Argonne Capital Group LLC, the nation’s largest IHOP franchise operator, added 40 IHOP restaurants to its growing portfolio. It also said it is hungry to acquire more of IHOP sister brand, Applebee’s.
Atlanta-based Argonne Capital Group, through affiliate Peak Restaurant Group LLC, acquired the assets, operations and franchise rights to 40 IHOP locations in seven Western states. The acquisition brings to 254 the number of IHOP restaurants operated or subfranchised by Argonne-owned entities, including affiliates Sunshine Restaurant Partners and ACG Texas.
Argonne did not disclose terms of the deal. The IHOP outlets were sold by Draper, Utah-based franchisee Quantum Management.
In December 2010, Argonne made its first acquisition into the Applebee’s Neighborhood Grill & Bar brand through affiliate Neighborhood Restaurant Partners, which purchased eight franchised locations of the casual-dining brand in San Antonio, along with development rights for the region.
Both Applebee’s and IHOP are owned and franchised by Glendale, Calif.-based DineEquity Inc.
Karl Jaeger, Argonne managing director, said the firm has been working with the IHOP brand since 2004 and lived through the “re-energizing” of the brand by DineEquity chief executive Julia Stewart and her management team.
“Our IHOPs have performed very, very well,” he said.
Argonne has been interested in Applebee’s since IHOP acquired the casual-dining brand in 2007, Jaeger said.
“We’re seeing some of the same plans being put in place and we’re seeing some of the same success,” he said. “We’d like to be part of that upside.”
Jaeger said Argonne is particularly interested in Applebee’s’ “multi-pronged” revitalization efforts, which have included restaurant remodels, new marketing efforts, an improving menu and operations.
“The remodel program, in particular, will go far in bringing people back into the restaurant,” Jaeger said.“It’s very different from what people knew before.”
Applebee’s also has benefited from promotions of its lower-calorie menu options, as well as its popular 2-for-$20 deal, an offer that can account for up to 20 percent of sales when promoted in national advertising.
The addition of late-night hours also has boosted alcohol sales at Applebee’s, DineEquity reported for its fourth quarter ended Dec. 31. Domestic systemwide same-store sales for the brand increased 2.9 percent in the fourth quarter, marking the second consecutive quarter of same-store sales growth.
Jaeger said Argonne may look at picking up corporate Applebee’s locations as DineEquity continues its ongoing refranchising effort. But the firm is looking in particular at acquiring locations from existing franchisees that may be looking to exit the system.
The IHOP acquisition by Peak Restaurant Group is the third by an Argonne affiliate in three and a half years. Sunshine Restaurant Partners was purchased in July 2007 and the Stevi B’s pizza buffet chain was acquired in February 2008.
In 2009, Argonne’s reported company restaurant sales, combined with Nation’s Restaurant News-estimates of the firm’s subfranchising revenue, totaled $224.5 million, which marked a 2.5-percent increase from the previous year, according to NRN’s annual Top 200 census.
The company said the restaurants operated by its IHOP subfranchisees generated 2009 sales of $85.5 million.
Michael Klump, founder and president of Argonne, said in a statement that he is optimistic about Applebee’s future, “and eager to participate in a more meaningful way as the Applebee’s system continues to build momentum.”
Contact Lisa Jennings at [email protected].