Overview of FAT Brands Inc. Financial Report

Revenue and Profit Trends

• Total revenue decreased by $9.9 million, or 6.5%, in the first quarter of 2025 compared to the same period in 2024. This was primarily driven by a decrease in restaurant revenue due to planned restaurant closures for conversions.
• Costs and expenses decreased by $2.8 million, or 1.8%, in the first quarter of 2025 compared to the same period in 2024, mainly due to decreased activity from company-owned restaurants.
• General and administrative expense increased by $3.0 million, or 10.1%, in the first quarter of 2025 due to increased professional fees related to pending litigation.
• Cost of restaurant and factory revenues decreased by $3.0 million, or 3.0%, in the first quarter of 2025 due to the decreased costs at company-owned restaurants and factory revenue.
• Depreciation and amortization increased by $0.2 million, or 1.9%, in the first quarter of 2025 due to the depreciation of new property and equipment at company-owned restaurant locations.
• Advertising expenses decreased by $1.5 million in the first quarter of 2025.
• Total other expense, net, increased by $2.6 million in the first quarter of 2025, primarily due to higher interest expense.
• The effective tax rate decreased from 10.1% in the first quarter of 2024 to 4.0% in the first quarter of 2025, mainly due to increases in the valuation allowance, nondeductible expenses, and the impact of state income taxes.

Strengths and Weaknesses Strengths:

• The company has a diversified revenue stream from royalties, franchise fees, advertising fees, restaurant sales, and factory revenue.
• The company is involved in a worldwide expansion of franchise locations, which could drive future growth.

Weaknesses:

• The company has experienced a decrease in revenue and profit, primarily due to planned restaurant closures and increased costs.
• The company has a significant liability of $91.8 million relating to put options exercised by others on its Series B Cumulative Preferred Stock, which could impact its liquidity.

Outlook

• The company believes it has sufficient liquidity to meet its needs for at least the next 12 months through available cash, cash flows from operations, and access to capital markets.
• However, the company’s ability to expand its franchise locations and acquire additional restaurant concepts may be limited by its ability to obtain sufficient financing.
• The company has paused the payment of cash dividends on its Series B Cumulative Preferred Stock, which could impact investor confidence.

Overall, FAT Brands Inc. has faced some challenges in the first quarter of 2025, with decreases in revenue and profit, as well as increased costs and liabilities. The company’s ability to execute its growth strategy and manage its financial obligations will be crucial for its future performance.