Dive Brief:

• Fat Brands said Tuesday that it plans to pursue an initial public offering of its Twin Peaks business, according to a press release. 
• The IPO would create a separate publicly traded company that will “help facilitate continued strong growth of the restaurant chain and market segment.” 
• Twin Peaks opened its 100th restaurant last week and plans to open 18 to 20 new units this year, bringing its total to around 115 lodges. This would mark a roughly 40% increase in unit volume since Fat Brands acquired the brand in October 2021 for $300 million.

Dive Insight:

In addition to Twin Peak’s current growth trajectory, the brand has a development pipeline of 109 franchised units, which will more than double its current unit count over the next several years, according to the press release. The company plans to increase the mix of franchised stores from 70% to over 80% during that time. This unit growth is expected to grow its systemwide sales to $1 billion annually. 

“Twin Peaks was an exceptional acquisition for us in 2021,” Ken Kuick, Co-CEO and CFO of Fat Brands, said in the press release. “Led by veteran CEO Joe Hummel and a seasoned management team, Twin Peaks continues to produce industry-leading average unit volumes, with annual same-store sales increasing by 11.3% in 2022.”

Twin Peaks had average unit volumes of $6 million as of Q1 2023. Some of its highest volume stores are in Florida, where AUVs range from $9 million to $12 million, former Fat Brands CEO and president Andy Wiederhorn said in the company’s May earnings call. Unlike its other brands, Fat is materially growing company-owned Twin Peaks units given the high return on investment and high profits, he said. By 2024, the company expects to open five to six locations annually compared to its previous average of two to three company-owned units per year.

“We really want to see the EBITDA in that business go from a $40 million run rate this year to a $50 million and then $60 million and so on and that will enable us to really realize the long-term value of Twin Peaks in the next three or so at a very big number,” Wiederhorn said. 

Becoming its own publicly traded company could unlock capital for Twin Peaks to acquire other sports lodge concepts that could be converted to Twin Peaks locations, a strategy Wiederhorn explained in the press release. 

“We believe that creating a separate publicly traded company will provide the best opportunity to further enhance the brand, capitalize on its expansion plans and build upon its position as a leader in the sports lodge dining category,” Kuick said. 

The company has yet to file a registration statement with the U.S. Securities and Exchange Commission. According to the press release, “the timing and size of the transaction to make Twin Peaks public will be subject to market conditions and other factors.” Fat Brands will remain the majority owner of the public company. 

Twin Peaks would be joining a growing cohort of restaurant businesses to go public this year, including Cava, Gen Restaurant Group and Panera Brands. With a recession expected around the corner and inflationary pressures easing, restaurants appear to be going public now before market conditions worsen.