Restaurant Takes Slow and Steady Approach in Plans for Expansion

By JENNIFER BELLANTONIO

Orange County Business Journal

Like its restaurants, Brea-based Calabee’s Inc. has an old-school strategy careful and slow growth.

Not that the Applebee’s franchisee wouldn’t like to grow faster in its home state. It’s just that the cost of doing business in California is too high to afford mistakes, said John Bifone, its founder and chief executive.

“We have to be able to find the right location and the economics have to work,” he said. “There’s no sense in chasing new stores if the market doesn’t support it.”

Calabee’s plans to open as many as 10 Applebee’s Neighborhood Bar & Grill restaurants in the next five years, Bifone said.

The company franchises restaurants from Overland Park, Kan.-based Applebee’s International Inc. It has seven Applebee’s in Los Angeles. It also owns Millie’s Restaurant & Bakery, a 15-restaurant chain that includes one in Brea.

The company declined to disclose revenue figures.

Bifone said he’s eyeing Brea, Yorba Linda, Anaheim, Orange and Garden Grove, among other cities, for new locations.

“I’m working on trying to feed the pipeline so to speak,” he said. “The challenge clearly is to be able to find locations in enough cities with enough sales to make the economics work here in California.”

Bifone said workers’ compensation insurance and a high minimum wage compared to other states are major considerations in locating spots to open restaurants.

“It’s very, very expensive to do business in California,” he said. “Frankly, it discourages us and people like us in the restaurant industry from being aggressive.”

At each new store, he said, the company hires more than 165 people. It costs about $1.4 million to $1.5 million to open an Applebee’s, which usually is about 5,000 square feet, Bifone said.

Overall, the chain has cultivated a large following throughout the U.S., with 1,600 stores in all states except Hawaii. Systemwide sales for Applebee’s were $3.5 billion last year, said Ron Paul, president of Chicago-based restaurant consultant Technomic Inc.

That puts it ahead of two other top casual dining chains, Outback Steakhouse Inc. and Brinker International Inc.’s Chili’s chain.