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Edited Transcript of FAT.OQ earnings conference call or presentation 10-Nov-20 10:00pm GMT

·27 min read

Q3 2020 FAT Brands Inc Earnings Call Nov 10, 2020 (Thomson StreetEvents) -- Edited Transcript of FAT Brands Inc earnings conference call or presentation Tuesday, November 10, 2020 at 10:00:00pm GMT TEXT version of Transcript ================================================================================ Corporate Participants ================================================================================ * Andrew A. Wiederhorn FAT Brands Inc. - President, CEO & Director ================================================================================ Conference Call Participants ================================================================================ * Joseph Anthony Gomes NOBLE Capital Markets, Inc., Research Division - Senior Generalist Analyst * Gregory Fortunoff * Ashley DeSimone ICR, LLC - MD ================================================================================ Presentation -------------------------------------------------------------------------------- Operator [1] -------------------------------------------------------------------------------- Good afternoon, ladies and gentlemen, and thank you for standing by. Welcome to the FAT Brands Inc. Third Quarter 2020 Earnings Conference Call. (Operator Instructions) Please note that this conference is being recorded today, November 10, 2020. On the call today from FAT Brands, are President and Chief Executive Officer, Andy Wiederhorn; and Chief Financial Officer, Rebecca Hershinger. I would now like to turn the call over to Ashley DeSimone of ICR to begin. -------------------------------------------------------------------------------- Ashley DeSimone, ICR, LLC - MD [2] -------------------------------------------------------------------------------- Thank you, operator, and good afternoon, everyone. By now, everyone should have access to our earnings release, which can be found on our Investor Relations website at ir.fatbrands.com in the press release section. Before we begin, I need to remind everyone that part of our discussion today will include forward-looking statements. These forward-looking statements are not guarantees of future performance and therefore, undue reliance should not be placed upon them. Actual results may differ materially from those indicated by these forward-looking statements due to a number of risks and uncertainties. The company does not undertake to update these forward-looking statements at a later date. For a more detailed discussion of the risks that could impact future operating results and financial conditions, please see today's earnings press release and our recent SEC filings. During today's call, the company may discuss non-GAAP financial measures, which it believes can be useful in evaluating performance. The presentation of this additional information should not be considered in isolation nor as a substitute for results prepared in accordance with GAAP. Reconciliations to comparable GAAP measures are available in today's earnings release. I would now like to turn the call over to Andy Wiederhorn, President and CEO. Andy? -------------------------------------------------------------------------------- Andrew A. Wiederhorn, FAT Brands Inc. - President, CEO & Director [3] -------------------------------------------------------------------------------- Thanks, Ashley. Good afternoon, everyone, and thank you all for joining us on the call today. I hope you're all staying safe and healthy as we continue to navigate through the COVID-19 pandemic. This afternoon, we made our Third Quarter Financial Results publicly available. Please refer to our press release and our earnings supplement, both of which are available in the Investors section of our website at www.fatbrands.com. Both contain details about the quarter, which closed on September 27. This is our fourth investor conference call since the beginning of the pandemic, and I want to use this time to give you an update on the organic performance of the business and then walk through the 2 transformative transactions that closed during this quarter. The acquisition of Johnny Rockets on September 21 and the preferred stock offering and related transactions on July 16. Then I would be happy to open up the line for questions. We have seen an uplift in system-wide sales as we moved from $42 million in Q2 2020 sales to $68 million in Q3 2020 sales, an increase of 63.2%. On average, across all of our brands, for the past 8 to 12 weeks, we've seen an average of 1% or 100 basis points improvement each week in sales. So very encouraging. These increases reflect the easing of shelter-in-place orders, phased reopening across the country, outdoor dining, strong to go in delivery sales across our brands and various initiatives we put in place to continue the positive trends around delivery. In September, we began the rollout of Chowly, a third-party delivery aggregator and HNGR, a native online ordering and delivery-as-a-service platform across our brands. During that first month, we saw an increase in delivery sales of over 40% for domestic Fatburger and co-branded Fatburger and Buffalo's Express locations. As we have discussed on our previous calls, we continue to work closely with our franchisees across our brands to provide the support that they need, as we navigate through this global pandemic together, including assisting with enhanced to-go packaging and delivery options, operating practices and procedures that align with local state and federal regulations, safety, sanitation and social distancing measures to provide comfort to guests and redesigned menu and serving options, which, for example, may focus on family packs to go or attendant served buffets. Let me now give you an update on our development pipeline and where we think we will end this year compared to 2019. During the third quarter, franchisees opened 12 new stores worldwide, which includes 12 Johnny Rockets openings, bringing the year-to-date total of 15 stores -- not 12 Johnny Rockets opening, sorry, it just includes Johnny Rockets openings, bringing the year to 15 -- to 45 total stores as of November 6, with 12 additional stores, slated to open by the end of the year. We expect to close 2020 with 57 new stores in total compared to 2019 when we opened 24 stores, excluding Johnny Rockets and 52, including Johnny Rockets. So during this pandemic, we're growing even more than last year. We remain optimistic about our prospects, even during this global crisis, as we're focused on driving our organic growth by not only assisting our franchisees with their top line sales recovery, but also by opening additional stores across our brands. Now let me turn to the 2 key transactions that occurred during the third quarter, which in many ways, transform the company. On September 21, we successfully completed the acquisition of Johnny Rockets from an affiliate of private equity group Sun Capital Partners for the purchase price of approximately $25 million. The transaction was funded with proceeds from an increase in the company's $80 million securitization facility, which I will expand upon in a few minutes. With the acquisition of Johnny Rockets, FAT Brands now franchises more than 700 restaurants around the globe in more than 30 countries with 2019 annual system-wide sales exceeding $700 million. In a pre-COVID environment, on a normalized annualized basis, we estimate that the addition of the Rockets brand would have increased our 2019 revenues by approximately 50% and our EBITDA by approximately 100%. In addition to providing the Rockets' franchisees with the same support through the pandemic that we provide to our existing franchisees, we intend to accelerate the brand's growth through a number of initiatives, such as the introduction of plant-based proteins, opening of virtual restaurants, utilization of our significant purchasing muscle, expansion of marketing and advertising programs and the implementation of additional delivery technology. This acquisition represents a significant milestone for us as we continue to leverage our platform and affirm our positioning as an asset-light franchisor. As we've discussed on prior calls, in March 2020, we closed on our whole business securitization facility, which has a key structural element called an accordion feature that allows us to expand the facility with relative ease to raise new money and support FAT Brands' acquisition growth strategy. At the March closing, we raised $40 million, $20 million in senior notes rated BB by DBRS Morningstar and $20 million in senior subordinated notes rated single B by DBRS Morningstar. Then just at the end of September, we utilized that accordion feature and raised another $40 million of subordinated notes, which funded the acquisition of Johnny Rockets as well as provided us with additional liquidity for working capital and organic growth. The second, but no less important transaction during the third quarter was the completion of the underwritten public offering of $9 million of 8.25% Series B Cumulative Preferred Stock and warrants. Both the preferred stock and the warrants began trading on the NASDAQ on July 14, concurrent with this offering, we issued additional shares with face value of over $6 million from the exchange of a portion of the Series A preferred stock and accrued dividends thereon into Series B preferred as well as the exchange of Series A-1 into Series B. These transactions simplified our capital structure, raising $9 million in cash and a total of $15 million in equity. I'd also like to note that of the Series B, nearly $3 million are owned by company insiders or affiliates, and we believe that demonstrates a true sense of confidence in our company. Turning now to the third quarter. Total revenue increased to $4.1 million from $3.1 million in the second quarter of 2020, and our system-wide sales increased 52% quarter-over-quarter, reflecting a bounce back from the height of the pandemic. As I mentioned on our last call, the burger brands are recovering very quickly, and they are more in line with consumer behavior versus life. And our Hurricane and Buffalo's Cafe brands have shown extremely strong resilience during the pandemic, even more so than the burger brands, comping over 100% on a weekly basis at this point. Total cost and expenses were $4.9 million in the quarter compared to $3.6 million last year. But when you exclude refranchising losses of $300,000 and refranchising gains of $900,000 in 2019 as well as an impairment charge during the third quarter of 2020, our cost and expenses totaled $3.8 million in the third quarter of 2020 compared to $4.5 million in the third quarter of 2019, a $700,000 savings. These combined effects of lower revenue and higher costs resulted in an adjusted EBITDA of $621,000. This compares to adjusted EBITDA of $2.3 million in the third quarter of 2019. While we are currently working through this challenging time in our industry, we are a stronger company today due to the progress, strategies and transactions we have achieved and executed year-to-date. As we all look forward to a vaccine, I'm confident that we are well positioned to drive our growth, both organically and through opportunistic acquisitions in the years ahead. Before we open the call for your questions, I'd once again like to extend my heartfelt thank you to all of our team members, our franchise partners and their employees, as they have done an outstanding job during these unprecedented times, in adapting and rising to meet the challenges our industry faces. I'm very proud of our team and our partners and remain excited for the opportunity in front of us, especially as we participate in industries recovery period. With that, operator, please open the line for questions. ================================================================================ Questions and Answers -------------------------------------------------------------------------------- Operator [1] -------------------------------------------------------------------------------- (Operator Instructions) Our first question comes from Joe Gomes with NOBLE Capital. -------------------------------------------------------------------------------- Joseph Anthony Gomes, NOBLE Capital Markets, Inc., Research Division - Senior Generalist Analyst [2] -------------------------------------------------------------------------------- Andy, nice quarter. Congrats on the transactions. Real quick, we'll put you on the spotlight on you. So you've been operating Johnny Rockets now for about, say, call it, 6 to 8 weeks. Can you talk a little bit there about some of the synergies, care to give what you think you can -- that brand can do in terms of revenues and EBITDA for you on the fourth quarter? -------------------------------------------------------------------------------- Andrew A. Wiederhorn, FAT Brands Inc. - President, CEO & Director [3] -------------------------------------------------------------------------------- So the synergies are significant. We picked up about half of the Johnny Rockets team. We're fortunate to have them. They're working hard, helping the franchisees all around the world. Remember that more than half of the Johnny Rockets units are international locations. So very different issues country-by-country or market-by-market. It's important that we get as many of those restaurants back open as possible. We still have a number of cruise ships and amusement parks, in parks, movie theaters, things like that, that are closed, some malls that are closed. So there's tremendous upside with Johnny Rockets, and this is an amazing brand. And as we get through COVID-19 over the next, let's say, 6 months or so, and the vaccine is out, we anticipate a very strong recovery there. I'm not going to project Q4 revenues yet because we just don't know how the rest of the fall here for the next 6 weeks is going to go. But I would say that it's performing as expected. We are continuing to open new restaurants, both at Johnny Rockets and with Fatburger and Hurricanes, et cetera. And so that's just one comment that I think is very important, our franchise sales are just off the charts compared to what we expected. We really are doing well, selling new territories and finding people who just don't want to work anymore for someone else. They want to be in business for themselves or multiunit operators who are stepping up to buy more locations and build more stores. So very positive there. -------------------------------------------------------------------------------- Joseph Anthony Gomes, NOBLE Capital Markets, Inc., Research Division - Senior Generalist Analyst [4] -------------------------------------------------------------------------------- That sounds it. Can you just give us a little more update color here on the steakhouses? I know that's been an issue, given their normal or historical way of serving and the fact you really don't have a takeout business. So just kind of what's going on, on that -- those brands? -------------------------------------------------------------------------------- Andrew A. Wiederhorn, FAT Brands Inc. - President, CEO & Director [5] -------------------------------------------------------------------------------- Yes. So definitely, the steakhouses have been beaten up the most. There have been some closures year-to-date from the steakhouses that are permanent, some older operators that have just shown in the towel and said I'm done. I don't really want to ride through the winter, which is always the tough time in the Midwest and the Northeast, for example. We did go to an attendant type of serving at the buffet. So the customer walk down. And when you go to an all-you-can-eat salad bar buffet, one of our attendants would serve up the guests, and that was -- that's work is very well. It actually lowered food cost a little bit because you had less waste, but probably is offset by the additional labor. The steakhouse brands represent about 8% of our revenue going forward. And so it's not going to affect us that much, but definitely had some closures there. Remarkable on the -- with the other brand, how strong they've been, but the steakhouses have been the pain point. -------------------------------------------------------------------------------- Joseph Anthony Gomes, NOBLE Capital Markets, Inc., Research Division - Senior Generalist Analyst [6] -------------------------------------------------------------------------------- Okay. Just talking about the winter weather, I know, in fact, I read in the newspaper today up here in Upstate New York, about a local restaurant that is closing until March because of the weather and having the loss of the outdoor spaces. Outside of Ponderosa, Bonanza, how much more of the unit count would be in potentially that type of a similar situation where they would lose access to any type of outdoor dining. -------------------------------------------------------------------------------- Andrew A. Wiederhorn, FAT Brands Inc. - President, CEO & Director [7] -------------------------------------------------------------------------------- Really good question because we don't really have that much exposure outside of Ponderosa and Bonanza. So we have restaurants in the New York area, but also a number of restaurants in Florida, Georgia, Texas, where -- in Arizona, where you have sort of the Sunbelt states that have much better weather and then, of course, all of California and the West Coast, Nevada. So we don't really have the dining room weather issue -- the outdoor dining room weather issue other than in the Northeast and Midwest with Ponderosa. So we should do pretty well. I mean, delivery and to go off the charts on the burger side, the outdoor dining rooms with Hurricane and Buffalo's, up in on the East Coast and in the south, very strong, more than 100% of normal sales, which is crazy, right? And they're consistently building on sales so much so that even when we have the hurricanes that have come through, we're still having positive sales over the last year, so very, very popular on the outdoor dining rooms. And we're fortunate that the Hurricanes and the Buffalo's were all built with those outdoor dining rooms or access to outdoor space. So we've been able to tent it off. We prepped all the franchisees early. Got heaters for the winter ahead of time, plastic, walls and tents and things like that. So I think we're well positioned for it there. -------------------------------------------------------------------------------- Joseph Anthony Gomes, NOBLE Capital Markets, Inc., Research Division - Senior Generalist Analyst [8] -------------------------------------------------------------------------------- Okay. And if you can just provide a little update here. In other words, we're kind of getting towards the end of the year, one of the goals was to complete the transaction with Fog Cutter Capital, and just if you give us an update there would be appreciated. -------------------------------------------------------------------------------- Andrew A. Wiederhorn, FAT Brands Inc. - President, CEO & Director [9] -------------------------------------------------------------------------------- Yes. We are knee-deep in the details of completing that transaction. The respective boards are negotiating with special committees on each side and fearless opinions and all those things. And so we hope to be in a position before the end of the year to complete a transaction, announce the transaction and be done with this once and for all and for everyone's benefit to get the tax losses into FAT Brands and increase the float and all those things. -------------------------------------------------------------------------------- Joseph Anthony Gomes, NOBLE Capital Markets, Inc., Research Division - Senior Generalist Analyst [10] -------------------------------------------------------------------------------- Great. And just one last one for me, kind of a point here. In the prepared materials, in the earnings supplement, you talked about over the 700 locations. But in the press release, it says 678 stores... -------------------------------------------------------------------------------- Andrew A. Wiederhorn, FAT Brands Inc. - President, CEO & Director [11] -------------------------------------------------------------------------------- Yes, that include the stores that are under construction and about to open. I think we have 700. As we have 12 more that will open before the end of the year in the next 6 weeks, and we're opening the new like crazy, right to a weekend on that basis. And then there are another 26 under development for the first half of 2021, a number of them will open in January and February. So that 700 number, 705 number includes those under construction. They're fully committed leases signed literally almost built. -------------------------------------------------------------------------------- Operator [12] -------------------------------------------------------------------------------- Okay, Mr. Fortunoff, can you hear us? -------------------------------------------------------------------------------- Gregory Fortunoff, [13] -------------------------------------------------------------------------------- I can hear you now. Okay, a couple of questions. The cash burn or what it was prior, is that over with? I mean, assuming things stay fairly stable, the cash will start building? -------------------------------------------------------------------------------- Andrew A. Wiederhorn, FAT Brands Inc. - President, CEO & Director [14] -------------------------------------------------------------------------------- That's right. So we are not burning cash any longer. We are generating cash. We never say never. We have the winter here, but we are positively cash flowing. And we'll just -- the difference between whatever our revenues are now in normal is all profit, and it's just for the short term, but we're not losing money anymore, we made expense reductions, we could. And with the additional revenue from Johnny Rockets and the new stores constantly coming online and cash flow is positive. -------------------------------------------------------------------------------- Gregory Fortunoff, [15] -------------------------------------------------------------------------------- Okay. Earlier, you mentioned the vaccine stuff. Obviously, it seems like one is on the way. Like can you quantify the leverage you have or to a vaccine? I mean, as you mentioned, a bunch of stores are in cruise ships or casinos or whatever. I mean, either with numbers or just sort of give us some idea? -------------------------------------------------------------------------------- Andrew A. Wiederhorn, FAT Brands Inc. - President, CEO & Director [16] -------------------------------------------------------------------------------- Well, so when our -- as we talked about, when you look at 2019 revenues and 2019 EBITDA. And you add in the Johnny Rockets transaction, and we see the revenues going up by 50% and EBITDA going up by 100% from 2019 levels on a stabilized basis, meaning getting all these stores back open. That's significant, right? That's very significant. And we have very little marginal cost, and that's already in those projections for the Johnny Rockets acquisition. So to be able to make that acquisition and bring on those team members, but not all the other corporate overhead, if we did $7.7 million in EBITDA in 2019, and that only had 6 months of Elevation Burger in it, we can double that. Or anything close to that on a run rate basis once the vaccine is out and all these restaurants are back open, it's very, very powerful. And that's why I've said over and over again, this is transformative to us. It makes this company right-sized for being a public company. So those public company costs are spread against so much more revenue and very little incremental cost. And as -- I mean, our margin will be above 50% to the bottom line for EBITDA. And as we continue to grow, that margin will continue to get bigger, and our cost of financing will continue to go down. We will look to resecuritize, refinance our securitization facility next year. That will, I believe, further lower our cost of capital because we were a first-time issuer, when we first went out in the bond market now, we've issued a second time. The deal is performing very, very well. And so I expect that our costs will be down as well. -------------------------------------------------------------------------------- Gregory Fortunoff, [17] -------------------------------------------------------------------------------- Okay. Well, that's good. So as far as growing and doing deals, what are your criteria now? I mean, obviously, things are different. The small deals may not mean as much. And you have to digest Johnny Rockets. So what do you foresee the plan being for the next 12 months as far as that goes? -------------------------------------------------------------------------------- Andrew A. Wiederhorn, FAT Brands Inc. - President, CEO & Director [18] -------------------------------------------------------------------------------- Good question. We've looked at a lot of transactions that have been shown to us over the last couple of quarters. The Johnny Rockets transaction is a deal that I was working on for 3 years. So it wasn't something that just dropped in our lap. We were in negotiations before COVID to buy it. We were able to make a little bit better deal, quite a bit better deal during COVID to buy it, but it also means it was a little bit banked up. There's a lot for sale. There's a lot more that will be for sale. You are right that the smaller deals are out there, they sort of across the board and some sellers haven't realized that valuations have come down for some of these businesses. Some have, but it's just -- we really -- we get so much more mileage just executing right now on Johnny Rockets. In every way possible, we can execute. Our revenues increase faster and our EBITDA increases faster that I don't want to take our eye off the ball without executing on this. That doesn't mean that we aren't prepared to make another acquisition in the next 3 to 6 months if we find the right deal, we have the ability under our securitization facility. But I'm not 100% sure when that will happen, but it will be very accretive because the way the business is structured now, we can make these acquisitions without having to issue equity and they're delevering. We're not increasing our leverage, we're delevering because the price we're paying to buy these businesses as a multiple of a cash flow under 4x cash flow is -- allows us to draw down our facility, up to 4x cash flow without any issue. So it's a delevering transaction to the extent we acquire more brands, and we will acquire more brands sometime in the next 6 to 12 months. -------------------------------------------------------------------------------- Gregory Fortunoff, [19] -------------------------------------------------------------------------------- But the size of the deals are now going to be a little bigger than before only because you need that -- the scale, I mean, a small... -------------------------------------------------------------------------------- Andrew A. Wiederhorn, FAT Brands Inc. - President, CEO & Director [20] -------------------------------------------------------------------------------- I think, yes. Right. I would expect that we buy something like Johnny Rockets, once a year going forward, which will just be like a lightning rod to our earnings. It doesn't mean we won't buy some smaller deals, but it means bigger deals will just move the needle faster for us. You know the old saying that small deals take as much time as the big deals. To some extent, that's true, to some extent it's not. I mean, buying more wings brands, pretty easy for us. And regionally, we've got a lot of room to go. So it's very easy for us to buy more wings brands like that and to put into our system. Those casual dining brands, over 100% comping same-store sales, growing system-wide sales, very easy to weave in. If we buy another burger brand, it would have to be a compelling acquisition strategy of some reason because we really have -- with having Fatburger, Elevation Burger and Johnny Rockets really gives us a complete portfolio when I'm talking to landlords, and we can sit down and say, what kind of burger brand would work best in your venue? Is it an urban brand? Is it a super healthy organic grass-fed brand like Elevation Burger? Or do you want a theme brand like Johnny Rockets? The landlord can help work with us to figure out what's going to work best in that location. And so we have a really complete portfolio on the burger side. Wings, it's more just scale. We just don't have the geographic coverage, and we could add more wings brands. And also the virtual restaurants concept, I don't want to leave that behind without talking more about that, being able to offer virtual restaurants with 9 different brands in our portfolio. Being able to say to our franchisees, look, you're running a Fatburger and a Buffalo's Express, but you could sell Hurricane Grill & Wings for delivery or the Johnny Rockets franchisees, you can sell Hurricane or Buffalo's for delivery out of your restaurants and take advantage of those real estate locations, not rent you're paying to sell the incremental sales on the wing side, very compelling for them. And the delivery platforms are set up for it. It just means bringing in product. There's not really a lot of waste because most of it's frozen, there's some fresh, but not a lot of waste you can manage it. So I think it's a big opportunity. -------------------------------------------------------------------------------- Gregory Fortunoff, [21] -------------------------------------------------------------------------------- Okay. Last question. As important as doing deals or more as organic growth. So this year, you're obviously, blowing it out even with the COVID. Next year, you're already talking about 26 stores. I mean, do you see this kind of growth going for a while? Or like, what do you see organic growth for the next 12 months? How about that? -------------------------------------------------------------------------------- Andrew A. Wiederhorn, FAT Brands Inc. - President, CEO & Director [22] -------------------------------------------------------------------------------- Yes. We always have targeted -- try to get to approximately 8% to 10% organic growth. So when we had 375 restaurants, you're trying to get to 37 restaurants in growth, new stores. And here with Johnny Rockets, getting to 57 out of 700 or 678, whatever, it's pretty close. And I don't see that stopping. I mean our franchise sales are very active right now. And so I anticipate we will continue to have very strong organic growth. There's just a lot of franchise partners who have interest in adding brands or adding units to their portfolio, and we want to do everything we can to help them. One thing about in part of the FAT Brands system now are purchasing power to buy food and paper and beverages more than $250 million a year that we're spending. And so when you're a smaller brand and you spend $20 million a year or $50 million a year, it's costing you 2% or 3% more and you get that saving. So unit level economics are better now for our franchisees to be part of the FAT Brands family than when they're stand-alone brand. And also, I mean, I think we all know that the prices for real estate are going to be nothing but better right now in the restaurant space. So it's a great time for new franchise sales. Operator, do you have any more questions? -------------------------------------------------------------------------------- Operator [23] -------------------------------------------------------------------------------- Yes, sir, we do. Our next question comes from Joe Gomes from NOBLE Capital. -------------------------------------------------------------------------------- Joseph Anthony Gomes, NOBLE Capital Markets, Inc., Research Division - Senior Generalist Analyst [24] -------------------------------------------------------------------------------- Andy, just one quick follow-up. I was wondering, historically, the last couple of calls, you've given kind of a breakdown by the brands as to how many of the stores are continued to be closed due to COVID. Do you have those numbers? -------------------------------------------------------------------------------- Andrew A. Wiederhorn, FAT Brands Inc. - President, CEO & Director [25] -------------------------------------------------------------------------------- Yes, I do. We have -- out of the 177, Fatburger's, we have about 14, they're temporarily closed, half of those in Canada, the balance around the U.S. -- sorry, 7 of those are in -- half of those are international, only 2 are in Canada and 2 outside of California, 3 in California. So half domestic half international. Buffalo's Cafe has 3 units closed internationally, temporarily Hurricane, everything is open. Yalla Mediterranean is open. Elevation Burger out of 42 stores 9 are temporarily closed, 8 of those are international. Ponderosa and Bonanza, 45 units still temporarily closed, 31 outside of the contiguous U.S. states and 14 domestically. Johnny Rockets has 70 out of 322 units that are temporarily closed. So in total, 141 out of 682. So about 25% of the stores are still temporarily closed. That means when I say temporarily closed, they're not doing delivery to go, they're closed. So we're -- the numbers we're putting up are from the restaurants that are open. That's why there's just tremendous opportunity to expand this year as we get the vaccine and let it run its course. -------------------------------------------------------------------------------- Joseph Anthony Gomes, NOBLE Capital Markets, Inc., Research Division - Senior Generalist Analyst [26] -------------------------------------------------------------------------------- Okay. And if I'm not mistaken, that I would believe the vast majority of the Johnny Rockets. Now we're talking like the cruise ships, the casinos, that just... -------------------------------------------------------------------------------- Andrew A. Wiederhorn, FAT Brands Inc. - President, CEO & Director [27] -------------------------------------------------------------------------------- The movie theaters, the amusement parks. Just for example, we're in 15 different -- 15 or 16 different Six Flags locations. And they're a great partner with us, but Six Flags is telling us that they're really focused on 2022, maybe they get parks open in the second half of next year, but they think it's going to be a really tough first half of the year for them. The cruise ships are trying to come back quickly. There's a couple of new cruise ships we're trying to launch that are under construction. But that -- those guys have been beaten up hard. It's just going to take them a few months to let the vaccine get out there and for people to come back. So I think we really have to look at this as a long-term investment. The demand is there. The partnerships are there with the movie theater operators, the cruise ships, the theme parks. That will all come back to us. We're just fortunate that we can do so well on delivery to go with most of these brands and the outdoor dining rooms. Operator, any other questions? -------------------------------------------------------------------------------- Operator [28] -------------------------------------------------------------------------------- No, sir, there are no further questions at this time. -------------------------------------------------------------------------------- Andrew A. Wiederhorn, FAT Brands Inc. - President, CEO & Director [29] -------------------------------------------------------------------------------- Great. Well then, operator, I'd like to just give some -- just a closing thank you to all of you participating in FAT Brands Third Quarter Earnings Discussion. I hope you all stay safe and healthy and appreciate your continued support. Thank you, operator. This concludes our call. -------------------------------------------------------------------------------- Operator [30] -------------------------------------------------------------------------------- Ladies and gentlemen, you may now disconnect your lines at this time. Thank you for your participation, and have a great day.