Fat Brands 2025 Q2 Earnings Misses Targets as Net Loss Widens 40.7%

Fat Brands (FAT) reported its fiscal 2025 Q2 earnings on Jul 31st, 2025. Revenue fell by 3.9% to $145.60 million, down from $151.54 million in the same quarter last year. Fat Brands missed expectations as its net loss widened significantly to $55.37 million, a 40.7% increase from last year. The company did not adjust its guidance, maintaining its revenue target of approximately $160 million for the upcoming fiscal year.

Revenue
Fat Brands experienced a revenue contraction in Q2 2025, with overall revenue decreasing to $145.60 million. The royalties segment generated $22.17 million, while restaurant sales contributed $102.39 million. Advertising fees amounted to $9.67 million, and factory revenues reached $10.25 million. Franchise fees and other revenue were recorded at $1.12 million and $1.24 million, respectively. The total revenue was slightly higher at $146.84 million across all segments.

Earnings/Net Income
The company reported a deepening loss of $3.17 per share in Q2 2025, compared to a $2.43 loss per share in the same quarter of 2024. The net loss widened to $-55.37 million from $-39.36 million, a 40.7% increase. The EPS performance indicates a negative trend for the company.

Price Action
The stock price of Fat Brands has edged down 2.98% during the latest trading day, has dropped 6.17% during the most recent full trading week, and has dropped 4.20% month-to-date.

Post-Earnings Price Action Review
The strategy of purchasing Fat Brands (FAT) shares immediately after a quarter-over-quarter revenue increase on the financial report release date and holding them for 30 days has proven ineffective over the past three years. This approach yielded no returns, with a compound annual growth rate of 0.00% and an excess return of -85.57%, significantly underperforming the benchmark return of 85.57%. Despite the apparent risk aversion shown by a maximum drawdown and volatility of 0.00%, this strategy failed to capture any gains in FAT's stock price. The results highlight the strategy's inability to capitalize on positive revenue news.

CEO Commentary
Andrew Friedman, CEO of Fat Brands, highlighted the company's resilient business performance amid ongoing challenges. He emphasized that growth drivers include the successful expansion of their brand portfolio and effective marketing strategies. Friedman noted the importance of strategic investments in technology and operational efficiencies to enhance market positioning. He conveyed an optimistic leadership outlook, asserting confidence in the company's ability to navigate industry headwinds and capitalize on emerging opportunities.

Guidance
Fat Brands anticipates continued revenue growth, projecting an increase driven by new store openings and franchise developments. The company expects to achieve a revenue target of approximately $160 million for the upcoming fiscal year, supported by strategic initiatives aimed at enhancing customer engagement. Additionally, management guides for an adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) margin improvement, reflecting ongoing efforts to streamline operations and optimize profitability.

Additional News
FAT Brands Inc. announced a major strategic move by spinning off Twin Hospitality Group Inc., creating a separate publicly traded company. This spin-off allows shareholders to directly participate in the growth of the Twin Peaks brand, providing the company with valuable capital resources. Additionally, FAT Brands is advancing its goal to become nearly 100% franchised by refranchising 57 company-operated Fazoli’s restaurants and focusing on expanding its manufacturing capabilities. The company also secured a significant agreement to open 40 new Fatburger locations in Florida over the next ten years, bolstering its expansion strategy amidst ongoing financial restructuring efforts.