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By Rayk Riechmann

Two great assets investors should inspect closely: Twin Peaks and Smokey Bones, a pair of fast-growing dining brands managed by Twin Hospitality Group Inc. (Nasdaq: TWNP).

Following its spinoff from Fat Brands (Nasdaq: FAT) in January, TWNP has emerged as independent, publicly-traded company. While Fat Brands retained significant economic interest, the companies now operate under separate leadership and board supervision. The structure allows for strategic continuity, long-term alignment, financial backing and resource sharing.

TWNP has already proven it can scale – and do so efficiently. As of March, the company had a total of 171 restaurants in operation: 82 franchised Twin Peaks restaurants and 34 company-owned units, alongside 55 company-owned Smokey Bones locations. Notably, a substantial 79.1% of open Twin Peaks restaurants have been successful conversions of existing buildings, resulting in a significant cost and time advantage over competitors.

As TWNP begins to convert more Smokey Bones locations into Twin Peak units, these advantages will play a key role in driving near-term unit growth and company profitability. Management’s long-term objective is to increase the firm’s operational footprint to 900 locations globally. By maintaining a 75% – 80% franchise ratio, this goal can be achieved with limited capital deployment. As of year-end 2024, TWNP already had over 100 signed franchise development commitments. With 73% of these coming from existing partners, the confidence in the business and its economic viability is eminent.

Twin Peak restaurants are specifically designed to allow for maximized throughput at all times of day, while leveraging a uniquely curated menu, lodge-cabin ambiance, and sports-bar feel. The model is a crowd pleaser: Twin Peaks outperforms the broader casual dining segment across all major customer satisfaction metrics, according to Black Box Intelligence. These factors drive high sales volumes, attractive restaurant-level margins, and brand stickiness. Select locations now experiment with adding Speakeasies, Cigar Bars, and Topgolf Swing Suites to further boost traffic and ticket size.

Especially among higher-income households, the demand for experience-driven dining is increasing. We believe TWNP is perfectly positioned with its brand strategy to capture this momentum. Combined with a laser focus on operational scale and utilizing relatively-fixed corporate costs, margins look set to grind higher.

As TWNP grows, the company is taking a prudent approach to its balance sheet. Management plans to raise $100 million in equity capital by October to pay down securitized debt. This measure would immediately improve interest coverage and reduce leverage. At a current enterprise value, adjusted for debt, of $784 million, TWNP trades well below Texas Roadhouse, Inc. and at an even steeper discount to the equity value assigned at the time of the spin.

TWNP could be the next bombshell in the restaurant business. If that’s the case, the shares will soon be turning heads.

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Contact:

Executives-Edge.com

Rayk@capmarketsmedia.com