Fat Brands to acquire Twin Peaks for $300M

Dive Brief:

Fat Brands, parent company of Fatburger and Johnny Rockets, announced on Wednesday it will acquire casual dining chain Twin Peaks from Garnett Station Partners for $300 million.
The transaction will include $232 million in cash and a series B preferred stock of Fat Brands, Bloomberg reports. The deal is slated to close by the end of September.
The acquisition marks Fat's entry into "polished casual dining", a departure from its roster of QSR, fast casual and casual brands. This is the second major deal for Fat this summer, following its $442.5 million purchase of Global Franchise Group in June.

Dive Insight:

Twin Peaks will bolster Fat's annual systemwide sales from roughly $1.4 billion to more than $1.8 billion with the addition of its 82 locations and 24 additional stores in development. This brings the restaurant company's global store footprint to more than 2,100 franchised and corporate-owned locations.

"Following the recent acquisitions of Johnny Rockets and Global Franchise Group, this acquisition comes at a time when we're seeking to expand our market segments into sports and polished casual dining," Fat Brands CEO Andy Wiederhorn said in a press release. "As a strong, growth-oriented concept, Twin Peaks complements our existing brands. The average unit volumes between $4.5 million and $6.5 million for new units is at the high end of industry growth standards."

Wiederhorn added that Twin Peaks' pipeline of new franchise location and its potential for global expansion are what sealed the deal for Fat.

Fat has been on an acquisition tear for some time, but diversifying its offerings with a polished casual chain opens the door to new targets that could strengthen Fat's foothold in this segment should the integration of Twin Peaks go well. It's possible there are already such deals in the pipeline — Wiederhorn said in June after Fat's acquisition of Global Franchise Group that he expected up to two additional acquisitions by the end of 2021. In Q1 of this year, Fat was eyeing nine or 10 different restaurant targets.

It's possible Twin Peaks could also be folded into Fat's ghost kitchen expansion plans, as well, which would allow Fat to scale the polished casual brand quickly and at low cost. Wiederhorn said earlier this year that Fat would grow newly acquired Johnny Rockets through ghost kitchens via its partnership with Epic Kitchens, and by allowing operators of other Fat brands to take on Johnny Rockets as a virtual brand.