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Which Credit Card Rewards Does the IRS Care About?When IHOP (NYSE: IHP) agreed acquire Applebee's nine months ago, Applebee's shareholders were none too pleased. Highly respected investor Sardar Biglari vocally opposed the deal, Applebee's director Burton Sack made plans to sue, and shares of IHOP rose more than Applebee's on the announcement -- a very rare occurrence.
But now things have changed as the restaurant industry has continued to weaken and shares of IHOP have lost a good chunk of their value. Applebee's competitors like Ruby Tuesday's (NYSE: RT) have plunged, and the deal is looking less well timed.
The company released its first quarter results this week and the Applebee's turnaround appears to be doing as well as could be expected given the environment -- the company saw the first quarter of positive same-store sales growth in two years. However, plans to sell and lease back some of the real estate that came with the deal has been "challenged by weakening credit market conditions." The plan to franchise more of the company-owned stores has made some progress.
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