Fat Brands has made a name for itself by acquiring brands. Now it plans to spin one off.
The Los Angeles-based owner of Johnny Rockets and Fazoli’s on Tuesday said it plans to take Twin Peaks public. Fat Brands said it plans to remain a majority owner of the 100-unit chain but believes the move of creating a separate publicly traded company will “unlock value for Fat Brands shareholders.”
“Twin Peaks was an exceptional acquisition for us in 2021,” Ken Kuick, co-CEO of Fat Brands, said in a statement. “We believe that creating a separate publicly traded company will provide the best opportunity to further enhance the brand, capitalize on expansion plans and build upon its leader in the sports lodge dining category.”
Fat Brands acquired Twin Peaks in 2021 for $300 million. It stood out among several acquisitions it has made since going public in 2017, mostly because it was a full-service dining concept with a substantial number of corporate locations. Fat Brands typically acquired limited-service franchise brands that it would fold into its operation under company management.
But Twin Peaks had operated separately from Fat Brands since that acquisition and has grown quickly since then. Unit volumes grew 8.3% last year, according to data from Restaurant Business sister company Technomic, and system sales grew 22.6%. It has added locations this year and now has 100 restaurants.
The company also expects to keep building new restaurants, which it calls “lodges,” and expects to finish 2023 with 115 such locations. It has at least another 109 franchise locations in its pipeline.
Fat Brands clearly doesn’t believe it’s getting credit for that growth. By taking the company public, it is making a bet that the parts of Fat Brands—its primary company and Twin Peaks—will be more valuable as separate parts than under a single roof.
It is also taking a bet that investors would welcome such a move. Several restaurant companies have been considering initial public offerings, with Cava Group starting its roadshow this week and GEN Korean BBQ filing documents for an IPO last week. With relatively little market for restaurant acquisitions, the public markets may look attractive for companies considering a financial move.
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