Key highlights of the Company’s financial results include:
- Total Revenues decreased 0.9% to $28.5 million for the quarter and 0.8% to $109.9 million for the year
- Total Restaurant Sales for Bad Daddy’s restaurants decreased 3.8% to $19.3 million for the quarter and 4.3% to $76.3 million for the year
- Total Restaurant Sales for Good Times restaurants increased 6.3% for the quarter to $9.0 million and 9.0% to $32.8 million for the year
- Same Store Sales for company-owned Bad Daddy’s restaurants decreased 12.2% for the quarter and decreased 17.7% for the year
- Same Store Sales for company-owned Good Times restaurants increased 10.0% for the quarter and 7.9% for the year
- Net Income Attributable to Common Shareholders was $1.5 million for the quarter including $0.3 million of asset impairment costs
- For the year, Net Loss Attributable to Common Shareholders was $13.9 million including $15.6 million of asset impairment costs and $1.0 million of preopening costs
- Adjusted EBITDA* (a non-GAAP measure) for the quarter was $2.9 million and $7.6 million for the year
- The Company ended the quarter with $11.5 million in cash, a $5.5 million outstanding under its senior credit facility and $11.6 million outstanding in Paycheck Protection Program loans
Ryan M. Zink, the Company’s Chief Executive Officer, said, “In spite of very significant concerns about liquidity and operating cash flow at the outset of the COVID-19 pandemic, a combination of quick decision-making, teamwork, and CARES Act relief have enabled us to fight through the initial blows the pandemic hit us with, and conclude fiscal 2020 on a positive note, with improved unit economics, improved camaraderie and culture throughout the organization, and a modestly improved balance sheet compared to the end of fiscal 2019. Both of our concepts continue to outperform their respective segments within the industry, and our leadership team continues be creative and energetic, anticipating and adapting to changes in our business driven by a pandemic that will likely be with us for the foreseeable future. We are doing everything possible to ensure we continue to operate all of our restaurants safely and to the maximum extent allowed under each location’s respective regulatory guidance.”
“We expect to resume Bad Daddy’s development in the second half of fiscal 2021, developing the two remaining Bad Daddy’s leases signed in 2019 and beginning the search for our 2022 development pipeline. However, unlike our growth model in the past, we expect our future development rate to be more modest, growing primarily out of operating cash flow and at least initially, developing only a couple of restaurants per year as we make a firm commitment to financial discipline and growing from a strong balance sheet with a minimal debt load.”
Fiscal 2021 Outlook:
Due to continuing unprecedented economic conditions associated with the ongoing COVID-19 pandemic and unpredictable nature of COVID-19 and government responses to the evolving situation, the Company had previously withdrawn its prior financial outlook for fiscal 2020 and has not provided a financial outlook for 2021. In late November 2020, all twelve of the Company’s Bad Daddy’s locations in Colorado had additional restrictions imposed upon them resulting in the closure of dining rooms in those locations. The removal of those restrictions will be dictated by specific metrics related to the pandemic used by the State of Colorado in determining such restrictions. The Company is unable to reasonably predict when inside dining will again be allowed in its Colorado Bad Daddy’s restaurants. Additionally, although no other states have at this time similarly restricted inside dining where the Company has Bad Daddy’s restaurants, the possibility remains that such restrictions might be put in place with limited notice. At the current time, the Company is therefore still unable to reasonably estimate the full impact of the continuing pandemic and, beyond providing the below updates on October and November sales and a projection of Net Income and Adjusted EBITDA for the first fiscal quarter, is unable to provide a financial outlook for fiscal 2021.
December, 11 2020
FAT (Fresh. Authentic. Tasty.) Brands Inc. (NASDAQ: FAT) announced today that it has entered into an agreement to combine with Fog Cutter Capital Group Inc. (FCCG), the Company’s controlling stockholder. The merger is intended to provide FAT Brands with increased financial flexibility and simplified corporate structure, at a time in the restaurant industry when committed capital and first mover advantage are critical to strategic acquisitions.
Andy Wiederhorn, President and CEO of FAT Brands, stated “We have taken a number of steps in 2020 to bolster our balance sheet and ensure that FAT Brands is as nimble and opportunistic as possible, especially in this environment. As we have disclosed in the past, FAT Brands has considered a combination with Fog Cutter as another step in our efforts to simplify our corporate structure and eliminate limitations that restrict our ability to use common stock for accretive acquisitions and capital raising. FCCG holds more than $100 million of net operating loss carryforwards (NOLs), which could only be made available to FAT Brands as long as FCCG owned at least 80% of FAT Brands. With this combination, the NOLs will be internalized at FAT Brands, and we will now have much greater flexibility and optionality in our capital structure.”
Wiederhorn continued, “We believe that the steps we have taken in 2020 will position us to capitalize on organic and acquisition-led growth in the future. We look forward to 2021, when we hope to experience some normalization as the pandemic subsides. With the acquisition of Johnny Rockets, in a post-COVID environment, we continue to anticipate that the Company can generate 2x our 2019 EBITDA of $7.7 million.”
In connection with the Fog Cutter combination, FAT Brands has declared a special stock dividend payable only to holders of its common stock other than Fog Cutter, consisting of 0.2319998077 shares of FAT Brands’ 8.25% Series B Cumulative Preferred Stock (NASDAQ: FATBP) for each outstanding share of common stock held by such stockholders, with the value of any fractional shares to be paid in cash. Fog Cutter will not receive any portion of the special dividend, which will have a record date of December 21, 2020 and expected payment date of December 23, 2020.
FAT Brands Inc. (NASDAQ: FAT) is a leading global franchising company that strategically acquires, markets and develops fast casual and casual dining restaurant concepts around the world. The Company currently owns nine restaurant brands: Fatburger, Johnny Rockets, Buffalo’s Cafe, Buffalo’s Express, Hurricane Grill & Wings, Elevation Burger, Yalla Mediterranean and Ponderosa and Bonanza Steakhouses, and franchises over 675 units worldwide.