IHOP Buys Applebee's for $2.2 Billion

The International House of Pancakes has purchased chain restaurant leader Applebee’s for $2.2 billion, according to the Wall Street Journal. So, what did they get for their money? And does this mean Applebee’s is going to start having sticky tables?

Applebee’s, the nation’s largest sit-down restaurant chain with about 2,000 locations, is trying to upgrade its menu to lure higher-income customers who are less sensitive to pressures on consumer spending. But a new menu it launched last year, with items like a bruschetta burger, have failed to reverse a slide in same-store sales. Analysts have said that Applebee’s needs to remodel its dated-looking restaurants, something that could require significant spending.

The move comes as mid-priced sit-down restaurants are trying to pull themselves out of one of the industry’s worst slumps in several years. A second consecutive summer of high gasoline prices, coupled with declining home values, has eaten into the wallets of the middle-class customers on which Applebee’s built its dining empire.

IHOP is planning on selling all 500 company owned Applebee’s and other real estate in the hopes of cutting costs and to offset some of the debt they had to take on in order to purchase Applebee’s.

We love how Applebee’s is trying to appeal to “upscale” customers. The day we are not good enough to eat at Applebee’s is the day we move back in with out parents and give up at life.

IHOP Buys Applebee’s for $2.2 Billion In Bold Move for Pancake Chain [WSJ]
(Photo:Scarequotes)

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  1. Kryndis says:

    My family went to Applebee’s a few times. The food and service were only fair at best every time we went. The last time we went I discovered a paper napkin cooked into my food. After that I saw no reason to ever go to an Applebee’s again and I don’t think I’ll be changing my mind.

  2. Abusiveelusive says:

    Maybe Applebee’s will now be open for breakfast.

  3. acambras says:

    @meghann marco

    And does this mean Applebee’s is going to start having sticky tables?

    That is hilarious — all this time I thought I was the only one who was bothered by this.

  4. bambino says:

    They’re the national leader in locations? Really? I eat out ALOT, & have never even thought of eating at applebee’s. Something about it just seems so Ruby Tuesdays (i.e. stodgy).

  5. wring says:

    applebee’s sucks.

  6. G-Dog says:

    I know this is going to sound bad, but I love IHOP with a passion. I can’t stand Applebee’s, so I guess anything at this point would be an improvement.

  7. josh1701 says:

    If there’s any restaurant worse than Applebee’s it has to be IHOP. The only thing redeeming about Applebee’s is the 1/2 price appetizers after 9 p.m. The only thing redeeming about IHOP is . . . nothing!

    I wonder if we will see combined Applebee’s/IHOP restaurants like the combined Yum Brand restaurants (A&W/KFC/Long John Silver’s/Pizza Hut/Taco Bell)? I guess everybody would then be able to find something on the menu to eat, right? Of course, IHOP offers more than just pancakes. Where’s the synergy in this deal?

  8. Toof_75_75 says:

    I just like going to Applebee’s for the Happy Hour (2 hours) that comes around just about the time I could use half-priced appetizers and a couple of beers :-)

  9. tvh2k says:

    About 20 min late to the game guys. Stock spiked before I saw this post (fortunately I was already an owner speculating on a buyout from IHOP). Buyout px is 25.50 though last trade was at 24.90 indicating that the market is questioning whether this acquisition will really happen.

  10. harumph says:

    does conglomeration of blandness equal more or less blandness overall?

  11. anita_job says:

    Wonder what this means for my job? (I never liked IHop.)

    Although corporate’s revenues have declined, I suspect Applebee’s gains/losses over the last few years have been highly uneven depending on how long a certain store has been there etc. That said I do think the menu does need more signature items. And then there’s competition from TGI Friday’s and many other similar chains for the same market niche….

  12. drjayphd says:

    @josh1701: Well, if AppleHOP does go that route, it just means all new and inventive ways to find screws in my food, if they really are following the example of A&W…

  13. yg17 says:

    IHOP > * > Applebees.

    Although, on the bright side, your toddler may be able to get a shot of tequila at IHOPs now.

  14. texasannie says:

    Sorry, it’s going to take more than being bought by IHOP (corporate slogan: “Worse Than Denny’s”) to make me forget that the food and service at Applebee’s is uniformly vile.

  15. yellojkt says:

    They don’t call it Crapplebees for nothing. Of the “wear some flair” group of restaurants it has the longest waits, blandest food, and worst service. Somehow I don’t see being owned by IHOP as improving any of these. Forget the decorations, improve the meals.

  16. Heyref says:

    In our family, IHOP is understood to mean International House of Old People. Bland food, bad service, and sticky tables were what I found the last time I ate in one some years ago. And yes, it was the last time I ate in one. I haven’t thought of a reason I should ever go into an Applebees.

  17. backspinner says:

    So IHOP is supposed to HELP Applebee’s update its outdated restaurants?

  18. BillyShears says:

    Talk about the bland leading the bland…

    (In the interests of full disclosure, IHOP is near the top of my list of Places To Go To For Drunken Grease Cravings.)

  19. etinterrapax says:

    The irony of being bought out by IHOP and simultaneously considering a move to attract higher-end customers is plain painful. And it’s possible that this could work, but there seems something a little off about a move to aspirational offerings when their customer base is having trouble affording them. There are fewer upscale consumers, and my guess is that they aren’t going to flock to Applebee’s under any circumstances. And their base customers would be the ones to take advantage of aspirational offerings, but they can’t afford the mid-range menu, so they won’t eat there either. Death blow.

  20. Morgan says:

    Huh. Applebees must vary a lot from location to location; the one near me has some very good food (I remember the first time I had a steak there commenting that Applebees had no right to making a steal that good) and I’ve never had a problem with service.

  21. eli_b says:

    IHOP is aiight, but the few times I chanced applebees, the food was drier than the placemats. Maybe IHOP can juice up their food with a little syrup.

  22. Youthier says:

    @backspinner: Heh. Exactly. I actually like IHOP once in awhile but I’ve never regarded them as an establishment that’s in the now.

  23. kaikhor says:

    This brings back the fond memory of when my husband and I were dating, broke up and since Denny’s was the “IT” place, we both skipped it in favor of IHOP, only to run into each other there.

    Anyway, never been too fond of either IHOP or Applebee’s, generally farther away from my home and food not as appetizing. Just give me Denny’s and TGIFridays…

  24. ARP says:

    I get that they can save some money with supply, admin, real estate, etc.

    But the market aspect is baffling. I don’t how IHOP owned Applebee’s is going to move upscale. You’ve got two categories of upscale:

    1) City folk and more adventurous eaters who would never go there anyway because they prefer better/different food.

    2) Small towners and suburbanites who are so class/brand conscious that they would never eat at Applebees lest they look “middle class.”

    If IHOP can clearly maintain separate brands, they might have a shot, but then you lose some of your overhead cost savings.

  25. Trick says:

    So one craphouse buys another so-called craphouse (I never had a bad experience at Applebee’s) and will then sell off the 500 stores to help pay off the debt over buying them?

    Great. Now we have 500 different owners all doing what they can to cut back on the food so they can pay for the loans they took off to buy the place!

  26. alhypo says:

    My sister got food poisoning from Applebee’s, so I don’t eat there.

    I do eat at IHOP occationally, so now I must decide if I should stop eating at IHOP or start eating at Applebee’s.

  27. floofy says:

    Applebees used to be good several years ago. Like every other company tho, they’ve cheapened their food quality to make $. I heard a rumor that their steaks are not cooked on a grill, but microwaved due to customer specifications (button for med rare, well done, etc), and that they have a branding iron that makes the grill marks. I don’t know if it’s true, but the way the steak tastes, I believe it!

  28. mopar_man says:

    @drjayphd:

    Must be an isolated incident. The A&W here (a drive-in) has great food and service. And did I mention it’s a drive-in? The coolest of all restaurants?

  29. StevieD says:

    I love both IHOP and Applebee’s, but alas I do not see any economy of scale benefits to IHOP owning the Applebee’s, especially if Applebee’s is going to be franchiesed out.

  30. souhaite says:

    Applebee’s used to be good? When? I ate there twice in college (longer ago than I care to admit). One time I found a hair in my food that was clearly not mine, and the other I got food poisoning. I can’t think of a viler restaurant.

  31. yg17 says:

    After seeing all of the IHOP complaints, I guess the one by me is just one of the few good ones. I’ve never had a bad meal there.

    Applebees, on the other hand. We had a bad meal. Gave it a second chance. Was just as bad. Then a couple months later, that crappblebees closed up. Good riddance.

  32. suburbancowboy says:

    Life is too short to eat at chain restaurants.
    Why I would I spend time and money eating at these places? The food and service is generally horrible.
    Eating out is supposed to be an enjoyable experience. Part of the fun is finding a new restaurant you have never been to before, and trying different wonderful foods. I would much rather seek out a privately owned restaurant that takes pride in its cooking, rather than eat some mass produced crap.
    And the first and only time I ate at Applebees, the food was terrible, and I found a hair in it.

  33. bdgbill says:

    Where the hell did IHOP get 2.2 billion dollars??

    I put them in the “Howard Johnsons” catagory a long time ago. I loved IHOP when I was a kid. Remember the “Alice in Wonderland” theme and the big peaked roofs they used to have.

    The other posters are correct about Applebees. I do not expect to ever step inside one again.

    After years spent on the road I just can’t eat the JackDanielsMargaritaCoconutPepperJack fajita slop they sell at Applebees, Chilis, TGI Fridays,Bennigans etc.

  34. philipbarrett says:

    I tried the bruschetta burger, when asked how it was I honestly told the waiter that the burger was dry as cardboard & the fries too greasy to eat. He said “oh, OK,” left the check and walked off. Problem is that during my travels Applebees is sometimes the only non-fast food option available. I always come out saying “never again!”

  35. WannaGetMatzoBalled says:

    My brothers and I always called IHOP “International House of Phlegm”. Gross.

  36. Ken28 says:

    Everybody seems to be wondering why IHOP even bothered, especially considering it’s taking on Applebee’s $155 million in debt. Found this interesting on NewsVisual: ([www.newsvisual.com])

    Looks like IHOP’s CEO/Chair and her past president position at Applebee’s may have played a role in this deal.

  37. Havok154 says:

    Am I the only one who likes IHOP? Applebees is ok, but nothing special. I’d rather go to Fridays and get some Jack Daniels anything.

  38. beehivebyways says:

    The only thing worse than eating at IHOPplebees is actually waiting in line for the privlege of a sticky table.

  39. jdorian says:

    The last two times I went to Applebees I felt some major stomach cramps. The food is just not worth the money. We tend to eat at Costco and Sams Club for the pizza slices more often than anything else. Otherwise, we go to Checkers, Burger King, McDonalds, or wherever else is quick at the time. If we have time to do a sit down meal, we would rather get some groceries that day and cook a meal. Unless its a special occasion, we don’t often go out anymore. Its not even a financial thing, its just we are bored with all the local places to eat. Nothing really is all that unique and exciting. IHOP and Applebees are clearly not unique.

  40. night_sky says:

    Applebee’s sucks. Chili’s FTW! mmm, mushroom jack fajita… *homer drool*

  41. Starfury says:

    We have an Applebees and an IHOP in our area. We never eat at either place. The Applebees’s food is ok, but not that good. Service is hit or miss.

    IHOP: Sucks. I will never eat there again. I prefer Denny’s (our local ones are excellent) and so do the kids.

    Most of our sit down restaurant dollars are spent at Red Robin or Chili’s. But when it costs $40 for us to eat out we don’t do it as often. I can make a dinner that’s as good or better for a lot less money.

  42. anita_job says:

    @floofy: Do you believe every stupid rumor you hear? I think you do.

    It breaks my heart to read all of the above comments about how bad people’s experiences have been at Applebee’s. Not because I care particularly about the brand and my employer’s good name (ha), but because there’s no excuse for bad food and service. Serving people good food and being attentive to their needs is not rocket science.

    I would ask everyone who has had/does have a bad experience there to either talk to a manager about it face to face or talk to the general manager of the store (they’re usually there during the day, usually not later than 8-10pm) about what happened. That way, people have a chance to improve. Blowing off the management and staff at the place doesn’t help the restaurant or the next set of hapless customers who will get the same treatment because no one spoke up.

  43. TheColdestAugust says:

    @ FLOOFY, I used to work at an Applebee’s as a host, and I never saw that occur. The steaks were cooked on a grill, just like everything else.

    I’m sorry everyone here thinks that Applebee’s is full of nasty ass food – guess you gotta pick and choose what you eat there. It’s very hit and miss.

  44. GreatMoose says:

    I’ve eaten at Applebees 5 times in my life, and have never had a meal that was warmer than room-temperature. God, I hate that place. IHOP, on the other hand, is the shiznit. the food ain’t great, but you can fill your face for $5, and leave satisfied.

  45. macinjosh says:

    New name: Apple iHop

  46. Sikes says:

    Calling it the “Apple iHop” might attract Jobs.

  47. TVarmy says:

    Applebee’s just never has served me anything all that great. The food has all been previously frozen like a Stouffer’s meal, as far as I can tell. I live in a town with only a few restaurants, but we have a bunch of great mom and pop places. However, Applebee’s gets all the ads, and people are convinced that the food must be good. It’s just not worth the money.

    As for IHOP, the pancakes are just okay. People should not have to go out for those, because pancakes are the easiest thing to make.

  48. philipbarrett says:

    @anita_job:

    No I don’t believe every “stupid” rumor I hear. I base my comments on having eaten at many Applebees in various parts of the country (and abroad, there’s one in Dubai) and NEVER had anything but a below average experience with either the food or the service. At which point you switch from “isolated incident” to “systemic problems.”

  49. mrwok says:

    Applebees really and truly is horrible. They microwave their food. I could stay at home, microwave dinner, give myself lousy service and save $20 instead.

  50. nic0le_6 says:

    Honestly, I work at an Applebee’s, and I’ve got to say that those of
    you who hate the restaurant must live near quite the craptacular
    Applebee’s. You’ve got to realize that you can’t just the whole
    franchise by one crappy experience. If I did that, I NEVER would have
    eaten at IHOP again due to an IHOP from hell experience. So I tell you
    what, if you are ever in Council Bluffs, Iowa, I dare you (yes,
    straight up dare you) to eat at the Applebee’s there. Because we are
    excellent. If the fact that I like the food MORE now that I work there
    doesn’t say something, what does? In addition, I dare you to find a
    successful, busy restaurant that DOESN’T freeze any of its food.

  51. night_sky says:

    @nic0le_6: You may be right. I know for a fact that Chili’s freezes their boats (the cheese, lettuce, salsa plate thing) but atleast their “frozen” food tastes a lot better! Applebee’s just has crappy tasting food. It really does come down to that. I’ve had crappy service at Chili’s many a time and I come back only because that fajita is too damn good to pass up sometimes.