FAT Brands (FAT) has announced that they acquired the Johnny Rockets burger chain. Shares of the Beverly Hills, California-based company soared 236% to $11.77 in pre-market trading.
The acquisition will be funded through cash on hand and proceeds generated from the company’s securitization facility, Fat Brands said.
The purchase is expected to be completed in September. Once the acquisition is completed, Fat Brands said it will have more than 700 franchised and company-owned restaurants around the globe with annual system-wide sales exceeding $700 million.
Johnny Rockets was founded in 1986 with a 1950s diner theme. It operates restaurants in 325 locations across the U.S. and internationally.
“This acquisition is a transformative event for Fat Brands in terms of scale and brand awareness,” said Andy Wiederhorn, Fat Brands’ president and CEO. “We see a lot of synergy with Johnny Rockets and our current restaurant concepts and we are eager to take the brand to new heights.”
Last week, Fat Brands reported second quarter revenue of $3.1 million, down from $5.9 million a year ago. The company said the decrease “overwhelmingly reflects a decline in royalty revenue related to the impact of COVID-19.”
The company reported a loss of $4.25 million or 36 cents per share, compared with a net loss of $508,000 or 4 cents per share a year ago.
Founded in 2017, Fat Brands currently owns eight restaurant brands and franchises with over 375 units worldwide. It is a subsidiary of Fog Cutter Capital Group Inc., a global franchising company.
Fat Brands’ Chief Executive Officer Andy Wiederhorn said the company expects to modernize Johnny Rocket’s menu, which already has a black bean burger, by adding plant-based options and vegan milkshakes.
The deal is expected to be completed in September, and following the acquisition, Fat Brands will have more than 700 franchised and company-owned restaurants.
