FAT (Fresh. Authentic. Tasty.) Brands Inc. announced that it has agreed to acquire Fazoli’s, an Italian chain known for its freshly prepared pasta, Submarinos sandwiches, and unlimited signature breadsticks, for $130 million from funds under management by Sentinel Capital Partners. This acquisition brings to FAT Brands the largest premium QSR Italian chain in the U.S., and will be funded with cash from the issuance of new notes from the Company’s securitization facilities. The transaction is expected to close by mid-December 2021.
The planned acquisition of Fazoli’s further speaks to FAT Brands’ recent diversification of their restaurant portfolio, making a foray into the Italian quick-service dining category. With over 200 stores currently open and a development pipeline of 100 units over the next several years, the purchase of Fazoli’s will increase FAT Brands’ footprint to 2,300 franchised and corporate-owned stores around the world, bringing 2022 expected systemwide sales at FAT Brands to more than $2.1 billion. The addition of Fazoli’s, including the new stores due to open and under development, is expected to increase the Company’s post-COVID normalized EBITDA by approximately $14.5 to $15 million in 2022.
“Fazoli’s has a great growth story, in particular, over the last year. They continue to surpass sales expectations across the board,” said FAT Brands CEO Andy Wiederhorn. “We have been eyeing this category for some time; however, we were waiting for the right brand—one that is high-growth, with almost all restaurants having drive-thru access, in addition to, the synergies that we will achieve adding Fazoli’s to our portfolio of brands. We look forward to building off of the success of Sentinel Capital Partners.”
“We have had an outstanding year and we couldn’t be more pleased to join forces with FAT Brands, a company that has the same growth-oriented mentality as us at Fazoli’s,” said Carl Howard, CEO of Fazoli’s. “From co-branding to virtual kitchens to menu development opportunities, we see great value in being a part of FAT Brands.”
For FAT Brands, Duff & Phelps Securities, LLC served as financial advisor and Foley & Lardner LLP acted as legal counsel. For Sentinel Capital Partners, North Point Mergers and Acquisitions Inc. served as financial advisor and Winthrop & Weinstine, P.A. acted as legal counsel.
