FAT Brands, the parent company of Fatburger, Johnny Rockets, Fazoli’s and other restaurant chains, warned of serious financial trouble after lenders demanded the immediate repayment of $1.26 billion in debt, according to a new filing with the SEC.
The issue began when several of FAT Brands’ subsidiaries couldn’t make their scheduled payments on October 27 because they didn’t have enough money in their accounts. As a result, UMB Bank—an indenture trustee acting on behalf of investors for several series of secured notes—informed the company on November 17 that the entire amount—plus about $43 million in unpaid interest—now has to be paid right away.
FAT Brands said in the filing that it does not have the money to pay what’s owed. Although lenders haven’t yet moved to take control of the assets that back the loans, the company said it can’t promise that won’t happen.
The restaurant group also stated that the situation could force either FAT Brands or some of its subsidiaries to file for bankruptcy if it cannot work out a new deal with its lenders. The company said it had been in talks with those lenders about restructuring the debt and plans to continue those discussions, though there’s no guarantee an agreement will be reached.
Between 2020 and 2023, FAT Brands spent well over $1 billion on acquisitions, including Johnny Rockets, Global Franchise Group (Round Table Pizza, Great American Cookies, Marble Slab Creamery, Hot Dog on a Stick, and Pretzelmaker), Twin Peaks, Fazoli’s, Native Grill and Wings, Nestlé Toll House Café, and Smokey Bones.
In the years that followed, the company has been focused on paying down debt from its M&A moves.
One strategy was to spin off Twin Peaks into a separately traded public company, which occurred at the beginning of 2025. Another is ramping up production and increasing EBITDA at its pretzel and cookie dough manufacturing facility in Atlanta, which the company has done by selling cookies at its other chains and offering Great American Cookies as a virtual concept at over 450 Chuck E. Cheese locations. The plant generated $9.6 million in sales in Q4 and $3.8 million in adjusted EBITDA while only operating at 45 percent capacity. A third lever is organic expansion. FAT Brands opened 13 locations in Q3, with plans to open 80 restaurants in fiscal 2025. About 900 committed locations are scheduled to debut over the next five to seven years.
FAT Brands’ same-store sales slipped 3.5 percent in Q3, an improvement from the 4.2 percent decline in the second quarter.
In September, the company announced that Andy Wiederhorn had returned as CEO after stepping down in 2023 due to a federal investigation. Charges against Wiederhorn were dropped during the summer.
