FAT Brands' (FAT) Pretzelmaker Expands With New Openings
FAT Brands Inc.’s FAT subsidiary, Pretzelmaker, inks a development deal with Canadian Cookie Enterprises, Inc. to open 25 new franchised locations in Canada. The company is set to open stores throughout the country over the next decade, marking a strategic expansion move for the company.
With 52 units, Canadian Cookie Enterprises has stood as an integral expansion ally for Pretzelmaker in Canada in the past two decades. This collaboration emphasizes the company's dedication to international expansion, solidifying the presence of the Pretzelmaker brand in the Canadian market.
Focus on Expansion
Shares of FAT have increased 31.6% this year against the industry’s 3.8% fall. The leading global franchising company strategically acquires, markets, and develops fast casual, quick-service, casual dining, and polished casual dining concepts worldwide. The company owns 17 restaurant brands and franchises more than 2,300 units globally.
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FAT has been proactive in signing franchise development agreements. Recently, the company signed various new development deals regarding the opening of 30 new co-branded and franchised locations in Iraq. This includes 12 co-branded Fatburger and Buffalo's Express locations, 10 co-branded Great American Cookie and Marble Slab Creamery relocations and 10 Hot Dog on a Stick locations. The company anticipates the developments to take place over the next five years.
In the year so far, the company has signed franchise development deals for more than 150 new locations, bringing its pipeline to over 1,100 signed agreements for new units over the next few years. This anticipated organic growth is estimated to contribute approximately $60 million in incremental adjusted EBITDA, bringing the total adjusted EBITDA to around $150 million and naturally improving the company's balance sheet.
During second-quarter 2023, FAT opened 25 new units, bringing its year-to-date openings to 66 locations. For third-quarter 2023, FAT anticipates opening more than 35 units, with 15 already in operation. Looking at the full year, the company is on track to launch 175 new units, marking a 25% increase from 2022 levels. This robust growth is driven by the high demand for its brands in the market.
Zacks Rank & Other Key Picks
FAT Brands currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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