Dive Brief:

• Fat Brands confidentially submitted a registration statement to the Securities and Exchange Commission to make its operating unit for Twin Peaks and Smokey Bones restaurant brands a standalone public company, Fat Brands said in a press release Tuesday.
• Twin Peaks could be worth between $1 billion and $2 billion in valuation, Fat Executive Chairman Andrew Wiederhorn previously told Restaurant Dive. 
• Twin Peaks is the first major restaurant brand to officially begin the process of going public this year, which could also include an IPO for Panera Brands. 

Dive Insight:

Fat anticipates using the proceeds of the IPO, or any alternative transactions, to “deleverage the balance sheet,” Wiederhorn said during the company’s first quarter earnings call. The company plans to refinance the securitization debt for Twin Peaks prior to an IPO, he added. Fat’s balance sheet includes over $1 billion debt that it accrued as it acquired several companies over the past few years.

“Twin Peaks continues to produce industry-leading economics and has a deep pipeline of profitable growth, making this a strong move, for both the brand and FAT Brands as a whole,” Wiederhorn said. 

Twin Peaks produces Fat’s highest average-unit volumes of about $6 million — some units in Florida have unit volumes between $9 million and $14 million, he said. The company expects to end the year with 125 Twin Peaks lodges after opening an anticipated 15 to 18 units, for a total increase in unit count of about 51% since Fat acquired the chain three years ago for $300 million. During the first quarter, Twin Peaks opened three restaurants in Guadalajara, Mexico; Boardman, Ohio and Doral, Florida, Wiederhorn said.   

Over the next five years, Twin Peaks plans to double its unit count, and has 125 franchise deals signed and committed to be built during this time frame, Wiederhorn said. This expansion will grow Twin Peaks’ systemwide sales to $1 billion. Franchisees will own between 75% to 80% of total units. 

“The excitement we are seeing from new and existing franchisees to open additional Twin Peaks locations reinforces the concept's strong consumer appeal and compelling unit economics,” Wiederhorn said. 

Fat is also in the process of converting Smokey Bones restaurants, which it acquired last year, to Twin Peaks as part of its expansion. Fat decided that over half of Smokey Bones’ 61 restaurants will be converted to Twin Peaks locations. A handful of these conversions are expected to be completed this year, with the bulk to occur in 2025 and 2026. 

“This strategy allows us to rapidly scale Twin Peaks footprint, leveraging existing restaurants rather than having to build new restaurants from the ground up, which can take more than two years,” Wiederhorn said. 

Fat will continue to grow the Smokey Bones brand, however, and intends to push it to 120 units, which it had at its height. Smokey Bones, which Fat acquired last year, is expected to generate $10 million in additional EBITDA net of any Twin Peaks conversions, Wiederhorn said.

The announcement of Twin Peaks confidential filing follows Wiederhorn and Fat Brands’ indictment over a $47 million loan scheme last week.