(Bloomberg) -- FAT Brands Inc., owner of the Johnny Rockets burger chain, has agreed to buy sports restaurant company Twin Peaks for $300 million.
The transaction will consist of $232 million in cash as well as series B preferred stock of FAT Brands paid to current owner Garnett Station Partners, Chief Executive Officer Andy Wiederhorn said in an interview. The transaction is expected to close by the end of September, he said.
FAT Brand's is entering a new category of so-called polished casual dining restaurants through the acquisition, which will boost its revenue to $1.8 billion from $1.4 billion, Wiederhorn said.
Polished casual restaurants typically see 50% of any bills in alcohol purchases, a lucrative part of the industry, versus roughly 25% for casual dining restaurants, he said.
Sit-down restaurants have faced challenges amid pandemic lockdowns and on-and-off restrictions on indoor dining across the U.S.
Brief Closures
Some Twin Peaks locations have seen brief closures during the pandemic but Wiederhorn doesn't expect that to continue.
“We don't believe there will be any prolonged dining room closures in the future,” he said. “We're making this investment for the long term.”
Many chains including TGI Friday's have permanently shut locations as fast-food drive-throughs and pizza delivery appeal to diners more than ever. While sales are recovering for some, the rise in Delta variant Covid cases could hamper sales again across the industry.
Dallas-based Twin Peaks was founded in 2005 and has about 80 locations in 25 states, according to a statement in June. The restaurants sell beer and wings, and tout high-definition TVs for sports.
‘Growth Story'
Twin Peaks is set to open 18 new locations in the next 18 months, Wiederhorn said. “Twin Peaks is a growth story.”
Following Twin Peaks and its acquisition of Global Franchise Group in July, Wiederhorn isn't ruling out additional deals this year.
“We just think that the restaurant industry is here to stay and the recovery is here to stay,” he said. “We're excited to add these brands to our portfolio and especially to get into the polished casual dining space.”
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