Applebee’s is a renowned casual dining restaurant brand with a global presence, making opening an Applebee’s franchise a dream investment for many entrepreneurs. However, the first step is to understand the lease rates and real estate requirements for opening a franchise.
We’ll explore all the crucial details you need to own an Applebee’s neighborhood grill franchise. From the lease rate to preferred location criteria, we’ll provide a comprehensive overview of Applebee’s franchise cost and considerations to help you make the best decision about your investments.
Whether you’re a first-time franchise owner or an experienced restaurateur, this guide will help you learn all you need to know about Applebee’s real estate lease requirements.
How Applebee’s Selects Their Site Location
Applebee’s Services Inc has a real estate team, including engineers, architects, and real estate professionals handling their site selection process. These professionals work together to identify and evaluate potential sites.
They also conduct feasibility studies and casual dining market research to determine if an area meets Applebee’s criteria. The team handles permit and zoning requirements and negotiates lease agreements.
Applebee’s site selection criteria include the following:
Before starting an Applebee’s franchise, the restaurant chain looks for locations with high traffic since it attracts more walk-in traffic. Simply put, Applebee’s looks for sites close to commercial areas with increased foot traffic, highways, and busy roads.
Applebee’s prioritizes visibility for its franchises. Therefore, the restaurant signage is always visible from afar to catch passersby’s attention.
Applebee’s franchises are often situated in places easily accessible to customers. As such, each new restaurant features ample parking spaces with an easily accessible parking lot. Also, the location is preferred close to a public transportation system.
When selecting a location, Applebee’s franchisor LLC considers factors like age distribution, education level, and median income. The company looks for locations with an age group mix, high-income households, and a high population density.
Applebee’s focuses on areas with fewer competing restaurants. They also ensure each new franchise operator isn’t in direct competition with another Applebee’s restaurant in a location.
Before building a new restaurant, they analyze the food market to determine if there’s a need for a new restaurant in the area.
Average Applebee’s Lease Rates
Applebee’s is a fast-growing franchised business with over 1,800 locations in the United States and beyond. As a prospective franchisee, you need to understand Applebee’s real estate lease rates and requirements before opening a franchise.
Applebee’s franchise lease rate varies depending on factors like property size and location. Generally, the restaurant’s location determines the cost of an Applebee’s lease. In high-traffic areas like shopping centers and urban centers, the lease rate is often higher compared to less busy locations.
The restaurant size also affects lease rates. Larger Applebee’s restaurants will undoubtedly require more resources and space, increasing the lease rates.
Since Applebee’s real estate operates a triple net lease, the tenant handles additional expenses like maintenance costs, property taxes, and utilities besides the base rent. The average lease rate is usually $8,000 to $15,000 monthly, and the average sales price is $3,146,900.
As with other similar franchises, the tenant needs to consider other additional costs like supplies, equipment, and initial franchise fee. Thankfully, Applebee’s offers comprehensive training and support to help franchisees succeed. With the maximum support from the company, a NNN lease agreement, and the right location, franchisees can enjoy a profitable Applebee’s franchise.
Applebee’s real estate grew through reselling and re-franchising through net leasing and sale-leasebacks transactions after its acquisition by IHOP. The company’s variable leasing contracts come in a 15-20 year lease with absolute triple net terms for franchise-owned properties, including variation in rent from a two percent annual increment to about a 10-15% increase with five-year adjustments.
Requirements Needed to Secure Applebee’s Lease Agreement
Securing an Applebee’s lease agreement requires attention to detail and careful planning. As a franchisee, you’ll need to meet some requirements by the franchisor to ensure Applebee’s brand is maintained across all locations.
Meeting the requirements is a way for the franchisee to show they have the resources to run a successful Applebee’s restaurant.
The following are some vital requirements for securing an Applebee’s lease agreement:
A potential Applebee’s franchisee will need to demonstrate financial stability and the ability to run the restaurant successfully without being limited by funds. Some of the requirements include a financial statement, a business plan, and proof of sufficient funds.
Applebee’s requirements for their restaurant locations include visibility from major roads, parking availability, and minimum square footage. The site should be in a high-traffic area and easily accessible.
Although Applebee’s prefers prior experience in running a restaurant, it’s not mandatory. However, knowing restaurant operations and management experience is crucial for running a successful Applebee’s franchise.
Applebee’s provides extensive expert training to their staff and franchisees. Before opening an Applebee’s restaurant, franchisees will need to complete comprehensive training covering all parts of restaurant operations, from customer service to menu operations.
Franchisees will need to comply with all applicable regulations and laws, including labor laws, health and safety codes, and zoning laws. Also, the tenant may need to pay some initial investment fees.
Besides the franchise fee deposit paid to Applebee as the franchisor, other fees include the following:
- Legal and accounting fees
- Server tablet maintenance fee
- Implementation fees
- Menu management platform fee
- Local advertising
- Insurance and miscellaneous expenses like training expenses
Franchisees will also need other permits and licenses, including liquor licenses for selling alcoholic beverages.
Is Applebee’s a Good Investment?
Absolutely! Applebee’s is an American restaurant brand founded in 1980 and headquartered in Glendale, California. Inspired by a bar T. J and Bill Palmer visited in Appleby, Texas, the brothers opened the first Applebee’s restaurant.
However, W.R. Grace and Company purchased Applebee’s in 1983 and continued to expand the brand by opening new restaurants throughout the US. John Hamra and Abe Gustin bought the company in 1988 and focused on franchising the concept.
In 2007, the International House of Pancake’s parent company IHOP Corp bought Applebee’s. Eventually, it merged the two companies to form Dine Brands Global Inc (DIN), which later became a giant global full-service restaurant chain.
Presently, Applebee’s continues to operate nearly 2,000 restaurants in over 10 countries, serving various American-style cuisine, including salads, steaks, burgers, and riblets (the restaurant brand’s signature dish).
The restaurant chain has been operational since 1980, creating a loyal customer base. Franchisees enjoy a 4% total gross sales as royalty, so be sure to take this into consideration as you make your decision.
Acquire Applebee for Sale With NNN Deal Finder
Applebee’s is a great investment option for commercial real estate investors and potential franchisees. If you’re trying to purchase an Applebee’s for sale, working with a professional in triple net leases like NNN Deal Finder is ideal.
At NNN Deal Finder, we offer customized services to help our clients secure profitable triple-net properties for sale at the best prices. Whether you’re a first-time franchisee or a seasoned investor, we have various Applebee’s for sale at prime locations in the country. Give us a call today to discuss Applebee’s real estate requirements, and discover the opportunities available to you!