Fat Patty's

## Executive Summary

Fat Pattys is a full-service burger restaurant franchise founded in 2007 and franchising since 2022. Acquired by ARC Group Inc for 12.3 million in 2018 the brand has demonstrated strong unit economics with an AUV of over 2 million. With approximately 5-6 locations primarily in West Virginia and Kentucky the franchise is now actively expanding along the eastern seaboard targeting smaller mid-sized markets. The brand offers a unique specialty burger concept combining traditional comfort food with creative flair.

## The Business

Fat Pattys operates as a full-service restaurant concept focused on unique specialty burgers. The brand was created to be a home away from home serving up unique specialty burgers that combine traditional comfort with a creative flair. Key business characteristics include full-service dining experience requiring experienced restaurant operators and a focus on smaller mid-sized cities with populations between 10000 and 15000. The development strategy favors second-generation restaurant spaces with existing infrastructure like grease traps hoods and refrigeration to reduce build-out costs.

## The Numbers

Initial Investment ranges from 493466 to 3046069. Minimum Liquid Capital Required is 250000. Net Worth Required is 750000. Average Unit Volume AUV exceeds 2 million based on 2023 franchisee performance in December 2024 FDD. For new builds investment can reach up to 3 million while second-generation spaces significantly reduce costs. Single-unit and multi-unit opportunities are available in AK AR DE FL GA KY NJ NC OH PA SC and TN.

## System Health

Fat Pattys shows measured growth with quality focus. Recent developments include January 2024 ownership change when Scott Wamsley and Jeremy Wright purchased all four West Virginia and Kentucky locations with plans for four new locations over two years. A fifth location opened in Morehead Kentucky in 2024 with a sixth location planned soon in New Jersey. January 2025 brought announcement of Ohio expansion targeting 10 locations over two years. The brand focuses on smart geographic expansion along the eastern seaboard targeting markets that fit their proven demographic profile.

## Franchisee Experience

Training Program includes over 50 years of executive level food and franchising experience with a 12 week program consisting of 60 hours of classroom training and seven weeks of on-the-job instruction at certified franchise locations.

Franchisee Support includes updated technology to simplify day-to-day operations a comprehensive leadership team to help franchise partners achieve individual success and a fun and collaborative culture for both owners and guests.

Franchisee Testimonial states the model is as scalable as any seen keeping up with industry trends and always keeping that Fat Pattys edge. It has been a pleasure working with The Fat Pattys team who stays ahead of the game to keep the brand on track and profitable.

Ideal Candidate Profile includes entrepreneurs with restaurant experience preferably full-service background who demonstrate Passion and Pace and will be hands-on in managing operations.

## Risk Assessment

Key Concerns include High Capital Requirements with investment up to 3M for new builds being significant barrier to entry. Limited Track Record shows only 5-6 units since 2022 providing limited franchisee performance data. Operator Intensive nature requires hands-on management with restaurant experience. Parent Company Portfolio means ARC Group also owns Dicks Wings and Grill and WingHouse so resources may be divided. Geographic Concentration shows current footprint heavily concentrated in Appalachian region.

Mitigating Factors include Strong Unit Economics with 2M AUV demonstrating robust customer demand. Second-Generation Strategy significantly reduces build-out costs. Experienced Leadership brings over 50 years of franchising expertise. Veteran Discounts and lower costs for second-generation builds improve accessibility. Strategic Market Selection focuses on proven demographic profiles in smaller markets.

## Competitive Position

Vs National Burger Chains like Five Guys Smashburger and Shake Shack Fat Pattys offers full-service dining experience versus fast-casual and more creative specialty menu items. Higher price point justified by elevated experience.

Vs Regional Full-Service like Applebees and Chilis Fat Pattys provides more focused menu and brand identity with smaller footprint and simpler operations.

Vs Local Burger Joints there are franchise support buying power and marketing advantages with proven operational systems and training.

Market Position as a full-service burger concept occupies a less crowded niche than fast-casual burger segment allowing for differentiation.

## Validation Questions

1. What is the typical breakeven timeline for new franchisees? 2. What are the actual food and labor cost percentages from the Item 19? 3. How many of the current 5-6 locations are profitable and at what margin? 4. What is the turnover rate for general managers and key staff? 5. What specific support does ARC Group provide versus dedicated Fat Pattys corporate team? 6. What is the timeline and cost difference between new build and second-generation conversions? 7. Can you provide references from the franchisee group that purchased the original four locations?

## Data Gaps

Item 19 Financial Details with specific revenue ranges and profitability metrics not publicly disclosed. Franchisee Satisfaction Data with no third-party satisfaction surveys or independent reviews found. Royalty and Marketing Fees not specified in public sources. Territory Requirements with protected territory size and population requirements not disclosed. Franchise Agreement Terms with contract length renewal conditions and transfer fees not publicly available. Site Selection Criteria with specific real estate requirements and square footage needs not detailed. Supplier Relationships with approved vendor requirements and food cost guarantees not disclosed.