Andy Wiederhorn will step down in May as CEO of FAT Brands, transitioning to a strategic adviser role as he seeks to eliminate the distraction of a federal investigation into the company and his family.
Wiederhorn will remain on the FAT Brands board and his family office, Fog Cutter Holdings, will remain the company’s controlling shareholder. FAT Brands in its announcement said it would appoint an interim CEO before Wiederhorn moves to the new role May 5.
Los Angeles-based FAT Brands owns Fatburger, Twin Peaks, Johnny Rockets, Fazoli’s and 13 other concepts. As an adviser, Wiederhorn will focus on FAT Brands’ “long-term strategy and capital allocation,” the company said in its announcement Monday. Wiederhorn, it said, “seeks to eliminate the distraction of the previously announced government investigation tied to him, and allow senior management to focus on continuing to drive shareholder value.”
FAT Brands last February said the U.S. Securities & Exchange Commission and the U.S. Attorney’s Office for California opened investigations in December 2021 into the company and its CEO. In an SEC filing February 22, 2022, the company said the government was “formally seeking documents and materials concerning, among other things, the company’s December 2020 merger with Fog Cutter Capital Group, transactions between these entities and other benefits or payments received by Mr. Wiederhorn or his family.”
FAT Brands CEO Andy Wiederhorn will step down May 5 and transition to a strategic adviser role.
That filing came just three days after a Los Angeles Times article reported Wiederhorn and his son Thayer Wiederhorn, also FAT Brands’ chief operating officer, were under investigation by federal agents “for allegations of securities and wire fraud, money laundering and attempted tax evasion.” Thayer Wiederhorn remains in the COO role.
“I stand by my statement that I categorically deny these allegations,” Wiederhorn said in an interview with Franchise Times in March 2022. “The newspaper articles have the facts wrong. And this shouldn’t be something that’s publicly vetted. There’s been no charges. It shouldn’t have been publicly disclosed, and it’s very unfair.”
The SEC investigation brought back to the surface questions about Wiederhorn’s past. He is a convicted felon who served 14 months in federal prison in 2004 and 2005 after pleading guilty to two felony counts, for paying an illegal gratuity to a pension fund manager and for filing a false tax return.
At the time, the board of his company, Fog Cutter Capital and the owner of Fatburger, agreed to pay him $4.6 million, which more than covered his $2 million government fine and his salary while he was in jail, violating federal rules and resulting in his company being delisted from Nasdaq, as reported in a Franchise Times cover story published in March 2018.
Wiederhorn took FAT Brands public in 2017 in a non-traditional way, via Regulation A+ also known as a mini-IPO. It raised $24 million and then bought the parent company of Ponderosa and Bonanza steakhouses and then Hurricane Grill & Wings.
In December 2020, FAT Brands merged with Fog Cutter as part of a corporate restructuring to remove restrictions and allow more options to purchase franchises. It went on to acquire Round Table Pizza, Great American Cookies, Marble Slab Creamery, Twin Peaks and others in a series of deals totaling nearly $1 billion.
In response to an interview request on Wiederhorn’s decision to step down as CEO, a FAT Brands spokesperson referred back to the company press release issued March 6.
“While I will be stepping aside as CEO, I will continue to support the growth and evolution of FAT Brands, including championing our talented executive team, which has over the past five years taken the company from two brands to 17 iconic restaurant brands with over 2,300 units and systemwide sales of $2.2 billion annually,” Wiederhorn said in a statement.
FAT Brands, as part of its 10-K SEC filing on February 24, noted its board of directors formed a Special Review Committee “comprised of directors other than Mr. Wiederhorn to oversee a review of the issues raised by the U.S. Attorney and SEC investigations, reach findings and make a recommendation to the board with respect to these matters.”
“The company intends to cooperate with the U.S. Attorney and the SEC regarding these matters and is continuing to actively respond to inquiries and requests from the U.S. Attorney and the SEC. We believe that the company is not currently a target of the U.S. Attorney’s investigation,” the filing said. “At this stage, we are not able to reasonably estimate or predict the outcome or duration of either of the U.S. Attorney’s or the SEC’s investigations.”