Dive Brief:
- Twin Hospitality is closing 15 underperforming Smokey Bones units, of which 10 have already shuttered, the company said Tuesday in a press release. The remaining five will close by the end of the third quarter.
- The closures are part of a strategic review of the Smokey Bones portfolio, which also identified 19 restaurants for conversion to Twin Peaks, Twin Hospitality Group CEO Kim Boerema said in a statement. The chain is focused on supporting the remaining profitable Smokey Bones restaurants
- Fat Brands originally purchased the 60-unit Smokey Bones for $30 million in 2023 and then spun it off into Twin Hospitality alongside Twin Peaks in January.
Dive Insight:
Twin Hospitality has focused on converting Smokey Bones locations into Twin Peaks restaurants, and identified 19 Smokey Bones units that it will convert. Two of the conversions have been completed and are already generating average unit volumes of about $7.8 million compared to the $3.5 million they generated as Smokey Bones. A third conversion will be completed by a franchisee and is expected to open later this year, the company said.
The 15 closures, along with the removal of about $1.5 million in corporate overhead, is expected to “materially enhance EBITDA performance,” Twin Hospitality said.
The remaining 26 Smokey bones restaurants have positive cash flow and contribute about $3 million to total EBITDA on a trailing 12-month basis. Unit volumes range from $1.3 million to $7.1 million.
“The company will leverage FAT Brands’ proven franchise model to begin franchising a portion of the remaining Smokey Bones locations, creating a more balanced corporate-to-franchise mix and unlocking additional growth potential for the brand,” according to the press release.
In addition to its strategic update, the company said it appointed Ken Brendemihl as president of Smokey Bones. He has over 25 years of restaurant experience, and most recently served as chief operating officer of Alamo Drafthouse. He has also held leadership positions at Velvet Taco, California Pizza Kitchen, Texas Roadhouse and On the Border.
“Ken will step in immediately bringing his deep operational expertise and proven track record to lead Smokey Bones into its next chapter,” Boerema said.
Twin Hospitality is also focused on growing its Twin Peaks brand, which has 114 units across 27 states and Mexico, and has 100 signed franchise agreements. However, the company reported losses from operations of $11.6 million and Twin Peaks same-store sales declined by 4.4% in the second quarter, according to an earnings release. The closure of unprofitable Smokey Bones should help improve losses.
