FAT Brands Inc. finds itself in a precarious financial position as its shares hover near yearly lows. The restaurant franchisor’s stock managed a 4.83% gain on Monday, closing at $1.52, yet this minor uptick fails to offset the nearly 20% decline witnessed over the preceding ten trading sessions. The current price level brings the stock dangerously close to its 52-week low of $1.40, reflecting deep-seated investor concerns about the company’s trajectory.
Expansion Strategy Confronts Financial Reality
Despite troubling financial metrics, management remains committed to an aggressive growth strategy. The company has already launched 60 new restaurant locations this year and has targeted 80 additional openings for 2025. Looking further ahead, FAT Brands has approximately 900 units in its development pipeline for the next five to seven years.
Early indications from co-branding initiatives show promise. A combined Round Table Pizza and Fatburger location in California reportedly doubled its weekly revenue, suggesting potential for this operational approach.
However, these expansion ambitions contrast sharply with recent financial performance. Third-quarter 2025 results revealed a 2.3% revenue decline to $140.0 million. More alarmingly, the net loss expanded significantly to $58.2 million, compared to $44.8 million in the same quarter last year. Adjusted EBITDA also contracted, falling to $13.1 million.
Should investors sell immediately? Or is it worth buying FAT Brands?
Debt Burden Demands Strategic Response
The company’s substantial debt load represents its most pressing challenge. FAT Brands is pursuing multiple avenues to address its financial leverage:
- Maintaining its dividend suspension, which conserves $35-40 million annually
- Actively negotiating with bondholders to restructure existing debt obligations
- Planning a $75-100 million capital infusion through Twin Hospitality Group
- Pursuing targeted acquisitions to strengthen core brand portfolios
Technical indicators present conflicting signals for investors. The RSI(14) reading of 20.88 suggests the stock is deeply oversold, potentially indicating a near-term bounce. Conversely, moving averages and MACD indicators continue to flash sell signals, reflecting persistent negative momentum.
Divergent Views on Future Prospects
Market opinion on FAT Brands remains sharply divided. One analytical firm maintains a “Strong Buy” rating with a $10.00 price target—representing potential appreciation of over 500% from current levels. This optimistic outlook suggests substantial upside if the company successfully executes its turnaround strategy.
The fundamental question facing investors is whether FAT Brands can balance its ambitious expansion plans with the imperative of debt reduction. The coming weeks will prove critical in determining whether current measures can stabilize the company’s financial foundation and reverse its downward trend.
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