DIN » Topics » Company-Operated Restaurants

These excerpts taken from the DIN 10-K filed Feb 26, 2009.

Company-Operated Restaurants

        Historically, company-operated Applebee's restaurants have been clustered in targeted markets to increase consumer awareness and convenience and enable us to take advantage of operational, distribution and advertising efficiencies. We plan to continue to execute our strategy, initiated in 2008, of transitioning to an approximately 98% franchised system.

        In 2008 we franchised 103 company-owned restaurants in the California, Nevada, Delaware and Texas markets. We have a signed agreement to franchise an additional seven company-owned restaurants in New Mexico. Our planned franchising efforts assume we will franchise approximately 200 company-operated Applebee's restaurants in 2009, and complete the franchising process in 2010. This heavily franchised business model is expected to require less capital investment, improve margins, and reduce the volatility of cash flow performance over time.

        In June 2008, we sold 181 fee-owned Applebee's properties (approximately 91% of our total fee-owned locations) in a sale-leaseback transaction in June 2008.

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        The following table shows the areas where our company-operated Applebee's restaurants were located as of December 31, 2008:

Area
   
 

New England (includes Maine, Massachusetts, New Hampshire, New York, Rhode Island and Vermont)

    71  

Detroit/Southern Michigan

    65  

Minneapolis/St. Paul, Minnesota

    63  

Virginia

    59  

St. Louis, Missouri/Illinois

    57  

Kansas City, Missouri/Kansas

    34  

Washington, D.C. (includes Maryland and Virginia)

    30  

Central Missouri/Kansas/Arkansas

    12  

Albuquerque, New Mexico(1)

    7  

Memphis, Tennessee

    7  

Shanghai, China

    1  
       

    406  
       

(1)
Five of these restaurants were franchised on February 24, 2009.

Company-Operated Restaurants

        Company-operated IHOP restaurants are essentially comprised of our IHOP owned restaurants in Cincinnati, Ohio. In addition, from time to time, restaurants developed by us under the Previous Business Model are returned by franchisees to us and may be operated by the Company for an indefinite period until they are refranchised. As of December 31, 2008, there were a total of 11 company-operated restaurants, ten of which were located in the Cincinnati market.

        We maintain the company-operated restaurants in Cincinnati to facilitate the testing of new building types and remodel designs, new products and equipment, new operational procedures, and new marketing, brand and design elements.

This excerpt taken from the DIN 10-K filed Feb 28, 2008.

Company-Operated Restaurants

        Company-operated IHOP restaurants are essentially comprised of our IHOP owned restaurants in Cincinnati, Ohio. In addition, from time to time, restaurants developed by us under the Old Business Model are returned by franchisees to us and operated by the Company until refranchised. As of December 31, 2007, there were a total of 11 company-operated restaurants, ten of which were located

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in the Cincinnati market. The other company-operated restaurant was taken back from a franchisee and subsequently refranchised in February 2008.

        We maintain the company-operated restaurants in Cincinnati primarily to understand key issues our franchisees face and to facilitate the development and testing of new building types, new products and equipment, new operational procedures, and new marketing, brand and design elements.

This excerpt taken from the DIN 10-K filed Mar 1, 2007.

Company-Operated Restaurants

Company-operated restaurants are comprised of our dedicated company-operations market in Cincinnati, Ohio. In addition, from time to time, restaurants developed by the Company under the Old Business Model are returned by franchisees to the Company and operated by the Company. The type and number of company-operated restaurants varies from time to time as we develop new restaurants, reacquire franchised restaurants and franchise reacquired restaurants.

At the end of 2006, the Company operated a total of ten IHOP restaurants, all of which are located in our dedicated Company market of Cincinnati. The Company will operate these restaurants in order to highlight best practices in operations and training, and perform various marketing, development and operations tests that can be instructive in the development of new business ideas. Restaurants that we reacquire from franchisees usually require investment in remodeling and rehabilitation before being refranchised. As a consequence, a number of reacquired company-operated restaurants are likely to incur operating losses during the period of their rehabilitation.

This excerpt taken from the DIN 10-K filed Mar 15, 2006.

Company-Operated Restaurants

Company-operated restaurants are comprised of two separate categories: restaurants in our dedicated company-operations market of Cincinnati, Ohio and restaurants returned to the Company by franchisees under our Old Business Model, where the Company developed and financed restaurants. Although the type and number of company-operated restaurants varies from time to time as we develop new restaurants, reacquire franchised restaurants and franchise reacquired restaurants, a strategic evaluation and repositioning effort completed in 2004 resulted in significantly fewer company-operated restaurants than in prior years.

At the end of 2005, the Company operated a total of seven IHOP restaurants. Of these, six are located in Cincinnati, Ohio. The Company expects to open an additional nine to 14 restaurants over the next two to three years. The Company will operate these restaurants in order to highlight best practices in operations and training, and perform various marketing, development and operations tests that can be instructive in the development of new business ideas. Restaurants that we reacquire from franchisees usually require investment in remodeling and rehabilitation before being refranchised. As a consequence, a number of reacquired company-operated restaurants are likely to incur operating losses during the period of their rehabilitation.

This excerpt taken from the DIN 10-K filed Apr 1, 2005.
Company-Operated Restaurants

Company-operated restaurants are those restaurants newly developed by us that have not yet been franchised and those restaurants reacquired by us through negotiation or franchisee defaults. Although the type and number of Company-operated restaurants varies from time to time as we develop new restaurants, reacquire franchised restaurants and franchise reacquired restaurants, our strategic evaluation and repositioning has resulted in significantly fewer Company-operated restaurants.

At the end of 2004, the Company operated a total of 10 IHOP restaurants. In 2003, the Company announced its intention to develop and operate between 15 and 20 IHOP restaurants in Cincinnati, Ohio. While we anticipate the development of the 15-20 restaurants will be completed over the next five to seven years, only two were in operation at the end of 2004. The Company will operate these restaurants in order to highlight best practices in operations and training. Restaurants that we reacquire from franchisees typically require investment in remodeling and rehabilitation before being refranchised. As a consequence, a number of Company-operated restaurants are likely to incur operating losses during the period of their rehabilitation.

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