Applebee's International said it earned $15.8M ($0.21/share) on revenue of $323.7M in the third quarter, slightly higher than the $14.8M ($0.20/share) on revenue of $314.2M posted a year ago. Excluding items, the restaurant operator posted earnings of $18.8M ($0.25/share), short of the $0.26/share expected by analysts, on average. Revenue was in line with expectations. System-wide domestic comparable-store sales dropped 0.3% while company and domestic franchise restaurant comps fell 0.2% and 0.4%, respectively. The company said its preliminary comparable store sales for October decreased 1.1% reflecting a 2.5%-3% decline in guest traffic, combined with a higher average check. Applebee's is set to be acquired by IHOP; shareholders will vote on the $25.50/share deal today. If approved, the combined company would be the largest sit-down restaurant chain in terms of location with more than 3,200, but the outcome of the vote is uncertain as institutional holders haven't indicated their voting intentions. The deal calls for a fundamental change in APPB's business model to that of a franchisor (full story).
Commentary: IHOP to Acquire Applebee's for $2.1 Billion
Stocks to watch: APPB, IHP.Competitors: EAT, RT
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