- FAT Brands acquired Elevation Burger for $10 million, funded by seller's notes and cash, according to a company release.
- Elevation Burger, which focuses on offering grass-fed, free-range and vegetarian options, has 44 locations across the U.S. and internationally.
- With this acquisition, FAT Brands now has more than 400 restaurants and annual systemwide sales of more than $400 million.
FAT Brands has been on a bit of an acquisition frenzy within the last few years. In 2018, it acquired Yalla Mediterranean a year after it bought Ponderosa and Bonanza Steakhouses. Acquisitions have been a key strategy for the company’s growth, especially as it looks into areas that complement the brand. The burger category is particularly primed for consolidation since there are plenty of QSR, fast casual and full-service burger brands in the U.S.
"We continue to believe there is a massive opportunity to consolidate franchise brand[s] onto the FAT Brands platform and we are seeking growth capital to fuel this acquisition strategy and lower our cost of capital," President and CEO Andrew Wiederhorn said during the company's Q1 2019 earnings conference call.
While acquisitions have been a top growth strategy, Wiederhorn also told investors that if the company's organic growth ramps up, then it could consider slowing down acquisitions since organic growth doesn't cost the company any money.
The restaurant bought Elevation Burger because its slogan "Ingredients Matter" align with FAT Brands' commitment to providing fresh, high quality food, Wiederhorn said in a press release.
Elevation Burger is primarily on the East Coast, but Wiederhorn said in an email to Restaurant Dive that the company plans to leverage interest in a number of markets where grass-fed, organic momentum will help grow this brand. FAT Brands also plans to add the Impossible Burger to the brand, which already offers a vegan patty and vegetarian burger.
Other burger brands have been undergoing transactions either to expand their depth and diversify or to help find a partner to help with growth. Whataburger sold a majority stake to BDT Capital Partners earlier in June. The firm will help the company to expand into new and existing markets. Chanticleer Holdings, which owns better burger brands Little Big Burger, BGR (Burgers Grilled Right) and American Burger Company, is also intending to buy a five-location better burger brand located in North Carolina, South Carolina and Virginia. Inspire Brands closed its acquisition of Sonic Burger last year.