Published: Fri, August 11, 2017
Money | By Armando Alvarado

Applebee's to Close up to 135 Restaurants

Applebee's to Close up to 135 Restaurants

Up to 160 Applebee's and IHOP restaurants could close during the next fiscal year, their parent company announced Thursday. Many chains grew too aggressively as Americans pulled back on dining spending.

Locations of the closing restaurants have not been released because not all have been identified, Mason said. The number of IHOP restaurants slated to close is estimated to be up to 25 from 18.

"We believe 2017 will be a transitional year for Applebee's and we are making the necessary investments for overall long-term brand health and expect to see improvement over the next year", CEO Richard J. Dahl said.

A list of potential closure locations has not been released. In February, DineEquity CEO Julia Stewart quit the company amid a steady decline. He takes over on September 12.

Shares of DineEquity, Inc (NYSE:DIN) reached a new 52-week low during mid-day trading on Wednesday after Maxim Group lowered their price target on the stock from $77.00 to $55.00. Domestic same-restaurant sales at IHOP declined 2.6 percent, while those at Applebee's dipped 6.2 percent over the past quarter. Instinet lifted their price objective on DineEquity from $55.00 to $58.00 and gave the stock a "neutral" rating in a report on Thursday, May 4th.

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These closures typically fall into one or two categories.

"For the company overall, with both brands, we think we'll be about even from the restaurant counts", he said.

As the locations set to close have not yet been announced, it's unclear at this time how many, if any, Detroit area restaurants will be affected.

Applebee's is experiencing financial trouble because customers have other choices for casual dining.

Dahl said IHOP "remains on solid ground" despite soft second-quarter sales. Same-store traffic fell by 3% during June. The company's quarterly revenue was down 3.2% on a year-over-year basis. Changes such as installing fire grills in all 2,000-plus locations across the U.S. - a $40 million investment by the chain's franchisees - and redesigning locations were supposed to distinguish Applebee's from other casual dining chains. IHOP opened its first restaurant in Toluca Lake, California, in 1958 and has more than 1,700 restaurants in 50 states, Puerto Rico, the District of Columbia, Guam and many countries in the Middle East.

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