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MDG Advertising – Branding / Marketing / Lead Generation

Applebee’s Franchise On The Brink Of New Ownership

Apple American Group, the owner of the largest franchise of Applebee’s Neighborhood Bar & Grill restaurants in the nation, is on the verge of being acquired by GS Capital Partners, the private equity arm of Goldman Sachs Group Inc, according to a recent article in The Wall Street Journal. The sale is reportedly worth several hundreds of million dollars and is considered an indication that Goldman has become more comfortable with consumer spending trends, which is a key factor to sustaining growth in the American economy.

Apple American owns and operates approximately 269 restaurants across the country, including California, Pennsylvania, Ohio and New Jersey. In 2010, the company had $665 million in sales and employed more than 16,000 people. GS Capital Partners previously owned Apple American and injected $50 million into the company to finance the sale of 73 Applebee’s outlets in 2001. Four years later, Apple American was sold for an undisclosed amount to Weston Presidio, which invests in late-stage-growth companies and manages more than $3 billion.

Applebee’s is recognized as a casual, mid-priced outlet that serves general American cuisine. Casual-dining restaurants have been devastated by the recession that began in 2008 with numerous restaurant chains putting some of their underperforming brands on the auction block. Over the last year, their stocks have recovered with many publicly-traded brands far outpacing the gains of the S&P 5 stock index.

Goldman is not the only investor jumping back on the casual-dining bandwagon. Last year, private-investment firm 3G Capital Management acquired Burger King Holdings Inc. for nearly $3.3 billion, and CKE Restaurants Inc., which owns the Carl's Jr. and Hardee's chains, was acquired by an affiliate of private-equity firm Apollo Management LLC for almost $700 million.

If these sales are any indication, then the return of diners to casual-dining chains are expected to deliver returns to investors, as well.

Michael Del Gigante is president and executive creative director of MDG Advertising in Boca Raton, Florida. MDG Advertising is a full-service South Florida advertising agency, with offices in Florida and New York, that specializes in developing targeted franchise marketing solutions, exceptional online executions, and solid branding and media buying strategies that give franchises a real competitive advantage.

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