The sports bar—estimated to have an equity value of around $1.2 billion—will officially go public in late January.

In 2011, Joe Hummel left a nearly two-decade career with Hooters to join Twin Peaks as a franchisee with several partners. The group saw an opportunity to grow a brand with a clean slate, unique assets, scratch kitchen, and 29-degree beer.

When they signed up, there were 14 stores. Since then, Twin Peaks has grown to 115 restaurants, each showcasing 150 bottles of liquor, 60 to 80 TVs ranging from 65 to 200 inches in size, and every sports package (NBA, NFL, NHL, and pay-per-view events) imaginable. That’s all paired with the authentic tones of a lodge and the iconic Twin Peaks girl.

The next step is spinning off into a public company at the end of January. That will be done with Hummel as CEO, a position he’s held for seven and a half years. Shortly after, he and his leadership team will be on Wall Street ringing the Nasdaq bell.

“We’ve been around for at least 100 openings, and now we get to go ring a bell. Kind of fun,” Hummel says. “And then we have a pipeline of just great growth out in front of us with more units.”

READ MORE:

FAT Brands Takes Big Step in Spinning Off Twin Peaks and Smokey Bones

Twin Peaks’ Conversion Strategy is Proving Successful

Twin Peaks is spinning off from FAT Brands, which purchased the polished casual for $300 million in 2021. The sports bar, along with Smokey Bones, will operate as Twin Hospitality Group. The move is part of FAT Brands’ overall strategy to reduce debt.

It also allows Twin Peaks’ growth story to stand on its own. The sports bar is estimated to have an equity value of around $1.2 billion.

“The strategic rationale for the spin is really unlocking focused growth, operational efficiencies, and tailored strategies,” says FAT Brands CEO Ken Kuick. “As an independent entity, Twin Peaks will be able to better prioritize its investments, enhance its market perception, and drive tailored strategies. From an independent investor perspective, it allows the investor to evaluate and invest in two distinct business models, and it provides a much clearer view into the values of each of those entities.”

Last year, Twin Peaks opened nine restaurants—one in Mexico and eight in the U.S. The company also signed four franchise area development agreements that should add 24 more restaurants across Pennsylvania, Colorado, South Carolina, Alabama, Florida, North Dakota, South Dakota, and Montana.

Twin Peaks has more than 100 franchise development commitments, and about 75 percent of that is from existing operators. The chain is about 70 percent franchised, but it would like to reach 75 percent in the next few years. Hummel foresees a pace of 10 to 12 franchise openings per year and three to four corporate openings.

In addition to organic franchise expansion, Twin Peaks will grow by converting roughly 30 Smokey Bones restaurants. The company has completed one so far in Lakeland, Florida. Next up is Brandon, Florida. The difference is notable; The Lakeland location earned $3.6 million AUV as a Smokey Bones but is tracking at north of $8 million as a Twin Peaks. Kuick cautions that all cases won’t be like this, but adds “the economics are significantly better.”

There are several more Smokey Bones conversions going through permitting and design in markets like Tampa; Ohio; Fayetteville, North Carolina; and Reading, Pennsylvania.

One-third of these 30 Smokey Bones units are in franchise territories. Another third are in company-owned markets. The remaining third exists outside of these zones.

“As we finish off the initial 10 corporate ones, our franchise development sales team will be selling those markets. And if they’re not quite there selling that market, don’t have the interest of finding somebody that wants to be a Twin Peaks franchisee in that existing market with the Smoky Bones, we’ll go ahead and float up there because we’re already operating 34 corporate stores. So to operate another one, two, five stores in another market, that’s not a problem with us because our corporate store development is in Colorado, New Mexico, Nevada, Chicago, Arkansas, Texas, and Florida. We have a lot of different regions from corporate. So just add another market on because we haven’t quite franchised it yet, it’s not a problem.”

That leaves roughly 30 other Smokey Bones locations—ones that can’t be converted for a variety of reasons, whether that’s vicinity to an existing Twin Peaks, an issue with alcohol licensing, or a problem with lease negotiations. Hummel wants the restaurant group to focus on conversions first before deciding how it wants to go after the Smokey Bones stores.

“We want to stay focused on that and keep Smokey running as Smokey,” Hummel says. “And then once we get to a standpoint of all right, we’ve done enough conversions, or we’re at that point, we’ll sit with the investment team and our bankers and say, OK, what’s the best use of Smokey Bones and how to grow it.”

Twin Hospitality Group believes Twin Peaks has a total market opportunity of 650 U.S. locations and 250 international locations, according to an SEC filing. Approximately 80 percent of units are second-generation conversions; the chain has converted Walk-On’s, TGI Fridays, Romano’s Macaroni Grill, and even a two-story real estate office and a credit union.

The chain typically spends $2 million to $5 million on a conversion compared to $4 million to $6 million on a new prototype, plus land costs. It also takes about nine months to finish a conversion compared to 18 months on a ground-up build.

Between 2019 and 2023, Twin Peaks’ AUV increased from $4.1 million to $5.4 million. Going forward, the brand expects new restaurants to earn $6.5 million in AUV by the third year of operations, in addition to a restaurant-level contribution margin of 16 percent and cash-on-cash returns of approximately 28.9 percent for conversions and 37.1 percent for new-build locations.

From a leadership standpoint, the spinoff will be relatively seamless since FAT Brands kept Twin Peaks’ systems independent from the rest of its concepts. Most of the brand leaders have been with the chain between 10 to 14 years and have seen most of the company’s evolution.

Although Twin Peaks plans to grow rapidly in the next few years, Hummel says the chain won’t forget what got it there in the first place.

“I think we breed that culture within our executive team and our support center,” Hummel says. “Our executive team and our support center is so ingrained in store operations, and everything is about store operations and the store experience for the guests. As long as we continue that focus from that culture of the executive team and the support center, [Twin Peaks] won’t get lost because the only thing that drives the executive team in the support center is what can we do for the operators/guest?”

Casual Dining, Chain Restaurants, Feature, Franchising, Growth, Twin Peaks