DineEquity Inc. said Friday it has agreed to sell 63 corporate Applebee’s restaurants in Minnesota and Wisconsin to the chain’s largest franchisee, Apple American LLC, for $32 million.
The deal, which does not contain a financing contingency and is subject to regulatory approval, is expected to close in the fourth quarter, Glendale, Calif.-based DineEquity said. The transaction will allow the company, which operates and franchises both Applebee’s and IHOP, to reduce securitized debt by $28 million, it said. The removal of leases and related obligations also will provide DineEquity with a benefit of $77 million.
After the sale is completed, the number of corporate Applebee’s will be reduced to 334 within the 2,001-unit chain. Combined with the 1,455-unit IHOP chain, which includes about 12 company-operated stores, DineEquity’s 3,456-unit system will be 90 percent franchise operated.
“We are pleased to have reached an agreement to sell our Minnesota and Wisconsin restaurants to our largest Applebee’s franchisee and one of our best operators, Apple American Group,” said Julia Stewart, DineEquity’s chair and chief executive. “Apple American is a valuable franchise partner who continues to support our menu, marketing and operations revitalization efforts currently underway and is committed to reinvesting in the brand through new restaurant development, acquisition and restaurant remodel programs.”
San Francisco-based Apple American owns and operates 206 Applebee’s Neighborhood Grill & Bar locations.
“This expansion of our commitment to Applebee’s demonstrates the long-term confidence we have in the brand,” Gregory G. Flynn, Apple American’s founder, chairman and chief executive officer, said. “Over the past three years, Applebee’s has become an even more competitive and relevant player in the grill-and-bar category, and we are excited for what the future holds. Apple American intends to help further drive and solidify Applebee's leadership position in casual dining.”
Since DineEquity acquired Applebee’s in November 2007, 110 locations have been refranchised, not including the 63 announced Friday.
Contact Lisa Jennings at [email protected].