Fat Brands, the restaurant company known for its chains Twin Peaks and Smokey Bones, has announced its plans to take both brands public through an initial public offering (IPO), despite facing charges of an alleged $47 million bogus loan scheme. The company had already disclosed an investigation by the U.S. Securities and Exchange Commission (SEC) into its chair, Andy Wiederhorn. However, last week, Fat Brands, Wiederhorn, and a few others were criminally indicted by a federal grand jury in Los Angeles for wire fraud, tax evasion, and other counts related to the scheme. The SEC also filed a separate civil complaint against the company and Wiederhorn for violations related to the same conduct.
Despite the charges, Fat Brands and Wiederhorn have denied any wrongdoing through their attorney. Twin Peaks, founded in 2005, has grown to nearly 115 restaurant locations in the U.S. and Mexico. Fat Brands acquired the sports bar chain in 2021. Known for its revealing uniforms worn by female staff, similar to Hooters, Twin Peaks has become a popular destination for customers. Smokey Bones, on the other hand, is a newer addition to Fat Brands’ portfolio. The barbecue chain was created by Darden Restaurants in 1999 but was later sold to Fat Brands in September 2023. The company plans to convert more than half of Smokey Bones’ corporate-owned restaurants into Twin Peaks locations.
Fat Brands’ priority for the potential IPO is to use the proceeds to reduce its debt. Wiederhorn, who owns 45% of the company’s common shares through Fog Cutter Holdings, expressed this during the company’s first-quarter conference call in May. However, this news has not been well-received by investors, as shares of the company have fallen 9% this year, leading to a market value of around $90 million.
In conclusion, despite the ongoing legal challenges, Fat Brands remains determined to proceed with the IPO of Twin Peaks and Smokey Bones. The success of this move will largely depend on how the company addresses the allegations and rebuilds trust with investors.
