Dive Brief:

• Fat Brands has agreed to acquire Arizona-based, 23-unit Native Grill & Wings for $20 million from Wingtime, LLC, a subsidiary of Cybeck Capital Partners, LLC, the company announced Monday. The transaction is expected to close in mid-December. 
• The purchase will be funded with cash from the issuance of new notes from the company's securitization facilities. This brand will become Fat's third chicken wing concept. 
• Fat has had a voracious acquisition appetite this year, buying Global Franchise Group in July for $442.5 million, Twin Peaks in October for $300 million and Fazoli's in November for $130 million. Combined, the company has spent $892.5 million on acquisitions so far this year.

Dive Insight:

Acquisitions have become a key growth strategy at Fat Brands as the company looks to round out its portfolio with new categories and expand in existing segments. 

"On the acquisition front, we are still in the early innings. This has been an exciting and aggressive year so far in our growth strategy and we remain active in evaluating additional acquisition candidates to augment our existing brands," Andy Wiederhorn, Fat Brands president and CEO, said during the company's third quarter call in November. 

The company is actively looking for brands that have high average unit volumes and strong growth pipelines, he said. 

"With the chicken wing sector growing in popularity throughout the pandemic, we knew that we wanted to continue developing our portfolio further into this category by bringing in a brand that would complement our existing wing concepts," Wiederhorn said in the press release. "Native Grill & Wings has been on our radar for some time given its ability to remain nimble and deliver strong system-wide sales growth over the past year."

With this acquisition, Fat will have over 2,300 franchised and corporate-owned stores globally with systemwide sales of about $2.3 billion. Native Grill & Wings, including stores expected to open and under development, will increase Fat's post-COVID-19 normalized EBITDA by about $3 million in 2022. 

Adding more brands to Fat's portfolio also creates more opportunities and diversification for the company's 750 franchisee partners. The holding company already sold a record amount of units to franchisees in a single year, Wiederhorn said on the Q3 call. During the third quarter, the franchise sales team closed nine deals for 166 locations, according to an earnings release. Year-to-date, the company has signed 32 deals for 581 locations, 157 of which are Global Franchise Group brands, Wiederhorn said on the call. 

"Franchise sales are just on fire," he said on the call. "They only have to deal with one franchisor and can go down the menu and pick and choose what concepts they want for their particular area because in some areas, they might have built all the Fatburgers that can fit in that area, but hey a Twin Peaks could go there or a Fazoli's would go great because they have their management teams there. That ability to cross-sell our brands to franchise partners everywhere … is really a cool opportunity."