At least eight suburban Chicago Applebee’s units are scheduled to close in the bankruptcy proceedings of franchisee AppleIllinois LLC.
AppleIllinois, a 33-unit franchisee based in Crestview Hills, Ky., filed for Chapter 11 bankruptcy reorganization on April 22 in the Eastern District of Kentucky, listing assets of between $1 million and $10 million and liabilities in that same range.
As part of those bankruptcy proceedings, AppleIllinois identified eight restaurants for impending closure and is seeking buyers for the remaining 25 units. In addition to the sale of remaining Applebee’s units, the bankruptcy court is also seeking bids for AppleIllinois’ franchise development rights for the market.
“Applebee’s continues to see Chicago as an important and viable market,” said Dan Smith, a spokesman for Applebee’s at the parent headquarters of DineEquity Inc., on Monday.
“We’re committed to ensuring the Applebee’s brand maintains a strong market presence in Chicago,” Smith said, “and will work closely with the new franchisee, once the sale is completed, to minimize the number of restaurants that close.”
Units slated for closure are outside Chicago proper, including the Illinois municipalities of Geneva, Homewood, Mokena, Palatine, Romoeoville, Schaumburg, Streamwood and Tinley Park.
Those eight restaurants were built after 2005 and in so-called “greenfield” — or new development areas — that never saw the necessary traffic to make the units profitable, especially given the recession, AppleIllinois said in court documents. The franchisee unsuccessfully sought concessions from landlords in order to keep the units open.
“The closing of any restaurant is a disappointment from the brand’s perspective,” Smith added. “But there are multiple factors involved in this specific decision that are unique to this franchisee’s business and the restaurants that he is choosing to close. None of those factors are associated with any larger brand issue.”
As for employees in the units scheduled to close, Smith said, “Our hope is the new franchisee will retain or reassign as many team members as they can as well.”
AppleIllinois, in plant-closing documents filed with the state of Illinois, said it could eliminate as many as 1,700 jobs by late June with the “possible closing” of restaurant units. The company said it had secured financing to continue operations through June 10.
Applebee’s has more than 2,000 casual-dining restaurants, of which all but a handful are franchised.
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