FAT Brands Inc. (FAT): Business Model Canvas [10-2024 Updated]

FAT Brands Inc. (FAT) has carved a unique niche in the competitive restaurant industry with its innovative franchise model and diverse portfolio of 18 restaurant brands. This blog post delves into the intricacies of FAT's Business Model Canvas, exploring key elements such as

• partnerships with franchisees
• value propositions that attract customers
• revenue streams generated from franchise fees

and much more. Discover how FAT Brands not only supports its franchisees but also engages customers to create a thriving dining experience.

FAT Brands Inc. (FAT) - Business Model: Key Partnerships

Franchisees for brand expansion

As of September 29, 2024, FAT Brands has approximately 2,300 locations open and under construction, with around 92% of these being franchise locations. The company has a significant reliance on franchisees to facilitate its expansion strategy globally.

Suppliers for food and materials

FAT Brands collaborates with various suppliers for its food and materials, which is essential for maintaining quality across its diverse restaurant brands. The cost of restaurant and factory revenues increased by $295.96 million during the first three quarters of 2024, primarily due to the acquisition of Smokey Bones and higher sales from company-owned restaurants.

Real estate partners for restaurant locations

The company actively seeks partnerships with real estate firms to secure prime locations for its restaurants. The ability to find high-quality real estate is crucial for the timely opening of new locations, which can significantly impact revenue growth.

Financial institutions for capital funding

FAT Brands has engaged with various financial institutions to secure capital for its expansion efforts. For example, the company reported net proceeds of $69.9 million from the sale of secured debt during the first three quarters of 2024. The company had long-term debt amounting to $1.18 billion as of September 29, 2024.

Type of Financial Instrument	Principal Amount ($ million)	Interest Rate (%)	Maturity Date
FB Royalty Securitization	137.0	4.75	04/25/2051
GFG Royalty Securitization	271.2	6.00	07/25/2051
Twin Peaks Securitization	243.7	7.00	07/25/2051
Fazoli's/Native Securitization	126.2	6.00	07/25/2051
FB Resid Securitization	50.9	10.00	07/25/2027

Marketing agencies for promotional campaigns

FAT Brands utilizes marketing agencies to drive promotional campaigns across its restaurant brands. The company reported advertising expenses of $37.28 million in the first three quarters of 2024, which represents an increase from the previous year. This investment in marketing is crucial for brand visibility and attracting customers to its various dining concepts.

FAT Brands Inc. (FAT) - Business Model: Key Activities

Franchise development and management

FAT Brands Inc. has a robust franchise development strategy, with approximately 2,300 locations open and under construction as of September 29, 2024. About 92% of these locations are franchised, showcasing the company's focus on expanding its brand presence through franchising.

Marketing and brand promotion

In the first three quarters of 2024, FAT Brands' total revenue increased to $447.4 million, a growth of 39% compared to the same period in 2023, driven by effective marketing strategies and brand promotions, including the acquisition of Smokey Bones. Advertising expenses during this period increased by $3.5 million, reaching $37.3 million.

Operational support for franchisees

The company provides extensive operational support to franchisees, including training, supervision, and access to operations manuals. In the first three quarters of 2024, general and administrative expenses increased by 49.7% to $94 million, primarily due to the acquisition of Smokey Bones and increased franchise support activities.

Acquisitions of new restaurant brands

FAT Brands has actively pursued acquisitions to expand its portfolio. The acquisition of Smokey Bones in September 2023 significantly contributed to the revenue growth reported in 2024. The acquisition strategy has resulted in increased revenue and operational costs, with total expenses rising 55.3% to $460.3 million in the first three quarters of 2024.

Supply chain management for efficiency

Efficient supply chain management is critical for FAT Brands, particularly with the operational changes following acquisitions. The cost of restaurant and factory revenues surged by 66.5% to $295.9 million in the first three quarters of 2024, reflecting the increased sales from company-owned restaurants and the dough factory.

Key Metrics	Q3 2024	Q3 2023	Change (%)
Total Revenue	$143.4 million	$109.4 million	31.1%
General and Administrative Expenses	$34.5 million	$24.5 million	41.0%
Cost of Restaurant and Factory Revenues	$96.8 million	$59.2 million	63.6%
Advertising Expenses	$10.0 million	$11.7 million	-14.5%
Net Loss	($44.8 million)	($24.7 million)	81.1%

FAT Brands Inc. (FAT) - Business Model: Key Resources

Diverse portfolio of 18 restaurant brands

As of September 29, 2024, FAT Brands Inc. operates a diverse portfolio consisting of 18 restaurant brands, including notable names such as Fatburger, Johnny Rockets, and Twin Peaks. The company has approximately 2,300 locations open and under construction, with around 92% of these being franchised.

Strong brand recognition and loyalty

FAT Brands has established strong brand recognition across its portfolio. Its brands benefit from customer loyalty, which is crucial for maintaining revenue streams through both company-owned and franchised locations. The acquisition of Smokey Bones in September 2023 has further expanded its market presence.

Experienced management team

The management team at FAT Brands is composed of experienced professionals with extensive backgrounds in the restaurant industry. Their expertise is pivotal in driving the company's growth strategy, which focuses on brand acquisitions and franchise expansion.

Franchise agreements and operational manuals

FAT Brands leverages franchise agreements that provide franchisees with access to operational manuals, training, and support. This structure not only enhances operational efficiency but also ensures brand consistency across all locations. The company's franchising model is a significant source of revenue, contributing to its total revenue of $447.4 million in the first three quarters of 2024, a 39% increase from the previous year.

Proprietary recipes and operational systems

The company maintains proprietary recipes and operational systems that are essential for its brand identity. These assets enable FAT Brands to differentiate its offerings in a competitive market. The operational efficiency is further supported by the management's focus on continuous improvement and adaptation of best practices across its brands.

Resource Type	Details	Financial Impact
Diverse Portfolio	18 restaurant brands, 2,300 locations	Revenue: $447.4 million (2024 Q3)
Brand Recognition	Established loyalty and market presence	Revenue Growth: 39% YoY
Management Team	Experienced professionals in the industry	Strategic Growth Execution
Franchise Agreements	Operational manuals and training for franchisees	Revenue from royalties and fees
Proprietary Recipes	Unique offerings and operational systems	Brand Differentiation and Competitive Edge

FAT Brands Inc. (FAT) - Business Model: Value Propositions

Variety of dining options across multiple brands

FAT Brands Inc. operates a diverse portfolio of restaurant brands, including Fatburger, Johnny Rockets, Twin Peaks, and Smokey Bones, among others. As of September 29, 2024, the company owned eighteen restaurant brands and had approximately 2,300 locations open and under construction, with around 92% of these being franchised. This variety allows FAT Brands to cater to different customer preferences and dining experiences, enhancing its market reach.

Asset-light franchising model for franchisees

FAT Brands employs an asset-light franchising model, which minimizes capital investment and operational risks for franchisees. This model allows franchisees to benefit from established brand recognition and operational support while reducing their financial burden. The company has reported total revenue of $447.4 million for the first three quarters of 2024, a 39% increase from $321.8 million in the same period of 2023, driven largely by its franchising efforts.

Support and training for franchisee success

FAT Brands is committed to the success of its franchisees by providing comprehensive support and training. This includes access to operational manuals, training programs, and ongoing assistance. The company's focus on franchisee success is reflected in its revenue model, which includes royalties, franchise fees, and advertising fees. For the thirteen weeks ended September 29, 2024, franchise fees alone contributed $2.6 million to total revenue.

Strong revenue potential through established brands

The established brands under FAT Brands contribute significantly to its revenue potential. For instance, restaurant sales for the third quarter of 2024 reached $99.2 million, up from $62.6 million in the previous year. This growth is indicative of the strong performance of its various dining concepts. The company's strategic acquisitions, such as Smokey Bones, have further bolstered its revenue-generating capabilities.

Innovative marketing strategies to drive traffic

FAT Brands employs innovative marketing strategies to enhance brand visibility and drive customer traffic to its restaurants. Advertising expenses for the first three quarters of 2024 increased by $3.5 million compared to the prior year, reflecting the company's commitment to effective marketing. These strategies are essential in a competitive market, ensuring that the brands remain top-of-mind for consumers.

Key Metrics	Q3 2024	Q3 2023	Change (%)
Total Revenue	$143.4 million	$109.4 million	31.1%
Restaurant Sales	$99.2 million	$62.6 million	58.5%
Franchise Fees	$2.6 million	$2.5 million	4.0%
Advertising Expenses	$10.0 million	$11.7 million	-14.5%

FAT Brands Inc. (FAT) - Business Model: Customer Relationships

Ongoing support and training for franchisees

FAT Brands Inc. places a strong emphasis on supporting its franchisees through comprehensive training programs. This includes initial training upon onboarding and ongoing support to ensure operational efficiency. In 2024, FAT Brands has allocated approximately $3.5 million towards franchise development and training initiatives, enhancing the capabilities of its franchise partners.

Loyalty programs for end customers

The company has implemented loyalty programs designed to increase customer retention and boost sales. As of 2024, FAT Brands reported that over 1 million customers are enrolled in their loyalty programs, which include rewards for frequent purchases. This has resulted in a 15% increase in repeat customer visits year-over-year.

Active engagement through social media

FAT Brands actively engages with customers via social media platforms, utilizing them to communicate promotions and gather customer feedback. The company has seen a 25% increase in social media followers across its brands in 2024, reaching over 500,000 total followers. This engagement has led to a 10% rise in customer interaction rates compared to the previous year.

Customer feedback mechanisms for improvement

FAT Brands employs various customer feedback mechanisms, including surveys and online reviews, to continuously improve service quality and menu offerings. In 2024, they collected over 50,000 customer feedback responses, which were analyzed to make strategic adjustments to menu items, resulting in a 12% increase in customer satisfaction scores.

Community involvement through local events

The company participates in local community events to strengthen its brand presence and foster relationships with customers. In 2024, FAT Brands sponsored over 30 local events across its franchise locations, leading to a 20% increase in local brand awareness as evidenced by community surveys.

Metric	2024 Data	Year-over-Year Change
Franchise Development Investment	$3.5 million	—
Loyalty Program Enrollment	1 million	+15%
Social Media Followers	500,000	+25%
Customer Feedback Responses	50,000	—
Community Events Sponsored	30	—

FAT Brands Inc. (FAT) - Business Model: Channels

Franchise sales through direct outreach

As of September 29, 2024, FAT Brands operates approximately 2,300 locations, with about 92% being franchised. The company focuses on direct outreach to potential franchisees, leveraging its established brand presence to attract new partners. Franchise fees contribute significantly to the overall revenue, which totaled $447.4 million in the first three quarters of 2024, representing a 39.0% increase from $321.8 million in the same period in 2023.

Online marketing and social media platforms

FAT Brands employs various online marketing strategies, including social media platforms, to reach a broader audience. Advertising fees amounted to $29.6 million in the first three quarters of 2024, up from $29.0 million in the same period of 2023. The company utilizes targeted ads and promotions to enhance brand visibility and engage with customers directly, effectively driving traffic to both franchise and company-owned locations.

Company-owned restaurants for direct sales

FAT Brands operates several company-owned restaurants as part of its business model. In the first three quarters of 2024, restaurant sales generated $312.6 million, a substantial increase from $188.0 million in the same period in 2023. This direct sales channel allows the company to maintain control over brand standards and customer experience, which is critical for sustaining brand reputation and loyalty.

Third-party delivery services for convenience

To enhance convenience for customers, FAT Brands partners with third-party delivery services. This strategy not only increases accessibility to their menu offerings but also aligns with evolving consumer preferences for delivery options. The integration of these services has contributed to the growth in restaurant sales, reflecting a broader industry trend where convenience plays a pivotal role in consumer choices.

Promotional events and partnerships

FAT Brands actively engages in promotional events and partnerships to boost brand awareness and drive sales. These initiatives often include collaborations with local businesses and participation in community events, which help to foster customer relationships and enhance brand loyalty. The company's marketing expenses, which include these promotional efforts, increased to $37.3 million in the first three quarters of 2024 from $33.8 million in 2023.

Channel	2024 Revenue (in millions)	2023 Revenue (in millions)	Growth Rate
Franchise Fees	5.17	4.04	28.0%
Restaurant Sales	312.6	188.0	66.5%
Advertising Fees	29.6	29.0	2.1%
Total Revenue	447.4	321.8	39.0%

FAT Brands Inc. (FAT) - Business Model: Customer Segments

Franchisees looking for business opportunities

FAT Brands Inc. actively targets franchisees as a crucial customer segment, providing them with comprehensive support and resources to establish and operate their restaurants. As of 2024, the company has expanded its franchise network significantly, with over 300 franchised locations across various brands, including Twin Peaks and Johnny Rockets.

Diners seeking diverse dining experiences

The company caters to diners looking for a variety of culinary options. With a portfolio that includes casual dining, fast-casual, and quick-service restaurants, FAT Brands aims to meet the diverse preferences of its customers. In 2024, FAT Brands reported restaurant sales of approximately $312.6 million, a significant increase from $188 million in the previous year, highlighting the growing demand for its dining experiences.

Families and groups for casual dining

FAT Brands emphasizes family-friendly dining experiences, providing a conducive environment for families and groups. The company’s brands, such as Twin Peaks and Buffalo's Cafe, are designed to appeal to these demographics. The average ticket price across these family-oriented brands typically ranges from $20 to $40 per visit, depending on the location and menu selections.

Young adults and millennials for fast-casual options

Targeting young adults and millennials, FAT Brands offers fast-casual dining options that resonate with this demographic's preference for quick, high-quality meals. Brands like Johnny Rockets and Fatburger are positioned to attract this segment, which values convenience and quality. In 2024, it was reported that approximately 35% of FAT Brands' sales came from this demographic, underlining the importance of this customer segment.

Health-conscious consumers for specific brands

FAT Brands also focuses on health-conscious consumers by offering specific menu items across its brands that cater to dietary restrictions and preferences. For example, their brand, Native Grill & Wings, has introduced a range of healthier options, including salads and grilled items. The health-conscious segment is becoming increasingly significant, with a reported 25% growth in sales of healthier menu items in 2024 compared to 2023.

Customer Segment	Characteristics	Key Brands	Sales Contribution (2024)
Franchisees	Business opportunities in food service	All brands	Over 300 locations
Diners	Diverse culinary preferences	All brands	$312.6 million
Families and Groups	Family-friendly casual dining	Twin Peaks, Buffalo's Cafe	Average ticket $20-$40
Young Adults and Millennials	Fast-casual dining preference	Johnny Rockets, Fatburger	35% of sales
Health-conscious Consumers	Dietary restrictions and preferences	Native Grill & Wings	25% growth in healthy items

FAT Brands Inc. (FAT) - Business Model: Cost Structure

Franchise support and training expenses

FAT Brands incurs expenses related to franchisee support and training, which are essential for maintaining brand standards and operational efficiency. For the first three quarters of 2024, general and administrative expenses, which include training costs, totaled $94.0 million, a significant increase from $62.8 million in the same period of 2023.

Marketing and advertising costs

Marketing and advertising expenses are crucial for promoting the various brands under FAT Brands. In the first three quarters of 2024, the advertising fees amounted to $37.3 million, slightly up from $33.8 million in the previous year. In the third quarter of 2024 alone, advertising expenses were reported at $10.0 million, showing a decrease compared to $11.7 million in the same quarter of 2023.

Operational costs for company-owned restaurants

The operational costs for company-owned restaurants have seen substantial growth, primarily due to the acquisition of Smokey Bones. For the first three quarters of 2024, these costs were $295.9 million, compared to $177.8 million in the same period of 2023, reflecting an increase of 66.5%.

Administrative and general overhead expenses

General and administrative expenses increased significantly, rising by 49.7% to $94.0 million in the first three quarters of 2024 from $62.8 million in the prior year. This surge is attributed to new acquisitions and increased operational activities.

Costs associated with brand acquisitions

Costs related to brand acquisitions are a significant component of FAT Brands' cost structure. The company has engaged in multiple acquisitions, including Smokey Bones, leading to increased operational and integration costs. The total costs and expenses for the first three quarters of 2024 reached $460.3 million, a 55.3% increase year-over-year.

Cost Category	2024 Q3 Amount ($ million)	2023 Q3 Amount ($ million)	Change (%)
Franchise Support and Training	Included in G&A	Included in G&A	N/A
Marketing and Advertising	10.0	11.7	-14.5%
Operational Costs for Company-Owned Restaurants	96.8	59.2	63.6%
Administrative and General Overhead	34.5	24.5	41.0%
Total Costs and Expenses	152.2	102.7	48.1%

In summary, FAT Brands Inc. has experienced significant increases in various cost categories, especially in relation to operational costs due to new acquisitions and enhanced support for franchisees. This trend highlights the company's aggressive growth strategy and the associated financial implications for its business model.

FAT Brands Inc. (FAT) - Business Model: Revenue Streams

Franchise fees from new and existing franchisees

In the third quarter of 2024, FAT Brands generated $2.576 million from franchise fees, compared to $2.477 million in the same period of 2023. For the first three quarters of 2024, the franchise fees totaled $5.170 million, up from $4.042 million in the first three quarters of 2023 .

Royalties from franchise sales

Royalties earned by FAT Brands amounted to $22.353 million in the third quarter of 2024, slightly down from $23.930 million in the same quarter of 2023. Year-to-date royalties for the first three quarters of 2024 were $67.618 million, compared to $69.166 million in the first three quarters of 2023 .

Sales from company-owned restaurant locations

Sales from company-owned restaurant locations reached $99.238 million in the third quarter of 2024, significantly increasing from $62.578 million in the third quarter of 2023. For the first three quarters of 2024, sales totaled $312.587 million, up from $187.957 million in the same period of the previous year .

Advertising fees from franchisees

FAT Brands collected $9.708 million in advertising fees during the third quarter of 2024, a slight decrease from $9.960 million in the third quarter of 2023. Throughout the first three quarters of 2024, advertising fees amounted to $29.569 million, compared to $28.979 million for the same period in 2023 .

Product sales from factory operations

Sales from factory operations contributed $9.490 million in the third quarter of 2024, showing a modest increase from $9.323 million in the same quarter of 2023. For the first three quarters of 2024, factory revenues totaled $28.599 million, compared to $28.174 million in the prior year .

Revenue Stream	Q3 2024 ($ million)	Q3 2023 ($ million)	YTD 2024 ($ million)	YTD 2023 ($ million)
Franchise Fees	2.576	2.477	5.170	4.042
Royalties	22.353	23.930	67.618	69.166
Company-Owned Restaurant Sales	99.238	62.578	312.587	187.957
Advertising Fees	9.708	9.960	29.569	28.979
Factory Operations	9.490	9.323	28.599	28.174
Total Revenue	143.365	109.366	447.372	321.821

Article updated on 8 Nov 2024

Resources:

1. FAT Brands Inc. (FAT) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of FAT Brands Inc. (FAT)' financial performance, including balance sheets, income statements, and cash flow statements.
2. SEC Filings – View FAT Brands Inc. (FAT)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.