Goldman Sachs buys stake in Apple American

The largest Applebee’s franchise group has received a “strategic growth investment” from Goldman Sachs Capital Partners in a deal that closed Monday, company officials said.

San Francisco-based Apple American Group LLC, operator of about 270 Applebee’s Neighborhood Grill & Bar locations in 11 states, said its current investment partner Weston Presidio will remain involved in the company. Terms were not disclosed.

Also participating in the investment and maintaining “a significant ownership position” are members of Apple American’s management team, including its founder, chairman and chief executive Greg Flynn, the company said.

This is the second time GS Capital Partners has invested in the group. The firm helped fund the acquisition of 73 Applebee’s units with a $50 million investment in 2001, taking majority control at the time. Weston Presidio then acquired the group from Goldman Sachs in 2005 for an undisclosed amount.

“We are pleased to welcome GS Capital Partners as an investor for the second time and appreciate the continued support of our long-term partner Weston Presidio,” said Flynn in a statement. “The firms’ investments are a testament to the success we have achieved in superlative restaurant operations. We now have the added resources we will need to continue to grow through a variety of initiatives, including existing restaurant revitalizations, new restaurant development, and potential new acquisitions.”

Founded in 1998, Apple American has projected annual sales of more than $700 million for 2011, and the group has more than 16,000 employees. In 2010, the company had sales of $557 million with 269 units.

“Apple American has experienced tremendous growth since its founding, and we see a number of opportunities for additional expansion,” said Sean Honey, partner of Weston Presidio, in a statement. “The casual-dining sector continues to outperform the broader U.S. restaurant industry, and we expect this trend to continue to benefit the established leaders in the space, such as Apple American.”

Brad Gross, managing director of GS Capital Partners, who also was involved in the firm’s original Apple American investment, added that “Greg and his team have done an outstanding job of delivering strong financial results by fostering a culture of continuous improvement and creating a consistently enjoyable and affordable dining experience for Applebee’s guests.”

The 2,011-unit Applebee’s brand is owned by Glendale, Calif.-based DineEquity Inc., which also owns and franchises sister brand IHOP.

For the company’s March-ended first quarter, DineEquity reported same-store sales increased 3.9 percent for domestic locations of its Applebee’s brand.

Applebee’s has benefited from revitalization efforts such as the addition of later hours, a renewed emphasis on the bar, under-550 calorie menu offerings and lunch deals starting at $5.99, DineEquity officials said.

For the year, Applebee’s domestic same-store sales are expected to rise between 2 percent and 4 percent.

Contact Lisa Jennings at [email protected] [3].