How FAT Brands grew to 2,300 locations: Top 10 scaling strategies

Scaling a restaurant from a single location to a thriving empire is a challenge that few can master. On a recent episode of the FULL COMP podcast, I had the pleasure of speaking with Andy Wiederhorn about exactly that.

In our conversation Andy, the founder behind FAT Brands, which ranks among the top 25 largest restaurant companies in the U.S., offered valuable insights into the process of building a restaurant brand that thrives across diverse markets.

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Meet Andy Wiederhorn

Andy is the founder and chairman of FAT Brands, a global franchising powerhouse with over 2,300 restaurant locations across 40 countries. With a sharp financial acumen and a deep understanding of the restaurant industry, Andy has successfully scaled multiple iconic brands, including Fatburger, Johnny Rockets, and Twin Peaks.

In less than ten years, his strategic vision and leadership have transformed FAT Brands into a multi-billion dollar enterprise, making him one of the most prominent figures in the world of franchising and hospitality.

Here are my top ten takeaways from our conversation:

1. Identifying and Leveraging Core Strengths

Andy’s entry into the restaurant industry was rooted in a deep understanding of the basics, learned during his teenage years working in local “mom and pop” restaurants. This foundational knowledge became crucial when he later acquired and scaled Fatburger. “What they really had going for them was outstanding food,” Andy recalls. The key was recognizing that this strength could be scaled across different markets without diluting the brand’s essence.

Take Action: Start by identifying the core strengths of your restaurant—whether it’s a unique menu item, exceptional customer service, or a distinctive dining experience. Focus on scaling these strengths consistently across all locations to maintain brand identity and appeal.

2. Establishing Robust Unit Economics

One of the cornerstones of Andy’s strategy is ensuring that each unit operates with strong financial health. He emphasizes the importance of good unit economics, stating, “You’ve got to have good unit economics… if franchise operators are making money, then they will want to expand.” This means each individual restaurant location must generate enough revenue to cover its costs and contribute to the overall profitability of the brand.

Take Action: Before considering expansion, conduct a detailed financial analysis of each location. Ensure that each unit is profitable and has the potential for sustainable growth. Develop financial benchmarks for potential franchisees to follow, ensuring they understand the economic expectations.

3. Consistency is Key

Consistency is critical to scaling a restaurant brand successfully. Andy’s experience with Fatburger highlighted the need to maintain the original recipes and operational practices that led to the brand’s success. “Consistency is what it’s all about,” he notes, emphasizing that customers expect the same quality and experience, no matter the location.

Take Action: Develop detailed standard operating procedures (SOPs) that cover every aspect of your restaurant’s operations, from food preparation to customer service. Train franchisees and their staff rigorously to ensure that these SOPs are followed precisely, maintaining the brand’s consistency.

4. Creating a Scalable Restaurant Model

Andy advocates for franchising as a strategic way to scale while mitigating financial risk. “The best way to scale a business is to franchise it,” he advises. By franchising, you can leverage other people’s capital to grow your brand, expanding your footprint without overextending your resources.

Take Action: Build a comprehensive franchise model that includes clear guidelines, support systems, and training programs for franchisees. Ensure that your franchise agreements protect the brand’s integrity while offering franchisees the tools they need to succeed.

5. Adapting to Market Variations

Scaling a brand across different regions requires a deep understanding of local markets. Andy’s approach with Fatburger involved adapting to local preferences without compromising the brand’s core identity. He accomplishes this by conducting thorough market research before entering new regions.

Take Action: Before expanding into a new market, research local demographics, preferences, and competitors. Adapt your menu, pricing, and marketing strategies to align with local tastes while maintaining your brand’s core offerings.

6. Investing in Technology and Systems

A scalable restaurant concept requires robust systems to ensure operational efficiency and consistency. Andy’s strategy involved implementing technology that supports scalable operations, from supply chain management to customer interactions. “You’re not reinventing the wheel,” he says, emphasizing the importance of reliable systems.

Take Action: Invest in technology that streamlines operations, such as point-of-sale systems, inventory management software, and customer relationship management tools. These systems should be scalable and easy for franchisees to implement, ensuring consistency across all locations.

7. Focusing on Profitability

For a franchise to thrive, franchisees must be profitable. Andy emphasizes the importance of coaching franchisees on maintaining their margins and understanding their financials. “If they don’t maintain their margin, they’re going to be out of business,” he warns. Top line metrics are a vanity number, focusing on the bottom line ensures success.

Take Action: Offer ongoing financial training and support to franchisees. Provide them with tools to monitor and manage their finances effectively, and encourage them to focus on profitability rather than just revenue growth.

8. Leveraging Non-Traditional Venues

Expanding into non-traditional venues, such as airports, stadiums, and universities, has been a successful strategy for FAT Brands. Andy explains that these venues offer “low-hanging fruit” for certain brands, providing additional revenue streams without the need for traditional restaurant locations.

Take Action: Explore opportunities to expand your brand into non-traditional venues. Consider whether your concept is suitable for these environments and develop tailored strategies to capture these markets, such as limited menus or streamlined service models.

9. Managing Price Elasticity

As inflation and wage increases put pressure on restaurant margins, Andy stresses the importance of maintaining price elasticity. He points out that customers have a limit to how much they can pay before reducing their frequency of visits. “You’ve got to give them a reason to come back,” he says. Scaling perceived value in the mind of the customer is critical.

Take Action: Regularly review your pricing strategy to ensure it aligns with customer expectations and market conditions. Introduce value-added offerings or promotions to maintain customer loyalty without sacrificing margins.

10. Fostering Strong Leadership and Resilience

Scaling a brand requires strong leadership and the ability to persevere through challenges. Andy emphasizes the importance of resilience, advising restaurateurs to “have the guts to persevere” and adapt when necessary. This mindset has been crucial in navigating the complexities of scaling FAT Brands.

Take Action: Develop your leadership skills and build a resilient mindset. Stay informed about industry trends, continuously refine your strategies, and be prepared to pivot when necessary. Encourage a culture of adaptability and problem-solving within your team.

Putting it all together

Andy Wiederhorn’s insights provide a comprehensive blueprint for restaurant owners and operators aiming to scale their brands.

By focusing on core strengths, ensuring profitability, maintaining consistency, leveraging technology, and fostering strong leadership, you can navigate the challenges of scaling and build a successful restaurant empire.

Remember, scaling a brand is not just about growth; it’s about sustainable, profitable growth that maintains the integrity of your brand and meets the evolving needs of your customers.

Click below to download our Restaurant Profitability Guide, providing you with a breakdown on how to implement these strategies.

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