Fog Cutter Capital Group Inc., parent to the Fatburger chain, has acquired the 26-unit, casual-dining chicken wing chain Buffalo’s Café, one of several new concepts the group plans to add to its franchise portfolio.
Andrew Wiederhorn, Fog Cutter’s chairman and chief executive, said the move would allow the group’s franchise development subsidiary to offer a new concept to its base of existing brands, both domestically and internationally.
Terms of the deal were not disclosed. The Fog Cutter subsidiary will operate Buffalo’s Café as an all-franchised brand under Buffalo’s Franchise Concepts Inc.
Based in Atlanta, Buffalo’s Café was founded in 1985 and specializes in Buffalo-style chicken wings and tenders, as well as salads, wraps, burgers, ribs and other American classics.
The chain was sold by an unnamed private investor in Los Angeles. The investor had been the landlord for what was a company-owned location, and later acquired the entire Buffalo’s chain. The investor retained one Buffalo’s unit in Loganville, Ga., which he will operate as a franchisee.
Buffalo’s Café has 20 domestic units in Georgia, Texas, Florida, North Carolina and Indiana, as well as six international locations: five in Kuwait, and one in Saudi Arabia.
Wiederhorn said Fog Cutter is also developing an express variant of the concept for smaller footprint locations. The express menu would focus on wings, sandwich wraps, soups and salads, he said.
The first express location is scheduled to open in 2012, with both domestic and international locations planned.
Wiederhorn said Fog Cutter is also in the process of acquiring franchising rights to another California bistro brand that will be grown overseas; he declined to reveal the brand.
In addition, Fog Cutter is looking at another cigar-lounge luxury concept that will also be an international franchise option.
Fog Cutter acquired the now 112-unit Fatburger concept in 2003.
Two of Fatburger Corp.’s corporate operating subsidiaries filed for Chapter 11 bankruptcy protection in 2009, and 25 locations operated by the two entities were sold at auction earlier this year to franchisees. Those entities in bankruptcy are now completing the Chapter 7 process, allowing Fatburger to emerge as another almost all-franchised brand, although Fog Cutter operates two corporate locations.
Meanwhile, the chain has been growing aggressively.
Wiederhorn said 24 franchised Fatburger locations have opened this year, with one more planned before the end of 2011. Another 40 units are in the pipeline for 2012, including about a dozen in Canada, 10 in the United States and the rest in various international locations, mostly in the Middle East.
This week, the brand debuted in Seoul, South Korea, with the opening of the first franchise location there by SW Group Inc., which plans to open a total of 10 Fatburgers in that country.
Fatburger has also signed deals with franchise partners in the new markets of Lebanon, Jordan and Pakistan, Wiederhorn said.
The Fatburger brand has been particularly popular in the Middle East, with units there showing average unit volumes about three times those in the U.S., he added.
That’s in part why Fog Cutter was drawn to Buffalo’s Café as an opportunity to bring another concept to a franchise base hungry for American food.
“Chicken wings are hot,” Wiederhorn said. “It’s an opportunity to distribute another product line that’s complementary to burgers.”
In addition, Buffalo’s Café already has locations in the Middle East that are performing well. “We have a leg up,” he said.
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