Downsizing Good in the Neighborhood Improves Sale Values

Apple Gold Group

Raleigh, NC

Challenge

110 Restaurant Applebee’s Franchisee, $185 million sales, $75 million debt


  • Company generating $3 million EBITDA and unable to service $75 million of debt
  • 20 restaurants in loss position
  • Applebee’s brand in multi-year decline
  • Over $10 million delinquency on Royalty and Advertising payments to Franchisor
  • Franchisor demanding Franchisor directed sale that would result in $20 million loss to bank group and triggering various personal guarantees by Owner
  • Owner giving lip service to taking decisive action

Solution

  • MorrisAnderson engaged as CRO over Franchisor objection
  • Cash projections developed which demonstrated company had ability to pay partial royalty fees
  • Company closed approximately 20 restaurants with Franchisor approval for $4 million improvement in EBITDA
  • Negotiated early lease termination payments with approximately 10 landlords
  • Structured sale process started with restaurant industry investment banker
  • Started sale of company-owned restaurant properties

Results

  • Company was sold in two out-of-court sale transactions
  • Banks will get 100% loan recovery
  • Owner avoided any significant losses due to potential personal guarantee enforcements
  • Company avoided bankruptcy
  • Approximately 2,000 jobs preserved
  • All trade creditors and employees paid in full

Daniel F. Dooley

Dan Dooley, CTP, is a Principal and CEO at MorrisAnderson based out of Chicago. He has a strong national reputation in crisis management, operations improvement, debt refinancing/restructuring and C-level positions. He is a frequent speaker at industry conferences and a regular author for industry periodicals. Dan has served on the Board of Directors of both… Read More

George T. Elliott

George Elliott is an Associate Director at MorrisAnderson. He comes from an investment banking and financial advisory background with extensive experience in accounting, advisory, financial modeling, and financial analysis. George uses this experience to provide restructuring and turnaround services through operational and financial analysis. Prior to joining MorrisAnderson, George was an Associate at Triton Capital… Read More