Fat Brands Soars 130% After Acquiring Johnny Rockets

Jayson Derrick
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Fast-casual and casual dining restaurant owner FAT Brands Inc (NASDAQ: FAT) announced it acquired the burger chain Johnny Rockets Group for $25 million.

What Happened: FAT, an acronym for Fresh, Autnethic, Tasty, will gain control of nearly 325 Johnny Rockets locations in more than 25 countries. Johnny Rockets is known for its cooked-to-order burgers, chicken sandwiches and hand-spun milkshakes.

Fat Brands will finance the acquisition through a combination of cash on hand and the proceeds from a securitization facility.

Why It's Important: Fat Brands acquired Johnny Rockets amid expectations for customers to return to casual-dining restaurants as the COVID-19 pandemic eases, CEO Andy Wiederhorn told The Wall Street Journal.

Even if the work from home trend expands in scope, Fat Brands expects its portfolio of restaurants to satisfy "demand to be able to socialize in some way," he said.

What's Next: Fat Brands expects the transaction to close in September. Following the closing of the deal, Fat Brands will boast more than 700 franchised and company-owned restaurants worldwide with total annual system-wide sales of more than $700 million.

The restaurant operator is fresh off a $40 million financing round in March and it will be looking for further acquisition opportunities, Wiederhorn told WSJ. By acquiring more small chains, the company can gain better scale and realize better prices for advertising and supplies.

"There is an opportunity now to take casual dining chains and get a consolidation of similar concepts," he said.

FAT Brands traded higher by 132% to $8.22 at the time of publication.

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