IHOP 2013 Annual Report Download - page 25

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4
For most IHOP restaurants opened after 2003, the franchisee is primarily responsible for the development and financing of
the restaurant. In general, we no longer provide any financing with respect to the franchise fee, restaurant site or equipment.
The franchise developer uses its own capital and financial resources along with third-party financial sources arranged for by the
franchise developer to purchase or lease a restaurant site, build and equip the business and fund its working capital needs. We
refer to this method of operation as our “Current IHOP Business Model.”
The first restaurant in what became the Applebee’s chain opened in 1980 in Decatur, Georgia. In November 2007, we
completed the acquisition of Applebee's International, Inc., which comprised 1,455 franchised restaurants and 510 company-
operated restaurants at the time of the acquisition. Over the next five years, we refranchised nearly 480 of the Applebee's
company-operated restaurants and realized our goal of becoming 99% franchised in each brand in October 2012.
Restaurant Concepts
Applebee's
We franchise, own and operate Applebee’s restaurants in the bar and grill segment within the casual dining category of the
restaurant industry. Each Applebee's restaurant is designed as an attractive, friendly establishment featuring high quality,
moderately-priced food, alcoholic and non-alcoholic beverage items, table service and a comfortable neighborhood
atmosphere. Applebee's restaurants offer a diverse menu of fresh, flavorful and fun-to-eat food at a great value. The menu
features a broad selection of signature dishes and traditional entrées, as well as appetizers, salads, sandwiches, specialty drinks
and desserts. Over the past several years we have distinguished the Applebee’s brand with several industry firsts. Our signature
“2 for $20” menu, a value proposition first introduced in 2009, continues to resonate with our guests and has been imitated by
many of our competitors. The innovative “Unbelievably Great Tasting & Under 550 CaloriesTM” menu provides our guests with
great tasting, generous portions that support their health and nutritional goals. Each of these platforms is refreshed regularly
throughout the year with new menu choices to give customers new reasons to come to Applebee's every day.
As of December 31, 2013, 61 franchise groups operated 1,988 Applebee’s franchise restaurants while we operated 23
restaurants in the Kansas City, Missouri area. These restaurants were located in 49 states within the United States, in one
United States territory and in 15 countries outside of the United States. Applebee's was the largest casual dining concept in the
United States in terms of 2012 system-wide sales(1).
IHOP
We franchise, own and operate restaurants in the family dining category of the restaurant industry under the names IHOP
and International House of Pancakes. IHOP restaurants feature full table service and high quality, moderately priced food and
beverage offerings in an attractive and comfortable family atmosphere. Although the restaurants are best known for their
award-winning pancakes, omelets and other breakfast specialties, IHOP restaurants also offer a variety of lunch, dinner and
snack items. IHOP restaurants are open throughout the day and evening hours. Over half of our IHOP restaurants operate
24 hours a day, seven days a week and approximately 200 additional restaurants operate 24 hours a day for some portion of the
week. In June 2013, we launched a newly designed IHOP menu with three primary objectives: (i) simplify the ordering process
with a new layout; (ii) reduce the overall number of menu items over time to lessen complexity; and (iii) introduce new menu
offerings and categories.
As of December 31, 2013, 348 franchise groups operated 1,607 IHOP franchise restaurants, while we operated 10
restaurants in the Cincinnati, Ohio area. The IHOP restaurants were located in all 50 states within the United States, in the
District of Columbia, in two United States territories and in eight countries outside of the United States. IHOP was the largest
family dining concept in the United States in terms of 2012 system-wide sales(1).
In addition, from time to time we may also operate, on a temporary basis until refranchised, IHOP restaurants that we re-
acquire for a variety of reasons from IHOP franchisees. There were three such restaurants included as company-operated
restaurants as of December 31, 2013.
See Item 2, Properties, for the geographic location of all Applebee’s and IHOP restaurants.
_____________________________________________________________________
(1) Source: Nation's Restaurant News, "Special Report: Top 100," June 24, 2013.