Applebee’s International, Inc.:
First Quarter Comparable Sales Increase 3.6 Percent for Company
Go deeper with GlobalData
Restaurants; April Company Comparable Sales Increase 3.4 Percent
Applebee’s International, Inc. (Nasdaq:APPB) yesterday reported net earnings of $16.8 million, or 68 cents and 67 cents per share on a basic and diluted basis, respectively, for the first quarter ended April 1, 2001. This represents an increase in earnings per share of 24 percent and 22 percent on a basic and diluted basis, respectively, as compared with 55 cents per share on both a basic and diluted basis for the first quarter of 2000.
Comparable sales for company restaurants increased 3.6 percent for the first quarter, reflecting an increase in guest traffic of approximately 0.5 percent combined with a higher average check. System-wide comparable sales increased 3.2 percent for the first quarter, while comparable sales for franchise restaurants increased 3.1 percent.
The company also reported comparable sales for the April fiscal period, comprised of the four weeks ended April 29, 2001. Comparable sales for company restaurants increased 3.4 percent, reflecting an increase in guest traffic of 1.5 to 2.0 percent, and a higher average check. System-wide and franchise restaurant comparable sales both increased 3.5 percent for the April period.
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Thank you!
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form
By GlobalDataLloyd L. Hill, chairman and chief executive officer, said, “We are enthusiastic about our same-store sales trends through April, especially considering the negative impact of winter weather during the first quarter. The introduction of our new advertising campaign in January, “Eatin’ Good in the Neighborhood,” has generated positive customer response and is contributing to both increased awareness and traffic. Our customers’ reaction to the new core menu also continues to be positive, and we are excited about completing the implementation throughout the franchise system later this quarter.
“We continue to expand our leadership position in the casual dining segment, and now have more than 1,300 restaurants operating system-wide. We are also executing new agreements with a majority of our franchisees that will increase restaurant development commitments over the next several years supporting our long-term expectation of at least 1,800 restaurants in the United States.”
Hill continued, “As the largest casual dining concept in the world, we recognize the opportunity to leverage our brand, system size and scale to optimize future growth and profitability. In that regard, we have recently commenced two strategic initiatives designed to further strengthen the competitive position of the Applebee’s concept. Our first initiative addresses the substantial opportunities to leverage the Applebee’s supply chain. During the remainder of this year, a team of supply chain management experts will conduct a comprehensive evaluation of our current supply chain in order to design and implement enhanced purchasing, inventory management and distribution systems.
“Our second initiative is a strategic assessment of the Applebee’s brand, designed to garner the full potential of the concept. This strategic assessment will focus on improving capacity utilization, identifying sales-building opportunities, and expanding distribution of the concept. The company has engaged a leading, worldwide strategic consulting firm to assist the Applebee’s management team in this endeavor.”
Hill concluded, “These strategic investments in the future of our business will allow us to capitalize on our position as an industry leader, maximize our growth opportunities, and significantly enhance the quality and consistency of the guest experience at every Applebee’s restaurant.”
Other results for the first quarter ended April 1, 2001, included:
- System-wide sales for the Applebee’s concept were a record $712.9 million for the first quarter ended April 1, 2001, an increase of 12 percent over the prior year.
- Operating revenues (comprised of company restaurant sales and franchise income) increased 10 percent for the first quarter.
- Restaurant margins before pre-opening expense were 15.7 percent in the first quarter, as compared to 16.2 percent in the first quarter of 2000, primarily reflecting the adverse impact of higher utility costs.
- Applebee’s ended the quarter with 1,299 restaurants system-wide (287 company and 1,012 franchise restaurants). During the first quarter of 2001, there were 14 new Applebee’s restaurants opened system-wide, including 2 company and 12 franchised restaurants.
- In February 2001, the company’s board of directors authorized an additional program to repurchase up to $55 million of the company’s common stock through 2001, subject to market conditions and pursuant to applicable restrictions under the company’s debt agreements. The company repurchased 890,000 shares of common stock in the first quarter at an average price of $33.16 for an aggregate cost of $29.5 million, including $18.9 million under this authorization and $10.6 million under previous authorizations.
The company also announced that John Koch, Senior Vice President of Research and Development, has decided to pursue other interests in the culinary field outside of chain restaurant operations. Under Mr. Koch’s leadership, the depth of the Applebee’s research and development department has been strengthened with a team of experienced professionals who will be responsible for continuing the execution of the company’s food and menu strategies while a nationwide search for his replacement is conducted.
BUSINESS OUTLOOK
The company also updated its guidance as to its business outlook for 2001.
- Comparable sales for both company and franchise restaurants are expected to increase by at least 2 to 3 percent for the remainder of 2001.
- Overall restaurant margins before pre-opening expense for the full year of 2001 are currently expected to be similar to fiscal year 2000 results, reflecting the estimated full year effect of continued higher utility costs. Second quarter margins will continue to be impacted by such costs, and are expected to be similar to first quarter margins.
- As a result of the incremental consulting and related costs associated with the company’s recently initiated supply chain management and strategic consulting projects, general and administrative expenses are expected to be in the high-9 percent range, as a percentage of operating revenues, for the remainder of the year.
- The market performance of the company’s common stock over recent weeks has resulted in an increase in the number of diluted shares outstanding. In addition, the market price of the company’s shares could affect the company’s plans to complete its previously announced stock repurchase program for 2001. These factors are expected to increase weighted average shares outstanding, thereby impacting future earnings per share.
- Consistent with current consensus analyst estimates, the company expects diluted earnings per share for fiscal year 2001 (a 52-week fiscal year as compared to 53 weeks in 2000) to be in the range of $2.74 to $2.78, an increase of 14 to 16 percent over the prior year. Diluted earnings per share for the second quarter are expected to be in the range of 69 to 70 cents.
Applebee’s International, Inc., headquartered in Overland Park, Kan., currently develops, franchises and operates restaurants under the Applebee’s Neighborhood Grill and Bar brand, the largest casual dining concept in the world. There are currently 1,307 Applebee’s restaurants operating system-wide in 49 states and eight international countries. Additional information on Applebee’s International can be found at the company’s website (www.applebees.com).
The statements contained in the Business Outlook section of this release are forward looking and based on current expectations. There are several risks and uncertainties that could cause actual results to differ materially from those described, including but not limited to the ability of the company and its franchisees to open and operate additional restaurants profitably, the continued growth of its franchisees and its ability to attract and retain qualified franchisees, the impact of intense competition in the casual dining segment of the restaurant industry and its ability to control restaurant operating costs which are impacted by market changes, minimum wage and other employment laws, food costs and inflation. For additional discussion of the principal factors that could cause actual results to be materially different, the reader is referred to the company’s current report on Form 8-K filed with the Securities and Exchange Commission on February 13, 2001. The company disclaims any obligation to update these forward-looking statements.
APPLEBEE’S INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
(in thousands, except per share amounts)
13 Weeks Ended
—————————–
April 1, March 26,
2001 2000
———– ———–
Revenues:
Company restaurant sales $ 160,143 $ 145,451
Franchise income 22,234 19,799
——- ——-
Total operating revenues 182,377 165,250
——- ——-
Cost of Company restaurant sales:
Food and beverage 43,305 40,058
Labor 50,900 46,168
Direct and occupancy 40,759 35,660
Pre-opening expense 135 296
——- ——-
Total cost of Company restaurant sales 135,099 122,182
——- ——-
General and administrative expenses 17,166 16,007
Amortization of intangible assets 1,463 1,451
Loss on disposition of restaurants and
equipment 187 353
——- ——-
Operating earnings 28,462 25,257
——- ——-
Other income (expense):
Investment income 357 349
Interest expense (2,357) (2,364)
Other income 90 118
——- ——-
Total other expense (1,910) (1,897)
——- ——-
Earnings before income taxes 26,552 23,360
Income taxes 9,771 8,597
——- ——-
Net earnings $ 16,781 $ 14,763
======= =======
Basic net earnings per common share $ 0.68 $ 0.55
======= =======
Diluted net earnings per common share $ 0.67 $ 0.55
======= =======
Basic weighted average shares
outstanding 24,744 26,670
======= =======
Diluted weighted average shares
outstanding 25,085 26,788
======= =======
The following table sets forth, for the periods indicated,
information derived from the Company’s consolidated statements of
earnings expressed as a percentage of total operating revenues, except
where otherwise noted. Percentages may not add due to rounding.
13 Weeks Ended
—————————–
April 1, March 26,
2001 2000
———– ———–
Revenues:
Company restaurant sales 87.8% 88.0%
Franchise income 12.2 12.0
——- ——-
Total operating revenues 100.0% 100.0%
======= =======
Cost of sales (as a percentage of
Company restaurant sales):
Food and beverage 27.0% 27.5%
Labor 31.8 31.7
Direct and occupancy 25.5 24.5
Pre-opening expense 0.1 0.2
——- ——-
Total cost of sales 84.4% 84.0%
======= =======
General and administrative expenses 9.4% 9.7%
Amortization of intangible assets 0.8 0.9
Loss on disposition of restaurants and
equipment 0.1 0.2
——- ——-
Operating earnings 15.6 15.3
——- ——-
Other income (expense):
Investment income 0.2 0.2
Interest expense (1.3) (1.4)
Other income — 0.1
——- ——-
Total other expense (1.0) (1.1)
——- ——-
Earnings before income taxes 14.6 14.1
Income taxes 5.4 5.2
——- ——-
Net earnings 9.2% 8.9%
======= =======
