Participants

Andrew Wiederhorn; Chairman of the Board, President; FAT Brands Inc

Kenneth Kuick; Co-Chief Executive Officer, Chief Financial Officer; FAT Brands Inc

Roger Lipton; Analyst; Lipton Financial Services, Inc.

Presentation

Operator

Good afternoon, ladies and gentlemen. Thank you for standing by. Welcome to the FAT Brands Inc., fourth-quarter 2024 earnings conference call.
(Operator Instructions) Please note that this conference is being recorded, today, February 27, 2025.
On the call, from FAT Brands, are Chairman of the Board, Andy Wiederhorn; and Co-Chief Executive Officer and Chief Financial Officer, Ken Kuick.
This afternoon, the company made its third-quarter 2024 financial results, publicly available.
Please refer to the earnings release and earnings supplement, both of which are available in the Investor Section of the company's website at www.fatbrands.com. Each contains additional details about the third quarter.
But, before we begin, I must remind everyone that part of the discussion, today, will include forward-looking statements. These forward-looking statements are not guarantees of future performance and, therefore, undue reliance should not be placed upon them.
Actual results may differ, materially, from those indicated by these forward-looking statements, due to a number of risks and uncertainties. The company does not undertake to update these forward-looking statements, at a later date.
For a more detailed discussion of the risk that could impact future operating results and financial conditions, please see today's earnings release and recent SEC filing.
During today's call, the company will also discuss non-GAAP financial measures, which it believes can be useful in evaluating its performance. The presentation of this additional information should not be considered in isolation nor as a substitute for results prepared in accordance with GAAP. Reconciliations to comparable GAAP measures are available in today's earnings release.
I would, now, like to turn the call over to Andy Wiederhorn, Chairman of the Board. Please go ahead.

Andrew Wiederhorn

Thank you, operator. Thank you, all, for joining us today.
As a Los Angeles-based company, our thoughts are, first and foremost, with those affected by the devastating fires. Before I begin today, I want to thank our team members, franchisees, and employees. Their dedication to our business, to each other, and to our communities, during this time, exemplifies the true spirit of FAT Brands.
We kicked off 2025 with a major milestone: the spin-out of Twin Hospitality Group, Inc., which operates our Twin Peaks and Smokey Bones restaurants. In January, we distributed 5% of Twin Hospitality's Class A common stock to shareholders, while retaining the remaining shares. This amounts to approximately a $50 million dividend, paid to our FAT Brands shareholders, of Twin Hospitality shares.
Twin Hospitality, now, trades separately on the Nasdaq, under the ticker TWNP. The public listing of Twin Hospitality creates an opportunity for shareholders to directly participate in the growth and success of the Twin Peaks brand.
This strategic move enhances transparency and enables the market to better appreciate the distinct value of Twin Peaks. Furthermore, it provides Twin Peaks additional currency to sustain and accelerate its robust growth.
If you reference the original $12 per share IPO price of FAT Brands in 2017 and adjust the price for all the ordinary and special dividends paid to FAT Brands shareholders, the current basis in FAT Brands' stock is $2.74. In other words, FAT has paid more than $9 in cumulative dividends.
The current trading price of FAT reflects an approximately $2.50 per share adjustment for the dividend of the TWNP shares to establish the listing of Twin Hospitality Group.
Following this call, we invite you to listen to the Twin Hospitality inaugural call at 5:15 Eastern Time, led by CEO Joe Hummel and CFO Ken Kuick. The details are contained within their earnings release, also issued this afternoon.
As noted in our public filings for Twin Hospitality Group, regarding our bond refinancing that took place in Q4 of last year, we are committed to raising equity between hospitality and reducing debt in 2025 by $75 million or more, including a minimum of $25 million by late April. We believe we are on track to fulfill that commitment.
As part of that same debt reduction obligation, we agreed not to pay the FAT common dividend until that $25 million is paid. So we expect to complete that over the next 60 days and declare and pay the Q1 dividend, as usual, at that time.
A key driver for FAT Brands, in 2025, is unlocking the tremendous amount of value created at Twin Hospitality, with TWNP operating as a separate independent public company.
And while market prices may fluctuate at the time of the spinoff listing, FAT's shares in TWMP were valued at more than $900 million. This is in addition to shedding over $400 million of Twin Hospitality's debt to the spinoff entity from FAT.
FAT will continue to consolidate the Twin Hospitality financials for the foreseeable future because of our ownership and control percentages. Nonetheless, we will break out this information so that you can see the clear unlocking of value at FAT.
So another way to summarize the balance sheet, post spinoff, is that FAT, now, owns the remaining 16 brands and their cash flow, plus all of its fully diluted 85% of the TWNP stock and has net debt of approximately $850 million, plus approximately $150 million in preferred stock.
On another note, we are also looking to refinance our remaining three securitization silos, as the market permits. Perhaps most or all of those in the second half of 2025.
Now, turning to our fourth-quarter results, which Ken will dive into in more detail, there were 13 weeks in the fourth quarter of 2024 and 14 weeks in the fourth quarter of 2023.
Total revenue decreased 8.4% to $145.3 million compared to $158.6 million in the prior year quarter, as a result of the incremental operating week in the prior year quarter. Our system-wide sales were $580.2 million for the quarter, representing a 7.4% decrease from the last year's quarter. Again, due to the incremental operating week last year.
To put this in perspective, that one less week equals about $45 million to $50 million of sales and $2.5 to $3 million of royalties and another $3 million to $5 million of adjusted store-level EBITDA.
So there's quite a lot of noise in our numbers because of that one week -- by one-week adjustment. And, also, as we convert the Smokey Bones stores and/or close a few of the underperforming units that won't make the conversion list.
We hope that this noise can be eliminated in 2025 so it will be a very clear line of sight for both TWMP and FAT, going forward, in 2026.
We ended 2024 with total revenue increasing 23.4% to $592.7 million and system-wide sales increasing 3.1% to $2.4 billion.
As a reminder, we are focused on three core strategic initiatives that drive our success. First, generating organic growth across our existing brand portfolios, 1,000-plus new unit pipeline. Second, evaluating strategic acquisitions that could complement and strengthen our portfolio. And, third, expanding manufacturing capabilities at our Georgia facility, particularly in cookie dough and dry mix production.
Turning, first, to our organic growth initiatives. Throughout 2024, we opened 92 new restaurants. This year, we plan to open over 100 new locations, having already opened 17 units a, year to date.
We anticipate strong organic growth across our portfolio in 2025. In particular, with Great American Cookies and Marble Slab Creamery, Fatburger and Buffalo's Express, Round Table Pizza and Fazoli's. This growth trajectory is further supported by our robust Twin Peaks' new store development pipeline.
Our current development pipeline consists of signed agreements for approximately 1,000 additional locations, which includes over 250 units that were signed in 2024. Once these units are opened, we expect them to generate approximately $50 million in incremental annual adjusted EBITDA, which will naturally strengthen our balance sheet and reduce our leverage.
This robust development pipeline demonstrates both strong consumer demand for our brands and the significant growth opportunities provided into our franchisee base.
Co-branding also continues to be a key driver of our growth strategy, as seen by the success of multiple brand pairings across our portfolio. Great American Cookies and Marble Slab Creamery has been a standout example, growing to over 160 co-branded locations since 2014, including 15 locations opening in 2024 and approximately 15 projected for this year.
Co-branded locations typically generate 10% to 20% higher incremental sales compared to single-brand units. These compelling unit economics continue to attract franchisees and drive expansion.
Building on our co-branding success, we're looking to further lean into this strategy in 2025. To kick off the year, we opened a tri-branded model of Great American cookies, Marble Slab Creamery, and Pretzelmaker in the Dallas area. Similarly, we are set to open several more Fatburger, Buffalo's Express, and Hot Dog on a Stick locations, in addition to Fatburger and Round Table Pizzas this year.
The international appeal of our brands is especially evident with Johnny Rockets, where international locations, now, represent over 55% of the brand's global footprint. In 2024 alone, we opened 11 new international locations across multiple markets: two in Chile; two in Bali, Indonesia; four in Mexico; two in Brazil; and a ghost kitchen in the United Arab Emirates.
Our presence continues to grow in key international markets, with over 40 locations, now, operating in Brazil and nearly 25 in Mexico, demonstrating the strength of our international expansion strategy.
Additionally, we continue to see significant opportunities in non-traditional venues. A prime example is the recent opening of Hurricane Grill & Wings at the Six Flags Great Escape Lodge in Lake George, New York -- our first theme park location for the brand.
Johnny Rockets also continued to grow across non-traditional venues, opening at the Soaring Eagle Casino & Resort in Mount Pleasant, Michigan.
We believe these non-traditional venues represent a significant growth avenue, allowing us to reach new customers while leveraging existing infrastructure and foot traffic.
I'd like to, also, address our renewed focus on synergies and cost reductions. We are continuing to reduce costs, as we separate out Twin Hospitality Group from the rest of the brands at FAT, taking essentially half of our 200 corporate stores and spinning them off with Twin Hospitality. Meaning: the corporate stores at Twin Peaks and the Smokey Bones locations.
We plan to refranchise, additionally, our 57 company-owned Fazoli's locations, leaving us with approximately 33 Hotdog on a Stick locations out of our 2,300 total locations, or 2,125, if you exclude Twin Peaks and Smokey Bones. This will bring us back to being almost 100%-franchised.
If you look at our supplement filed on January 13 -- and it's in the Investor Section, on our website -- you will see on pages 11 and 12, the third-party valuation of all of our brands, less our debt, and given various assumptions. This supplement gives a good roadmap to value creation and our strategy to unlock the same, which is clearly our focus, today.
Now, turning to our growth-by-acquisitions strategy. Our recent transactions have been highly strategic, creating multiple avenues for value creation.
A prime example is our acquisition of Nestle Toll House Café by Chip, about 3 years ago. This transaction was particularly compelling as it allowed us to convert these units to Great American Cookies locations, effectively growing our cookie footprint, while simultaneously increasing production volume in our manufacturing facility.
Similarly, we bought Smokey Bones, in late 2023, to help fuel Twin Peaks' growth, which will allow us to convert about 30 of the Smoky Bones locations into Twin Peaks.
This dual benefit illustrates our approach to acquisitions. We look for opportunities that not only expand our restaurant portfolio but also drive incremental value through our manufacturing capabilities. Essentially, getting two bites at the apple.
Looking ahead, our acquisition strategy remains focused on opportunities that are synergistic with our existing portfolio. We're especially interested in concepts that could leverage our manufacturing capabilities, such as additional cookie concepts that would utilize our cookie dough or pretzel mix operation.
However, we maintain strict discipline in our approach. And we're not interested in turnaround situations. Of which, we have seen many, lately.
Turning to our manufacturing operations. We currently generate approximately $38 million in annual sales from our franchisees through our Georgia facility, with a profit of about $15 million, representing a 40% margin.
This is a win-win situation, as our franchisees buy cookie dough and pretzel mix at a below-market price from us. And we benefit from this high-margin revenue stream.
Our manufacturing facility presents significant growth potential -- currently operating at only 40% capacity. We have substantial room for expansion. The facility spans four acres and we are only utilizing about half an acre. We can also increase production capacity through modest equipment upgrades within the existing facility, when needed.
Our near-term goal is to increase utilization to 60% to 70%, which would significantly enhance the facility's value. Ultimately, this asset could provide an opportunity to reduce our leverage through a potential sale. But, for now, we're focused on optimizing its operations and capturing the available growth opportunity.
Before concluding, I'd like to share an update on the FAT Brands Foundation.
Since the Fat Brands Foundation commenced its giving in 2023, the organization continues to further cement, itself, as an emerging nonprofit leader. In one year, the foundation increased its giving by 36%, providing approximately $325,000 in grants.
The foundation also provided 27 more grants to deserving nonprofits across the US, an increase of 59% from 2023, for a total of 70 grants in 2024 -- across 17 states, plus Washington DC.
Our commitment to community support also extends to crisis response, as demonstrated during the recent LA wildfires. Through Fatburger's food truck, the Fat Mobile, we provided 10,000 meals to first-responders sites and shelters. While Round Table Pizza offered free personal cheese pizzas to first responders, at over 50 Los Angeles area locations. And Hotdog on a Stick handed out free lemonade at a fundraising event, at the Santa Monica Pier.
These initiatives particularly resonated in Los Angeles, where many of our brands have their roots.
The combination of immediate crisis-response capabilities and long-term community development, through our foundation's work, demonstrates our ongoing commitment to making meaningful contributions to the communities we serve.
The strong support from both FAT Brand's corporate and our franchisees shows how deeply embedded community engagement is in our company culture.
In conclusion, 2025 is off to an exciting start, with a successful launch of Twin Hospitality Group as a standalone public company. As we look ahead, our primary focus for 2025 is [deleveraging] our balance sheet, while continuing to execute on our robust pipeline of organic growth opportunities.
The energy momentum I see across our organization makes me incredibly optimistic about FAT Brand's future. And I look forward to updating you on our progress in the coming quarters.
And, with that, I'd like to hand the call over to Ken Kuick to discuss our financial highlights from the fourth quarter. Ken?

Kenneth Kuick

Thanks, Andy.
Before I discuss our quarterly results, I'd like to briefly recap -- and Andy covered it a bit -- our recent spinoff of Twin Hospitality.
On January 30, we distributed 5% of our ownership in Twin Hospitality Group Inc.'s classic common stock to our shareholders, while the remaining shares continue to be held by FAT Brands. Twin Hospitality Group began trading on the Nasdaq at the time of the spinoff. And we're excited, as we begin this next chapter.
Separately, during the fourth quarter, we refinanced our Twin Peaks debt to a new series of 30-year fixed-rate notes. This refinancing strengthens our financial structure and enabled us to complete the public listing of Twin Hospitality.
As Andy mentioned, we are committed to raising equity at Twin Hospitality and reducing debt by $75 million in 2025 and believe we are on track to fulfill that commitment.
Moving on to our fourth -quarter results. I'll start by noting that 2024 was a 52-week fiscal year and 2023 was a 53-week fiscal year. The fourth quarter of 2024 was a 13-week quarter and the fourth quarter of 2023 was a 14-week quarter. So there's one more week of operations in last year's results and the extra week falls in the fourth quarter.
Moving on to our quarterly results. Total revenues were $145.3 million in the quarter, an 8.4% decrease from $158.6 million in last year's quarter. This was driven by the incremental operating week in the prior year quarter, which contributed $11.3 million in revenue, lower same store sales, and the closure of Smokey Bones locations for conversion into Twin Peaks lodges, partially offset by revenue generated by our new Twin Peaks lodges.
Turning to costs and expenses. General and administrative expense increased to $34.5 million in the quarter, from $30.3 million in the year ago quarter, primarily due to $5 million in Smokey Bones store closure costs, partially offset by the incremental operating week in the prior year quarter.
Costs of restaurant and factory revenues decreased to $97.2 million compared to $105.1 million, primarily due to lower company-owned restaurant sales.
During the fourth quarter of 2024, we recognized $30.6 million of non-cash, goodwill, and other intangible asset impairment, primarily resulting from the decline in restaurant performance during 2024.
Advertising expense varies in relation to advertising revenues and decreased to $11.8 million from $13.8 million in the year ago period. Additionally, we slowed down advertising at Smokey Bones, as we continue our strategy of converting locations into Twin Peaks lodges.
Total other expense net, which consisted primarily of interest expense, was $36.4 million in the quarter compared to $31.9 million in last year's quarter. Additionally, in the fourth quarter of 2024, we recognized a $2.2 million dollar non-cash loss on the extinguishment of debt related to the refinancing of our Twin Peaks securitized debt.
Net loss was $67.4 million or $4.06 per diluted share compared to a net loss of $26.2 million or $1.68 per share in the prior year quarter. And on an as-adjusted basis, our net loss was $29.9 million or $1.87 per diluted share compared to $17.3 million or $1.15 per diluted share in the prior year quarter.
And, lastly, adjusted EBITDA, for the quarter, was $14.4 million compared to $27 million in the year ago quarter, with the extra operating week in the fourth quarter of 2023 contributing $1.9 million to adjusted EBITDA.
And, with that, operator, please open the line for questions.

Question and Answer Session

Operator

Thank you. We will now be conducting a question-and-answer session.
(Operator Instructions)
Roger Lipton, Lipton Financial Services.

Roger Lipton

Yeah. Hi, Andy. Hi, Ken. Several questions.
The Smokey Bones impairment loss -- the stores closed -- you mentioned, presumably, there was an operating or an EBITDA loss in the quarter, also, that affected the results. Is that a fair assumption?

Kenneth Kuick

It is, Roger. It's a fair assumption. The operating loss from those restaurants, really, was felt throughout the year.

Roger Lipton

Right. Can you quantify that, at all?

Kenneth Kuick

It's about $2.6 million for the year. Full year.

Roger Lipton

Okay. And I noted that the litigation costs dropped, quite sharply, in half, actually, year to year.
Granted that it's hard to talk about the expectations of litigation, but, Andy, can you venture any thought, at all, in terms of how that's going or might go? Or how the cash cost out-of-pocket will take place, here, going forward?

Andrew Wiederhorn

Well, as you know, no company really wants to talk about continuing litigation without having any clear line of sight. But we're hopeful that the bulk of this litigation gets resolved, during this year, and we eliminate further legal expense.
We also are hopeful that we'll reach a settlement with some of our insurance carriers that will enable us to recover some of those legal fees that we've spent, this year. And I think we're very optimistic about that coming to play in, probably, Q2.
So look forward to reporting on that, as soon as we have news to break.

Roger Lipton

Okay. And I think everybody has to be concerned -- you, guys, most of all -- about liquidity and maintaining strong liquidity. So can you bring us up-to-date on how that stands, in terms of cash-on -hand and available cash to deal with the month-to -month operational needs?

Andrew Wiederhorn

Sure. All of our numbers are reported, publicly. So you can look at our financial statements for cash-on-hand.
But, with respect to liquidity, we maintain an available-for-sale portfolio of bonds. We have approximately $150 million available for sales securities, that sit on our balance sheet. That, from time to time, as we need liquidity, we sell them into the market to generate cash.
We also have an ATM-on-file that allows us to issue preferred stock, common stock, whatever we need t for liquidity purposes.
And, as noted already on this call, we anticipate raising equity at the Twin Peaks-level in the coming weeks, in an effort to reduce some of our Twin Peaks corporate debt. And that will also generate liquidity for Twin Peaks and some repayment of intercompany obligations between Twin Peaks and FAT.
So all those things are happening. The markets seem to be open and moving again, which is great. And we don't really see any foreseeable issues.

Roger Lipton

All right. That's helpful.
And, in terms of the potential within the portfolio, aside from the potential of Twin Peaks, which is obviously on everybody's mind and is taking place and will progress forward.
But what portion of your remaining 16 brands could be used the same way? What are you thinking about, in terms of -- you mentioned Johnny Rockets, with international growth. I don't know whether that's in any state that could be used in a similar fashion.

Andrew Wiederhorn

You should not think about -- I would not think about FAT Brands as an activity and splitting up the company brand by brand. That's not a goal that we've stated.
We felt that the Twin Peaks business is very different than many of the other franchise concepts that we operate -- in that alcohol percentages, et cetera. So we've spun it off, now.
And, of course, we're sitting on some 50 million shares of Twin Peaks stock so we look forward to realizing value from that brand, which, in and of itself, would go a long way to either reducing or eliminating all of our debt.
We've talked before about our manufacturing operation -- and I just talked about it on this call -- as an opportunity. to essentially take a non-core asset. And once we've used up more capacity or utilization of the factory, then, we might look for a liquidity event.
Now, that could be an outright sale. It could be a spinoff, again. One of those things.
I don't see us spinning off additional restaurant brands. today. Never say never but I don't really think that's likely. In fact, I think we'll probably acquire more brands.
But I think the next couple of things to look at are our investment in Twin Peaks and our manufacturing business, as logical next steps.

Roger Lipton

Okay. Well. Thanks very much.

Operator

Joe Gomes, Noble Capital Markets.

Hey. Good afternoon, everybody. It's [Josh], on for Joe.
I just wanted to start off with -- I looked at the earnings and you, guys, have 92 openings for the year, which is great. But you, guys, expected a little bit of 100-plus, can you add any color as to, maybe, why would this just push to the right from the franchisees, themselves, into '25?

Andrew Wiederhorn

Yeah. There's definitely a little slippage into' 25, from 24, of maybe 20% of the stores. Some of that has to do with franchisee financing; a little bit of construction delays; but, mostly, just franchisees dragging their feet a little bit or claiming that lenders, from a construction financing standpoint, are just a little bit slower to react, a little choosier.
So it's a slight delay but the pipeline's very solid. We have -- one way to measure the health of the franchise system is when your franchisees are continuing to come back and buy the rights to build more stores.
And, like I mentioned, we sold, like, 250 incremental stores last year, keeping that pipeline full and keeping our development schedule full. So we're optimistic that we'll get more than 100 opened this year.
We'll know better, as we get into the coming couple of quarters, exactly what number that's going to be.

Okay. That's helpful.
And, obviously -- we got a report that consumer confidence is down. Has any, really, of the brands been hit harder than others, with respect to, like, consumer spending?
And, really, on that flip side, which concepts have you, guys, seen that, really, have been, like, outperformers?

Andrew Wiederhorn

Yeah. We definitely saw the QSR sector get hit on at the Fazoli's level, where it's very price-sensitive brand. And you had frequency during 2024 trade-down, as customers were trading down from their spending patterns -- from fast casual to QSR and so on.
And so we probably saw high-single-digit declines in that category. But things have also started to turn around. We're pretty optimistic about 2025 sales.
And we've seen some categories, definitely, be in the [block]. We've seen, for example, Round Table Pizza with positive same store sales. And we've seen cookies and ice cream come back, handsomely.
So I think it's a little bit of a mixed bag. But, also, there's been crazy weather in the first six weeks of the year that, really, has affected everyone.
So I think, generally, we're optimistic. We may not be forecasting huge positive same-store sales increases across all brands but there's definitely segments where we're seeing positive pushes.

Okay. That's great.
And the last one for me is: Obviously, you touched on this in you, guys', remarks. But, with the election really behind us now, can you expand more, really, in the M&A pipeline of new opportunities come to you that really just haven't, prior to the election?

Andrew Wiederhorn

Well, we have -- I don't think it's so much about the election -- we see a lot of stuff, right? We see deals every single week.
There's just a lot of turnarounds. And they just haven't been strategic for us, where we're checking two or three boxes, at the same time. Cost of capital is still high, relative to 2021.
And we'd rather refinance, delever, things like that, right now, rather than add to our leverage.
So we've committed to unlocking value and reducing leverage. We're focused on that.
There are definitely some targets that make strategic sense for us to acquire -- that would complement the existing portfolio. We are pursuing those. Timing is everything so we'll just have to see how that comes together and how the markets react.
And I think we'd all like to see lower interest rates and a looser financing market. But, until such time, we're going to focus on delevering. We've got this huge pipeline of organic growth, which is free. So to get that $50 million of incremental EBITDA by just opening those 1,000 stores, that doesn't cost us anything. We don't have to borrow anything.
And so that's a big focus for us -- is to get those stores open. If we wanted to buy $50 million of EBITDA, then, we're going to have to go write a big check. And that's going to have to come from somewhere. So that doesn't really help our delevering strategy.
Now, that may all change as Twin Peaks grows, as we get diluted in our ownership and create some liquidity there and pay down some debt -- that could all change. But I don't think that that's a big 2025 initiative, other than, maybe, one or two targets that are very interesting, strategically, for us and we are continuing to focus on.

Okay. That's helpful. Thanks for taking my questions.

Andrew Wiederhorn

Thank you.

Operator

Roger Lipton, Lipton Financial Services.

Roger Lipton

Yeah. Hi, again. Relative to putting to work or disposing of the Smokey Bones locations, what timetable do you think is realistic?

Andrew Wiederhorn

Smokey Bones will -- the majority of them will get through in 2026. 2025, 2026. We should be fairly far along.
There may be some stragglers. But the majority of it, over the next 24 months, we will have made a decision on and move forward.
The numbers have been very encouraging. There are some complicated leases, where there are multiple properties under master leases. And so we're trying to negotiate all of the leases, at once, because that's what the landlord wants, maybe moreso than what we want.
So it's taking a little longer on some of those more complicated master leases. But, otherwise, we have a solid line of sight and we have franchisees who are stepping up to convert locations in their markets. And we're converting the corporate ones, as well.

Roger Lipton

Right. And you're still thinking that something, like, 30 of the 58 locations will be suitable for conversions?

Andrew Wiederhorn

Yeah. 30 is a good number. There were 61, when we started. We've converted a couple. We've closed one.
So 30 is a safe number, give or take, that we get done. There's always a chance it's more.
Usually, if we haven't converted a location and we don't plan to, it's because there's already a Twin Peaks nearby so they're too close to each other. Or there's some landlord restriction that may have to do with the sale of alcohol or things like that.
And some landlords, where there might be a Smokey Bones, have some master lease, with a Target, as an example where they may have a 25% alcohol restriction. And we know that Twin Peaks is in the high 40%s percentage of alcohol so it doesn't qualify.
Those are the kind of reasons as to why.

Operator

Okay. Thank you.

Andrew Wiederhorn

Thank you, Roger.

Operator

Thank you.
As there are no further questions, ladies and gentlemen, we have reached the end of question-and-answer session.
I would, now, like to turn the floor over to Andy Wiederhorn for closing comments.

Andrew Wiederhorn

Thank you, operator.
I would like to thank all of you for participating in our earnings call, today. Happy to take any follow up, on a one-off basis.
Thank you, again.

Operator

Thank you. This concludes today's teleconference.
You may disconnect your lines, at this time. Thank you for your participation.