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- **Legal Resolution and Savings**:** DOJ dismissal and derivative case resolution save $30M+ annually. $10M+ SG&A reductions achieved, targeting more through restaurant cost optimization.
- **Operational Momentum**:** 3.5% same-store sales decline narrowed from 4.2%. Casual dining segment grew 3.9%. Digital sales up 19% YoY. Twin Peaks EBITDA margin 17%.
- **Strategic Growth**:** 13 new units Q3, 60 YTD. 190 franchise agreements signed for 900+ future units. Virtual Dining Concepts partnership to expand Great American Cookies to 500+ Chuck E. Cheese locations.
- **Manufacturing Scale-Up**:** Georgia facility at 45% capacity, generating $3.8M EBITDA. Exploring partnerships to boost utilization.
- **Debt Restructuring Progress**:** Twin Peaks equity raise ($75-$100M) pending government reopening. Noteholders restructuring nearing resolution. Targeting positive cash flow in coming quarters.
- **Co-Branding Success**:** First co-branded Round Table + Fatburger location saw 100% sales growth. 50+ co-branded locations in pipeline. Fatburger re-entering Japan with 4 Okinawa units (first opening Q4 2025).

**【CEO Opening Remarks】**
- **Legal Resolution and Leadership Transition**:** DOJ dismissed all charges against FAT Brands and key executives. Derivative lawsuits resolved with $10M insurance payout and 200K Twin Hospitality shares. Andy Wiederhorn reassumed CEO role, with Ken Kuick focusing on CFO duties.
- **Financial Improvement**:** Adjusted EBITDA of $13.1M, narrowed same-store sales decline to 3.5% (from 4.2%), casual dining segment grew 3.9%. Digital sales up 19% YoY.
- **Strategic Initiatives**:** 13 new units opened Q3, 60 YTD, targeting 80 by year-end. 190 franchise agreements signed for 900+ future units. Co-branded locations (e.g., Round Table + Fatburger) saw 100% sales growth. Virtual Dining Concepts partnership to expand Great American Cookies delivery to 500+ Chuck E. Cheese locations.
- **Manufacturing Growth**:** Georgia facility generated $3.8M EBITDA (39.6% margin) at 45% capacity. Exploring further partnerships to boost utilization.
- **Balance Sheet Strengthening**:** $75-$100M Twin Peaks equity raise planned to reduce debt. $35M+ annual savings from dividend pause and legal resolution. $10M+ SG&A reductions achieved, targeting more through restaurant cost optimization.

**【CFO Financial Commentary】**
- **Q3 Financials**:** Total revenue $140M (-2.3% YoY). Adjusted EBITDA $13.1M (-7% YoY). Net loss $58.2M ($3.39/share). G&A up 24% YoY due to store closure reserves and Twin Hospitality listing costs.
- **Cost Management**:** Food/wage inflation offset by lower same-store sales. ADRs down 10% YoY. Restaurant-level margins improving (e.g., Twin Peaks at 17%).
- **Debt Restructuring**:** Equity raise for Twin Peaks pending government reopening. Noteholders restructuring discussions ongoing. Targeting positive cash flow in coming quarters.

**【Q&A Highlights】**
- **Debt Restructuring Timing**:** Equity raise for Twin Peaks contingent on government reopening. Noteholders restructuring nearing resolution. $10M+ annual savings from legal resolution.
- **Store Closures**:** 11 Smokey Bones closures completed. Remaining closures tied to underperforming leases; no immediate plans beyond Q4.
- **Refranchising Progress**:** Fazoli’s refranchising in advanced stages; 100+ units targeted for conversion.
- **2025 Growth**:** 80 new units target (down from 100) due to franchisee delays. 190 franchise agreements signed for 900+ future units. Virtual Dining Concepts partnership to drive $50-$60M incremental EBITDA.
- **Restaurant Industry Challenges**:** 3.5% same-store sales decline reflects broader industry headwinds. Focus on cost optimization (e.g., G&A reductions, menu price adjustments) to mitigate margin pressure.

**【Operational Wins】**
- **Co-Branding Success**:** First co-branded Round Table + Fatburger location saw 100% sales growth. 50+ co-branded locations in pipeline. First Fatburger + Buffalo’s Express in Oklahoma.
- **International Expansion**:** 7 new units opened in Iraq, Chile, UAE, Mexico, Brazil. Fatburger to re-enter Japan with 4 Okinawa locations (first opening Q4 2025).

FAT Brands Inc.(FAT)-20251106-2025 Q3 Earnings call transcript

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