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IHOP Buys Applebee's
IHOP Corp. has purchased the Applebee’s chain for $2.1 billion.
IHOP said that it intends to convert most of Applebee’s 508 company owned restaurants to franchises. IHOP had previously undergone the same transition to franchises in order to improve its business. Applebee’s is headquartered in Overland Park, KS and currently franchises three quarters of its 1,943 worldwide restaurants. IHOP franchises approximately 99% of its 1,319 restaurants.
Combined, the company would have 3,250 restaurants and $6.8 billion in annual sales.
Applebee’s has been struggling with declining profit. IHOP hopes that by converting to a franchised owned operation, it reduces the overhead and shifts more risk to owner-operators as opposed to the parent company. Further, a franchise operation would allow individual restaurants to respond quickly to changing trends in their individual markets.
The deal is expected to close in the 4th quarter of 2007.
For more information, please visit the following websites: http://adage.com/article?article_id=119322
http://news.cincypost.com/apps/pbcs.dll/article?AID=/20070717/BIZ/707170335/1001
Ray
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