Owner of Fatburger, Johnny Rockets makes $442.5 million acquisition

Fat Brands is making an acquisition that will more than double its footprint.

The owner of Fatburger, Johnny Rockets and seven other restaurant banners has agreed to acquire Global Franchise Group from Serruya Private Equity and Lion Capital LLP for $442.5 million in cash and stock.  GFG operates 1,400 franchised and corporate stores under five quick-serve banners: Round Table Pizza, Great American Cookies, Hot Dog on a Stick, Marble Slab Creamery, and Pretzelmaker.  

Fat Brands said it would fund the deal with cash on hand and issue the sellers, Serruya Private Equity and Lion Capital, $92.5 million in stock.  As part of the deal, which is expected to close  by the end of July, Fat Brands will acquire GFG’s manufacturing operations.

Fat Brands currently owns nine restaurant brands: Fatburger, Johnny Rockets (which it acquired last August), Buffalo’s Cafe, Buffalo’s Express, Hurricane Grill & Wings, Elevation Burger, Yalla Mediterranean, and Ponderosa and Bonanza. Its footprint includes 700 units worldwide.

With the acquisition of GFG, Fat Brands will have more than 2,000 franchised and company owned restaurants around the world, with combined annual system-wide sales of approximately $1.4 billion. The company said the acquisition would increase its earnings before interest, taxes, depreciation and amortization by about $40 million to $55-$60 million per year.

“We have been very acquisitive in recent years, seeking to add strong and growing restaurant brands to our portfolio,” said Andy Wiederhorn, president and CEO of Fat Brands. “Now that the economy is emerging from COVID-19 and restaurants are rapidly recovering, we are pleased to have reached this agreement to incorporate a powerhouse restaurant franchising group with the support of Serruya Private Equity and Lion Capital. The five new restaurant concepts have been very resilient coming out of the pandemic and will complement our existing brands.”

“This is truly a transformative deal for both FAT Brands and GFG. Andy has an exciting vision for FAT Brands and through his recent acquisitions, he has been able to create brand synergies within the portfolio while maintaining an asset-light business model,” said Michael Serruya, Managing Director at Serruya Private Equity and Chairman of the Board of GFG. “I look forward to our continued involvement with GFG through our company’s support of FAT Brands from an equity and strategic perspective.”

Lyndon Lea, Managing Partner of Lion Capital, added: “We are incredibly thankful to the management team of GFG, for their incessant focus on building a great business and culture, while successfully navigating an unprecedented period amidst COVID-19. We wish FAT Brands and GFG the best in the next phase of their journey.”