The franchisee purchased the restaurants in 2015. | Photo: Shutterstock

Applebee’s is suing a Kansas City franchisee who closed eight locations and filed for bankruptcy late last month.

In a complaint filed Oct. 30 in Kansas District Court, the casual dining restaurant company accused Apple Central KC of closing the restaurants without permission, in violation of its franchise agreement. Applebee’s said Apple Central owes it about $4.5 million in future royalties and advertising fees and $3.6 million in rent.

With the lawsuit, Applebee’s hopes to recover these amounts from Apple Central.

The companies’ relationship began in 2015, when Apple Central purchased 23 company-operated Applebee’s restaurants in the Kansas City area for $10 million, according to Apple Central’s Oct. 30 bankruptcy filing.

Restaurants were losing money at the time, and Apple Central aimed to turn them around. It had good results at first, but after Applebee’s introduced a hand-cut, wood-fired steak promotion in 2016, restaurants began losing money again. Sales began to rebound in 2018 and 2019, but that progress was wiped out by the pandemic. A brief recovery was quickly erased by rising food and labor costs and a decline in consumer spending.

In total, Apple Central closed 13 restaurants from 2016 to 2023. It then closed eight more unprofitable restaurants last month.. It hopes to sell or continue operating the remaining two locations through the bankruptcy process.

Apple Central reported that assets are between $1 million and $10 million, and liabilities are between $10 million and $50 million.

This comes as Applebee’s 1,620 restaurants continue to struggle with declining traffic and sales. Same-store sales fell nearly 6% in the third quarter, parent company Dine Brands reported Wednesday. This was the chain’s sixth consecutive quarter of negative same-store sales.

Apple Central became the second Applebee’s franchisee to go bankrupt in October. Operator with 14 units at the beginning of the month Louisiana Apple forced into Chapter 11 by a lender.

They are among a growing list of restaurant bankruptcies this year; This is a sign of the lasting effects of the pandemic and the difficult working environment.

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