Kansas City, Mo. Applebee's International Inc. said Wednesday it would close 24 company-owned restaurants that aren't meeting performance goals.
The Overland Park-based company typically closes one or two restaurants a year. The big jump comes as Applebee's is struggling with declining sales and a shareholder activist demanding the company sell off many of its 528 corporate-owned locations.
"These restaurant closures will have a positive impact on our future earnings, cash flow and return on invested capital," David Goebel, the company's chief executive officer, said in a news release.
Ten of the marked restaurants are in two New England states and the remainder are spread over nine states. Company spokeswoman Laurie Ellison declined to say which states because Applebee's officials have just started talking with the affected locations.
Ellison said the typical Applebee's restaurant has five managers and 60 to 70 regular employees. She said the company will transfer most of the managers and give the regular employees a chance to apply for jobs at nearby locations.
The company said it plans to close 19 of the restaurants by the end of the first quarter. It said it will record $13.5 million to $15.5 million in noncash impairment charges during the quarter and pay between
$8.5 million and $11 million in lease termination and other charges for the stores closed in the first quarter.
The remaining stores are expected to be closed as the company negotiates with landlords and are expected to generate an additional $1.5 million to $2.5 million in charges.
The news came a day after the company filed its preliminary proxy for its annual meeting, advising shareholders not to vote for a slate of four directors offered by hedge fund Breeden Partners LP.
Breeden, which owns 5 percent of Applebee's shares and is operated by former Securities and Exchange Commission Chairman Richard Breeden, is looking to gain a larger voice on the 12-member board, saying current management hasn't used the restaurant chain's capital wisely and should sell many of its company-owned restaurants to franchise operators.
Applebee's did say in the proxy that it has changed its corporate policy to no longer allow private use of the company's plane, one of several complaints from Breeden.
Shares of Applebee's gained 28 cents to close at $25.11 in trading Wednesday on the Nasdaq Stock Market.