IHOP cuts Applebee's executive ranks as merger nears closure: CEO Goebel, CFO Lumpkin among 11 vets to step down

Nation's Restaurant News,  Nov 19, 2007  by Lisa Jennings

Tags: Applebee's, merger

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"They're saying, 'Let's go, let's move on.' They're chomping at the bit," she said.

Further layoffs are expected, however, as Applebee's moves toward becoming a nearly 100-percent-franchised brand, much as IHOP currently is following Stewart's implementation of a conventional franchising model at IHOP Corp. Before she orchestrated that change, IHOP for decades had borne the cost of financing new-restaurant openings and then selling the branches to franchisees in turnkey transactions.

Over the next two or three months, Stewart expects to put together a "100-day plan" to outline her intentions for re-energizing Applebee's, she said.

Stewart previously outlined a plan to sell off an average of 40 corporate Applebee's restaurants per quarter, with the chain's 42 existing franchisees having first dibs on those spinoffs.

However, analysts have warned that Stewart may not have an easy time turning around Applebee's, given the macroeconomic pressures threatening the entire casual-dining segment as consumers increasingly tighten their belts in the face of falling home values and rising gasoline prices.

"The economic environment today is dramatically different than it was five years ago when she turned around IHOP," Penney said. "Consumer malaise is broadening and getting worse."

Stewart, however, brushes off doom-and-gloom predictions, noting that IHOP was in a similar situation as a struggling family-dining concept when she joined the company six years ago.

"When I got to IHOP, people were flocking from the [family] category," she said. "We set about the task of re-energizing the brand, and we did it.

"I'm not going to worry about the macroeconomics. I can't control the price of gas. There are a lot of people who have been to Applebee's but just haven't been there in a while. It's my job to bring them back."

ljenning@nrn.com

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