered into an Exchange Agreement with the Twin Peaks sellers and redeemed 1,821,831 shares of the Company's 8.25% Series B Cumulative Preferred Stock at a price of $23.69 per share, plus accrued and unpaid dividends to the date of redemption, in exchange for $46.5 million aggregate principal amount of secured debt ($43.2 million net of debt offering costs and original issue discount) as discussed in Note 10. Prior to the redemption, the Twin Peaks sellers held 2,847,393 shares of Series B Cumulative Preferred Stock. Pursuant to the Exchange Agreement, (i) at any time prior to July 25, 2023, the Company may call from the Twin Peaks sellers all or a portion of the Class M-2 Notes at the outstanding principal balance multiplied by 0.86, plus any accrued plus unpaid interest thereon; (ii) at any time on or after the date of the Exchange Agreement, the Company may call from the Twin Peaks sellers, and at any time on or after July 25, 2023, the Twin Peaks sellers may put to the Company, all or a portion of the Class A-2 Notes and/or Class B-2 Notes at the outstanding principal balance multiplied by 0.94, plus any accrued plus unpaid interest thereon; and (iii) at any time on or after July 25, 2023, the Company may call from the Twin Peaks sellers, and the Twin Peaks sellers may put to the Company, all or a portion of the Class M-2 Notes at the outstanding principal balance multiplied by 0.91, plus any accrued plus unpaid interest thereon. If the Company does not remit the applicable call price or put price upon a duly exercised call or put, as applicable, the amount owed by the Company will accrue interest at 10% per annum, which interest is due and payable in cash monthly by the Company. On July 13, 2023, pursuant to the Exchange Agreement, the Twin Peaks sellers exercised their put option. During the first quarter of 2024, the Company paid $1.0 million to settle the 10% per annum interest in perpetuity and to settle the put option. As a result, as of June 30, 2024, the outstanding principal balance owned by the Twin Peaks sellers is no longer subject to the put option. The FB Royalty securitization notes are generally secured by a security interest in substantially all the assets of FB Royalty and its subsidiaries. GFG Royalty Securitization In connection with the acquisition of GFG, on July 22, 2021, FAT Brands GFG Royalty I, LLC ("GFG Royalty"), a special purpose, wholly-owned subsidiary of FAT Brands, completed the issuance and sale in a private offering of three tranches of fixed rate secured notes with a total aggregate principal amount of $350.0 million. Immediately following the closing of the acquisition of GFG the Company contributed the franchising subsidiaries of GFG to GFG Royalty, pursuant to a Contribution Agreement. On December 15, 2022, GFG Royalty issued an additional $113.5 million aggregate principal amount of three tranches of fixed rate secured notes. Of the $113.5 million aggregate principal amount, $25.0 million was sold privately during the fourth quarter of 2022. In January 2023, an additional $40.0 million aggregate principal amount was sold privately, resulting in net proceeds of $34.8 million. On September 20, 2023, an additional $2.8 million aggregate principal amount was sold privately resulting in net proceeds of $2.5 million. In October 2023, $20.2 million aggregate principal amount previously issued to FAT Brands Inc. was sold privately resulting in net proceeds of $18.1 million. The remaining $25.3 million in aggregate principal amount remains issued to FAT Brands, Inc., pending sale to third party investors. The GFG Royalty securitization notes are generally secured by a security interest in substantially all the assets of GFG Royalty and its subsidiaries. Twin Peaks Securitization In connection with the acquisition of Twin Peaks on October 1, 2021, the Company completed the issuance and sale in a private offering through its special purpose, wholly-owned subsidiary, FAT Brands Twin Peaks I, LLC, of three tranches of fixed rate secured notes with a total aggregate principal amount of $250.0 million. Immediately following the closing of the acquisition of Twin Peaks the Company contributed the franchising subsidiaries of Twin Peaks to FAT Brands Twin Peaks I, LLC, pursuant to a Contribution Agreement. On September 8, 2023, FAT Brands Twin Peaks I, LLC issued an additional $98.0 million aggregate principal amount of two tranches of fixed rate secured notes to FAT Brands Inc., pending sale to third party investors. Of the $98.0 million aggregate principal amount, $48.0 million was sold privately during the third quarter of 2023 resulting in net proceeds of $45.2 million. A portion of the proceeds was used to purchase $14.9 million aggregate principal amount of outstanding Securitization Notes, which will be held pending re-sale to third party investors. The remaining $50.0 million in aggregate principal of notes issued by FAT Twin Peaks I, LLC was issued to a wholly-owned subsidiary of FAT Brands, Inc., pending sale to third party investors. On March 20, 2024, FAT Brands Twin Peaks I, LLC issued an additional $50.0 million aggregate principal amount of one tranche of fixed rate secured notes to FAT Brands Inc., pending sale to third party investors. Of the $50.0 million aggregate principal amount, $38.8 million was sold privately during the first quarter of 2024 resulting in net proceeds of $36.4 million. A portion of the proceeds was used to purchase $7.4 million aggregate principal amount of outstanding Securitization Notes, which will be held pending re-sale to third party investors. In connection with the bonds repurchased, the Company recognized a $0.4 million net gain on extinguishment of debt. During the second quarter of 2024, the remaining $11.2 million in aggregate principal of notes was sold privately to a third party investor resulting in net proceeds of $10.7 million. The Twin Peaks securitization notes are generally secured by a security interest in substantially all the assets of FAT Brands Twin Peaks I, LLC and its subsidiaries. Fazoli's / Native Securitization In connection with the acquisition of Fazoli's and Native Grill & Wings on December 15, 2021, the Company completed the issuance and sale in a private offering through its special purpose, wholly-owned subsidiary, FAT Brands Fazoli's Native I, LLC, of three tranches of fixed rate secured notes with a total aggregate principal amount of $193.8 million. Immediately following the closing of the acquisition of Fazoli's and Native the Company contributed the franchising subsidiaries of these entities to FAT Brands Fazoli's Native I, LLC, pursuant to a Contribution Agreement. The Fazoli's/Native securitization notes are generally secured by a security interest in substantially all the assets of FAT Brands Fazoli's Native I, LLC and its subsidiaries. FB Resid Holdings 1, LLC On July 8, 2023, FB Resid Holdings I, LLC (“FB Resid”), a special purpose, wholly-owned subsidiary of FAT Brands, completed the issuance of two tranches of fixed rate secured notes with a total aggregate principal amount of $150.0 million. Of the $150.0 million aggregate principal amount, $105.8 million was sold privately in 2023, resulting in net proceeds of $105.3 million. A portion of the proceeds was used to purchase $64.6 million of outstanding Securitization Notes, which will be held pending re-sale to third party investors. The remaining $44.2 million in aggregate principal of notes issued by FB Resid was issued to a wholly-owned subsidiary of FAT Brands, Inc., pending sale to third party investors. Retained Notes During the twenty-six weeks ended June 30, 2024, the Company repurchased certain of its securitized notes to be held for resale to third party investors and sold certain of its securitized notes previously repurchased or issued and not sold (collectively, the "Retained Notes"). During the twenty-six weeks ended June 30, 2024, cash proceeds from the sale of Retained Notes and cash used to repurchase Retained Notes was $90.3 million and $29.9 million including accrued interest, respectively. The $90.3 million includes the sale of $50.0 million aggregate principal Twin Peaks Securitization notes issued in 2024 in addition to securitization notes previously held in wholly-owned subsidiaries of Fat Brands Inc. As of June 30, 2024, the Company held $180.3 million of Retained Notes, which have been eliminated in consolidation. Terms and Debt Covenant Compliance The FAT Royalty securitization notes, the GFG Royalty securitization notes, the Twin Peaks securitization notes, the Fazoli's/Native securitization notes and the FB Resid notes (collectively, the "Securitization Notes") require that the principal (if any) and interest obligations be segregated to ensure appropriate funds are reserved to pay the quarterly principal and interest amounts due. The amount of monthly cash flow that exceeds the required monthly interest reserve is generally remitted to the Company. Interest payments are required to be made on a quarterly basis. Beginning July 26, 2023, additional interest equal to 1.0% per annum and principal payments equal to 2.0% per annum of the initial principal amount on the FAT Royalty securitization notes, the GFG Royalty securitization notes, the Twin Peaks securitization notes and the Fazoli's/Native securitization notes will be made on the scheduled quarterly payment dates. The material terms of the Securitization Notes contain covenants which are standard and customary for these types of agreements, including the following financial covenants: (i) debt service coverage ratio, (ii) leverage ratio and (iii) senior leverage ratio. As of June 30, 2024, the Company was in compliance with these covenants. Elevation Note On June 19, 2019, the Company completed the acquisition of Elevation Burger. A portion of the purchase price included the issuance to the Seller of a convertible subordinated promissory note (the “Elevation Note”) with a principal amount of $7.5 million, bearing interest at 6.0% per annum and maturing in July 2026. The Elevation Note is convertible, under certain circumstances, into shares of the Company’s common stock at $12.00 per share. The Elevation Note is a general unsecured obligation of Company and is subordinated in right of payment to all indebtedness of the Company arising under any agreement or instrument to which Company or any of its Affiliates is a party that evidences indebtedness for borrowed money that is senior in right of payment. Equipment Financing (Twin Peaks) During fiscal year 2022, an indirect subsidiary of the Company entered into certain equipment financing arrangements to borrow up to $1.4 million, the proceeds of which will be used to purchase certain equipment for a new Twin Peaks restaurant and to retrofit existing restaurants with equipment (the "Equipment Financing"). The Equipment Financing has maturity dates between August 10, 2027 and April 1, 2028, and bear interest at fixed rates between 7.99% and 8.49% per annum. The Equipment Financing is secured by certain equipment of the Twin Peaks restaurant. Construction Loan Agreement (Twin Peaks) On December 5, 2022, an indirect subsidiary of the Company entered into a construction loan agreement to borrow up to $4.5 million, the proceeds of which will be used for a new corporate Twin Peaks restaurant (the "Construction Loan"). The Construction Loan has an initial maturity of August 5, 2023, with an optional six-month extension, bearing interest at the greater of the 3-month Secured Overnight Financing Rate (SOFR) plus 360 basis points, or 8% per year, and is secured by land and building. In August 2023, management extended the maturity to February 5, 2024. On December 26, 2023, the loan was paid in full as part of a sale leaseback transaction. On March 9, 2023, an indirect subsidiary of the Company entered into a construction loan agreement to borrow up to $4.5 million, the proceeds of which will be used for a new corporate Twin Peaks in Sarasota, Florida (the "Sarasota Construction Loan"). The Sarasota Construction Loan has an initial maturity of January 9, 2024, with an optional three-month extension, bearing interest at the greater of the 3-month Overnight Financing Rate (SOFR) plus 575 basis points or 4% per year and is secured by land and building. On September 27, 2023, the loan was paid in full as part of a sale leaseback transaction. On December 28, 2023, an indirect subsidiary of the Company entered into a construction loan agreement to borrow up to $4.75 million, the proceeds of which will be used for a new corporate Twin Peaks in McKinney, TX (the "McKinney Construction Loan"). The McKinney Construction Loan has an initial maturity of December 28, 2024, with an optional 12-month extension, bearing interest at Wall Street Journal Prime plus 100 basis per year and is secured by land and building. As of June 30, 2024, the total amount outstanding on the McKinney Construction Loan was $2.7 million. Promissory Note (Twin Peaks) On December 4, 2023, an indirect subsidiary of the Company purchased all member interest units of a joint venture entity for $1.3 million in the form of a $0.3 million cash payment and 10 equal monthly payments of $0.1 million beginning in January 2024. The $1.0 million promissory note bears interest of 5.3%.
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REDEEMABLE PREFERRED STOCK |
6 Months Ended |
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Jun. 30, 2024 | |
Equity [Abstract] | |
REDEEMABLE PREFERRED STOCK | REDEEMABLE PREFERRED STOCK GFG Preferred Stock Consideration On July 22, 2021, the Company completed the acquisition of GFG. A portion of the consideration paid included 3,089,245 newly issued shares of the Company’s Series B Cumulative Preferred Stock valued at $67.3 million (the "GFG Preferred Stock Consideration"). Additionally, on July 22, 2021, the Company entered into a put/call agreement with the GFG sellers, pursuant to which the Company may purchase, or the GFG Sellers may require the Company to purchase, the GFG Preferred Stock Consideration for $67.5 million plus any accrued but unpaid dividends on or before August 20, 2022 (extended from the original date of April 22, 2022), subject to the other provisions of the Put/Call Agreement. Since the Company did not deliver the applicable cash proceeds to the GFG Sellers by that date, the amount accrues interest at the rate of 5% per annum until repayment is completed. On March 22, 2022, the Company received a put notice on the GFG Preferred Stock Consideration and reclassified the GFG Preferred Stock Consideration from redeemable preferred stock to current liabilities on its consolidated balance sheet. As of June 30, 2024, the carrying value of the redeemable preferred stock was $67.5 million. On September 16, 2022, the Company entered into an agreement with one of the GFG sellers who held 1,544,623 put preferred shares. Pursuant to the agreement, effective August 23, 2022, the interest rate applicable to such holder's 1,544,623 put shares was increased from 5% to 10% per annum, payable monthly in arrears. During the thirteen and twenty-six weeks ended June 30, 2024 the Company paid $0.8 million and $1.6 million of interest. On March 9, 2023, the Company entered into an agreement with the second GFG seller who held 1,544,623 put preferred shares. Pursuant to the agreement, effective August 23, 2022, the interest rate applicable to such holder's 1,544,623 put shares was increased from 5% to 10% per annum, payable on the date of redemption. Twin Peaks Preferred Stock Consideration On October 1, 2021, the Company completed the acquisition of Twin Peaks. A portion of the consideration paid included 2,847,393 shares of the Company’s 8.25% Series B Cumulative Preferred Stock (the "Twin Peaks Preferred Stock Consideration") valued at $67.5 million. On October 1, 2021, the Company and the Twin Peaks Seller entered into a Put/Call Agreement (the “Put/Call Agreement”) pursuant to which the Company was granted the right to call from the Twin Peaks Seller, and the Twin Peaks Seller was granted the right to put to the Company, the Initial Put/Call Shares at any time until March 31, 2022 for a cash payment of $42.5 million, and the Secondary Put/Call Shares at any time until September 30, 2022 for a cash payment of $25.0 million (the Initial Put/call Shares together with the Secondary Put/Call Shares total $67.5 million), plus any accrued but unpaid dividends on such shares. Unpaid balances, when due, accrue interest at a rate of 10.0% per annum until repayment is completed. On October 7, 2021, the Company received a put notice on the Initial Put/Call Shares and the Secondary Put/Call Shares. On October 21, 2022, the Company entered into an Exchange Agreement with the Twin Peaks Seller and redeemed 1,821,831 shares of the Company’s 8.25% Series B Cumulative Preferred Stock at a price of $23.69 per share, plus accrued and unpaid dividends to the date of redemption in exchange for $46.5 million aggregate principal amount of secured debt ($43.2 million net of debt offering costs and original issue discount) as discussed in Note 9. As of June 30, 2024, the carrying value of the Twin Peaks Preferred Stock Consideration totaled $24.3 million. The Company recognized interest expense relating to the Twin Peaks Preferred Stock Consideration for the thirteen and twenty-six weeks ended June 30, 2024 in the amount of $0.6 million and $1.2 million.
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SHARE-BASED COMPENSATION |
6 Months Ended |
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Jun. 30, 2024 | |
Share-Based Payment Arrangement [Abstract] | |
SHARE-BASED COMPENSATION | SHARE-BASED COMPENSATION Effective September 30, 2017, the Company adopted the 2017 Omnibus Equity Incentive Plan (the “Plan”). The Plan was amended on December 20, 2022 to increase the number of shares available for issuance under the Plan. The Plan is a comprehensive incentive compensation plan under which the Company can grant equity-based and other incentive awards to officers, employees and directors of, and consultants and advisers to, FAT Brands Inc. and its subsidiaries. The Plan provides a maximum of 5,000,000 shares available for grant. The Company has periodically issued stock options under the Plan. All of the stock options issued by the Company to date have included a vesting period of three years, with one-third of each grant vesting annually. As of June 30, 2024, there were 3,178,199 shares of stock options outstanding with a weighted average exercise price of $9.16. During the thirteen and twenty-six weeks ended June 30, 2024, the Company granted a total of 326,360 stock options under the Plan with a grant date fair value of $0.9 million. During the thirteen and twenty-six weeks ended June 25, 2023, the Company granted a total of 566,907 stock options under the Plan with a grant date fair value of $1.0 million. The related compensation expense will be recognized over the vesting period. The Company recognized share-based compensation expense in the amount of $0.7 million and $0.5 million during the thirteen weeks ended June 30, 2024 and June 25, 2023, respectively. The Company recognized share-based compensation expense in the amount of $1.4 million and $1.6 million during the twenty-six weeks ended June 30, 2024 and June 25, 2023, respectively. As of June 30, 2024, there remains $1.8 million of related share-based compensation expense relating to non-vested grants, which will be recognized over the remaining vesting period of approximately 2.7 years, subject to future forfeitures.
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WARRANTS |
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Jun. 30, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Warrants | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
WARRANTS | WARRANTS The Company’s warrant activity for the twenty-six weeks ended June 30, 2024 was as follows:
During the twenty-six weeks ended June 30, 2024, 88,221 warrants were exercised in exchange for 88,221 shares of common stock with net proceeds to the Company of $0.2 million.
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COMMON STOCK |
6 Months Ended |
---|---|
Jun. 30, 2024 | |
Common Stock | |
COMMON STOCK | COMMON STOCK On July 9, 2024, the Board of Directors declared a cash dividend of $0.14 per share of Class A common stock and Class B common stock, payable on August 30, 2024 to stockholders of record as of August 15, 2024. On November 14, 2022, we entered into an ATM Sales Agreement (the "ThinkEquity Sales Agreement") with ThinkEquity LLC (the "Agent"), pursuant to which we may offer and sell from time to time through the Agent up to 21,435,000 maximum aggregate offering price of shares of our Class A Common Stock and/or 8.25% Series B Preferred Stock. During the three months ended June 30, 2024 pursuant to the ThinkEquity Sales Agreement, the Company sold and issued 62,296 shares of Series B Cumulative Preferred Stock, at a weighted average share price of $15.40, paid the Agent commissions of $28,787 for such sales and received net proceeds of $0.9 million (net of fees and commissions) for such sales. The ThinkEquity Sales Agreement with the Agent was terminated in May 2024. On July 19, 2024, we entered into an Equity Distribution Agreement (the “Noble Sales Agreement”) with Noble Capital Markets, Inc. (the “Sales Agent”), pursuant to which we may offer and sell from time to time through the Sales Agent shares (the “Placement Shares”) of our Class A Common Stock and/or 8.25% Series B Cumulative Preferred Stock.
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COMMITMENTS AND CONTINGENCIES |
6 Months Ended |
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Jun. 30, 2024 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES Government Investigations and Litigation In December 2021, the U.S. Attorney’s Office for the Central District of California (the “U.S. Attorney”) and the U.S. Securities and Exchange Commission (the “SEC”) informed the Company that they had opened investigations relating to the Company and our former CEO, Andrew Wiederhorn, and were formally seeking documents and materials concerning, among other things, the Company’s December 2020 merger with Fog Cutter Capital Group Inc. (“FCCG”), transactions between those entities and Mr. Wiederhorn, as well as compensation, extensions of credit and other benefits or payments received by Mr. Wiederhorn or his family from those entities prior to the merger. On May 10, 2024, the U.S. Department of Justice (“DOJ”) indicted the Company on two violations of Section 402 of the Sarbanes-Oxley Act for directly and indirectly extending and/or arranging for the extension of credit in 2019 and 2020 to former CEO Andrew Wiederhorn in the amount of $2.65 million. These charges allege that the Company, through its subsidiary Fatburger N.A., transferred approximately $600,000 to Mr. Wiederhorn in the form of a personal loan on January 30, 2019, and lent approximately $2 million in 2020 to its former parent company FCCG which indirectly funded a personal loan from FCCG to Mr. Wiederhorn. The indictment also includes charges against Mr. Wiederhorn, the Company’s former CFO, Rebecca Hershinger, and the Company’s former tax advisor, William Amon, on violations of various federal tax and other laws related to loans from FCCG to Mr. Wiederhorn. Concurrently with the DOJ’s charges, the SEC filed a complaint against the Company, claiming violations of Section 17(a)(2) of the Securities Act of 1933; Sections 10(b), 13(a), 13(b)(2)(A), 13(b)(2)(B), 13(k), and 14(a) of the Securities Exchange Act of 1934; and Rules 10b-5(b), 12b-20, 13a-1, 13a-13, 14a-3, and 14a-9 thereunder. The SEC’s claims pertain principally to allegations that, for fiscal periods covering 2017 through 2020, the Company failed to disclose certain related party transactions, failed to disclose the salaries of Mr. Wiederhorn’s adult children working at the Company, failed to maintain proper books and records and internal accounting controls, made false or misleading statements regarding the Company’s liquidity and use of proceeds from certain transactions, and directly or indirectly extended credit to Mr. Wiederhorn in the form of a personal loan. The SEC’s complaint also names Mr. Wiederhorn, Ms. Hershinger, and the Company’s SVP of Finance, Ron Roe, as defendants. The SEC is seeking injunctive relief, disgorgement, and civil monetary penalties. The Company is evaluating these charges and intends to vigorously defend itself against them. Derivative Litigation James Harris and Adam Vignola, derivatively on behalf of FAT Brands, Inc. v. Squire Junger, James Neuhauser, Edward Rensi, Andrew Wiederhorn, Fog Cutter Holdings, LLC and Fog Cutter Capital Group, Inc., and FAT Brands Inc., nominal defendant (Delaware Chancery Court, Case No. 2021-0511) On June 10, 2021, plaintiffs James Harris and Adam Vignola (“Plaintiffs”), putative stockholders of the Company, filed a shareholder derivative action in the Delaware Court of Chancery nominally on behalf of the Company against the Company’s current and former directors (Squire Junger, James Neuhauser, Edward Rensi and Andrew Wiederhorn (the “Individual Defendants”)), and the Company’s majority stockholders, Fog Cutter Holdings, LLC and Fog Cutter Capital Group, Inc. (collectively with the Individual Defendants, “Defendants”). Plaintiffs assert claims of breach of fiduciary duty, unjust enrichment and waste of corporate assets arising out of the Company’s December 2020 merger with Fog Cutter Capital Group, Inc. Defendants filed a motion to dismiss Plaintiffs’ complaint, which the Court denied in an oral ruling on February 11, 2022 and subsequent written order on May 25, 2022. On April 7, 2022, the Court entered a Scheduling Order setting forth the key dates and deadlines that would govern the litigation, including a discovery cutoff of March 24, 2023 and trial date of February 5-9, 2024. To date, the parties have engaged in substantial written discovery, though no depositions have been taken. On February 3, 2023, the Company’s board of directors appointed a Special Litigation Committee (“SLC”), which retained independent counsel and moved for a six-month stay of the action pending resolution of the SLC's investigation, which the Court granted on February 17, 2023. On April 5, 2023, the Court granted Plaintiffs’ motion to lift the stay of the proceedings, and entered a Second Amended Pre-Trial Scheduling Order resetting key dates and deadlines, including a fact discovery cutoff of August 4, 2023, and a trial date to be set sometime after May 10, 2024. On May 4, 2023, a new SLC was appointed, and on May 8, 2023, the new SLC moved for a six-month stay of the action pending resolution of its investigation. Two days later, on May 10, 2023, the United States of America moved for a partial stay of discovery pending its own investigation. On May 31, 2023, the Court granted the United States of America’s Motion, except that it granted a six-month stay of all proceedings in the action, and on that basis deemed the SLC’s motion to be moot. On December 4, 2023, the stay of all proceedings was extended through March 3, 2024, and on March 1, 2024, the stay of all proceedings was extended to June 3, 2024. On June 3, 2024, the Court granted the United States’ request to further extend the stay of all proceedings pending resolution of the charges in United States v. Wiederhorn et al., 2:24-CR-295-RGK (C.D. Cal.). Defendants dispute the allegations of the lawsuit and intend to vigorously defend against the claims. We cannot predict the outcome of this lawsuit. This lawsuit does not assert any claims against the Company. However, subject to certain limitations, we are obligated to indemnify our directors in connection with defense costs for the lawsuit and any related litigation, which may exceed coverage provided under our insurance policies, and thus could have an adverse effect on our financial condition. The lawsuit and any related litigation also may be time-consuming and divert the attention and resources of our management. James Harris and Adam Vignola, derivatively on behalf of FAT Brands, Inc. v. Squire Junger, James Neuhauser, Edward Rensi, Andrew Wiederhorn and Fog Cutter Holdings, LLC, and FAT Brands Inc., nominal defendant (Delaware Chancery Court, Case No. 2022-0254) On March 17, 2022, plaintiffs James Harris and Adam Vignola (“Plaintiffs”), putative stockholders of the Company, filed a shareholder derivative action in the Delaware Court of Chancery nominally on behalf of the Company against the Company’s current and former directors (Squire Junger, James Neuhauser, Edward Rensi and Andrew Wiederhorn (the “Individual Defendants”)), and the Company’s majority stockholder, Fog Cutter Holdings, LLC (collectively with the Individual Defendants, “Defendants”). Plaintiffs assert claims of breach of fiduciary duty in connection with the Company’s June 2021 recapitalization transaction. On May 27, 2022, Defendants filed a motion to dismiss Plaintiff's complaint (the "Motion"). Argument on the Motion was heard on November 17, 2022, and again on February 23, 2023, and the Court took its decision under advisement. The Court denied the motion on April 5, 2023. On May 2, 2023, the Court entered a pre-trial scheduling order setting key dates and deadlines that will govern the litigation, including a fact discovery cutoff of February 2, 2024, and a trial date to be set sometime after October 15, 2024. On July 21, 2023, the Company’s board of directors appointed a Special Litigation Committee (“SLC”), which retained independent counsel and moved for a six-month stay of the action pending resolution of the SLC’s investigation. On August 10, 2023, the parties filed a stipulation to stay the case for six months, conditioned upon Defendants continuing to review the documents in response to Plaintiffs' First Requests for Production and to produce non-privileged responsive documents to the SLC and to Plaintiffs no later than December 1, 2023. The Court granted the stipulation the same day. In accordance with the stipulation, Defendants produced documents to the SLC and Plaintiffs by the December 1, 2023 deadline. On February 7, 2024, the SLC requested, and the Court granted, an extension of the stay of all proceedings through May 6, 2024, granting the SLC an additional 90 days to complete its investigation, and on May 7, 2024, the Court granted the SLC another 90-day extension, staying proceedings through August 5, 2024. Defendants dispute the allegations of the lawsuit and intend to vigorously defend against the claims. As this matter is still in the early stages, we cannot predict the outcome of this lawsuit. This lawsuit does not assert any claims against the Company. However, subject to certain limitations, we are obligated to indemnify our directors in connection with defense costs for the lawsuit and any related litigation, which may exceed coverage provided under our insurance policies, and thus could have an adverse effect on our financial condition. The lawsuit and any related litigation also may be time-consuming and divert the attention and resources of our management. Other Litigation Mitchell Kates v. FAT Brands, Inc., Andrew Wiederhorn, Kenneth J. Kuick and Robert G. Rosen (United States District Court for the Central District of California, Case No. 2:24-cv-04775-MWF-MAA) On June 7, 2024, plaintiff Mitchell Kates, a putative investor in the Company, filed a putative class action lawsuit against the Company, Andrew Wiederhorn, Kenneth J. Kuick and Robert G. Rosen, asserting claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended (the “1934 Act”), alleging that the defendants are responsible for false and misleading statements and omitted material facts in the Company’s reports filed with the SEC under the 1934 Act related to the subject matter of the government investigations and litigation discussed above, the Company’s handling of these matters and cooperation with the government. The plaintiff alleges that the Company’s public statements wrongfully inflated the trading price of the Company’s common stock, preferred stock and warrants. The plaintiff is seeking to certify the complaint as a class action and is seeking compensatory damages in an amount to be determined at trial. As this matter is still in the early stages, we cannot predict the outcome of this lawsuit. Stratford Holding LLC v. Foot Locker Retail Inc. (U.S. District Court for the Western District of Oklahoma, Case No. 5:12-cv-772-HE) In 2012 and 2013, two property owners in Oklahoma City, Oklahoma sued numerous parties, including Foot Locker Retail Inc. and our subsidiary Fog Cutter Capital Group Inc. (now known as Fog Cutter Acquisition, LLC), for alleged environmental contamination on their properties, stemming from dry cleaning operations on one of the properties. The property owners seek damages in the range of $12.0 million to $22.0 million. From 2002 to 2008, a former Fog Cutter subsidiary managed a lease portfolio, which included the subject property. Fog Cutter denies any liability, although it did not timely respond to one of the property owners’ complaints and several of the defendants’ cross-complaints and thus is in default. The parties are currently conducting discovery. The court has vacated the current trial date and has not yet reset the trial date. The Company is unable to predict the ultimate outcome of this matter, however, reserves have been recorded on the balance sheet of FAT Brands relating to this litigation. There can be no assurance that the defendants will be successful in defending against these actions. SBN FCCG LLC v FCCGI (Los Angeles Superior Court, Case No. BS172606) SBN FCCG LLC (“SBN”) filed a complaint against Fog Cutter Capital Group, Inc. (“FCCG”) in New York state court for an indemnification claim (the “NY case”) stemming from an earlier lawsuit in Georgia regarding a certain lease portfolio formerly managed by a former FCCG subsidiary. In February 2018, SBN obtained a final judgment in the NY case for a total of $0.7 million, which included $0.2 million in interest dating back to March 2012. SBN then obtained a sister state judgment in Los Angeles Superior Court, Case No. BS172606 (the “California case”), which included the $0.7 million judgment from the NY case, plus additional statutory interest and fees, for a total judgment of $0.7 million. In May 2018, SBN filed a cost memo, requesting an additional $12,411 in interest to be added to the judgment in the California case, for a total of $0.7 million. In May 2019, the parties agreed to settle the matter for $0.6 million, which required the immediate payment of $0.1 million, and the balance to be paid in August 2019. FCCG wired $0.1 million to SBN in May 2019, but has not yet paid the remaining balance of $0.5 million. The parties have not entered into a formal settlement agreement, and they have not yet discussed the terms for the payment of the remaining balance. SBN FCCG LLC v FCCGI (Supreme Court of the State of New York, County of New York, Index No. 650197/2023) On January 13, 2023, SBN filed another complaint against FCCG in New York state court for an indemnification claim stemming from a lawsuit in Oklahoma City regarding the same lease portfolio formerly managed by Fog Cap (the “OKC Litigation”), and a bankruptcy proceeding involving Fog Cap (the “Bankruptcy Proceeding”). SBN alleges that under a February 2008 stock purchase agreement, Fog Cutter is required to indemnify SBN and its affiliates. According to the complaint, SBN has, at the time of filing the complaint, incurred costs subject to indemnification of approximately $12 million. On March 11, 2024, the court issued an order granting FCCG’s motion to dismiss SBN’s complaint without prejudice to refile the complaint, if at all, once the underlying proceedings (the OKC Litigation and the Bankruptcy Proceeding) were complete. On April 10, 2024, SBN filed a notice of appeal of the trial court's order dismissing SBN's complaint. We are unable at this time to express any opinion as to the eventual outcome of this matter or the possible range of loss, if any. The Company is involved in other claims and legal proceedings from time-to-time that arise in the ordinary course of business, including those involving the Company’s franchisees. The Company does not believe that the ultimate resolution of these actions will have a material adverse effect on its business, financial condition, results of operations, liquidity or capital resources. As of June 30, 2024, the Company had accrued an aggregate of $5.1 million for the specific matters mentioned above and claims and legal proceedings involving franchisees as of that date.
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GEOGRAPHIC INFORMATION |
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Geographic Information And Major Franchisees | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
GEOGRAPHIC INFORMATION | GEOGRAPHIC INFORMATION Revenue by geographic area was as follows (in millions):
Revenue is shown based on the geographic location of our company-owned and franchisees’ restaurants. All assets are located in the United States. During the twenty-six weeks ended June 30, 2024 and June 25, 2023, no individual franchisee accounted for more than 10% of the Company’s revenue.
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Pay vs Performance Disclosure - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
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Jun. 30, 2024 |
Jun. 25, 2023 |
Jun. 30, 2024 |
Jun. 25, 2023 |
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Pay vs Performance Disclosure | ||||
Net loss | $ (39,359) | $ (7,091) | $ (77,675) | $ (39,217) |
Insider Trading Arrangements |
3 Months Ended |
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Jun. 30, 2024 | |
Trading Arrangements, by Individual | |
Rule 10b5-1 Arrangement Adopted | false |
Non-Rule 10b5-1 Arrangement Adopted | false |
Rule 10b5-1 Arrangement Terminated | false |
Non-Rule 10b5-1 Arrangement Terminated | false |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) |
6 Months Ended |
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Jun. 30, 2024 | |
Accounting Policies [Abstract] | |
Basis of presentation | Basis of presentation – The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and its subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. Our revenues are derived primarily from two sales channels, franchised restaurants and company-owned locations, which we operate as one reportable segment. The accompanying unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America (“GAAP”) for complete financial statements. In the opinion of the Company, all adjustments considered necessary for the fair presentation of the Company’s results of operations, financial position and cash flows for the periods presented have been included and are of a normal, recurring nature. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company's 2023 Annual Report on Form 10-K for the fiscal year ended December 31, 2023 filed with the SEC on March 12, 2024.
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Nature of operations | Nature of operations – The Company operates on a 52-week calendar and its fiscal year ends on the last Sunday of the calendar year. Consistent with industry practice, the Company measures its stores’ performance based upon 7-day work weeks. Using the 52-week cycle ensures consistent weekly reporting for operations and ensures that each week has the same days since certain days are more profitable than others. The use of this fiscal year means a 53rd week is added to the fiscal year every 5 or 6 years. In a 52-week year, all four quarters are comprised of 13 weeks. In a 53-week year, one extra week is added to the fourth quarter. Fiscal year 2023 was a 53-week year and 2024 is a 52-week year.
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Employee Retention Tax Credits | Employee Retention Tax Credits - On March 27, 2020, the U.S. government enacted the Coronavirus Aid Relief and Security Act (the "CARES Act") to provide certain relief as a result of the COVID-19 pandemic. The CARES Act provides tax relief, along with other stimulus measures, including a provision for an Employee Retention Credit ("ERC"). As there is no authoritative guidance under U.S. GAAP on accounting for government assistance to for-profit business entities, the Company accounts for the ERC by analogy to International Accounting Standard, Accounting for Government Grants and Disclosure of Government Assistance ("IAS 20"). During the thirteen weeks ended June 30, 2024 and June 25, 2023, the Company received and recognized $2.1 million and $12.7 million, respectively of ERCs recorded within general and administrative expense on the consolidated statements of operations.
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Use of estimates in the preparation of the condensed consolidated financial statements | Use of estimates in the preparation of the condensed consolidated financial statements – The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements. Significant estimates include the determination of fair values of goodwill and other intangible assets, allowances for uncollectible notes receivable and accounts receivable, and the valuation allowance related to deferred tax assets. Estimates and assumptions also affect the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
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Recently Issued Accounting Standards Not Yet Adopted | Recently Issued Accounting Standards Not Yet Adopted In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. The amendments improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. The amendments require that a public entity disclose, on an annual and interim basis, an amount for other segment items by reportable segment and a description of its composition. The other segment items category is the difference between segment revenue less the segment expenses disclosed under the significant expense principle and each reported measure of segment profit or loss. The amendments improve financial reporting by requiring disclosure of incremental segment information on an annual and interim basis for all public entities. The amendments are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. A public entity should apply the amendments retrospectively to all prior periods presented in the financial statements. Upon transition, the segment expense categories and amounts disclosed in the prior periods should be based on the significant segment expense categories identified and disclosed in the period of adoption. The Company is currently evaluating the impact the adoption of this standard will have on its consolidated financial statements. In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The amendments require that public business entities on an annual basis disclose specific categories in the rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold. The amendments also require that all entities disclose on an annual basis the income taxes paid disaggregated by jurisdiction. The amendments eliminate the requirement for all entities to disclose the nature and estimate of the range of the reasonably possible change in the unrecognized tax benefits balance in the next 12 months or make a statement that an estimate of the range cannot be made. The amendments are effective for annual periods beginning after December 15, 2024. Early adoption is permitted. The amendments should be applied on a prospective basis. Retrospective application is permitted. The Company is currently evaluating the impact the adoption of this standard will have on its consolidated financial statements.
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MERGERS AND ACQUISITIONS (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Combination, Asset Acquisition, and Joint Venture Formation [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed | The allocation of the consideration to the net tangible and intangible assets acquired is presented in the table below (in millions):
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Schedule of Proforma Revenue and Net Loss | The table below presents the combined pro forma revenue and net loss of the Company and Barbeque Integrated Inc. for the thirteen and twenty-six weeks ended June 25, 2023, respectively, assuming the acquisition had occurred on December 27, 2022 (the beginning of the Company’s 2023 fiscal year) (in millions). This pro forma information does not purport to represent what the actual results of operations of the Company would have been had the acquisition of Barbeque Integrated Inc. occurred on this date nor does it purport to predict the results of operations for future periods.
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REFRANCHISING (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Refranchising | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Assets Classified as Held for Sale | The following assets used in the operation of certain restaurants meet all of the criteria requiring that they be classified as held-for-sale, and have been classified accordingly in the accompanying condensed consolidated balance sheets as of June 30, 2024 and December 31, 2023 (in millions):
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Schedule of Operating Results of Refranchising Program | The following table highlights the operating results of the Company's refranchising program (in millions):
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PROPERTY AND EQUIPMENT, NET (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Property and Equipment, Net | Property and equipment, net consists of the following (in millions):
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GOODWILL AND OTHER INTANGIBLE ASSETS, NET (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Goodwill | Changes in Carrying Value of Goodwill and Other Intangible Assets (in millions)
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Schedule of Finite-Lived Intangible Assets | Changes in Carrying Value of Goodwill and Other Intangible Assets (in millions)
Gross Carrying Value and Accumulated Amortization of Other Intangible Assets (in millions)
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Schedule of Indefinite-Lived Intangible Assets | Changes in Carrying Value of Goodwill and Other Intangible Assets (in millions)
Gross Carrying Value and Accumulated Amortization of Other Intangible Assets (in millions)
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Schedule of Finite-Lived Intangible Assets, Future Amortization Expense | The expected future amortization of definite-life intangible assets by fiscal year (in millions):
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INCOME TAXES (Tables) |
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Jun. 30, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Provision for Income Taxes | The following table presents the Company’s provision for income taxes (in millions):
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LEASES (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Operating Lease Right of Use Assets and Operating Lease Liabilities Relating to Operating Leases | Operating lease right-of-use assets and operating lease liabilities relating to the operating leases are as follows (in millions):
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Schedule of Contractual Future Maturities of Operating Lease Liabilities | The contractual future maturities of the Company’s operating lease liabilities as of June 30, 2024, including anticipated lease extensions, are as follows (in millions):
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Schedule of Supplemental Cash Flow Information Related to Leases | Supplemental cash flow information for the twenty-six weeks ended June 30, 2024 related to leases was as follows (in millions):
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DEBT (Tables) |
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Jun. 30, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Long-Term Debt | Long-term debt consisted of the following (in millions):
|
WARRANTS (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Warrants | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Warrant Activity | The Company’s warrant activity for the twenty-six weeks ended June 30, 2024 was as follows:
|
GEOGRAPHIC INFORMATION (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Geographic Information And Major Franchisees | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Revenues by Geographic Area | Revenue by geographic area was as follows (in millions):
|
ORGANIZATION AND RELATIONSHIPS (Details) $ in Thousands |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jun. 30, 2024
USD ($)
location
|
Jun. 25, 2023
USD ($)
|
Jun. 30, 2024
USD ($)
location
franchise
|
Jun. 25, 2023
USD ($)
|
Dec. 31, 2023
USD ($)
|
|
Debt Securities, Available-for-Sale [Line Items] | |||||
Number of franchise brands | franchise | 18 | ||||
Number of locations | location | 2,300 | 2,300 | |||
Percent of total restaurants franchised (as a percent) | 92.00% | 92.00% | |||
Income (loss) from operations | $ (2,703) | $ 18,465 | $ (4,085) | $ 18,852 | |
Accumulated deficit | 346,452 | 346,452 | $ 268,777 | ||
Negative working capital | 170,800 | 170,800 | |||
Redeemable preferred stock | 91,836 | 91,836 | 91,836 | ||
Unrestricted cash | 16,576 | 16,576 | $ 37,044 | ||
Fixed Rate Secured Notes | |||||
Debt Securities, Available-for-Sale [Line Items] | |||||
Repurchased amount of notes | 104,700 | 104,700 | |||
Fixed Rate Secured Notes | |||||
Debt Securities, Available-for-Sale [Line Items] | |||||
Debt securities | $ 75,600 | $ 75,600 |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) $ in Millions |
3 Months Ended | 6 Months Ended | |
---|---|---|---|
Jun. 30, 2024
USD ($)
|
Jun. 25, 2023
USD ($)
|
Jun. 30, 2024
segment
salesChannel
|
|
Accounting Policies [Abstract] | |||
Number of sales channels | salesChannel | 2 | ||
Number of reportable segments | segment | 1 | ||
CARES Act, ERCs received | $ | $ 2.1 | $ 12.7 |
MERGERS AND ACQUISITIONS - Narrative (Details) - Barbeque Holding LLC $ in Millions |
Sep. 25, 2023
USD ($)
|
---|---|
Business Acquisition [Line Items] | |
Purchase price of business | $ 31.3 |
Fair value of net assets and liabilities acquired | 31.3 |
Identifiable intangible assets acquired | $ 8.8 |
MERGERS AND ACQUISITIONS - Recognized Identified Assets Acquired and Liabilities Assumed (Details) - USD ($) $ in Thousands |
Jun. 30, 2024 |
Dec. 31, 2023 |
Sep. 25, 2023 |
---|---|---|---|
Business Acquisition [Line Items] | |||
Goodwill | $ 305,054 | $ 305,089 | |
Barbeque Holding LLC | |||
Business Acquisition [Line Items] | |||
Cash | $ 300 | ||
Accounts receivable, net of allowance | 2,800 | ||
Inventory | 2,600 | ||
Prepaids and other current assets | 1,500 | ||
Other intangible assets, net | 8,800 | ||
Goodwill | 11,700 | ||
Operating lease right-of-use assets | 108,900 | ||
Other assets | 1,800 | ||
Property and equipment, net | 18,100 | ||
Below market leases | 200 | ||
Accounts payable | (3,600) | ||
Accrued expenses and other liabilities | (9,900) | ||
Operating lease liability, current portion | (3,900) | ||
Operating lease liability, net of current portion | (105,600) | ||
Other liabilities | (2,400) | ||
Total net identifiable assets | $ 31,300 |
MERGERS AND ACQUISITIONS - Schedule of Pro Forma Revenue and Net Loss (Details) - Barbeque Holding LLC - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended |
---|---|---|
Jun. 25, 2023 |
Jun. 25, 2023 |
|
Business Acquisition [Line Items] | ||
Revenue | $ 151.8 | $ 304.7 |
Net loss | $ (7.1) | $ (38.9) |
REFRANCHISING - Schedule of Remaining Assets Classified as Held for Sale (Details) - USD ($) $ in Thousands |
Jun. 30, 2024 |
Dec. 31, 2023 |
---|---|---|
Refranchising | ||
Property and equipment | $ 0 | $ 700 |
Operating lease right-of-use assets | 400 | 3,100 |
Total | $ 370 | $ 3,756 |
REFRANCHISING - Narrative (Details) - USD ($) $ in Thousands |
Jun. 30, 2024 |
Dec. 31, 2023 |
---|---|---|
Refranchising | ||
Operating lease liabilities related to the assets classified as held for sale | $ 393 | $ 3,421 |
REFRANCHISING - Schedule of Operating Results of Refranchising Program (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2024 |
Jun. 25, 2023 |
Jun. 30, 2024 |
Jun. 25, 2023 |
|
Long Lived Assets Held-for-sale [Line Items] | ||||
Refranchising loss | $ 175 | $ 179 | $ 1,683 | $ 338 |
Restaurant Sales | Assets Classified as Held for Sale | ||||
Long Lived Assets Held-for-sale [Line Items] | ||||
Restaurant costs and expenses, net of revenue | (300) | 200 | 700 | 400 |
Loss (gain) on store sales or closures | 500 | 0 | 1,000 | (100) |
Refranchising loss | $ 200 | $ 200 | $ 1,700 | $ 300 |
PROPERTY AND EQUIPMENT, NET - Schedule of Carrying Value of Property and Equipment (Details) - USD ($) $ in Thousands |
Jun. 30, 2024 |
Dec. 31, 2023 |
---|---|---|
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 141,900 | $ 128,400 |
Accumulated depreciation | (38,800) | (27,900) |
Property and equipment, net | 103,079 | 100,524 |
Real estate | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 85,100 | 83,500 |
Equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 56,800 | $ 44,900 |
PROPERTY AND EQUIPMENT, NET - Narrative (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2024 |
Jun. 25, 2023 |
Jun. 30, 2024 |
Jun. 25, 2023 |
|
Property, Plant and Equipment [Abstract] | ||||
Depreciation | $ 5,100 | $ 3,300 | $ 11,600 | $ 6,700 |
Loss on disposals | $ 158 | $ 0 |
GOODWILL AND OTHER INTANGIBLE ASSETS, NET - Changes in Carrying Value of Goodwill and Other Intangible Assets (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2024 |
Jun. 25, 2023 |
Jun. 30, 2024 |
Jun. 25, 2023 |
|
Amortizing Intangible Assets | ||||
Amortizing Intangible Assets, Beginning balance | $ 157,900 | |||
Amortization | $ (3,900) | $ (3,800) | (7,800) | $ (7,500) |
Amortizing Intangible Assets, Ending balance | 150,100 | 150,100 | ||
Goodwill | ||||
Goodwill, Beginning balance | 305,089 | |||
Goodwill, Ending balance | 305,054 | 305,054 | ||
Trademarks | ||||
Trademarks | ||||
Trademarks, Beginning balance | 462,700 | |||
Trademarks, Ending balance | $ 462,700 | $ 462,700 |
GOODWILL AND OTHER INTANGIBLE ASSETS, NET - Narrative (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2024 |
Jun. 25, 2023 |
Jun. 30, 2024 |
Jun. 25, 2023 |
|
Goodwill and Intangible Assets Disclosure [Abstract] | ||||
Amortization expense | $ 3.9 | $ 3.8 | $ 7.8 | $ 7.5 |
GOODWILL AND OTHER INTANGIBLE ASSETS, NET - Expected Future Amortization (Details) - USD ($) $ in Millions |
Jun. 30, 2024 |
Dec. 31, 2023 |
---|---|---|
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Remainder of 2024 | $ 7.6 | |
2025 | 15.2 | |
2026 | 15.2 | |
2027 | 15.2 | |
2028 | 15.2 | |
Thereafter | 81.7 | |
Net Carrying Amount | $ 150.1 | $ 157.9 |
INCOME TAXES (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2024 |
Jun. 25, 2023 |
Jun. 30, 2024 |
Jun. 25, 2023 |
|
Income Tax Disclosure [Abstract] | ||||
Provision for income taxes | $ (1,901) | $ (1,346) | $ (5,425) | $ (3,882) |
Effective tax rate | 5.10% | 23.40% | 7.50% | 11.00% |
INCOME TAXES - Narrative (Details) |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2024 |
Jun. 25, 2023 |
Jun. 30, 2024 |
Jun. 25, 2023 |
|
Income Tax Disclosure [Abstract] | ||||
Statutory tax rate | 21.00% | 21.00% | 21.00% | 21.00% |
Effective tax rate | 5.10% | 23.40% | 7.50% | 11.00% |
LEASES - Narrative (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jun. 30, 2024 |
Jun. 25, 2023 |
Jun. 30, 2024 |
Jun. 25, 2023 |
Dec. 31, 2023 |
|
Leases [Abstract] | |||||
Lease expense recognized | $ 7,900 | $ 4,700 | $ 16,100 | $ 9,500 | |
Current portion of the operating lease liability | $ 17,331 | $ 17,331 | $ 17,254 |
LEASES - Schedule of Operating Lease Right of Use Assets and Operating Lease Liabilities (Details) - USD ($) $ in Millions |
Jun. 30, 2024 |
Dec. 31, 2023 |
---|---|---|
Lessor, Lease, Description [Line Items] | ||
Operating lease right-of-use assets | $ 212.2 | $ 223.1 |
Operating Lease, Right-of-Use Asset, Statement of Financial Position [Extensible Enumeration] | Assets classified as held-for-sale, Operating lease right-of-use assets | Assets classified as held-for-sale, Operating lease right-of-use assets |
Total operating lease liabilities | $ 224.5 | $ 232.4 |
Continuing Operations | ||
Lessor, Lease, Description [Line Items] | ||
Operating lease right-of-use assets | 211.8 | 220.0 |
Total operating lease liabilities | 224.1 | 229.0 |
Discontinued Operations, Held-for-Sale | ||
Lessor, Lease, Description [Line Items] | ||
Operating lease right-of-use assets | 0.4 | 3.1 |
Total operating lease liabilities | $ 0.4 | $ 3.4 |
LEASES - Schedule of Contractual Future Maturities (Details) - USD ($) $ in Millions |
Jun. 30, 2024 |
Dec. 31, 2023 |
---|---|---|
Leases [Abstract] | ||
Remainder of 2024 | $ 19.5 | |
2025 | 30.9 | |
2026 | 27.6 | |
2027 | 27.3 | |
2028 | 26.5 | |
Thereafter | 349.6 | |
Total lease payments | 481.4 | |
Less: imputed interest | (256.9) | |
Total | $ 224.5 | $ 232.4 |
LEASES - Schedule of Supplemental Cash Flow Information (Details) - USD ($) $ in Millions |
6 Months Ended | |
---|---|---|
Jun. 30, 2024 |
Jun. 25, 2023 |
|
Leases [Abstract] | ||
Operating cash flows from operating leases | $ 15.0 | $ 8.8 |
WARRANTS - Warrant Activity (Details) - Warrant - $ / shares |
6 Months Ended | 12 Months Ended |
---|---|---|
Jun. 30, 2024 |
Dec. 31, 2023 |
|
Number of Shares | ||
Warrants outstanding, Beginning balance (in shares) | 1,048,438 | |
Exercised (in shares) | (88,221) | |
Warrants outstanding, Ending balance (in shares) | 960,217 | 1,048,438 |
Warrants exercisable, Ending balance (in shares) | 960,217 | |
Weighted Average Exercise Price | ||
Weighted average exercise price of outstanding warrants, Beginning balance (in dollars per share) | $ 2.95 | |
Exercised (in dollars per share) | 2.67 | |
Weighted average exercise price of outstanding warrants, Ending balance (in dollars per share) | 2.71 | $ 2.95 |
Weighted average exercise price of exercisable warrants, Ending balance (in dollars per share) | $ 2.71 | |
Weighted Average Remaining Contractual Life (Years) | ||
Weighted average remaining contractual life (in years) of warrants outstanding | 1 year 1 month 6 days | 1 year 7 months 6 days |
Weighted average remaining contractual life (in years) of warrants exercised | 1 year |
WARRANTS - Narrative (Details) $ in Millions |
6 Months Ended |
---|---|
Jun. 30, 2024
USD ($)
shares
| |
Warrant Activity | |
Common stock issued through exercise of warrants (in shares) | 88,221 |
Net proceeds from exercise of warrants | $ | $ 0.2 |
Warrant | |
Warrant Activity | |
Warrants exercised (in shares) | 88,221 |
GEOGRAPHIC INFORMATION (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2024 |
Jun. 25, 2023 |
Jun. 30, 2024 |
Jun. 25, 2023 |
|
RestaurantFranchising [Line Items] | ||||
Total revenue | $ 152,040 | $ 106,764 | $ 304,007 | $ 212,455 |
United States | ||||
RestaurantFranchising [Line Items] | ||||
Total revenue | 149,700 | 105,100 | 299,200 | 207,900 |
Other countries | ||||
RestaurantFranchising [Line Items] | ||||
Total revenue | $ 2,300 | $ 1,700 | $ 4,800 | $ 4,600 |
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