FDD Talk 2019: Twin Peaks Franchise Review (Financial Performance Analysis, Costs, Fees, and More)

In this FDD Talk post, you’ll learn the following:

• Section I – Background information on the Twin Peaks franchise opportunity, including relevant news updates

• Section II – Estimated initial investment for a Twin Peaks franchise, based on Item 7 of the company’s 2019 FDD

• Section III – Initial franchise fee, royalty fee, marketing fee, and other fees for a Twin Peaks franchise, based on Items 5 and 6 of the company’s 2019 FDD

• Section IV – Number of franchised and company-owned Twin Peaks outlets at the start of the year and the end of the year for 2016, 2017, and 2018, based on Item 20 of the company’s 2019 FDD

• Section V – Presentation and analysis of Twin Peaks’ financial performance representations, based on Item 19 of the company’s 2019 FDD, including information on the:

• 2018 average, median, high, and low unit volume for the 50 franchised Twin Peaks Restaurants operating for the full 2018 fiscal year ended December 30, 2018

• 2017 average, median, high, and low unit volume for the 47 franchised Twin Peaks Restaurants operating for the full 2017 fiscal year ended December 31, 2017

• 2018 average, median, high, and low unit volume for the 30 company-owned Twin Peaks Restaurants operating for the full 2018 fiscal year ended December 30, 2018

• 2018 average cost of goods sold (food cost, bar cost, total) and labor cost (hourly staff, manager, payroll taxes/benefits, total) for the 30 company-owned Twin Peaks Restaurants operating for the full 2018 fiscal year ended December 30, 2018

Section I – Background Information

11 Things You Need to Know About the Twin Peaks Franchise

Enhances Beverage Menu With More Than 30 New Options

1.  In early February 2019, Twin Peaks launched an extensive new beverage menu at all of its restaurants across the United States. The enhanced beverage menu now offers more than 30 new options including cocktails, shots, new categories, and on-trend liquors.

2.  Customers can heighten their culinary adventure with new cocktails, some of which include:

• Tennessee Stud – Jack Daniel’s, agave syrup, lemon juice, lemon peel;
• Rob Roy – Monkey Shoulder, Carpano Antica sweet vermouth, aromatic bitters, Luxardo cherry;
• Sazerac – Bulleit Rye, simple syrup, Peychaud’s bitters, aromatic bitters, Absinthe, lemon peel;
• Woodford Sour – Woodford Rye, simple syrup, lemon juice, lemon peel, Luxardo cherry;
• Orange Mountain Buffalo Mule – Buffalo Trace, simple syrup, lemon juice, orange juice, Fever Tree Ginger Beer, orange wedge;
• Russell’s Billion Old Fashioned – Russell’s Reserve, Disaronno Amaretto, simple syrup, aromatic bitters, Billionaire’s Bacon;
• Spicy Margarita – Herradura Silver Tequila, triple sec, agave syrup, lime juice, jalapeño, cilantro sprigs;
• Paloma – Dulce Vida Grapefruit Tequila, simple syrup, lime juice, grapefruit juice, club soda, lime wedge.

2.  In addition to the new cocktails, Twin Peaks has a new line of Party Shots, which includes Blue Chair Bay, Key Lime Cream, Southern Comfort, Dulce Vida Grapefruit Tequila, Redneck Riviera Whiskey, Fernet-Branca, and Ole Smoky Salty Caramel Whiskey.

3.  Beyond the cocktails and Party Shots, Twin Peaks has added five drink sections to the menu, further extending its wide variety of beverage options. The new sections include an Old Fashioned section, Rum section, Tequila Cocktail section, Coffee & Enhancements section, and an Energized section with Red Bull options.

4.  Alex Sadowsky, Twin Peaks’ executive chef, said, “We are always striving to enhance our menu offerings and craft new cocktails using ingredients that are on trend and in peak season. We’ve not only created several delicious new cocktails, we’ve also enhanced the overall menu selection, giving guests even more options to choose from. At Twin Peaks, we give you everything you need to eat and drink like a champion.”

Lands First Latin American Franchise Deal

5.  In mid-June 2019, Twin Peaks announced that it was opening its first location in Latin America. Twin Peaks has partnered with Operadora 2 Montes to bring eight Twin Peaks restaurants to Mexico City, with the first location expected to open in November 2019.

6.  Rodolfo Garcia, CEO of Operadora 2 Montes, said, “We couldn’t be more thrilled to bring Twin Peaks to Mexico City. There were several things that initially attracted us to Twin Peaks. The menu’s fresh products, ice-cold 29-degree beer, multiple TV-viewing design and beautiful Twin Peaks Girls all combine to create an unmatched experience that will be unique and very well received in Mexico. For most people, Twin Peaks will be a whole new experience, which makes it that much more exciting for us to bring it to the area.”

7.  With its whole team from Mexico, and having established itself as a key stakeholder in the restaurant business in Mexico, Operadora 2 Montes will contribute not only the knowledge of the market but also the network it has developed to the Twin Peaks franchise.

8.  According to Joe Hummel, CEO of Twin Peaks, “This is a huge accomplishment for Twin Peaks to sign its first Mexico franchise deal. We couldn’t have asked for a better team to lead the way into Mexico than Operadora 2 Montes. The Twin Peaks experience is unlike anything in the area and is sure to be a huge success.”

Appoints New Director of Franchise Sales Development

9.  Near the end of August 2019, Twin Peaks announced that industry veteran Mark Ramage will join the team as director of franchise sales development. Ramage brings over 20 years of experience spearheading development, sales, and real estate of restaurant and service brands to his new role at Twin Peaks. He also continues to serve as chief development officer for 1Franchise Advisory Group, which he founded in 2018.

10.  Joe Hummel, CEO of Twin Peaks, said, “Mark is a dynamic franchise development professional with an exemplary record of success. He has proven expertise in driving profitable change and will undoubtedly play an instrumental role in accelerating Twin Peaks’ franchise expansion. We couldn’t be more thrilled to have Mark join our team.”

11.  Ramage added, “I’m proud to be joining the Twin Peaks team during such an exciting time of its development. Twin Peaks is so much more than your typical sports bar, offering a unique experience unlike anything else in the industry. It’s a clearly defined brand that delivers consistent category leading financial results. Twin Peaks has a ton of potential and I’m eager to build off of its momentum and leverage my expertise to help Twin Peaks continue to expand.”

12.  Expansion will continue to be a priority in 2019 as several new and existing franchise groups are looking to grow the Twin Peaks brand. In Q2 of this year, Twin Peaks executed two key franchise deals, including its second location in the Nashville area and its first Latin American franchise deal in Mexico City. As the year continues, Twin Peaks has many restaurants in the pipeline to open in Ohio, Texas, Arizona, and more.

Company History

13.  Twin Peaks was founded in 2005 by Randy Dewitt and Scott Gordon in Lewisville, Texas. Dewitt had previously helped Brinker International develop Rockfish Seafood and noted that the sports-bar market was thriving when he conceived the idea for Twin Peaks. The restaurant features a mountain lodge motif and attractive female servers, who typically wear uniforms that consist of cleavage- and midriff-revealing red plaid (or sometimes black bikini) tops, as well as khaki short shorts.

14.  Following the success of the first Twin Peaks restaurant, the company began franchising in 2007 and initially grew around Texas. By 2013, Twin Peaks had grown to nearly 40 locations across 17 states. A few years later, in 2016, former executives of the rival chain Hooters acquired a majority interest in Twin Peaks. As part of the deal, Joe Hummel was appointed as Twin Peaks’ new CEO. Today, there are Twin Peaks restaurants around the United States and internationally in Mexico and Russia.

Entrepreneur’s Franchise 500

15.  Twin Peaks did not rank on Entrepreneur’s 2019 Franchise 500 list.

Section II – Estimated Costs

• Please click here for detailed estimates of Twin Peaks franchise costs, based on Item 7 of the company’s 2019 FDD.

Section III – Initial Franchise Fee, Royalty Fee, Marketing Fee, and Other Fees

• Please click here for detailed information on Twin Peaks’ initial franchise fee, royalty fee, marketing fee, and other fees, based on Items 5 and 6 of the company’s 2019 FDD.

Section IV – Number of Franchised and Company-Owned Outlets

Franchised

2016

• Outlets at the Start of the Year:  45
• Outlets at the End of the Year:  51
• Net Change:  +6

2017

• Outlets at the Start of the Year:  51
• Outlets at the End of the Year:  51
• Net Change:  0

2018

• Outlets at the Start of the Year:  51
• Outlets at the End of the Year:  53
• Net Change:  +2

Company-Owned

2016

• Outlets at the Start of the Year:  26
• Outlets at the End of the Year:  27
• Net Change:  +1

2017

• Outlets at the Start of the Year:  27
• Outlets at the End of the Year:  30
• Net Change:  +3

2018

• Outlets at the Start of the Year:  30
• Outlets at the End of the Year:  30
• Net Change:  0

Section V – Financial Performance Representations (Item 19, 2019 FDD) and Analysis

Part 1 – Annual Unit Volume (AUV) of Mature Franchised Twin Peaks Restaurants (FY 2018 and FY 2017)

• Twin Peaks’ 2018 fiscal year began on January 1, 2018 and ended on December 30, 2018 (“FY 2018”) and its 2017 fiscal year began on December 26, 2016 and ended on December 31, 2017 (“FY 2017”).

FY 2018

• As of the last day of FY 2018, there were 53 franchised Twin Peaks Restaurants operating in the US, of which 50 Twin Peaks Restaurants were open and had been operating for the full FY 2018 (the “2018 Mature Franchised Restaurants”).

• The 2018 Mature Franchised Restaurants are included in the data set for Part 1 and are located in the following states: Alabama, Arkansas, Arizona, California, Florida, Georgia, Idaho, Indiana, Kansas, Louisiana, Michigan, Missouri, Mississippi, North Carolina, Oklahoma, South Carolina, Tennessee, Texas, and Washington.

• The 2018 Mature Franchised Restaurants operated for an average of 4.6 years as of the last day of FY 2018.