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| The Uncle Nearest Distillery in Shelbyville, Tennessee. |
I'd like to take a moment to offer some perspective on the Uncle Nearest situation. This is especially for folks who jumped to the conclusion that it was a scam from jump.
FAT Brands is a global franchising company in the fast-casual, quick-service, casual dining, and polished casual dining segments. Some of their better-known brands are Fatburger, Johnny Rockets, Ponderosa and Bonanza. (Those last two are revivals of brands from the 60s.)
FAT is bankrupt and their debt is so big, even debtors who thought they were safe may be impacted.
According to Bloomberg, FAT has $1.4 billion in bonds supported by just $40 million in annual earnings. Like Hooters and T.G.I. Fridays before it, FAT pledged virtually all its earnings to a debt structure that became too much to bear.
It's not the same as Uncle Nearest, of course, but in both cases the scheme fell apart when the market for the company's products suddenly changed, and they didn't have enough wiggle room in their financing to adapt.
That doesn't change anything. I'm just saying many businesses are a house of cards in the sense that a sudden change beyond their control can bring it all crashing down.
