UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) February 9, 2000
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Commission File Number: 000-17962
Applebee's International, Inc.
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(Exact name of registrant as specified in its charter)
Delaware 43-1461763
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
4551 W. 107th Street, Suite 100, Overland Park, Kansas 66207
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(Address of principal executive offices and zip code)
(913) 967-4000
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(Registrant's telephone number, including area code)
None
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(Former name or former address, if changed since last report)
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Item 5. Other Events
The following information is provided by Applebee's International, Inc.
(the "Company") in accordance with the Private Securities Litigation Reform Act
of 1995 as it relates to a safe harbor for companies making forward-looking
statements. The factors listed below are important factors that could cause
actual results to differ materially from those projected in forward-looking
statements made by the Company.
System Growth. The Company's continued growth will depend upon the
ability of the Company and its franchisees to open and operate additional
restaurants profitably. The opening of new restaurants, both by the Company and
its franchisees, depends on a number of factors, many of which are beyond the
control of the Company and its franchisees. These factors include, among others,
the availability of management, restaurant staff and other personnel; the cost
and availability of suitable restaurant locations; acceptable leasing or
financial terms; cost effective and timely construction of restaurants (which
construction can be delayed due to, among other reasons, labor disputes, local
zoning and licensing matters, and weather conditions); and securing required
governmental permits. There can be no assurance that the Company or its
franchisees will be successful in opening the number of restaurants anticipated,
or that new restaurants opened by the Company or its franchisees will be
operated profitably.
The Company's system development plans depend, in part, on the
successful introduction of new smaller scale unit designs to be used primarily
in communities of under 25,000 in population. The successful entry into small
towns depends on many factors, including supply logistics, customer acceptance
and advertising efficiencies. There can be no assurance that the introduction of
the smaller scale unit designs or the entry into small towns will be successful.
In the course of expanding its restaurant systems, the Company and its
franchisees enter new or more highly competitive geographic regions or local
markets in which they may have limited operating experience. There can be no
assurance of the level of success of the restaurant concepts in these regions or
particular local markets. Newly opened restaurants typically operate with below
normal profitability and incur certain additional costs in the process of
achieving operational efficiencies during the first several months of operation.
When the Company or its franchisees enter highly competitive new markets or
territories in which the Company's restaurant systems have not yet established a
market presence, the adverse affects on sales and profit margins may be greater
and more prolonged.
The Company's expansion has and will continue to require the
implementation of enhanced operational systems. The Company regularly evaluates
the adequacy of its current policies, procedures, systems and resources,
including financial controls, management information systems, field and
restaurant management, and vendor capacities and relations. There can be no
assurance that the Company will adequately address all of the changing demands
that its planned expansion will impose on such systems, controls, and resources.
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Reliance on Franchisees. The continued growth of the Company is, in
part, dependent upon its ability to retain qualified domestic franchisees and to
attract franchisees for international markets and the ability of its franchisees
to maximize penetration of their designated markets and to operate their
restaurants successfully. Although the Company has established criteria to
evaluate prospective franchisees, there can be no assurance that the Company's
existing or future franchisees will have the business abilities or access to
financial resources necessary to open the required number of restaurants or that
they will successfully develop or operate these restaurants in their franchise
areas in a manner consistent with the Company's standards. The Company intends
to continue its efforts to franchise restaurants in certain international
territories. The ability of franchisees to open restaurants outside of the
United States is subject to the same factors as are applicable to opening
domestic restaurants described above. There can be no assurance that the Company
will be able to attract qualified franchisees or that such franchisees will be
able to open and operate restaurants successfully.
As a result of the refranchising of the large territory of a former
franchisee, several new franchisees have been added to the Applebee's system who
will operate the restaurants previously owned by the former franchisee. Although
the Company believes that these franchisees will be able to improve the
operations in those units to increase unit sales, there can be no assurance that
the franchisees will be successful in doing so.
Competition. Competition in the casual dining segment of the restaurant
industry is expected to remain intense with respect to price, service, location,
concept, and the type and quality of food. There is also intense competition for
real estate sites, qualified management personnel, and hourly restaurant staff.
The Company's competitors include national, regional and local chains, as well
as local owner-operated restaurants. There are a number of well-established
competitors, some of which have been in existence for a longer period than the
Company and may be better established in the markets where the Company's
restaurants are or may be located. The Company is experiencing increased
competition in attracting and retaining qualified management level operating
personnel.
Restaurant Industry. The restaurant industry is affected by changes in
consumer tastes and by national, regional, and local economic conditions,
demographic trends, traffic patterns, and the type, number, and location of
competing restaurants. Multi-unit chains such as the Company can also be
adversely affected by publicity resulting from food quality, illness, injury or
other health concerns or operating issues stemming from one restaurant or a
limited number of restaurants. Dependence on fresh produce and meats also
subjects restaurant companies such as the Company to the risk that shortages or
interruptions in supply, caused by adverse weather or other conditions, could
adversely affect the availability, quality or cost of ingredients. In addition,
factors such as inflation, increased food, labor, and employee benefit costs,
and the availability of qualified management and hourly employees may also
adversely affect the restaurant industry in general and the Company's
restaurants in particular. The continued success of the Company will depend in
part on the ability of the Company's management to identify and respond
appropriately to changing conditions.
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Operating Costs. Restaurant operating costs consist principally of food
and beverage costs, labor and benefits costs, and occupancy costs. Several of
these factors are subject to price increases from time to time due to market
changes, minimum wage and other employment laws, and inflation. In addition,
from time to time, the Company may implement new menu items and operating
procedures at its restaurants, which may be either temporary or permanent. Such
operating procedures and menu items may result in increased food or labor costs.
The Company may not be able to recoup all operating cost increases through price
increases.
Government Regulation. The restaurant industry is subject to extensive
state and local governmental regulations relating to the sale of food and
alcoholic beverages and to sanitation, public health, fire, and building codes.
Termination of the liquor license for any restaurant would adversely effect the
revenues of that restaurant. Restaurant operating costs are also affected by
other government actions that are beyond the Company's control, including
increases in the minimum hourly wage requirement, workers' compensation
insurance rates, and unemployment and other taxes. The Company may be subject in
certain states to "dram-shop" statutes, which generally provide a person injured
by an intoxicated person the right to recover damages from an establishment that
wrongfully served alcoholic beverages to the intoxicated person. The Company is
also subject to federal regulation and certain state laws which govern the offer
and sale of franchises. Many state franchise laws impose substantive
requirements on any franchise agreement, including limitations on noncompetition
provisions and the termination or nonrenewal of a franchise.
Capital Expenditures. The Company's capital expenditures are primarily
related to the development or acquisition of additional restaurants, maintenance
and refurbishment of existing restaurants, and expansion of management
information systems, office space and other corporate infrastructure. The costs
related to restaurant development, maintenance and refurbishment include
purchases and leases of land, buildings and equipment and facility and equipment
maintenance, repair and replacement. The labor and materials costs involved vary
geographically and are subject to general price increases. There can be no
assurance that future capital expenditure costs will not increase.
Share Repurchases. The Company currently intends to commit up to
$32,500,000 to repurchase shares of its common stock through the year 2000. Any
such repurchases are subject to prevailing market prices, and pursuant to
applicable restrictions under the Company's debt agreements, may be made in open
market or private transactions and may occur or be discontinued at any time.
There can be no assurance that the full amount committed for share repurchases
will be used.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
APPLEBEE'S INTERNATIONAL, INC.
(Registrant)
Date: February 9, 2000 By: /s/ George D. Shadid
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George D. Shadid
Executive Vice President and
Chief Financial Officer
