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 2021 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 2021 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 2018, 2019, and 2020, based on Item 20 of the company’s 2021 FDD
- Section V – Presentation and analysis of Twin Peaks’ financial performance representations, based on Item 19 of the company’s 2021 FDD, including information on the:
- 2020 average, median, high, and low unit volume for the 51 franchised Twin Peaks Restaurants operating for the full 2020 fiscal year ended December 27, 2020
- 2020 average, median, high, and low unit volume for the 26 company-owned Twin Peaks Restaurants operating for the full 2020 fiscal year ended December 27, 2020
- 2020 average cost of goods sold (food cost, bar cost, total) and labor cost (hourly staff, manager, payroll taxes/benefits, total) for the 26 company-owned Twin Peaks Restaurants operating for the full 2020 fiscal year ended December 27, 2020
Section I – Background Information
19 Things You Need to Know About the Twin Peaks Franchise
Appoints New Executive Leaders to Help Fuel Growth
1. In mid-September 2020, Twin Peaks announced the newest additions to its senior leadership team – Chief Financial Officer Scott Gray and Controller Mike Prentiss. Twin Peaks CEO Joe Hummel said, “We are very excited to have Scott and Mike join the Twin Peaks team. Both team members bring extensive, impressive backgrounds with proven track records of success in finance and in the restaurant industry to our brand.”
2. Gray comes to Twin Peaks with public accounting and more than 24 years of industry experience, as well as a passion and strategic focus on restaurant-level unit economics to drive franchise value. Over the course of Gray’s career, he has worked in both private and publicly-traded multi-concept restaurant organizations, including Pappas Restaurants and Luby’s, Inc. As chief financial officer at Twin Peaks, Gray will act as a strategic partner to the company’s management team, franchise partners, and investors.
3. Another seasoned executive, Prentiss brings 15 years in the industry to Twin Peaks. He began his career at Ernst & Young prior to joining Landry’s Restaurants, Inc. and then Fogo De Chao, where he worked his way up to chief financial officer. At Twin Peaks, Prentiss will be responsible for directing all accounting operational functions as the controller.
4. Hummel added, “Scott and Mike are both talented, dedicated individuals, and we believe their unique skills and attributes will better our company. We look forward to them both making significant impacts within our team and Twin Peaks as a whole.”
5. Twin Peaks made more changes to its executive team in early March 2021. Vice President of Franchise Development Glenn Moon and Vice President of International Franchise Development John Brisco were welcomed to the team. To further drive franchise development across the globe, Moon will focus on growing Twin Peaks in all parts of the U.S., while Brisco will target development in new international regions.
6. Hummel said, “We have hired two incredibly talented individuals, and we are thrilled to welcome them to our leadership team. Moon and Brisco bring a wealth of valuable experience and expertise to Twin Peaks. They both have extensive backgrounds in developing franchises. We have seen how successful they can be as they both have previously taken restaurant and hospitality brands to new heights.”
7. Moon joins Twin Peaks with more than 15 years of hospitality investment, real estate development, and franchise sales experience with a strong background in site selection, commercial real estate analysis, relationship development with clients, and vendor and franchise recruitment. Moon spent most of his career with several large, premier brand companies including Choice Hotels International, Wyndham Hotels & Resorts, and Best Western Hotels & Resorts. Moon transacted franchise agreements from the economy to upper upscale segments in major markets in the Western United States.
8. Another franchise veteran, Brisco brings more than 30 years of executive international and domestic development to Twin Peaks. Brisco spent six years at TGI Friday’s, where he most notably served as vice president of international development across 75 countries, totaling 190 stores. From there, he went on to work at Ruby Tuesdays, where he created the company’s international business plan and expanded its franchise base to 38 countries within a five-year period. In 2005, he joined Sbarro as the brand’s president of international franchise and established agreements for an additional 1,000 new stores to be developed within the next 10 years. Most recently, Brisco served as president and CEO of Tony Roma’s.
9. Hummel added, “Both Moon and Brisco are going to be incredible assets to Twin Peaks as we prepare to bring our brand to more markets within the U.S. and to other parts of the world. Twin Peaks is already experiencing impressive growth, but now that we’ve hired them to fuel global franchise development, we are fully prepared to expand even quicker. We are all very excited about what’s in store for the future of Twin Peaks.”
Overcomes Industry Challenges and Gains Momentum for 2021
10. At the end of January 2021, Twin Peaks announced that it was expanding on successful 2020 initiatives to carry its strong momentum throughout the new year. According to Knapp-Track, Twin Peaks has been in the Top 10 in Casual Dining for the last seven months – June through December 2020. When states were mandating restrictions but allowing restaurants to operate under some capacity, Twin Peaks acted quickly to extend its premises with outdoor tents and patio enhancements along with restaurant technology upgrades.
11. According to Twin Peaks CEO Joe Hummel, “After dining rooms were forced to close, we immediately put a new business plan in place. The first step in our strategy was upgrading technology, then extending premise and leaning into serving our guests off-premise. Doing what’s best for our customers and team members has always been our top priority. When we were planning how to reopen, we wanted to reinforce our commitment to cleanliness and change the dining experience at Twin Peaks to focus on safety, quality and guest engagement.”
12. In 2020, Twin Peaks introduced its acclaimed sports viewing experience to Latin America when the brand made its debut in Mexico City. In addition, Twin Peaks finished the year by opening a new sports lodge in Hollywood, Florida. The brand has 12-15 new locations set to open in 2021.
13. On the development side, Twin Peaks unveiled its first-ever franchise incentive program in August due to the current real estate market climate. The aggressive new franchise relief program waives franchise royalties during the first year of opening a new Twin Peaks restaurant. This program is available to all qualified developers that meet Twin Peaks’ then-current criteria at the time of execution of an Area Development Agreement.
14. Twin Peaks will continue to lean heavily on maximizing its conversion strategy with their refined conversion program that takes available real estate with a kitchen and looks for cost-effective solutions to rebrand the building. Franchisees take on a lower cost of entry, as well as a lower build-out cost when converting a building into a Twin Peaks, as opposed to building from the ground up
15. Twin Peaks remained committed to menu innovation in 2020 with the launch of additional smoked in-house items like its Smoked Brisket Tacos, the Smokestack Burger topped with pulled pork and smoked mozzarella, and the Smoked Half-Chicken. Continuing menu innovation into 2021, Twin Peaks plans to enhance several different areas of its beverage menu to include the Tequila Cocktail and Classic Whiskey Cocktail categories. Food innovation remains top of mind for Twin Peaks, with several food tests coming down the pipeline to include some unique flavors like meatballs, street tacos, and more.
16. Hummel concluded, “Twin Peaks has so much in store for 2021, including more digital enhancements, new locations and even a virtual concept. We have what works and a huge part of our brand success is our passionate, raving fans.”
17. Twin Peaks was founded in 2005 by Randy Dewitt and Scott Gordon in Lewisville, Texas. Dewitt, who has years of experience in the restaurant industry, noticed that the sports-bar market was thriving and decided to develop his own concept. Twin Peaks’ motif is based on a mountain lodge and like other sports bar chains, features attractive female servers in skimpy uniforms that reflect the mountain lodge theme.
18. Two years after opening the first Twin Peaks, Dewitt and Gordon began franchising the Twin Peaks concept. The first franchised locations were opened around Texas before Twin Peaks expanded to other states. Today, Twin Peaks has a mix of corporate-owned and franchised locations primarily in the Southwest, Midwest, and South.
Entrepreneur’s Franchise 500
19. Twin Peaks did not rank on Entrepreneur’s 2021 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 2021 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 2021 FDD.
Section IV – Number of Franchised and Company-Owned Outlets
- Outlets at the Start of the Year: 50
- Outlets at the End of the Year: 53
- Net Change: +3
- Outlets at the Start of the Year: 53
- Outlets at the End of the Year: 56
- Net Change: +3
- Outlets at the Start of the Year: 56
- Outlets at the End of the Year: 52
- Net Change: -4
- Outlets at the Start of the Year: 30
- Outlets at the End of the Year: 30
- Net Change: 0
- Outlets at the Start of the Year: 30
- Outlets at the End of the Year: 28
- Net Change: -2
- Outlets at the Start of the Year: 28
- Outlets at the End of the Year: 26
- Net Change: -2
Section V – Financial Performance Representations (Item 19, 2021 FDD) and Analysis
Part 1 – Fiscal Year 2020 Annual Unit Volume of Franchised Twin Peaks Restaurants
- Twin Peaks’ 2020 fiscal year began on December 29, 2019 and ended on December 27, 2020 (“FY 2020”).
- As of the last day of FY 2020, there were 52 franchised Twin Peaks Restaurants (the “Franchised Restaurants”) operating in the US, of which 51 were open and had been operating for the entire FY 2020.
- The 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, Ohio, Oklahoma, South Carolina, Tennessee, Texas, and Washington.
- The Franchised Restaurants operated for an average of 6.1 years as of the last day of FY 2020.
- Each of the Franchised Restaurants was temporarily closed and/or offered delivery or curbside pick-up only for at least six weeks during FY 2020 as a result of the COVID-19 pandemic. Shortly after mid-year, most of the 2020 Franchised Restaurants were open for full-service dining.
- The Franchised Restaurants are primarily standalone sites of 6,000-8,000 square feet, although some Franchised Restaurants may operate similarly-sized Twin Peaks Restaurants in end-cap or inline locations. The Franchised Restaurants are generally consistent with the current Twin Peaks model offered in the disclosure document, with current audio/visual system and related technology systems.
- Average AUV: $3,538,558
- Median AUV: $3,560,496
- Percentage and Number of Franchised Restaurants Which Attained or Surpassed Average AUV: 52.9% / 27
- Highest AUV: $7,139,117
- Lowest AUV: $1,671,565
- “AUV” means the annual unit volume calculated based upon the sales of the Franchised Restaurants included in the data set. The sales data was obtained from reports generated by the point-of-sale systems in the applicable Franchised Restaurants and has not been audited or independently verified by Twin Peaks for accuracy.
- The average, median, highest, and lowest AUVs include the total of all food sales and beverage sales, including liquor, wine, and beer sales and sales of promotional merchandise.
- Sales as shown in this Part 1 do not equate to “Gross Sales” as defined in the Franchise Agreement because the “Gross Sales” definition provides for certain exclusions, including (as examples) refunds provided to customers in connection with resolving customer satisfaction issues, promotional campaigns established by Twin Peaks, taxes, and employee meal discounts.
Part 2 – Fiscal Year 2020 Annual Unit Volume of Company-Owned Twin Peaks Restaurants
- Average AUV: $2,864,783
- Median AUV: $2,681,060
- Percentage and Number of Company-Owned Restaurants Which Attained or Surpassed Average AUV: 50.0%/13
- Highest AUV: $5,186,354
- Lowest AUV: $1,672,650
Part 3 – Profit and Loss Data for Company-Owned Restaurants
Average AUV: $2,864,783 (100.0%)
Average Cost of Goods Sold: $764,359 (26.7%)
- Food: $438,416 (15.3%)
- Bar: $325,943 (11.4%)
Average Labor Cost: $854,768 (29.8%)
- Hourly Staff: 16.4%
- Manager: 8.5%
- Payroll Taxes/Benefits: 4.9%
- As of the last day of FY 2020, there were 26 company-owned Twin Peaks Restaurants (“Company-Owned Restaurants”) operating in the US, of which 26 were open and had been operating for the full FY 2020. Part 2 and Part 3 include data for the 26 company-owned Twin Peaks Restaurants.
- The Company-Owned Restaurants are located in Arkansas, Colorado, Illinois, Nevada, New Mexico, and Texas.
- Each of the Company-Owned Restaurants was temporarily closed and/or offered delivery or curbside pick-up only for at least six weeks during FY 2020 as a result of the COVID-19 pandemic. Shortly after mid-year, all of the 2020 Company-Owned Restaurants were open for full-service dining.
- As of the last day of FY 2020, the Company-Owned Restaurants included in the data sets for Part 2 and Part 3 operated for an average of 8.9 years.
- The Company-Owned Restaurants are primarily standalone locations with square footage of 6,000 to 8,000 square feet.
- All of the company-owned Twin Peaks Restaurants, including the Company-Owned Restaurants, offer substantially the same products and services to customers the Franchised Restaurants are expected to offer.
- During FY 2020, Twin Peaks closed three Company-Owned Restaurants. Consequently, those have been excluded from the data set.
- “AUV” means the annual unit volume calculated based upon the sales of the Company-Owned Restaurants included in the data set. The average, median, highest, and lowest AUVs include the total of all food sales and beverage sales, including liquor, wine, and beer sales and sales of promotional merchandise.
- Cost of Goods Sold includes the total costs of all food, bar mixes, liquor, wine, beer, and promotional merchandise and events. Cost of Goods Sold represents 26.7% of total sales.
- Sales from alcoholic beverages (i.e. bar mixes, liquor, beer, and wine) comprise 50% of the total sales of company-owned Twin Peaks Restaurants and sales from food, merchandise, and events comprise 50% of total sales.
- Twin Peaks purchases many items used in the operation of the company-owned Twin Peaks Restaurants under arrangements negotiated with suppliers and distributors which may permit it to purchase and have such food, beverage, supply, and other items delivered at a volume discount.
- Labor costs includes costs for restaurant management and hourly personnel and includes benefits (including medical benefits for eligible personnel), training expenses (excluding management training expenses described below), payroll taxes, and bonuses.
- Labor costs does not include personnel employed by Twin Peaks at its headquarters or its field personnel that provide support services to company-owned and franchised Twin Peaks Restaurants (e.g. real estate, licensing and permitting, marketing support, information technology services, accounting services, and human resources).
- The costs of providing group medical and dental insurance for employees will vary depending on many factors, including the extent and amount of coverage provided and the loss experience of the group. Other benefits which you elect to provide to your employees, such as the amount of vacation time and vacation pay, are factors which may affect total labor and operating costs.
- In addition, the cost of hiring and training personnel in connection with the commencement of company-owned Twin Peaks Restaurant operations is expensed in pre-opening costs as incurred in accordance with Twin Peaks’ customary accounting practices. For the purposes of this analysis, pre-opening expenses are excluded.