Eight Applebee’s restaurants in the Kansas City metro area have shuttered as the owner filed for Chapter 11 bankruptcy protection.
On October 30, the franchisee group Apple Central KC LLC, which owned 10 units on both sides of the Kansas-Missouri state border, made its filing in federal court in the District of Kansas. With eight of its Applebee’s locations closed, only two remain in the market.
In its court filing, Apple Central marked that its noncontingent liquidated debts were less than $3.02 million. Bankruptcy documents showed the number of creditors between 200 and 999 and its estimated asset worth between $1 million and $10 million. Additionally, the estimated liabilities were between $10 million and $50 million.
Creditors listed in the filing included tax commitments for both states, as well as contractors and the food distribution company Sysco. To the latter, Apple Central owes just over $339,000, which is the highest amount to a single party, followed by $250,000 to G&G Real Estate Investments and $116,035 for Kansas sales tax.
In a statement to Franchise Times, Applebee’s President Tony Moralejo said, “Applebee’s restaurants are independently owned and operated by franchisees. The bankruptcy filing looks to be a result of financial circumstances and decisions made by the franchisee.
“This situation is unfortunate, and we continue to believe the Kansas City area is a great neighborhood for Applebee’s restaurants,” said Moralejo. “We are exploring options about the future of these restaurants.”
According to the Kansas City Star, in 2018 the franchisor sued Apple Central after the operator closed seven restaurants without brand approval. The Star reports that one of the units was closed temporarily, then permanently, following a racial profiling incident in which staff reportedly accused two women of not paying their bill.
The filing followed another bankruptcy case from a separate Applebee’s franchisee last month. Earlier in October, Louisiana Apple, which operates the brand in Arkansas, Indiana, Kentucky and Oklahoma, filed for Chapter 11 protection.
City National Bank of Florida sued the operator, alleging that Louisiana Apple owed $8.3 million for a loan tied to the Federal Reserve’s Main Street Lending Program. The bank claimed Louisiana Apple failed to make payments due since July 2023.
Louisiana Apple entered into a forbearance and loan modification agreement in February 2024, but the bank claimed that expired in May, and Louisiana Apple has failed and refused to make payments. In July, Applebee’s sued the franchisee and terminated some of its franchise agreements after the franchisee failed to pay royalties and other fees.
Applebee’s is one of three companies in the Dine Brands portfolio, along with Fuzzy’s Taco Shop and IHOP. Financial reports from Dine Brands show Applebee’s has had declining same-store year-over-year sales since Q2 of 2023. In the Q2 of 2024, Applebee’s saw a same-store sales decline of 1.8 percent.
Its total unit count also declined in recent years, falling from 1,787 in 2019 to 1,642 in 2023. Total sales are above pre-pandemic levels, though, coming to $4.59 billion in 2022 and $4.58 billion in 2023, above 2019’s $4.35 billion.