Smokey Bones Closing Locations: Strategic Shift to Twin Peaks Boosts Profitability

FAT Brands Inc., the global franchiser which acquired Smokey Bones in 2023, is overseeing significant changes in its barbecue restaurant portfolio by closing locations and converting some into its fast-growing sports bar concept, Twin Peaks. This strategic shift is aimed at enhancing profitability and addressing underperformance, as the franchise endeavors to adapt to changing market dynamics.

Smokey Bones, which once boasted a presence of over 100 locations nationwide, is now set to close 15 underperforming outlets. These closings will leave the barbecue chain with 26 locations that, according to company statements, continue to generate positive cash flow. As highlighted in a recent company release, 10 of these underperforming restaurants have been shuttered, with the remaining five expected to close before the end of the fiscal third quarter.

Furthermore, Twin Hospitality, the parent company of both Smokey Bones and Twin Peaks, plans to convert 19 existing Smokey Bones locations into Twin Peaks lodges. The company has completed two such conversions, with data showing these venues now generate approximately $7.8 million per location in average unit volumes, a significant increase from the $3.5 million average when they operated under Smokey Bones. A third conversion is currently underway, with expectations to open later this year.

FAT Brands' strategy to realign its portfolio reflects a broader industry trend where barbecue chains are finding it challenging to maintain growth amidst rising operational costs and diverse consumer preferences. The decision to shift focus towards the more profitable and rapidly expanding Twin Peaks brand aligns with the company's commitment to maximizing return on investments.

Twin Peaks, known for its lodge-themed environment and featuring "Twin Peaks Girls," offers a differentiated dining experience that has shown a strong market demand. Capitalizing on this trend, Twin Hospitality aims to utilize the existing infrastructures from Smokey Bones locations to expedite the conversion process, thereby reducing construction time and costs. This approach not only promises increased profitability but also aligns with the broader goal of cutting $1.5 million in expenses as part of the company’s cost-reduction initiatives.

The leadership, under the guidance of Twin Hospitality's newly appointed Smokey Bones president, Ken Brendemihl, is set to play a crucial role in navigating the brand through this transition. With over 25 years of experience in the restaurant industry, Brendemihl's expertise is anticipated to guide Smokey Bones through these changes and position the brand for sustainable growth.

As the remaining Smokey Bones locations continue to perform positively, plans are also in place to begin franchising a portion of them, a move aimed at creating a more balanced corporate-to-franchise mix. This strategy is expected to unlock additional growth potential for the brand, positioning Smokey Bones to benefit from the proven franchise model of FAT Brands.

Smokey Bones' restructuring underscores a pivotal moment in its operational strategy, reflecting necessary adjustments in response to evolving consumer dining preferences and economic pressures. As the company concurrently addresses inefficiencies while embracing burgeoning opportunities within its Twin Peaks concept, it illustrates a proactive approach to long-term sustainability in the competitive restaurant sector. Twin Hospitality's announcement of these operational shifts marks a major transition as the company endeavors to harness growth through its investment in Twin Peaks, leveraging synergies across its brands to build on existing market strengths.