Skip navigation
Ponderosa Steakhouse international potential

FAT Brands sees international potential in Ponderosa

Fatburger owner believes international operators will buy into slim version of steak chain

Foreign markets love American brands, or so says international restaurant expansion experts. So why wouldn’t they love a steak chain?

FAT Brands Inc. is betting they will with its planned acquisition of Homestyle Dining LLC, the owner of the Ponderosa and Bonanza steak chains. FAT Brands, the owner of Fatburger and Buffalo’s Café, has agreed to pay $10.5 million for Homestyle.

CEO Andy Wiederhorn (left) said the plan is to sell the brands to franchisees of its existing brands in international markets.

“Our franchisees love American brands, and they love burgers, shakes and fries, wings, steaks, seafood,” Wiederhorn said.

“The opportunity for us to create a little smaller footprint Ponderosa or Bonanza fast-casual steakhouse is a great opportunity. And our franchisees would love a great American steakhouse in Asia or the Middle East.”

“International is a must for an American steakhouse,” he added, noting that the chains already have some international locations.

But Wiederhorn also believes the company can expand domestically again, something it hasn’t done for years.

Ponderosa was a popular Midwestern steak chain that has steadily shrunk over the years. In 2013, Ponderosa and Bonanza combined operated 211 locations. Today, they operate about 120 locations.

“Domestically, they’re a couple of long-storied brands,” Wiederhorn said. “They’re in a space that is not always in favor. It comes and it goes. But they’re favorites of Middle America. Their peers in the space are doing well. And they’ve stabilized from where it was.”

Wiederhorn said that the companies could be reinvigorated in part through marketing.

“These brands have not been marketed properly in years,” he said. He also believes that new ownership could be a “breath of fresh air for franchisees” because FAT Brands plans to be aggressive with its new acquisition.

“It’s a different attitude when you have entrepreneurs growing a business to really make something out of it,” Wiederhorn said.

The chains give Wiederhorn more concepts to sell as part of his plan to make his newly created FAT Brands into a large, publicly traded multi-concept franchisor.

Wiederhorn, through his Fog Cutter Capital Group Inc., acquired Fatburger in 2003 and then Buffalo’s Café in 2011. The company since created a limited-service version, Buffalo’s Express, that are now cobranded inside Fatburgers. 

Homestyle “fits perfectly with our business model,” Wiederhorn said. “We focus on the financial success of our franchisees. If they do well, they pay us more royalties. And it works out for everybody. If they’re not doing well, we know what happens.”

FAT Brands wants to buy other concepts. 

Fat Brands announced the acquisition agreement last week as it priced shares of stock for its upcoming “mini-IPO,” in which it hopes to raise $24 million from Fatburger customers and institutional investors.

Funds from that IPO, and a debt deal that could total $30 million, are to be used to fund the acquisition — and potentially future acquisitions.

Wiederhorn said in an interview he had originally planned to do a conventional IPO that would raise $50 million to $60 million. “We had bankers lined up to do that in a conventional way,” he said.

The mini-IPO, known as Regulation A+, was made possible by the 2012 JOBS Act and enables companies to raise less than $50 million from customers and other small investors. Companies traditionally can’t raise such amounts on the public equity markets, and small, retail investors are traditionally shut out from such IPOs. And the companies can’t advertise such offerings to their customers, either.

“The process allows good companies that have upside potential to make strategic moves, initially,” said Ed Rensi, a former McDonald’s Corp. executive and currently FAT Brands’ chairman.

Wiederhorn said the company was to start taking its presentation to prospective investors on Monday.

“There’s already a lot of interest in the stock,” he said.

Contact Jonathan Maze at [email protected]

Follow him on Twitter: @jonathanmaze

Hide comments


  • Allowed HTML tags: <em> <strong> <blockquote> <br> <p>

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.