Saturday, March 3, 2012

In view of the recent proposed buy out by International House of Pancakes, there is uncertainty about the direction of the Applebee's chain, it's management, the likihood of the aquisition going through and focus on future growth opportunities of both Applebee's and the IHOP operations.|||Applebee's is sucking wind. The casual restaurant market in the US is very competitive. Too many restaurants offering the same bland food and "experience". What is the real difference between Applebee's, TGIFridays, Ruby Tuesday, etc.

With that being said IHOP is eyeing Abblebee's real estate. They have some good locations. Look for IHOP to exploit Applebee's real estate holdings and shut down a lot of locations.|||Applebee's doesn't have much of a choice but to accept a buyout. They've been thumped in the marketplace by a slowing economy affecting discretionary spending. IOW, families don't have as much money to spend of dining out, and they're not doing it at Applebee's as much. Applebee's doesn't have the money to go off and try a new idea right now. They've shut down a number of restaurants, in fact.

That said, IHOP's plan for Applebee's is structural: convert the owned and operated restaurants into franchises, reducing their exposure to real estate valuation fluctuations. The downside to this approach is the risk involved in allowing franchisees leeway in setting quality standards for the brand and product.

Future growth ops for IHOP will come through expansion of franchise licensing, sorta similar to what we see for McDonalds and such.|||contact nitron circle of experts

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