Applebee's Reports Strong First Quarter Earnings Growth

Strategic Insights -

Applebee's International, Inc. posted a strong first quarter earnings growth, driven by a 34% increase in operating revenues and a 77% increase in pro forma net earnings. The company's financial results reflect the combined earnings of Applebee's International and Innovative Restaurant Concepts, Inc. (IRC), acquired in March 1995. Excluding one-time merger costs, Applebee's pro forma net earnings would have been $6,023,000, or approximately 21 cents per share, representing a 77% increase from the comparable period in 1994.

Key Takeaways:

  • Applebee's reported pro forma net earnings of $4,253,000, or 15 cents per share, for the first quarter ended March 26, 1995, a 77% increase from the comparable period in 1994.
  • Operating revenues increased 34% to $75,439,000, driven by a 32% increase in company restaurant sales.
  • Company restaurant operating earnings increased 58% to $10,034,000, and restaurant operating margins, excluding pre-opening expense, increased 3.2 percentage points to 16.2% in the first quarter of 1995.
  • Total system sales for the Applebee's concept were $278.4 million in the first quarter of 1995, an increase of 43% from the comparable 1994 period.
  • System-wide comparable sales for the Applebee's concept increased 2.6% in the first quarter of 1995, comprised of comparable company sales, which decreased 0.8%, and comparable franchisee sales, which increased 0.6%.
  • As of March 26, 1995, there were 535 Applebee's restaurants open, with 105 company-owned or operated, and 13 Rio Bravo Cantinas and four specialty restaurants.
  • Applebee's has a strong start on its 1995 development plan, with 30 new Applebee's restaurants opened, including 8 company openings.
  • The company is focusing on preparing the Rio Bravo concept for franchising, with a goal of having its first franchise restaurants opening in 1996.

Statistics:

  • Pro forma net earnings: $4,253,000 (15 cents per share)
  • Operating revenues: $75,439,000 (34% increase from 1994)
  • Company restaurant sales: $66,021,000 (32% increase)
  • Company restaurant operating earnings: $10,034,000 (58% increase)
  • Restaurant operating margins: 16.2% (excluding pre-opening expense)
  • Total system sales: $278.4 million (43% increase from 1994)
  • System-wide comparable sales: 2.6% (first quarter 1995)
  • Weighted average shares outstanding: 2,630,000 (shares issued in connection with IRC acquisition) and 3,300,000 (shares issued in connection with Pub Ventures acquisition)

Sources:

  • Applebee's International, Inc. press release, May 1, 1995
  • PRNewswire, May 1, 1995