June 1, 2011 · 0 Comments
GLENDALE, CA–(www.hospitalitybusinessnews.com) May 31, 2011 – DineEquity, Inc.
The transaction is expected to result in net proceeds after taxes of approximately $49 million and reduce DineEquity’s sale-leaseback related financing obligations by approximately $12 million, of which $9 million will be removed from DineEquity’s balance sheet. The Company expects to pay approximately $9 million related to the settlement of net working capital liabilities and deal costs. Additionally, the sale of these Applebee’s company-operated restaurants will result in approximately $3 million in annualized general and administrative savings. The average per unit sales volume of these Applebee’s company-operated restaurants for the trailing twelve months ended March 31, 2011 was $2.1 million and the restaurant operating margin was 11.5%. The Company anticipates closing the transaction in the third quarter of 2011.
“We are delighted to move one step further towards achieving our long-term strategic goal of becoming a predominantly franchised system,” said Julia A. Stewart, DineEquity’s chairman and chief executive officer. “Since the closing of the acquisition of Applebee’s in November 2007, we have refranchised more than half of Applebee’s company-operated restaurants, enabling us to leverage free cash flow to pay down debt and focus on enhancing the Applebee’s restaurant experience through comprehensive marketing, menu, operations and remodel strategies.”
Gregory G. Flynn, Apple American’s founder, chairman and chief executive officer, said, “We have great confidence in the strength of the Applebee’s brand and look forward to working with employees at the 66 restaurants in the New England market to deliver an outstanding dining experience to customers. We’re particularly excited about the opportunity to enhance the performance of these restaurants through an expedited revitalization program and anticipate that this program will allow us to drive sales and profits to new heights, more than justifying the additional investment.”
To date, DineEquity has sold a total of 258 Applebee’s company-operated restaurants since its acquisition of Applebee’s International in November 2007. This includes previously announced transactions already completed in the first quarter of 2011 for the sale of 65 Applebee’s company-operated restaurants in St. Louis, Missouri, parts of Illinois and Washington, D.C.
Upon consummation of the pending sales of 66 additional Applebee’s company-operated restaurants, as detailed in this news release, 95% of DineEquity’s restaurants will be franchised. The Company believes that its increasingly franchised business model is less capital intensive and experiences less volatility in cash flow performance compared to the operation of company-operated restaurants.
The Company will update its 2011 financial performance guidance to account for the New England transaction concurrently with the disclosure of second quarter 2011 results.
Apple American Group owns and operates 270 Applebee’s Neighborhood Grill and Bar restaurants in California, Delaware, Indiana, Minnesota, New Jersey, Ohio, Pennsylvania, Nevada, Washington, West Virginia and Wisconsin. With over 16,000 employees, Apple American is the largest franchisee in the Applebee’s system, the largest U.S. casual dining franchisee, and the second largest franchisee of any concept in the U.S.