January 27, 2025 • 25 mins
Twin Peaks’ first conversion of a Smokey Bones restaurant is generating run rate sales of $8.3 million, up from $3 million before the switch, CEO Joe Hummel tells Bloomberg Intelligence. In this episode of the Choppin’ It Up podcast, Hummel sits down with BI’s senior restaurant and foodservice analyst Michael Halen to discuss the company’s unit-growth strategy, including plans to convert half of its Smokey Bones locations. He also comments on the importance of balancing data analytics with restaurant visits, and plans for excess cash.
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Episode Transcript
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Speaker 1 (00:13):
Welcome to Chopping It Up.
Speaker 2 (00:15):
I'm your host, Mike Allen, Senior Restaurant and food Service
analyst at Bloomberg Intelligence. Our research and that of bi's
five hundred analysts around the globe can be found exclusively
on the Bloomberg terminal. Today, we're joined by Joe Hummel,
the CEO of Twin Peaks Restaurants. Hey, Joe, sorry we
didn't have a chance to catch up at ICR, but
this will have to do.
Speaker 1 (00:34):
This works, This works just fine.
Speaker 2 (00:36):
Yeah, and I'm sure you've been a very busy man.
Fat brand spin off of Twin Peaks and Smoky Bones
is less than a week away.
Speaker 1 (00:44):
That's right. Our record date is the twenty seventh of January.
Speaker 2 (00:47):
So and shares will start trading on twenty ninth. I
think I saw, yeah, twenty ninth. Yeah, NASDA TWNP is
their symbol. All right, good stuff. So what initially you've
been there for a little while, But what initially drew
you to Twin Peaks.
Speaker 1 (01:00):
Well, I had about a two decade career at Hooters.
I worked for Hooters of America and this new brand
came up and was stealing some share, and they're a
pretty cool brand, and I was intrigued by him, and
so twenty eleven, myself and a couple of my partners
at Hooters left and bought a six state development agreement
(01:24):
in twenty eleven and there was fourteen stores, So we
did take a leap of faith. We felt in our
gut it was a great brand that could really grow,
and we left Hooters. It was probably four hundred and
thirty units, just under a billion in sales, and so
we jumped in and so we I think our first
(01:45):
door we be in July of twenty twelve, which was
number twenty two in buck Ed, Georgia. So we've been
blessed to see the brand from twenty eleven till today.
So I've been a part of some former fashion of
hotter At units being opened and look forward to the
next hundred. It's going to be great.
Speaker 2 (02:02):
Yeah, you made a could bet back then.
Speaker 1 (02:05):
I did. I should have been in Vegas that day.
Speaker 3 (02:09):
Right, throw the dice right early retirement. I would know
what to do with myself as retired. For you couldn't
retire you're way too young. What's the day parts split?
And what percentage of your sales are from alcohol?
Speaker 1 (02:21):
Food? Is fifty two percent liquor, beer, wines, forty eight
day part, approximately thirty eight percent lunch the rest of
the week dinner. Now that dinner portion eleven of it's
late night. So nice, nice spread of the three segments.
But you know we're running about a sixty forty dinner
to lunch, but dinner carries further out.
Speaker 2 (02:41):
One hundred and seventy two restaurants at the end of
three Q seventy four US franchise, seven international franchise, thirty
three US company owned, and there's fifty eight company owned
Smoky Bones. Per your release, you expect to convert about
half of the Smoky Bones restaurants. A twin peaks how
much well the conversion's costs versus building a new unit
(03:02):
from scratch.
Speaker 1 (03:04):
Yeah, you know, when I look at our units, out
of one hundred and fourteen, twin peaks, ninety of them
or second generation. So myself, our corporate development, and our
franchise partners are used to doing second generation. We have
some great ground ups. So we you know, we saw
that as an opportunity when Fat Brands bought Smokey Bones
is a real estate play. We ran it through our
(03:26):
real estate platform and about thirty of them made very
scored very well for Twin Peaks. So we did our
first one in Lakeland, Florida. It was doing about three
million for Smokey Bones. We opened it in late September.
The sales are run rate and at about eight point
three million, so quite a bit of a difference. We
put about four point two million in it between leasehold
(03:48):
improvements in FF and E some good syentergies we were
able to pull out of the building. You know, you
get a lot of good things out of second generation.
Every second generation building gives you something different. But the
store itself is great footprint, really doing well, great addition
to the central Florida market. And we're finalizing our second
conversion in brandon be sometime in mid February. Okay, cool, Yeah,
(04:12):
that was a great strategy for Cava. How big are
the restaurants They average about seven thousand to eight thousand
square feet. I have units anywhere from sixty five hundred
to fourteen thousand in the in our Twin Peaks portfolio,
so seven you know, our sweet Spot prototypes about eighty
two hundred, so it works just fine. It's a nice
(04:33):
thing about second generation. You can have all kinds of
different footprints and floor plans. They all have the same DNA,
but they have different you know, lodge effects. So it's
pretty cool. You get your own local lodge. Lakeland will
be different than Brandon, and Brandon will be different than Cassemi,
and you know, they all have their own special you know,
local lips about it. That's cool.
Speaker 2 (04:54):
Is it changed strong in Florida? And are there any
other states where it's strong geographically?
Speaker 1 (05:00):
Virginia for Smoking Bones, that is, for twin Peaks, Well,
we're in Dallas for starters. Dallas is quite strong. Texas
we have about thirty four stores. Florida we have fifteen,
and we're still growing quite a bit. Those are probably
the most concentrated. Arizona does really well. You know, the
brand's so portable. We see the fanfare whether it's Dallas, Miami, Lakeland, Florida, Columbus, Columbus, Ohio,
(05:26):
Louisville still has that same fact, same volume. We don't
see a volume letof because of different regions warm weather,
cold weather. And we have seven down of Mexico. Okay, Cole,
what's the right number of company owned restaurants for you?
We're in a seventy thirty mix between franchise and corporate.
We think our sweet spot seventy five to twenty five,
(05:48):
which is very doable. We have a lot of good
franchise partners. We have about one hundred development franchise commitments
from our franchise partners already, so very doable.
Speaker 2 (05:59):
Number okay cool, excluding excluding the Smokey Bones conversions. How
many units do you expect to open in twenty five
and are you having any issues finding new sites?
Speaker 1 (06:09):
Well, that was one of the reasons we picked up
the Smoky Bones. Control in those sites gave a nice
short term path. So with the Smoky Bones because we'll
do probably five or six this year conversions between ourselves
and our franchisees. We looked to do two to four
corporate stores ten to twelve franchise stores for this year.
(06:30):
Last year we got nine open total. For me, it
was a little slow last year, so we looked for
hopefully things picked up a little bit with that. You know,
a lot of staffing issues and with the perameters and
inspectors and just being short staffed.
Speaker 2 (06:43):
Gosha, what percentage of new units are opened by existing
franchisees coming up?
Speaker 1 (06:48):
Uh?
Speaker 2 (06:48):
Yeah, Well, ten to twelve will be franchisees. Two to
four will be corporate existing or from out of the system.
Speaker 1 (06:55):
That's that'll be existing, that's in the existing system. So
we still you know, we have a friend development team
that's selling new territories. They're actually out in California doing
our real estate tour right now with us some prospects.
We just signed somebody out up for the Fargo, South Dakota,
Montana market. We have another group looking out of Canada.
So franchise development side active on finding new groups and
(07:19):
then the existing groups are actively built.
Speaker 2 (07:22):
Okay, great new stores. Do they have big honeymoon periods
or they tend.
Speaker 1 (07:26):
To build to your target AUV? You know, it depends.
It depends on if you're in a mature market. I've
had stores even here in Dallas that start out at
five five six, they're at nine million now. So we
have dural MP in last year it's run rating at
fourteen million. And then you have some newer markets where
(07:47):
the development's coming and so you get there before the
development and the mature markets just sell right into their
average AUV quickly. So all depends on the market. We
see a big fanfare when we open a new store
in the DMA by itself, because it's just they haven't
seen anything like it.
Speaker 2 (08:02):
Okay, And I noticed in the in your disclosures, current
AAV is about five two to five three million versus
the target of six point five for new builds. So
what's the difference there? Are you building bigger units, are
you modeling strong same sort of sales growth from the
existing sore base and that we'll get to that six '
five or is there something else that kind of explained
(08:23):
that gap?
Speaker 1 (08:24):
Yeah, the difference is you have some legacy stores. They
are lower avs. You know, they started off in the
early day Z five six oh seven. When we started
building eleven, we started exploring with some bigger buildings, bigger footprints,
two bars, patios. In sixteen seventeen we really started finding
tuning what we thought our guests needed and wanted. With
(08:45):
our design team, we employed our real estate strategy platform
E Site and that really helped us take our consumer
demographics and map out where we should be putting our
stores based off the white space available. So it really
helped us in our targeting. You know, the early days,
you're not targeting because you don't have you don't have
a base to target off of. You kind of going
with your gut, and as you build that demographic up,
(09:08):
you really know what your user is. So when you
go to new space, as you find that user and
that platform really helps you do that. So as we
continue to fine tune that from sixteen seventeen, we really
fine tune the brand, the model, the offering, and then
the real estate strategy too. And then we just all
the new openings have been very strong. So it's actually
(09:30):
the new all the new openings I say new openings.
You know, from twenty twenty one twenty two, I have
been dragging that AUV up and you know some of
those early legacy stores as those leases expire, will shift
markets and go for a different sized building.
Speaker 2 (09:43):
Yeah, six point five millions a strong AUV. Is there
any other unit economic data that you'd like to share?
Speaker 1 (09:50):
You know, we target sixteen percent four while margin. The
biggest thing is, you know, we we want to concentrate
on the unit economics. So conversions give you about a
twenty eight percent cash on cash return, and then if
you do a new build where you're buying the dirt
and doing a sale lease back, you can get upboards
to thirty seven percent cash on cash return because you
can get to take those sale lease back proceeds. So
(10:12):
the boat strategies were great. Those are great unit economics
for US. Six ' five we think is a reasonable number.
You know, as I said, Lakeland's trailing at eight point
three million Lakeland, Florida. That's not a huge metropolis. And
even like the you know, the Derials of the world
that opened last year, like I said, we're thirteen fourteen million.
(10:32):
So we think six five is a modest number to
go for because our AUV has been driving up with
every new opening.
Speaker 2 (10:38):
Yeah, so same store sales are strong versus your peers
versus twenty nineteen, but there were down a little more
than the casual index in twenty three. Why do you
think Twin Peaks was hit harder than other chains last year?
Speaker 1 (10:52):
Well, if you look at our same store sales, double
digit stacked. Eventually you stop stacking and it's time to
open new I mean, And so it doesn't what doesn't
take an account if you're doing a market and I
have a market in San Antonio three stores for the
longest time, and we added a fourth, you pick up
six million in total sales, but you lose five hundred
(11:14):
thousand out of one of the other stores. So the
six million you don't get accounted for in same stores
because it's in you know, it's not in that eighteen
month period where you start comping, but that the guy
you lost five hundred, he loses the comp So, you know,
we look at overall market share. Same sources is certainly
an effective tool to make sure the brand's still relevant.
(11:36):
It's one of the reasons we use black Box to
make sure we're keeping our ear to the wall with
what our guests are saying about every store. We like
to see what the stores are doing per their zip code,
and that's black Box is able to give us that.
You know, if if our stores are trending high or
lower than zip code, we were able to take action
either way. The social sentiment's big to us because it
(11:57):
really truly says what our guests are talking about with us. So,
you know, I think that's one of the reasons you
just you get double digit same store, same store, same store,
Eventually you stop comping, and as I said, you have
to build no store.
Speaker 2 (12:08):
Yeah, you know, and let's let's stick to that black
Box intelligence point. When we did a panel together back
in twenty three. I was impressed by how data driven
you are from people I know in the industry. You know,
they say you're very dialed into the numbers and run
your business accordingly. Can you talk about how you're using
that data, particularly to analyze store performance, bonus out your
(12:31):
employees and stuff like that.
Speaker 1 (12:33):
Yeah, you know, we use black Box for a lot
of different reasons, whether it's sales traffic, even from an
employee standpoint, making sure we're in the right pay categories
by position. That social sentiment side helps tell the rest
of the story. And even like I said earlier, tracking
your sales by zip code which really helpful because you
(12:54):
look at your sales versus DFW. Well, DFW is quite
large or Chicago quite large, so I can track my
store in I'll go by a zip code. Then I'm
kind of in the game because obviously for geographic region
and so having the sales, the traffic, and the social
side of it gives the full story. You could be
up in sales, but your zip codes up even higher,
(13:15):
so maybe you're not exceeding what you should be. You
could be down in sales, but the zip codes tremendously down,
and so you're you're battling and you're knocking it out
based off whatever reasons causing that and the other reason.
You look at sales and traffic and then you compare
it to the social side of it, and we get
a daily, weekly, monthly, quarterly feed. We do a quarterly
(13:35):
recap with black Box, kind of going over the whole
analytics of of everything they're seeing with us and out there.
But the social side tells a story too. And you
could be doing really well in sales because the traffic's
just so high, so dense, but your but your guests
are given negative comments. So let's let's us focus even
(13:55):
to the point of it might not be affecting your sales,
but somebody could be saying, your frieser cols, your frier coal. Hey,
this month, we need to focus on fries. Let's make
sure we're serving hot, fresh fries and we're not dragging fries.
So it does dial us into certain elements of the
brand or the business or the community if we're doing
better than the other side. So it just gives us
a better parallel platform. And we use data word data junkies.
(14:19):
We try not to do paralysis by analysis, but we
do take that data with us to the field to
help us understand what's being said. No matter where it's at,
whether it's black Box or the east Site platform we
use for our real estate, we have a lot of
different data elements.
Speaker 2 (14:33):
Yeah, it sounds like you're leaning on it basically as
a leading indicator, right that it could show moves and
seam sourselves.
Speaker 1 (14:39):
But before they still have to be in the field,
whether it's looking for sites or being in a restaurant.
You can't just look at the data and say, oh,
this is what's happened. You still need to go. And
my emphasis to our team is you've got to be
in the field. Four walls are where it's happened. This
office we're sitting in today, it does not make any money.
(15:00):
It costs money. The fuss make the money, and my
whole support team and executive team has to be driven
to the field. We want them part of the field
for sure.
Speaker 2 (15:11):
How are you looking to drive same star sales growth
in twenty five.
Speaker 1 (15:14):
Well, we have a built in marketing calendar called Sports
which is really helpful and we're able to take that
experience with the Twin Peaks Girl our kitchen and our bar,
and that is our mechanism driven same shot sales, just
the overall memorable experience event that happens in our stores.
(15:35):
We want to stay really dialed in on food. We
want to keep a pricing structure that's in bar belt strategy.
We want to be able to something on an affordable level.
If you're working off a lower budget, you want to
splurge on yourself. There's a higher end. We don't want
to take big, big price jumps. That's not that's not
how we're going to go. I think the consumer's tired
of price jumps, and we've been fortunate enough not to
(15:57):
do them. We've done small two to three percent over
the you know, over traarly twelve months, keeping up with
some minimum wage increases. But we try not to take
those big five six percent jumps, which some people do.
So we just execute executing, understanding the sports calendar and
making sure that sports day is so overwhelming to you
in a good way you come back just for lunch
(16:19):
on Monday.
Speaker 2 (16:20):
Yeah, I'm sure the expanding sports calendar is helping, right,
the bigger college football playoff, right, and then we're seeing
new sports Formula one, right, yeah.
Speaker 1 (16:30):
I mean the seasonality of sports used to you know,
you're really in season, you're out of season or in
the season. It's really stretched. And even NFL they started
dabbling into some Friday games, some different day games that
you weren't used to. Heavy. We're heavy into soccer Champions League,
Gold Cups, South America Cups, World Cup obviously is coming
(16:53):
to town. We lean in the Premier League, La Liga,
all the different and those are nice time zones too,
because a lot of those games are you know, two
three o'clock afternoons, so it really plays well with stretching
the calendar out. NBA is just big, you know, we
really you know, it's a long season, and then from
(17:13):
April to June, it's just playoff mania. You know, you're
you get rid of you go college NFL College playoffs,
NFL Playoffs, Super Bowl, roll into the February and you're
into conference basketball, March madness, playoff implication, NBA, NBA playoffs,
(17:35):
NHL playoffs. Through June, there's probably a little lull, but
then there's always a lot of summer, a lot of
summer soccer that happens, and those those cups are happening
during then the you know, European Cups, South American Cups,
all those are happening a lot of the summertimes. Then
you roll in Fantasy Draft and you're back in football,
so it stretches. Yeah, I hope the college playoffs go
(17:56):
to thirty two teams. Just keep adding game. I'm sure
that was big business man with UFC, big partner of ours,
and you know they're they have great material as pay
per view, but then they have a material that's on
ESPN Plus that we're playing, and they have a lot
of different elements there. There's always boxing that lay in there,
so there's there's always In marketing, one of marketing's jobs
(18:20):
are really to keep up the calendar and all right,
we have this big event coming on Friday. What are
we gonna do to accent that event besides just have
it off. What's the beer special or the drink special
or what you know, what what element are we gonna
put in there to make that just a notch above
everybody else. It gives our operators a chance to plan
because you see the calendar, so it's not like a
bus is pulling in and you're unprepared. You know they're
(18:42):
gonna you know, you're gonna be crowded, so let's overstaff
and make sure that experience is incredible. Great.
Speaker 2 (18:49):
Are there any changes to the marketing planning making the
share now? We're staying We're staying focused on you know,
local store marketing. We like that one three five mile radius.
Speaker 1 (18:59):
We think it's important to be a part of the
local lodge versus some national commercial that maybe doesn't have
the impact. And you know, our footprint doesn't allow for
a national commercial, so it'd be kind of a waste,
and we just think our money's better spent at the
local DMA for sure. So we're going to continue to
push that one three five mile radius. Local sports talks,
(19:20):
local businesses, festivals, local teams, you know, sponsorships that way,
really just driving that traffic in. You know, everybody's like
when you do a commercial, Well, when everybody in your
one three five mile radius has tried you and wants
to come back to you, we'll start thinking about commercial
because there's a lot of bodies between one three and
five and our building should be a marketing tactic. You're
(19:42):
picking good sites with a lot of good traffic driving
by you, and your building is beautiful. That's going to
drive people in. That's a billboard itself for sure. If
you need a billboard, you probably pick the wrong site. Sometimes,
no doubt you touched on it a little bit.
Speaker 2 (20:00):
It's like you're not taking too much pricing. I think
that's the smart play in twenty twenty five. You know
how much inflation do you expect, and how much price
are you willing to share?
Speaker 1 (20:09):
How much creature between two and three percent, and really
just to keep up at the minimum wage. We've locked
a lot of our proteins in so we know what
our cost effects are there. We ate some margin last
year and we went after the margin in other categories,
but we ate some margin. And the poultry. Poultry is
extremely high last year, five year high. But we know
(20:31):
it's sick. It moves, you know. We track in month
to month, year to year, and if you took price
every time we went to an all time high, you
would outprice yourself. So you just have to be cost
effective in other areas and eat some of that costs.
Speaker 2 (20:45):
So yeah, our in our research, some of the chains
like Texas road Has and wing Stuff that have the
highest cogs are generating the most traffic, right, they're offering
the most.
Speaker 1 (20:53):
Value on the plate. Yeah, we we're pretty pleased with our.
Speaker 2 (20:57):
Cog good and you know it sounds like you're going
to spend some of your cash on building three new stores.
But i'd imagine you generate a lot of cash. Can
you talk about, you know, how you plan to use
that excess cash this yere?
Speaker 4 (21:12):
Uh.
Speaker 1 (21:12):
You know, we'll delever, delver some of our debt. And
that's one of the reasons you know we're moving towards
a spin off, is for investors to look at us
as a standalone portfolio and understand this brand, give us
focus on development. We certainly want development equity there so
we can continue to grow the footprint, and then we'll
deliver some of our debt. All right, good stuff, So
(21:33):
what's your favorite menu item? Liquid would be something from
Kentucky on a clear ice ball and I spent you know,
love love me some Blantons and weller, I can't go
wrong with any of those. Nothing wrong with us. A
good micaltree there the Corona. Food wise, love our flatbreads,
(21:54):
smoked wings. We have our own smoker programs. We smoke
most we smoke briskets, wings, chicken thighs or so. Once
again that scratch kitchen. Our kitchens are great. Charg real
flat top fryars, convection of it and smokers really gives
us a lot of flexibility to make that menu flexible.
But those are probably like go tos, flatbreads and smoke
(22:15):
wings really good go too, or hand cut steak. We
have handcut in New York strips.
Speaker 2 (22:20):
All right, good stuff. Yeah, the wings are great. I'm
gonna have to try those smoke chicken thighs, man, it'll
sound pretty good too.
Speaker 1 (22:25):
Yeah, we smoke our own chicken thighs, and then we
utilize them in our chicken nachos, we utilize them in
the case of das, we utilize them in our green
chili chicken soup. So yeah, we try to really make
sure our pantrees has good flow through. So our chef's great,
he's able to look at recipe items and make sure
(22:45):
we maximize the pantry item out of it. So we
don't have just one item sitting there for one recipe
because we know how that goes either run out or
it doesn't make it. And so if you have good
flow through on your inventory, that helps up.
Speaker 2 (22:57):
All right, good stuff, Thanks for doing this. Where can
the audience go to find their nearest twin Peaks and
what social media program should we follow you on?
Speaker 1 (23:05):
Well, at twin peaks dot com, that's the best for
following us. We have great Instagram. Every store has its
own Facebook Instagram really try to stay localized. So you
just click on your local Instagram twin Peaks, it'll pop
up great feeds, local store, depends on where you're at.
The next new one will be Brandon, Tampa, Florida.
Speaker 2 (23:25):
Okay, cool man, Yeah, I have to follow you on Instagram.
Speaker 1 (23:29):
Yeah, good luck. Man.
Speaker 2 (23:30):
This is going to be a fun one to watch,
a little too small for me to cover, but I'll
be watching closely.
Speaker 1 (23:36):
Man. Are you based out of I'm in New Jersey.
I'm working on it, working on Pennsylvania right now. Now. Okay, yeah,
I've listen.
Speaker 2 (23:42):
I've been Scottsdale, Austin, Southern Florida, so I've been to
a few. I'll try to get closer to Are you
a Giants fan Jets fan? Well, I'm a Raiders fan.
I'm actually a Raiders fan. I was born into this
life of disappointment. They won the Super Bowl the day
I was born, and I grew up wanting to be
a Raider.
Speaker 4 (24:01):
Now you got TV twelve leading the team. He's Mike.
I'm hoping for uh an improvement for sure. You might
get the Sanders kid. Need could be your QP.
Speaker 1 (24:13):
It does a lot of rumors swirling around man. Yeah,
we'll see. It's always fun to watch and keep up
with it. Yeah. Who's your team? Cowboys Living Down Okay? Yeah?
Speaker 2 (24:23):
Yeah, yeah, yeah for sure man. Uh you know, there's
a lot of Cowboys fans here and everywhere.
Speaker 1 (24:28):
But actually my team is wherever, wherever a store is,
that's my team. I feel like a bookie. Then when
I'm watching a game and my family's like, who do
you want? Like, I want this, white want that. We
have three stories. Brother.
Speaker 2 (24:42):
Yeah, thanks again, and I want to thank the audience
for tuning into. If you like the episode, please share
with your friends and colleagues. Check back soon for a
discussion with Kyle Kavanaugh, the founder at Maine and May
Welcome to Chopping It Up.
Speaker 2 (00:15):
I'm your host, Mike Allen, Senior Restaurant and food Service
analyst at Bloomberg Intelligence. Our research and that of bi's
five hundred analysts around the globe can be found exclusively
on the Bloomberg terminal. Today, we're joined by Joe Hummel,
the CEO of Twin Peaks Restaurants. Hey, Joe, sorry we
didn't have a chance to catch up at ICR, but
this will have to do.
Speaker 1 (00:34):
This works, This works just fine.
Speaker 2 (00:36):
Yeah, and I'm sure you've been a very busy man.
Fat brand spin off of Twin Peaks and Smoky Bones
is less than a week away.
Speaker 1 (00:44):
That's right. Our record date is the twenty seventh of January.
Speaker 2 (00:47):
So and shares will start trading on twenty ninth. I
think I saw, yeah, twenty ninth. Yeah, NASDA TWNP is
their symbol. All right, good stuff. So what initially you've
been there for a little while, But what initially drew
you to Twin Peaks.
Speaker 1 (01:00):
Well, I had about a two decade career at Hooters.
I worked for Hooters of America and this new brand
came up and was stealing some share, and they're a
pretty cool brand, and I was intrigued by him, and
so twenty eleven, myself and a couple of my partners
at Hooters left and bought a six state development agreement
(01:24):
in twenty eleven and there was fourteen stores, So we
did take a leap of faith. We felt in our
gut it was a great brand that could really grow,
and we left Hooters. It was probably four hundred and
thirty units, just under a billion in sales, and so
we jumped in and so we I think our first
(01:45):
door we be in July of twenty twelve, which was
number twenty two in buck Ed, Georgia. So we've been
blessed to see the brand from twenty eleven till today.
So I've been a part of some former fashion of
hotter At units being opened and look forward to the
next hundred. It's going to be great.
Speaker 2 (02:02):
Yeah, you made a could bet back then.
Speaker 1 (02:05):
I did. I should have been in Vegas that day.
Speaker 3 (02:09):
Right, throw the dice right early retirement. I would know
what to do with myself as retired. For you couldn't
retire you're way too young. What's the day parts split?
And what percentage of your sales are from alcohol?
Speaker 1 (02:21):
Food? Is fifty two percent liquor, beer, wines, forty eight
day part, approximately thirty eight percent lunch the rest of
the week dinner. Now that dinner portion eleven of it's
late night. So nice, nice spread of the three segments.
But you know we're running about a sixty forty dinner
to lunch, but dinner carries further out.
Speaker 2 (02:41):
One hundred and seventy two restaurants at the end of
three Q seventy four US franchise, seven international franchise, thirty
three US company owned, and there's fifty eight company owned
Smoky Bones. Per your release, you expect to convert about
half of the Smoky Bones restaurants. A twin peaks how
much well the conversion's costs versus building a new unit
(03:02):
from scratch.
Speaker 1 (03:04):
Yeah, you know, when I look at our units, out
of one hundred and fourteen, twin peaks, ninety of them
or second generation. So myself, our corporate development, and our
franchise partners are used to doing second generation. We have
some great ground ups. So we you know, we saw
that as an opportunity when Fat Brands bought Smokey Bones
is a real estate play. We ran it through our
(03:26):
real estate platform and about thirty of them made very
scored very well for Twin Peaks. So we did our
first one in Lakeland, Florida. It was doing about three
million for Smokey Bones. We opened it in late September.
The sales are run rate and at about eight point
three million, so quite a bit of a difference. We
put about four point two million in it between leasehold
(03:48):
improvements in FF and E some good syentergies we were
able to pull out of the building. You know, you
get a lot of good things out of second generation.
Every second generation building gives you something different. But the
store itself is great footprint, really doing well, great addition
to the central Florida market. And we're finalizing our second
conversion in brandon be sometime in mid February. Okay, cool, Yeah,
(04:12):
that was a great strategy for Cava. How big are
the restaurants They average about seven thousand to eight thousand
square feet. I have units anywhere from sixty five hundred
to fourteen thousand in the in our Twin Peaks portfolio,
so seven you know, our sweet Spot prototypes about eighty
two hundred, so it works just fine. It's a nice
(04:33):
thing about second generation. You can have all kinds of
different footprints and floor plans. They all have the same DNA,
but they have different you know, lodge effects. So it's
pretty cool. You get your own local lodge. Lakeland will
be different than Brandon, and Brandon will be different than Cassemi,
and you know, they all have their own special you know,
local lips about it. That's cool.
Speaker 2 (04:54):
Is it changed strong in Florida? And are there any
other states where it's strong geographically?
Speaker 1 (05:00):
Virginia for Smoking Bones, that is, for twin Peaks, Well,
we're in Dallas for starters. Dallas is quite strong. Texas
we have about thirty four stores. Florida we have fifteen,
and we're still growing quite a bit. Those are probably
the most concentrated. Arizona does really well. You know, the
brand's so portable. We see the fanfare whether it's Dallas, Miami, Lakeland, Florida, Columbus, Columbus, Ohio,
(05:26):
Louisville still has that same fact, same volume. We don't
see a volume letof because of different regions warm weather,
cold weather. And we have seven down of Mexico. Okay, Cole,
what's the right number of company owned restaurants for you?
We're in a seventy thirty mix between franchise and corporate.
We think our sweet spot seventy five to twenty five,
(05:48):
which is very doable. We have a lot of good
franchise partners. We have about one hundred development franchise commitments
from our franchise partners already, so very doable.
Speaker 2 (05:59):
Number okay cool, excluding excluding the Smokey Bones conversions. How
many units do you expect to open in twenty five
and are you having any issues finding new sites?
Speaker 1 (06:09):
Well, that was one of the reasons we picked up
the Smoky Bones. Control in those sites gave a nice
short term path. So with the Smoky Bones because we'll
do probably five or six this year conversions between ourselves
and our franchisees. We looked to do two to four
corporate stores ten to twelve franchise stores for this year.
(06:30):
Last year we got nine open total. For me, it
was a little slow last year, so we looked for
hopefully things picked up a little bit with that. You know,
a lot of staffing issues and with the perameters and
inspectors and just being short staffed.
Speaker 2 (06:43):
Gosha, what percentage of new units are opened by existing
franchisees coming up?
Speaker 1 (06:48):
Uh?
Speaker 2 (06:48):
Yeah, Well, ten to twelve will be franchisees. Two to
four will be corporate existing or from out of the system.
Speaker 1 (06:55):
That's that'll be existing, that's in the existing system. So
we still you know, we have a friend development team
that's selling new territories. They're actually out in California doing
our real estate tour right now with us some prospects.
We just signed somebody out up for the Fargo, South Dakota,
Montana market. We have another group looking out of Canada.
So franchise development side active on finding new groups and
(07:19):
then the existing groups are actively built.
Speaker 2 (07:22):
Okay, great new stores. Do they have big honeymoon periods
or they tend.
Speaker 1 (07:26):
To build to your target AUV? You know, it depends.
It depends on if you're in a mature market. I've
had stores even here in Dallas that start out at
five five six, they're at nine million now. So we
have dural MP in last year it's run rating at
fourteen million. And then you have some newer markets where
(07:47):
the development's coming and so you get there before the
development and the mature markets just sell right into their
average AUV quickly. So all depends on the market. We
see a big fanfare when we open a new store
in the DMA by itself, because it's just they haven't
seen anything like it.
Speaker 2 (08:02):
Okay, And I noticed in the in your disclosures, current
AAV is about five two to five three million versus
the target of six point five for new builds. So
what's the difference there? Are you building bigger units, are
you modeling strong same sort of sales growth from the
existing sore base and that we'll get to that six '
five or is there something else that kind of explained
(08:23):
that gap?
Speaker 1 (08:24):
Yeah, the difference is you have some legacy stores. They
are lower avs. You know, they started off in the
early day Z five six oh seven. When we started
building eleven, we started exploring with some bigger buildings, bigger footprints,
two bars, patios. In sixteen seventeen we really started finding
tuning what we thought our guests needed and wanted. With
(08:45):
our design team, we employed our real estate strategy platform
E Site and that really helped us take our consumer
demographics and map out where we should be putting our
stores based off the white space available. So it really
helped us in our targeting. You know, the early days,
you're not targeting because you don't have you don't have
a base to target off of. You kind of going
with your gut, and as you build that demographic up,
(09:08):
you really know what your user is. So when you
go to new space, as you find that user and
that platform really helps you do that. So as we
continue to fine tune that from sixteen seventeen, we really
fine tune the brand, the model, the offering, and then
the real estate strategy too. And then we just all
the new openings have been very strong. So it's actually
(09:30):
the new all the new openings I say new openings.
You know, from twenty twenty one twenty two, I have
been dragging that AUV up and you know some of
those early legacy stores as those leases expire, will shift
markets and go for a different sized building.
Speaker 2 (09:43):
Yeah, six point five millions a strong AUV. Is there
any other unit economic data that you'd like to share?
Speaker 1 (09:50):
You know, we target sixteen percent four while margin. The
biggest thing is, you know, we we want to concentrate
on the unit economics. So conversions give you about a
twenty eight percent cash on cash return, and then if
you do a new build where you're buying the dirt
and doing a sale lease back, you can get upboards
to thirty seven percent cash on cash return because you
can get to take those sale lease back proceeds. So
(10:12):
the boat strategies were great. Those are great unit economics
for US. Six ' five we think is a reasonable number.
You know, as I said, Lakeland's trailing at eight point
three million Lakeland, Florida. That's not a huge metropolis. And
even like the you know, the Derials of the world
that opened last year, like I said, we're thirteen fourteen million.
(10:32):
So we think six five is a modest number to
go for because our AUV has been driving up with
every new opening.
Speaker 2 (10:38):
Yeah, so same store sales are strong versus your peers
versus twenty nineteen, but there were down a little more
than the casual index in twenty three. Why do you
think Twin Peaks was hit harder than other chains last year?
Speaker 1 (10:52):
Well, if you look at our same store sales, double
digit stacked. Eventually you stop stacking and it's time to
open new I mean, And so it doesn't what doesn't
take an account if you're doing a market and I
have a market in San Antonio three stores for the
longest time, and we added a fourth, you pick up
six million in total sales, but you lose five hundred
(11:14):
thousand out of one of the other stores. So the
six million you don't get accounted for in same stores
because it's in you know, it's not in that eighteen
month period where you start comping, but that the guy
you lost five hundred, he loses the comp So, you know,
we look at overall market share. Same sources is certainly
an effective tool to make sure the brand's still relevant.
(11:36):
It's one of the reasons we use black Box to
make sure we're keeping our ear to the wall with
what our guests are saying about every store. We like
to see what the stores are doing per their zip code,
and that's black Box is able to give us that.
You know, if if our stores are trending high or
lower than zip code, we were able to take action
either way. The social sentiment's big to us because it
(11:57):
really truly says what our guests are talking about with us. So,
you know, I think that's one of the reasons you
just you get double digit same store, same store, same store,
Eventually you stop comping, and as I said, you have
to build no store.
Speaker 2 (12:08):
Yeah, you know, and let's let's stick to that black
Box intelligence point. When we did a panel together back
in twenty three. I was impressed by how data driven
you are from people I know in the industry. You know,
they say you're very dialed into the numbers and run
your business accordingly. Can you talk about how you're using
that data, particularly to analyze store performance, bonus out your
(12:31):
employees and stuff like that.
Speaker 1 (12:33):
Yeah, you know, we use black Box for a lot
of different reasons, whether it's sales traffic, even from an
employee standpoint, making sure we're in the right pay categories
by position. That social sentiment side helps tell the rest
of the story. And even like I said earlier, tracking
your sales by zip code which really helpful because you
(12:54):
look at your sales versus DFW. Well, DFW is quite
large or Chicago quite large, so I can track my
store in I'll go by a zip code. Then I'm
kind of in the game because obviously for geographic region
and so having the sales, the traffic, and the social
side of it gives the full story. You could be
up in sales, but your zip codes up even higher,
(13:15):
so maybe you're not exceeding what you should be. You
could be down in sales, but the zip codes tremendously down,
and so you're you're battling and you're knocking it out
based off whatever reasons causing that and the other reason.
You look at sales and traffic and then you compare
it to the social side of it, and we get
a daily, weekly, monthly, quarterly feed. We do a quarterly
(13:35):
recap with black Box, kind of going over the whole
analytics of of everything they're seeing with us and out there.
But the social side tells a story too. And you
could be doing really well in sales because the traffic's
just so high, so dense, but your but your guests
are given negative comments. So let's let's us focus even
(13:55):
to the point of it might not be affecting your sales,
but somebody could be saying, your frieser cols, your frier coal. Hey,
this month, we need to focus on fries. Let's make
sure we're serving hot, fresh fries and we're not dragging fries.
So it does dial us into certain elements of the
brand or the business or the community if we're doing
better than the other side. So it just gives us
a better parallel platform. And we use data word data junkies.
(14:19):
We try not to do paralysis by analysis, but we
do take that data with us to the field to
help us understand what's being said. No matter where it's at,
whether it's black Box or the east Site platform we
use for our real estate, we have a lot of
different data elements.
Speaker 2 (14:33):
Yeah, it sounds like you're leaning on it basically as
a leading indicator, right that it could show moves and
seam sourselves.
Speaker 1 (14:39):
But before they still have to be in the field,
whether it's looking for sites or being in a restaurant.
You can't just look at the data and say, oh,
this is what's happened. You still need to go. And
my emphasis to our team is you've got to be
in the field. Four walls are where it's happened. This
office we're sitting in today, it does not make any money.
(15:00):
It costs money. The fuss make the money, and my
whole support team and executive team has to be driven
to the field. We want them part of the field
for sure.
Speaker 2 (15:11):
How are you looking to drive same star sales growth
in twenty five.
Speaker 1 (15:14):
Well, we have a built in marketing calendar called Sports
which is really helpful and we're able to take that
experience with the Twin Peaks Girl our kitchen and our bar,
and that is our mechanism driven same shot sales, just
the overall memorable experience event that happens in our stores.
(15:35):
We want to stay really dialed in on food. We
want to keep a pricing structure that's in bar belt strategy.
We want to be able to something on an affordable level.
If you're working off a lower budget, you want to
splurge on yourself. There's a higher end. We don't want
to take big, big price jumps. That's not that's not
how we're going to go. I think the consumer's tired
of price jumps, and we've been fortunate enough not to
(15:57):
do them. We've done small two to three percent over
the you know, over traarly twelve months, keeping up with
some minimum wage increases. But we try not to take
those big five six percent jumps, which some people do.
So we just execute executing, understanding the sports calendar and
making sure that sports day is so overwhelming to you
in a good way you come back just for lunch
(16:19):
on Monday.
Speaker 2 (16:20):
Yeah, I'm sure the expanding sports calendar is helping, right,
the bigger college football playoff, right, and then we're seeing
new sports Formula one, right, yeah.
Speaker 1 (16:30):
I mean the seasonality of sports used to you know,
you're really in season, you're out of season or in
the season. It's really stretched. And even NFL they started
dabbling into some Friday games, some different day games that
you weren't used to. Heavy. We're heavy into soccer Champions League,
Gold Cups, South America Cups, World Cup obviously is coming
(16:53):
to town. We lean in the Premier League, La Liga,
all the different and those are nice time zones too,
because a lot of those games are you know, two
three o'clock afternoons, so it really plays well with stretching
the calendar out. NBA is just big, you know, we
really you know, it's a long season, and then from
(17:13):
April to June, it's just playoff mania. You know, you're
you get rid of you go college NFL College playoffs,
NFL Playoffs, Super Bowl, roll into the February and you're
into conference basketball, March madness, playoff implication, NBA, NBA playoffs,
(17:35):
NHL playoffs. Through June, there's probably a little lull, but
then there's always a lot of summer, a lot of
summer soccer that happens, and those those cups are happening
during then the you know, European Cups, South American Cups,
all those are happening a lot of the summertimes. Then
you roll in Fantasy Draft and you're back in football,
so it stretches. Yeah, I hope the college playoffs go
(17:56):
to thirty two teams. Just keep adding game. I'm sure
that was big business man with UFC, big partner of ours,
and you know they're they have great material as pay
per view, but then they have a material that's on
ESPN Plus that we're playing, and they have a lot
of different elements there. There's always boxing that lay in there,
so there's there's always In marketing, one of marketing's jobs
(18:20):
are really to keep up the calendar and all right,
we have this big event coming on Friday. What are
we gonna do to accent that event besides just have
it off. What's the beer special or the drink special
or what you know, what what element are we gonna
put in there to make that just a notch above
everybody else. It gives our operators a chance to plan
because you see the calendar, so it's not like a
bus is pulling in and you're unprepared. You know they're
(18:42):
gonna you know, you're gonna be crowded, so let's overstaff
and make sure that experience is incredible. Great.
Speaker 2 (18:49):
Are there any changes to the marketing planning making the
share now? We're staying We're staying focused on you know,
local store marketing. We like that one three five mile radius.
Speaker 1 (18:59):
We think it's important to be a part of the
local lodge versus some national commercial that maybe doesn't have
the impact. And you know, our footprint doesn't allow for
a national commercial, so it'd be kind of a waste,
and we just think our money's better spent at the
local DMA for sure. So we're going to continue to
push that one three five mile radius. Local sports talks,
(19:20):
local businesses, festivals, local teams, you know, sponsorships that way,
really just driving that traffic in. You know, everybody's like
when you do a commercial, Well, when everybody in your
one three five mile radius has tried you and wants
to come back to you, we'll start thinking about commercial
because there's a lot of bodies between one three and
five and our building should be a marketing tactic. You're
(19:42):
picking good sites with a lot of good traffic driving
by you, and your building is beautiful. That's going to
drive people in. That's a billboard itself for sure. If
you need a billboard, you probably pick the wrong site. Sometimes,
no doubt you touched on it a little bit.
Speaker 2 (20:00):
It's like you're not taking too much pricing. I think
that's the smart play in twenty twenty five. You know
how much inflation do you expect, and how much price
are you willing to share?
Speaker 1 (20:09):
How much creature between two and three percent, and really
just to keep up at the minimum wage. We've locked
a lot of our proteins in so we know what
our cost effects are there. We ate some margin last
year and we went after the margin in other categories,
but we ate some margin. And the poultry. Poultry is
extremely high last year, five year high. But we know
(20:31):
it's sick. It moves, you know. We track in month
to month, year to year, and if you took price
every time we went to an all time high, you
would outprice yourself. So you just have to be cost
effective in other areas and eat some of that costs.
Speaker 2 (20:45):
So yeah, our in our research, some of the chains
like Texas road Has and wing Stuff that have the
highest cogs are generating the most traffic, right, they're offering
the most.
Speaker 1 (20:53):
Value on the plate. Yeah, we we're pretty pleased with our.
Speaker 2 (20:57):
Cog good and you know it sounds like you're going
to spend some of your cash on building three new stores.
But i'd imagine you generate a lot of cash. Can
you talk about, you know, how you plan to use
that excess cash this yere?
Speaker 4 (21:12):
Uh.
Speaker 1 (21:12):
You know, we'll delever, delver some of our debt. And
that's one of the reasons you know we're moving towards
a spin off, is for investors to look at us
as a standalone portfolio and understand this brand, give us
focus on development. We certainly want development equity there so
we can continue to grow the footprint, and then we'll
deliver some of our debt. All right, good stuff, So
(21:33):
what's your favorite menu item? Liquid would be something from
Kentucky on a clear ice ball and I spent you know,
love love me some Blantons and weller, I can't go
wrong with any of those. Nothing wrong with us. A
good micaltree there the Corona. Food wise, love our flatbreads,
(21:54):
smoked wings. We have our own smoker programs. We smoke
most we smoke briskets, wings, chicken thighs or so. Once
again that scratch kitchen. Our kitchens are great. Charg real
flat top fryars, convection of it and smokers really gives
us a lot of flexibility to make that menu flexible.
But those are probably like go tos, flatbreads and smoke
(22:15):
wings really good go too, or hand cut steak. We
have handcut in New York strips.
Speaker 2 (22:20):
All right, good stuff. Yeah, the wings are great. I'm
gonna have to try those smoke chicken thighs, man, it'll
sound pretty good too.
Speaker 1 (22:25):
Yeah, we smoke our own chicken thighs, and then we
utilize them in our chicken nachos, we utilize them in
the case of das, we utilize them in our green
chili chicken soup. So yeah, we try to really make
sure our pantrees has good flow through. So our chef's great,
he's able to look at recipe items and make sure
(22:45):
we maximize the pantry item out of it. So we
don't have just one item sitting there for one recipe
because we know how that goes either run out or
it doesn't make it. And so if you have good
flow through on your inventory, that helps up.
Speaker 2 (22:57):
All right, good stuff, Thanks for doing this. Where can
the audience go to find their nearest twin Peaks and
what social media program should we follow you on?
Speaker 1 (23:05):
Well, at twin peaks dot com, that's the best for
following us. We have great Instagram. Every store has its
own Facebook Instagram really try to stay localized. So you
just click on your local Instagram twin Peaks, it'll pop
up great feeds, local store, depends on where you're at.
The next new one will be Brandon, Tampa, Florida.
Speaker 2 (23:25):
Okay, cool man, Yeah, I have to follow you on Instagram.
Speaker 1 (23:29):
Yeah, good luck. Man.
Speaker 2 (23:30):
This is going to be a fun one to watch,
a little too small for me to cover, but I'll
be watching closely.
Speaker 1 (23:36):
Man. Are you based out of I'm in New Jersey.
I'm working on it, working on Pennsylvania right now. Now. Okay, yeah,
I've listen.
Speaker 2 (23:42):
I've been Scottsdale, Austin, Southern Florida, so I've been to
a few. I'll try to get closer to Are you
a Giants fan Jets fan? Well, I'm a Raiders fan.
I'm actually a Raiders fan. I was born into this
life of disappointment. They won the Super Bowl the day
I was born, and I grew up wanting to be
a Raider.
Speaker 4 (24:01):
Now you got TV twelve leading the team. He's Mike.
I'm hoping for uh an improvement for sure. You might
get the Sanders kid. Need could be your QP.
Speaker 1 (24:13):
It does a lot of rumors swirling around man. Yeah,
we'll see. It's always fun to watch and keep up
with it. Yeah. Who's your team? Cowboys Living Down Okay? Yeah?
Speaker 2 (24:23):
Yeah, yeah, yeah for sure man. Uh you know, there's
a lot of Cowboys fans here and everywhere.
Speaker 1 (24:28):
But actually my team is wherever, wherever a store is,
that's my team. I feel like a bookie. Then when
I'm watching a game and my family's like, who do
you want? Like, I want this, white want that. We
have three stories. Brother.
Speaker 2 (24:42):
Yeah, thanks again, and I want to thank the audience
for tuning into. If you like the episode, please share
with your friends and colleagues. Check back soon for a
discussion with Kyle Kavanaugh, the founder at Maine and May
Host
Michael Halen
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