FAT Brands (FAT) Inks Deal to Expand Fazoli's Reach in Canada

FAT Brands Inc. FAT, the parent company of Fazoli's, enters into a new development agreement with franchisee Briwin Restaurants Inc. to open 25 Fazoli's locations in Canada over the next 10 years. The initial locations are slated to open in Alberta in 2025.
Fazoli's has been focusing on expanding domestically, with operations in 26 states and more than 200 locations. FAT Brands has a robust network of international franchisees, spanning nearly all its restaurant concepts.
The company is optimistic about the prospect of Fazoli's international debut. An experienced operator within the Fatburger franchise system will be launching and developing an additional FAT Brands restaurant concept in Canada. FAT believes that expanding in Canada is a natural first step for Fazoli's in becoming a leading global chain.

Focus on Expansion

The leading global franchising company strategically acquires, markets and develops fast casual, quick-service, casual dining and polished casual dining concepts worldwide. FAT owns 18 restaurant brands and franchises. It owns more than 2,300 units globally.
Solid franchisee interest in development opportunities has increased its total pipeline to 1,100 units, including more than 225 development agreements signed in 2023.
In the fourth quarter of fiscal 2023, FAT Brands opened 29 new stores, thus taking the fiscal year's total to 125 new store openings. For 2024, management expects to open at least another 125 new units.
The company's emphasis on three strategic pillars, consisting of acquisitions, organic growth and productivity growth for its Georgia-based manufacturing facility, is likely to drive performance in the upcoming period.

Price Performance

Image Source: Zacks Investment Research

Shares of FAT have risen 18.7% in the past three months compared with the industry's 4.3% growth. The company has been benefiting from an increase in system-wide sales and new restaurant openings. Also, focus on franchise partners bodes well.
FAT is optimistic about moving into 2024, thanks to its strong brand management platform. It believes that this platform positions it well to efficiently integrate new brands while maintaining a healthy and evolving pipeline for organic growth.

Zacks Rank & Key Picks

FAT Brands currently carries a Zacks Rank #3 (Hold).
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