Twin Hospitality (TWNP), a casual dining operator that runs several restaurant chains, has been caught up in the vortex created by the downfall of rival Hooters of America. Hooters is reportedly navigating a restructuring plan through bankruptcy court, and competitors like Twin Hospitality Group are feeling the heat of the adjacent limelight, which has helped send the company’s shares down roughly 55% in the past month.
Under Close Scrutiny Heading Into Q4 Results Call
Twin Hospitality Group is a U.S.-based casual dining restaurant operator and franchisor currently managing the Twin Peaks and Smokey Bones brands. The company has grown to 115 restaurants in 17 states.
At the end of January, the company was spun off by FAT Brands (FAT), which distributed 5% of Twin Hospitality Group’s shares to its shareholders but maintains 95% ownership. The new company projects sales of between $580 million and $590 million this year and aspires to achieve $1 billion in sales eventually. In the future, Twin Peaks plans to quicken the rate of new restaurant openings by leveraging the capital increase from its parent company.
However, investors are concerned that Twin Hospitality isn’t immune to the issues plaguing Hooters, such as inflation, supply chain disruptions, and higher food costs elevating menu prices, which are likely to drive an ongoing decline in sales across the industry as people eat out less.
Before its launch, FAT Brands issued new notes to refinance Twin Hospitality’s whole business securitization credit facility (lightening its own debt in the process). The aggregate principal balance of the new notes was roughly $416 million across four tranches, with a weighted average interest rate of 9.5% per annum.
A slowdown in business, with an overhang of expensive debt, could be a toxic mix as the company seeks to find its footing. Twin Hospitality has confirmed it will host a conference call to review its Q4 and full-year 2024 financial results on February 27, 2025. Investors will be keenly watching for signs of distress.
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