FAT Brands Q1 2025: Key Contradictions on Smokey Bones Impact, Litigation Expenses, and Strategic Refranchising

Smokey Bones impact on Adjusted EBITDA, litigation expenses and future expectations, Fazoli's Refranchising and Strategic Value, Financial Impact of Increasing Cookie Facility Utilization, and Smokey Bones to Twin Peaks conversions are the key contradictions discussed in FAT Brands' latest 2025Q1 earnings call.



Revenue and Sales Decline:
- FAT Brands reported total revenue of $142 million for Q1 2025, declining 6.5% from the previous year, with system-wide sales at $571.1 million, down 1.8% year-over-year.
- The decline was primarily due to lower same-store sales and the closure of Smokey Bones locations for conversion into Twin Peaks lodges.

Strategic Divestments and Debt Reduction:
- FAT Brands aims to reduce outstanding debt by $75 million through strategic acquisitions and divestitures.
- This is part of a broader strategy to improve its balance sheet and achieve cash flow positivity, excluding new corporate store development.

International Sales Recovery:
- The company observed a rebound in international locations towards the end of Q1 2025, which is encouraging for future growth.
- This recovery is attributed to strategic initiatives and market demand in international markets.

Cookie Dough Manufacturing Expansion:
- The company's Georgia production facility reported $8.8 million in first quarter sales and $3.1 million in adjusted EBITDA, a 35% margin.
- FAT Brands seeks to increase utilization to 60% to 70%, which could enhance the facility's market value and operational efficiency.