Dive Brief:
- Fat Brands signed a development deal with California Burger to add Fatburger to 40 existing Round Table Pizza restaurants across Northern California, the company said in a press release Wednesday.
- California Burger also operates Circle Pizza, which, at 70 units, is the largest multi-unit franchisee of Round Table Pizza. The deal covers the next 10 years, with the first of the resulting hybrid units to open this year.
- Fat Brands, which owns 17 concepts following years of acquisitions, uses co-branding as one of its growth strategies to provide menu diversity and additional revenue for franchisees.
Dive Insight:
Fat Brands opened its first Round Table/Fatburger location last year in Dallas with SNM Management Group, which committed to three additional co-branded units in that market. The company has over 200 co-branded locations across its portfolio, executive chairman Andy Wiederhorn said during the company’s March earnings call.
Fat began co-branding Fatburger and Buffalo’s Express in 2013, and the dual-branded concept has grown to over 100 units worldwide. In 2022, it co-branded Johnny Rocket’s with Hurricane Wings in Washington, D.C. and opened its first tri-branded restaurant in California. The company also co-brands its Marble Slab Creamery and Great American Cookies concepts.
“Co-branding is a great model from both a menu and margin perspective and produces an incremental sales lift of 10% to 20%,” Wiederhorn said on the company’s earnings call. “From the franchisees' perspective, adding another concept in the same space costs significantly less than what it would be to open on its own. As a result, our franchisees see a great return with co-branding and we will continue to roll out new options in the years to come.”
Fat Brands has accelerated growth in the past few years, opening 125 units last year. Wiederhorn projects another 125 units to open this year. The chain has over 1,100 locations in its development pipeline, which it expects to increase adjusted EBITDA by about $60 million.
