Professor Elam

IHOP purchased much larger Applebes.  Read the article to see how IHOP is changing strategy. IHOP used to finance their franchisee’s in their buidlings. Now they simply take a fee and let the franchise do their own financing.  Capital expenditures dropped about $130 M and revenue dropped from $80M to $60M. As the CFO says, that’s a deal he will take any day.  Such a reduction would have the greatest impact on what statement, why Cash Flow of course.  They plan a simialr changeover for Applebees. They saw this working as IHOP is mainly breakfast lunch and Applebees is more lunch supper.