Fat Brands – as it is pushing toward a unique IPO of its own – is offering consumers with $500 to burn an interesting opportunity: the chance to purchase their own piece of Fatburger.
Fatbrands – which owns Buffalo Wild Wings officially plans to sell shares in the firm to the public next month on a quest to earn $20 million so it it can better expand its business and pay down some of its corporate debt.
“As we make the transition from a private company to a public one, we are delighted to position our restaurants so that our fans can now be part owners too,” Fat Brands founder and CEO Andy Wiederhorn said in a statement.
The IPO for small investors (and a smallish sum) is the product of a set of stock rules known as Regulation A+.
Regulation A+ allows companies to raise up to $50 million via a mini-IPO.
The mini-IPO process will be less rigorous and work intensive than a traditional IPO. Though small-scale public offerings have existed legally for some time (via Regulation A) they have historically been a high-complexity vehicle with a low $5-million ceiling that few companies ever bother to make use of.
Regulation A+ opens up investing to “average Joe” investors who are not “accredited.” To be an accredited investors – one must earn more than $200K a year or have $1 million in combined (non-primary residence) assets. Generally, investors must be accredited as a rule because the goal is to prevent average investors from unknowingly making high-risk investment bets on untested start-up ventures by limiting who can access them.
Regulation A+ does face some limits as to how much an individual can invest (only 10 percent of their net worth or annual income), but other than that cap, anyone who wants to take part is more or less qualified as an investor under the new rules.
So, for example, FatBurger’s coming investor class must earn $5,000 a year – or have a net worth of that amount.
And by buying their $500 piece of the beef, so to speak, investors are getting a chance to buy a part of a historic brand. FatBurger was founded during the golden era of American fast food innovation – 1947 – by a woman named Lovie Yancey. The first location was a food cart – and true to its current fundraising efforts, the initial money for opening came care/of Yancey’s construction worker brother.
Today there are 200 Fatburgers in 18 countries – though tragically for those of us who live in the Eastern U.S., it has yet to leave it historical home of the West Coast.
The chain specialized in fresh (never frozen) beef, made-to-order food – and onion rings standing proudly next to French fires as a side dish on offer.
Fatburger has also attracted its share of celebrity followers over the last six or so decades. Ray Charles was a fan as far back as the 1960s – and in the modern era Nicki Minaj, Justin Bieber and the inimitable Kanye West all call themselves proud patrons of a chain whose name alone should scare off the image and figure conscious of the world.
So what’s next for the chain that seeks to prove by its very existance that thin may be in, but fat’s where it’s at?
If the IPO is successful and it can get to that $20-million mark – Fatburger will officially trade under the ticker symbol FAT. It will also push its expansion farther – so that perhaps someday the people of Boston and Maine can too know the joy of the Fatrburger lifestyle.
It will, however, be a franchise-only operation. FatBurger, unlike many of the other players in the fast food game, does not own any of its restaurants. It makes its money wholly from licensing fees and the franchise fees it charges to start up a Fatburger of one’s own.