Dive Brief:
- Fat Brands founder Andy Wiederhorn will resign from his CEO post effective May 5, the company announced Monday. He will remain a board member and controlling shareholder, and will become an outside consultant and strategic advisor to the restaurant company.
- An interim CEO will be named prior to Wiederhorn’s departure. The company didn’t specify if a successor has already been chosen.
- This announcement comes roughly one year after Fat Brands confirmed Wiederhorn and his son Thayer Wiederhorn, COO of the company, were under federal investigation for alleged money laundering, fraud and misrepresentations to investors. Fat said Wiederhorn is stepping down to “eliminate the distraction” the investigation creates for senior management.
Dive Insight:
Under Wiederhorn’s leadership, Fat Brands’ empire has grown from two restaurants brands to 17 in five years, he said in a statement. But its seems Wiederhorn’s legal entanglements may have grown to be an obstacle to the holding company’s future, though Thayer Wiederhorn remains COO.
Last year, Fat Brands disclosed that U.S. attorneys and the SEC had requested, “documents and materials concerning, among other things, the Company’s December 2020 merger with Fog Cutter Capital Group Inc., transactions between these entities and Mr. Wiederhorn, and compensation, extensions of credit and other benefits or payments received by Mr. Wiederhorn or his family.” Fog Cutter Holdings, the Wiederhorn family’s company, is the controlling shareholder of Fat Brands.
Fat merged with Fog Cutter in a bid for “financial flexibility and a simplified corporate structure,” which helped the company purchase several restaurant chains over the past few years.
It seems likely that Fat Brands will maintain its growth tear, both through acquisitions and organic expansion, under new leadership. Fat has a 1,000-unit development pipeline, and plans to open these locations by 2028. This year, the company aims to open 175 new units, which would eclipse its expansion record of 142 openings in 2022.
The 1,000-unit development pipeline would represent 43% new unit growth and drive roughly $60 million in incremental adjusted EBITDA, Wiederhorn said on the company’s Q4 2022 earnings call.
