On Monday this week, Fat Brands, the multi-brand restaurant franchising company that operates Fat Burger, along with Buffalo's Cafe and Buffalo's Express, filed a Regulation A+ IPO.
If you aren't familiar, you may be asking how is the Reg A+ different than the traditional IPO that other brands like Shake Shack and Habit Burger have filed in the past?
According to the NYSE, a "Regulation A+ (Reg A+) is an alternative to a traditional IPO, which makes it easier for smaller, early stage companies to access capital."
Fat Brands is the 6th company to go the Reg A+ IPO route.
So why did the company filed this type of IPO versus the traditional IPO model?
“We were in the process of doing a conventional S-1 IPO but we decided to switch over to Reg A+ because of the lower costs for the process and because we have many customers that are fans of our restaurants. We wanted to provide a way for them and for our franchisees to become owners of our stock. Our franchisees are our partners and their involvement is key to our success. Many have told me that they want to be shareholders and the Reg A+ IPO method makes that possible," said Andy Wiederhorn, CEO of Fat Brands.
The IPO was filed officially on Monday to raise $24 million and 2,000,000 shares sold priced at $12 per share.
“The offering was very well received with $64 million of interest - we had to decline $40 million,” said Mark Elenowitz, CEO of TriPointGlobal Equities LLC and the underwriter of the IPO. “We built the broker-dealer syndicate of 21 members and we had to decline an additional 6 syndicate members that wanted to join, but by then we were already oversubscribed. Fatburger is an iconic brand which certainly helped us build traction with investors."
This Reg A+ was the most successful to date.
The company is expected to expand its portfolio of restaurants with acquisitions. Its current restaurants are in 18 countries with 176 total stores.
Fat Brands employs 30 people, but has created a large network of franchisees. 99% of the stores are ran by franchisees. For the last four years, the company has been able to impressively grow revenues at a rate of 10% per year over year.
Do you think other brands will follow-suit and go the Reg A+ route after Fat Brands' success?