Applebee's May Be Coming To Arab
(Continued From Home Page)

QRC, with headquarters in Birmingham, owns approximately sixty Applebee's restaurant franchises and plans to build as many as six more this year.  If the plan is approved they would move to build and open the Arab restaurant as soon as possible.  Wassweiller said a new restaurant can usually be open within 120 days from the letting of a construction contract.  All new locations must be approved by Applebee's corporate offices located in Overland Park, Kansas.  According to Wassweiller, Applebee's is the largest casual dining restaurant chain in the world and is also the fastest growing.

The plan would involve a one of a kind relationship between QRC and the Arab CDA.  Current plans call for the CDA to issue taxable revenue bonds to purchase the land and build the building.  QRC would then lease the building from the CDA.  The agreement would call for the City to commit up to two cents of the sales tax generated by the restaurant to help with the bond payment until the restaurant becomes profitable.  The sales tax commitment would actually be on a sliding scale dependent upon the restaurant profits and would decrease as the profits rise and would disappear at a certain level.  The scale and profit level triggers would be negotiated by QRC and the CDA prior to the lease and would be reviewed on a regular basis.  As an example, failure to reach level one could result in the City contributing two cents of the sales tax generated by the restaurant to make the bond payment.  If the restaurant surpassed level one but did not reach level two the City's portion might be one cent of the tax.  As the profits rise the City's portion drops until it eventually reaches zero.  If the restaurant reached it's profitability goals immediately the City would contribute nothing to the bond payment.  According to Wassweiller the worst case scenario would be that the commitment could be for twenty years if the restaurant never reaches the agreed upon profitability levels.  Only taxes generated by the restaurant would be subject to the commitment.  No other tax revenues would be involved.  If the restaurant closes QRC is responsible for the entire amount of the bond issue.  The bond issue is expected to range from 1.7 to 2 million dollars.

CDA Chairman, Alan Bagwell told the council that the CDA Board had researched the company and their proposal and had found the financial to be sound.  Bagwell said the concept had been tested in a Birmingham Circuit Court case and had been upheld.  He also told the council that this type of arrangement was unique for restaurants but not for other types of businesses and industry.  He said there are only two such arrangements in Alabama.  The sliding scale tax commitment and a few other points of the agreement is what makes the Arab deal unique.  Bagwell said the CDA supports the proposal and is recommending it to the City.

Wassweiller said there were multiple reason for partnering with the CDA.  He said the CDA would likely be able to secure a more competitive rate on a bond issue and the costs of construction materials would likely be less if purchased by the CDA.  "We need to squeeze the budget as much as possible to make the project feasible," Wassweiller said.

Susan McKenney, asked how many other Applebee's restaurants had been opened in a city with no alcohol sales.  Wassweiller said that he was aware of three.  "Applebee's is not a bar, it is primarily a casual dining restaurant which encourages bringing the entire family to the restaurant and is not a significant alcohol revenue generator.  Applebee's does not chase the alcohol dollar and location decisions are not based on the sale of alcohol." he added.

Mayor Frank Lee Cox asked what steps the City needed to take in order to show support for the project.  Wassweiller said that a letter of endorsement and an agreement to share the tax revenues would be necessary.  Once the final agreements are completed QRC will submit the project to Applebee's International.  Wassweiller said, "We basically have to do all of the homework, put together a plan and prove the feasibility of the concept to Applebee's International headquarters."  When asked about the chances of approval he said, "If the package is put together properly, I believe they will support it."

A tentative timeline would have all of the legal work completed and approvals secured in order to let a contract by June 1st.  If that timeline is met the restaurant could be open by the first of September.

Correction:  Susan McKenney had earlier been identified in this article as a member of the Citizens For Arab's Future group.  Ms. McKenney is a member of the media representing WAFN - 92.7 FM.  She has confirmed that  she  is not a member of the group.  We apologize for the error and are happy to make this correction.