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OVERLAND PARK, KS-The Applebee’s restaurant chain plans to open fewer new company-owned locations in 2007 than in 1996, corporate officials said Thursday in reporting on financial results for the third quarter ended Sept. 24. Applebee’s, which ended the quarter with 1,884 restaurants, says that its plans for next year include only 10 to 15 new company-owned stores, compared with an expansion plan this year that call for 35 new company restaurants and at least 90 franchised locations by the end of the year.

Through the third quarter, the chain had opened 92 new restaurants this year, including 25 company and 67 franchised restaurants. That included 28 new Applebee’s restaurants opened in the third quarter, six of them company-owned and 22 franchised.

“We’ve been indicating since early summer that we expected 2007 company growth to be less than 2006, and we have significantly reduced company unit growth from approximately 35 units this year to 10 to 15 next year,” Dave Goebel, Applebee’s president and CEO, said Thursday during a conference call to discuss quarterly results. Goebel said that the chain will “continue to apply a very tough filter to the site selection process,” for new stores, adding, “It’s accurate to say that only the strong sites will survive.”

Applebee’s also may step up its capital improvements program to remodel stores, Goebel said, explaining that the remodelings will be one of the ways the company will improve financial performance. The CEO also raised the issue of refranchising some company-operated stores. While noting that Applebee’s has “the highest franchise ownership in the casual dining segment,” with 512 company and 1,372 franchise operations, he said that the chain “will continue to evaluate our portfolio of company markets, and just as we’ve done historically, when we find a franchisee that can operate a market better than we have,” it will consider refranchising as it has already done in Philadelphia, Long Island and Atlanta. However, Goebel added, the company will not publicly discuss the refranchising of any market “unless it is in the context of a specific deal.”

Applebee’s outlined its expansion and franchising plans in the context of reporting third quarter earnings of $14.8 million, or 20 cents per diluted share, compared with earnings of $22.1 million, or 28 cents per share, in last year’s third quarter. The company cited restaurant closing costs and legal expenses related to the pending settlement of a $1.5 million lawsuit among the factors reducing earnings this quarter. On the sales side, the company reported that comparable sales slid 2.3% on total sales that rose by 5.1% to nearly $321 million.

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