Twin Peaks and Fazoli’s parent company FAT Brands is coming off of a mixed fourth quarter, balancing massive growth (the company expanded tenfold over the past three years) with a net loss of $26.2 million, for the fourth quarter ended Dec. 31, 2023. The beleaguered Beverly Hills, Calif.-based company is also facing down a Wells notice from the U.S. Securities and Exchange Commission, indicating that the federal government has concluded its investigation into FAT Brands.
Despite these fiscal and legal challenges — the latter of which, former CEO Andy Wiederhorn declined to comment further on — FAT Brands is looking to continue its aggressive expansion strategy, both within the brands it already owns, and looking ahead to new acquisition possibilities.
“As we continue to assess potential targets for acquisition, our focus remains on identifying strategic and EBITDA accretive opportunities with brands that have demonstrated long-term sustainability and robust profitability,” Wiederhorn said during Thursday’s earnings call. “We are also interested in categories we currently do not operate in to round out our portfolio, such as salad, sandwich, or coffee brands. Acquisition targets must be both scalable and synergistic with our existing platform, including leveraging our existing manufacturing capacity when possible.”
Besides acquisition considerations in new categories, FAT Brands is also continuing to convert underperforming Smokey Bones restaurants into Twin Peaks locations. The company acquired Smokey Bones last fall and is planning to go public with Twin Peaks in 2024. Previously, FAT Brands had suggested that an IPO might happen as early as Q2 of this year, but now it has been delayed to likely Q3.
“The timing and the size of the [Twin Peaks IPO] transaction is subject to market conditions and other factors,” Wiederhorn said. “We view an IPO or any alternative transaction as an opportunity to monetize the business for the benefit of that shareholders. Our priority is to use some of the proceeds from any transaction we might pursue to pay down debt.”
After converting some Smokey Bones locations, the company plans to build the brand back up to its previous store count of approximately 120 locations. As previously reported, cobranding continues to be a major strategy for FAT Brands this fiscal year, as well as opening stores in nontraditional locations.
FAT Brands announced a same-store sales decline of 0.6% for the fourth quarter, with total revenue growth up 52.8% to $158.6 million, compared with $103.8 million in the fourth quarter of 2022. Income net loss was $26.2 million or $1.68 earnings per share compared to $70.8 million, or $4.39 per diluted share, in the fiscal fourth quarter of 2022. FAT Brands reported 29 new store openings for the fourth quarter.
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