Fat Brands has taken steps to spin off Twin Peaks. | Photo: Shutterstock.
Fat Brands, the collector of chains like Fazoli’s and Fatburger, took a key step Monday in fulfilling its long-held promise to spin off its full-service Twin Peaks brand.
The Los Angeles-based Fat Brands filed a registration statement with the U.S. Securities and Exchange Commission for the planned spinoff of Twin Peaks under the Twin Hospitality Group name. Fat Brands shareholders will get 5% of the shares of the new company, while Fat Brands will keep the other 95%.
Twin Hospitality Group will then be operated as a separate company and will be publicly traded on the Nasdaq Stock Exchange.
Ken Kuick, co-CEO of Fat Brands, called the filing “an important milestone in unlocking value and growth opportunities for Twin Hospitality Group and the Twin Peaks brand, while continuing the generate long-term value for Fat Brands shareholders.”
Fat Brands acquired Twin Peaks in 2021 for $300 million as part of a massive buying spree totaling more than $900 million.
But the casual-dining chain has always been a bit different from the rest of the Fat Brands portfolio. The chain is a full-service operator, while the bulk of Fat Brands’ chains like Great American Cookies and Fatburger are limited-service brands.
Twin Peaks also operates a substantial number of its own restaurants—30 at the end of 2023, according to data from Restaurant Business sister company Technomic. Fat Brands is traditionally a pure franchised company.
Twin Peaks boasts 115 high-volume locations. The system generates $5.3 million in average unit volumes and some of its top restaurants generate $9 million to $14 million in annual sales.
But sales and profitability at Twin Peaks have been hit this year.
The chain’s same-store sales declined 0.2% in 2023 and are down 3.9% so far in 2024 through the end of September, according to SEC filings. Restaurant-level contribution margins declined, however, to 8.7% of sales so far this year, from 14.3% in the same period a year ago.
Last year, Fat Brands acquired the Smokey Bones brand, mostly to convert many of those restaurants into the higher-volume Twin Peaks brand. The company expects to convert 60 Smokey Bones restaurants into Twin Peaks locations.
Fat Brands argues that Twin Peaks could grow to 650 locations nationwide.
“We’re extremely optimistic about the conversion of these Smokey Bones into Twin Peaks,” Fat Brands Chairman Andy Wiederhorn told analysts last week, according to a transcript on the financial services site AlphaSense. “The first stores have been a huge success.” Those locations went from $3.6 million in annual sales to $8.3 million, he said.
“The buildings are a little bit more beat up than we had hoped they would be … so the cost is just a little bit higher,” he added. “But the result is outstanding.”
Wiederhorn said last week that the company had confidentially filed a registration statement with the SEC, kicking off the planned spinoff.
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