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As its IPO nears, LA's Fatburger looks to grow

Ronald D. White, Los Angeles Times on

Published in Business News

LOS ANGELES -- The upcoming initial public offering of stock in Fatburger's parent company won't be big by Wall Street standards.

But it will draw attention because of the burger chain's near-cult status in Los Angeles. Besides its celebrity franchise owners, which include Kanye West and Pharrell, and such fans as Nicki Minaj and Justin Bieber, the company has a rich history.

African-American entrepreneur Lovie Yancey started her first restaurant -- calling it Mr. Fatburger -- 70 years ago in a South Los Angeles shack, catering to many area entertainers such as Ray Charles.

Over the years, the brand has been immortalized in rap songs such as Ice Cube's "It Was a Good Day," in prime-time sitcoms and in blockbuster movies, including "The Fast and the Furious." David Letterman named Fatburger one of the top 10 things he'd miss most when his "Late Show" left Los Angeles.

Today, privately run Fat Brands Inc. is enjoying its best financial performance in years. Revenue passed $10 million in 2016 and is up 12 percent this year, it says.

Chief Executive Andy Wiederhorn envisions using the stock-offering proceeds to expand to 500 restaurants from the current nearly 300 in the U.S. and overseas.

"We created Fat Brands to be a global franchising company," Wiederhorn said. "We felt like the public market was the perfect way to continue to access capital to buy more brands to distribute to our franchise partners."

Fat Brands hopes to raise $24 million at $12 a share when it opens trading on the Nasdaq stock exchange this month.

The company is talking up potential investors but is unable to sell to any of them until the Securities and Exchange Commission clears the stock offering.

But investors may be wary of betting on restaurants. The U.S. is so saturated with burger offerings in particular -- from big fast-food chains to gourmet boutique restaurants -- that experts expect only slow growth and small profits through at least 2022.

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