Dive Brief:

• Fat Brands acquired Smokey Bones Bar & Fire Grill from an affiliate of Sun Capital Partners for $30 million, the company said Monday in a press release.
• The acquisition, which was funded by Fat’s existing securitization facilities, is expected to increase Fat’s EBITDA by about $10 million and will bring 61 corporate locations into Fat’s system.
• This marks the company’s 18th acquisition and its first barbecue brand. Smokey Bones fits into a market niche Fat describes as “polished casual dining,” which includes Twin Peaks.

Dive Insight:

Although Fat has decelerated its pace of acquisitions, it continues to focus on brands that are “scalable and synergistic,” according to Rob Rosen, co-CEO of Fat. The addition of Smokey Bones adds another brand for its sales team to offer its franchise partners for new unit growth.

“Having a strong player in the barbecue space provides another arrow in our quiver for the polished dining segment and opens the door for additional growth strategies for our sister brands,” Andrew Wiederhorn, chairman and founder of Fat Brands, said in a statement. “We look forward to generating impressive results, similar to our Johnny Rockets integration, which we also acquired from an affiliate of Sun Capital Partners.”

Smokey Bones’ current initiatives are similar to many Fat strategies, as well. The barbecue chain has been focused on expanding its off-premise channels in the past year, opening its first drive-thru after launching virtual brands over two years ago.

Smokey Bones’ system is entirely company-owned and will likely grow through Fat’s healthy franchising strategy. Fat’s past acquisitions have led to a development pipeline of 1,000 units and a record-breaking amount of new unit openings (142) last year. The company expects to surpass that number this year with 175 openings. 

Fat has done well in the polished dining segment, with Twin Peaks opening its 100th unit earlier this year. Fat originally purchased Twin Peaks in 2021 for $300 million and is considering an IPO for the brand that could generate a valuation between $1 billion and $2 billion, which could help Fat pay down the cost of its aggressive acquisitions over the past few years. The company is also looking at other sports lodge concepts that it could convert to Twin Peaks, Wiederhorn said during the company’s August earnings call.