Fat Brands B 2025 Q2 Earnings Misses Targets as Net Income Worsens by 40.7%

Fat Brands B (FATBB) reported its fiscal 2025 Q2 earnings on July 31st, 2025. The company announced a decline in total revenue, dropping 3.9% to $145.60 million compared to the same quarter in 2024. Net income figures revealed a significant increase in losses, widening to $55.37 million, marking a 40.7% rise from the previous year. Revenue fell slightly short of expectations, and guidance remained in line with projections. The company anticipates a 5.2% annual growth in revenue and a 29.7% increase in EPS, aiming to bolster investor confidence.

Revenue

Fat Brands reported a decrease in total revenue for Q2 2025, reaching $145.60 million, down from $151.54 million in Q2 2024. Breakdown of revenue streams included royalties yielding $22.17 million, restaurant sales contributing $102.39 million, and advertising fees generating $9.67 million. Factory revenues added $10.25 million to the total, franchise fees accounted for $1.12 million, and other revenue sources provided $1.24 million.

Earnings/Net Income

Fat Brands B experienced a deeper loss in Q2 2025, with EPS declining to $3.17 per share from a loss of $2.43 per share in Q2 2024. The net loss widened to $55.37 million, a 40.7% increase from the previous year. The performance was notably negative, reflecting financial challenges.

Post-Earnings Price Action Review

The strategy of purchasing Fat Brands B shares following a quarter where revenue increased quarter-over-quarter proved to be ineffective. This investment approach, implemented on the financial report release date and sustained for 30 days, resulted in a considerable underperformance. The strategy yielded a return of -58.75%, starkly contrasting with the benchmark return of 49.94%. This resulted in an excess return of -108.69%, demonstrating a significant loss over the three-year period. The compound annual growth rate (CAGR) of -22.88% further accentuated the unfavorable outcome, highlighting the substantial losses incurred. Despite initial expectations of positive returns, the strategy faltered, underscoring the volatility and unpredictability associated with investment decisions based on quarterly revenue increases.

CEO Commentary

CEO of FAT Brands emphasized overcoming financial hurdles by enhancing operational efficiency and expanding market presence. He acknowledged challenges but expressed confidence in recovery through strategic investments and transparency efforts, aiming to regain investor trust. His tone was cautiously optimistic about potential positive transformations.

Guidance

FAT Brands anticipates a revenue target of approximately $145.6 million for Q2 2025, with an expected EPS of -$3.17. The company is guiding towards an annual growth in revenue of 5.2% and a notable increase in EPS by 29.7%, reflecting a commitment to improving financial outcomes. Leadership expects these projections to bolster investor confidence and facilitate future growth, underlining the importance of meeting or exceeding these targets in the upcoming quarters as part of their strategic recovery plan.

Additional News

In recent developments, FAT Brands announced plans to open 40 additional Fatburger locations in Florida over the next decade, expanding its presence to approximately 50 locations in the state. The company also reported a robust pipeline of roughly 1,000 signed deals and the opening of 18 new locations during Q2 2025. Furthermore, FAT Brands is strengthening its financial position by securing a bondholder agreement to convert amortizing bonds to interest-only, generating $30 to $40 million in annual cash flow savings. Additionally, over $5 million in annual G&A reductions have been implemented, and efforts are underway to refinance remaining securitization silos ahead of their July 2026 maturity. These strategic actions are expected to position FAT Brands for cash flow positive status in upcoming quarters.