Ozark Apples sells its holdings for $39.5 mil

Overland Park, Kan.-based Applebee’s International said April 12 it would acquire the 12 properties from franchisee Ozark Apples Inc., owned by Greg McGee and Greg Walton, partners since 1992.

McGee, based in Springfield, is chief operating officer, and Walton, based in Kansas City, is CEO. Walton also owns Walton Construction.

The sale includes two Springfield restaurants, 2430 N. Glenstone and 1855 E. Primrose, and one each in Branson, Nixa, Lebanon, Osage Beach, Columbia, Jefferson City, Joplin, Pittsburgh, Kan., and Rogers, Ark. A second Columbia store under construction is also part of the deal.

While Ozark Apples wasn’t for sale, McGee said the corporation made an offer the partners couldn’t refuse.

“If you’re going to be taken over by someone, it’s better to be taken over by the parent company,” McGee said, adding that all of Ozark Apples’ approximately 850 employees will become employees of Applebee’s International.

“The only one losing their job is me, and that was my goal to begin with,” McGee said. “One of my partner’s and my goal was at some point we would cash out.”

And cash out they will. The purchase price is $39.5 million, according to Applebee’s International’s Form 8-K filed April 12 with the Securities and Exchange Commission. McGee declined to share how the proceeds will be split.

The deal is scheduled to close May 23, and McGee has agreed to work for the corporation for at least a month after that to help get the second Columbia store open June 27.

McGee said Applebee’s International tries to retain about 25 percent of the restaurants in the system, which totals more than 1,700 in 49 states and 12 countries, which means building new stores or acquiring existing franchises. Ozark Apples, he said, was the last remaining franchisee in Missouri.

McGee declined to share store revenues, but Applebee’s Chief Financial Officer Steve Lumpkin said in a press release, “Fiscal year 2004 comparable sales for these restaurants were higher than the system average, and average weekly sales were in excess of $50,000.”

Laurie Ellison, executive director of communications for Applebee’s International, said that it’s an advantage for the company to own restaurants within such proximity to each other and near company headquarters.

“There’s a lot of synergies, more marketing and operation viewpoints, when your restaurants are closer together. That’s a huge plus for us,” she said.

McGee has been offered a position in Overland Park, but he declined to share details. “We just haven’t negotiated that at this point. My main concern is making sure all of my employees are taken care of and I get the 12th restaurant open. I’ll worry about me when all that’s done,” he said.

McGee anticipates taking a couple of months off once the second Columbia store opens, and then he will either join Applebee’s International or start another business. “Push comes to shove, that’s probably what I’ll end up doing,” he said.

Applebee’s stock (Nasdaq: APPB) closed April 20 at $27.02 per share. In the last year, it has ranged from $22.26 a share to $29.19 a share.