Twin Peaks plans to close nine underperforming Smokey Bones locations this year and could close more if they continue to drag down the company's profits, executives said Thursday.
The nine closures will leave Smokey Bones with about 45 remaining units. About 30 of those are slated to be turned into Twin Peaks in the future. The Smokey Bones not earmarked for conversion will be under close observation by management.
“We’re always watching the operations of the restaurants, so it is very possible that we would close additional restaurants,” CFO Ken Kuick said during an earnings call.
Twin Peaks locations have been far more profitable than Smokey Bones. Last year, Twin Peaks' restaurant-level margins were 14.7% compared to 3.5% for Smokey Bones, which resulted in a combined margin of 9.2%.
"It will continue to be a drag on our margins ... and those restaurants will be a drag for a period of time," Kuick said. "[CEO Joe Hummel] and I and the team are working to close those as quickly as possible."
The two chains were brought together by brand collector Fat Brands, which acquired Twin Peaks in 2021 and added Smokey Bones in 2023. Smokey Bones, created in 1996 by Darden Restaurants, specializes in barbecue and other meat-centric dishes. It once had nearly 130 locations.
Fat Brands' plan was to convert about half of the Smokey Bones system into Twin Peaks to help speed the chain’s development. Last month, the two brands spun off from Fat Brands as their own publicly traded entity, Twin Peaks Hospitality Group.
Twin Peaks has converted two Smokey Bones locations so far and both are off to strong starts, executives said Thursday. It plans to do two more conversions in 2025 en route to opening as many as 11 Twin Peaks restaurants this year.
As for Twin Peaks’ performance, same-store sales declined by 0.6% year over year in the fourth quarter, in part due to the inclusion of an extra week in the year-ago period.
But same-store sales have continued to slow entering the new year, and were down 2.8% quarter-to-date. About 1 point of that decline was due to bad weather, said CEO Joe Hummel. Weather has been widely blamed for a sluggish start to the year at many restaurants.
Twin Peaks is optimistic that the upcoming March Madness college basketball tournament and a fresh slate of marketing efforts will help bring in more customers this spring.
“We’re optimistic of how the traffic and sales will continue to grow,” Hummel said.
Twin Peaks has 115 “sports lodges” in 27 states and Mexico. It’s known for its scantily clad waitresses and large food and drink menu. The company believes there is room for as many as 650 Twin Peaks in the U.S. and up to 250 internationally.
Twin Peaks' stock has lost about half of its value since debuting on the Nasdaq at $17.45 per share on Jan. 30. It was down about 9% on Friday morning.
Members help make our journalism possible. Become a Restaurant Business member today and unlock exclusive benefits, including unlimited access to all of our content. Sign up here.