IHOP 2012 Annual Report Download - page 3

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We said it. We did it.
What’s next?
“ This year, we completed
our transition to a 99%
franchised company.”
Julia Stewart
1 Nation’s Restaurant News, “Special Report: Top 100,” June 25, 2012 (Applebee’s rank based on U.S. system-wide sales in the casual
dining category; IHOP rank based on U.S. system-wide sales in the family dining category).
To Our DineEquity Family of Shareholders,
When we acquired Applebee’s in November 2007, we had a lot of work
ahead of us. Today, I am proud to announce that we’ve accomplished
everything we set out to do.
With the completion of the final three Applebee’s® refranchising transactions
in late 2012, DineEquity has successfully transitioned to a 99% franchised
system. Over the course of the last five years, we’ve also completed several
major objectives for the business, beginning with substantially lowering
general and administrative (G&A) expenses; reducing our total debt by
over $1 billion since the acquisition, and re-pricing our senior secured credit
facility. We reengineered the Applebee’s menu for profitability. We’ve also
completed a sale-leaseback agreement for 181 Company-owned properties
and improved performance at the Company-owned restaurants. We formed
Centralized Supply Chain Services, LLC (CSCS), an independent purchasing
cooperative that enables franchisees to mitigate commodity and distribution
costs. Lastly, we’ve implemented an internal Shared Services model to
deliver services more effectively and efficiently to our IHOP® and Applebee’s
franchisees. All of these measures combined have helped both Applebee’s
and IHOP maintain the number one positions in their respective categories.1
Last year, I also stepped back into the day-to-day leadership role at IHOP,
in order to provide strategic direction and re-ignite the success of this iconic
brand. The team and I have been working on a strategy to regain our share
in the breakfast category. In 2012, we honed a strategy that centers upon
revitalizing our menu, delivering a better value proposition to our guests,
achieving operations excellence, and maximizing advertising and media.
We’re continuing to roll out these efforts nationwide and look forward to
sharing more in 2013.
1