Archive for Thursday, March 22, 2007

Applebee’s to close 24 eateries

Move comes after declining sales, shareholder demands

March 22, 2007

Advertisement

— 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.

Comments

MyName 8 years, 4 months ago

I think the problem that chain restaurants have in Lawrence, is the fact that there are alot of pretty good local restaurants that people would rather go to. Food service wages are low no matter where you go, but it's the tips that decide whether you get food prepared by people who care or whether it's bland, tasteless fare. IIRC, the last place I ate at a restaurant that wasn't locally owned, I was in Topeka, and I'm sure I'm not the only Lawrencian who can say that.

Now fast food OTOH, is a totally different beast.

kj 8 years, 4 months ago

I agree with you. I would like to have an Olive Garden if we are picking a chain.

Porter 8 years, 4 months ago

"I hate to say it, but Lawrence is the problem, not Applebees."

Wow. This takes Lawrence-hating to a whole new level.

You didn't expand, though. What is it about Lawrence that makes the food at a chain-restaurant bad?

KsGirl 8 years, 4 months ago

I would like to see a Ruby Tuesday in Lawrence. I add the salad bar to my meal for around $3. I fill up on the salad bar and take my meal home for the next day!!

kj 8 years, 4 months ago

Macaroni Grill would be great. Zio's Pizza in Omaha is great. But I don't think it is the same as Zio's Italian Kitchen.

Mike Blur 8 years, 4 months ago

Isn't there an Olive Garden on 23rd, next to McDonalds? I went to the Bill Self show there once.

KsGirl 8 years, 4 months ago

There is a Chili's next to McDonalds.

KsGirl 8 years, 4 months ago

I'm sorry, brain spasm...there is a Carlos O'Kelly's next to McDonalds

momof4 8 years, 4 months ago

Carlos OKelley's is next to McDonalds on 23rd. I think Bill Self has held his show there before. Mexican or Italian, not close in my book.

Emily Hadley 8 years, 4 months ago

Wouldn't it be cheaper to leave the restaurants open and just take the microwaves out of the kitchen?

Joel Hood 8 years, 4 months ago

The worst dining experience I ever had was at the Applebees on S. Iowa many years ago shortly after they opened. I'm sure the staff & management there now aren't nearly as incompetent and oblivious as they once were - but I'll never know.

OldEnuf2BYurDad 8 years, 4 months ago

What killed Pizzeria Uno in Lawrence is what is killing Applebees: the yawn factor. Uno built a reputation doing specialty pizzas, then changed their menu to that Applebees/TGIF/Bennigans carbon-copy menu (the last time I ate at Uno, the menu only had a half-page of pizzas, the rest was chicken fingers and burgers). The key to success in food is to do something ORIGINAL and do it well. Applebees doesn't "do" anything special for me. Chicken fingers, burgers, odd steaks and "pieces of flair".

Not a month goes by that I don't think about Paradise Cafe. Now THAT was a success.

I_Bejewel 8 years, 4 months ago

I almost always prefer a home-cooked meal, but it would be nice to have more options for those times you just don't want to cook or just want to "go out". I would personally love to see an Olive Garden in Lawrence. Does anyone know what they're planning to build where Furr's was just torn down? (so glad they finally did that BTW).

Dorothy Hoyt-Reed 8 years, 4 months ago

offtotheright Have you tried eating at the Thai house, La Parilla, Ixtapa, the mexican restaurant on the north side whose name eludes me (old age), Aimees Coffeehouse? The local restaurants are much better than the corporate restaurants; although, I do like Applebees when I'm being good on my diet. Their alliance with Weight Watchers made going out to eat much easier for me.

Commenting has been disabled for this item.