New #1 at IHOP

Area Developer Acquires 148 Florida and Georgia IHOPs 

Sunshine Restaurant Partners LLC, an affiliate of Atlanta-based Argonne Capital Group LLC, has acquired 148 IHOP restaurants in Florida and southern Georgia from FMS Management Systems, Inc. 

With this acquisition the distinction of being IHOP’s largest U.S. area licensee and operator, will pass from FMS to Argonne.  In August 2004 another Argonne affiliate ACG Texas LP acquired 35 IHOP restaurants in Texas along with the rights to develop an additional 31 locations in the state.  Since the Texas acquisition ACG has opened or acquired 16 addtional locations and have 4 under development which will bring their total to 55.

The financial terms of the deal were not disclosed, however it was reported that FMS sales in 2006 were $189 million and that Argonne will retain FMS’s existing management team.  FMS opened its first IHOP restaurant in N. Miami Beach in 1961.

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Comments

THIS IS WHAT A GOOD FRANCHISE LOOKS LIKE

You just can't compare hardly any of the franchise offerings out there today with IHOP. The IHOP franchise is so investment worthy that I know of people who plot and scheme to hijack restaurants/misrepresent their circumstances in the hope of being able to become approved to be a franchisee.

While we rant and rave about the shysters day after day who fleece investors, it's nice once in a while to see a company that does it well.

Richard Solomonwww.FranchiseRemedies.com

IHOP Even the Good Mess Up!

Over the long haul - IHOP has proven to be a good franchisor, and sometimes even good franchisors make a mess of things as did IHOP earlier this year when they allowed the registration of their marks to lapse which resulted in all kinds of secondary issues as reported here on BlueMaumau

It is important for ZEEs to recognize that NO franchisor is perfect, and they all make mistakes.  ZORs need to recognize that IHOP took very little flak from their ZEEs because .... IHOP has built strong relationships with their ZEES.

Believe & Succeed,DaleFranSynergy, Inc.Synergizing Franchising!www.fransynergy.com

Good Franchise

I'm a zee, but wanted to thank Richard for giving IHOP the thumbs up. There has always been a question in my mind as to how to seperate the good from the bad, its nice to see that there is one that gets recognition for being the good guy

Maybe a good system but the numbers aren't wild

The press release states that 148 restaurants had revenues of 189 mill.

That's about $100k / month per reastaurant. That's really not great for a concept like IHOP.

A concept like Panera that competes in most of the same day segments has average sales nearly 50% higher.

Even Denny's franchised units average 15% higher sales ( Denny's corporate stores average over 30% higher ) 

I don't know what the setup is for an IHOP but I can't imagine it's way different to Denny's which on their site is said to kick off at a cool $1.3 mill for a 150 seater.

Just over $100k a month for that kind of investment seems pretty pedestrian to me. ( Please remember the comments passed about Minuteman press )

 PizzaGuy

IHOP Even the Good Mess Up!

Over the long haul - IHOP has proven to be a good franchisor, and sometimes even good franchisors make a mess of things as did IHOP earlier this year when they allowed the registration of their marks to lapse which resulted in all kinds of secondary issues as reported here on BlueMaumau

It is important for ZEEs to recognize that NO franchisor is perfect, and they all make mistakes.  ZORs need to recognize that IHOP took very little flak from their ZEEs because .... IHOP has built strong relationships with their ZEES.

Believe & Succeed,DaleFranSynergy, Inc.Synergizing Franchising!www.fransynergy.com

Maybe a good system but the numbers aren't wild

The press release states that 148 restaurants had revenues of 189 mill.

That's about $100k / month per reastaurant. That's really not great for a concept like IHOP.

A concept like Panera that competes in most of the same day segments has average sales nearly 50% higher.

Even Denny's franchised units average 15% higher sales ( Denny's corporate stores average over 30% higher ) 

I don't know what the setup is for an IHOP but I can't imagine it's way different to Denny's which on their site is said to kick off at a cool $1.3 mill for a 150 seater.

Just over $100k a month for that kind of investment seems pretty pedestrian to me. ( Please remember the comments passed about Minuteman press )

 PizzaGuy

LOOK AT WHO THE BUYERS ARE

I agree with you. No new investor in that segment should do that. But here we are talking about buyers who are already multi unit owners. They run the business in its best moode - get the most net out of whatever sales are available. No newcomer to the business could ever get their level of return.

Comparing their sales to Denny's doesn't tell you the comparative rate of return. No one invests to obtain sales. Investment is only to obtain return.

For someone like these buyers, IHOP is a great investment. 

Richard Solomonwww.FranchiseRemedies.com

Buyers - level of investment

True - they didn't reveal the level of investment so they may have got a great deal. I was reacting more to the statement about it being a good franchise. If you define good as bang for your greenfields investment buck then there seems to be better out there. I used Denny's because it seemed about the most directly comparable in terms of market, menu, system size etc.

With them both being listed companies you can see what their respective food costs are and see what would be left over as gross margin.        

PizzaGuy

Buyers - level of investment

True - they didn't reveal the level of investment so they may have got a great deal. I was reacting more to the statement about it being a good franchise. If you define good as bang for your greenfields investment buck then there seems to be better out there. I used Denny's because it seemed about the most directly comparable in terms of market, menu, system size etc.

With them both being listed companies you can see what their respective food costs are and see what would be left over as gross margin.        

PizzaGuy