At the Top of the Food Chain

You probably don't think of New York as a hotbed of franchise restaurants. After all, isn’t the Big Apple home to some of America’s most elegant cuisine? But in 1994, Zane Tankel and partner Roy Raeburn founded Apple-Metro, Inc., and opened an Applebee’s restaurant in Staten Island. Kansas-based Applebee’s is the country’s largest casual-dining company (T.G.I. Friday’s, Chili’s and Outback Steakhouse are well-known competitors).

That restaurant was a hit and Tankel and Raeburn were off building their company. Today they have 25 Applebee’s, including the world’s three largest (on 50th Street and 42nd Street in Manhattan and in Rego Park, Queens), along with two Chevys Fresh Mex restaurants. In 2004 they also started their own casual dining spot, Zanaro’s Italian, in White Plains. Apple-Metro is currently the 54th largest restaurant franchisee in the U.S., as ranked by Restaurant Finance Monitor.

Tankel has spent a large portion of his 67 years owning and operating a series of businesses, including a graphic arts and printing company that had five plants across the U.S. Other firms he has owned and operated include a public relations company, an employee assistance consulting firm, a real estate business and a radio station. He got his feet wet in the restaurant business as an owner and operator of Cameos, a Manhattan fine dining spot, and was an investor in another restaurant. Tankel has been similarly adventurous in his spare time. An accomplished mountain climber, he was part of a team that successfully reached the summit of Mount Everest, and he has traveled to the North and the South Pole.

Recently, Apple-Metro’s business took an interesting turn when Applebee’s International, Inc., the franchisor, announced it was being sold to IHOP Corp. That sale is scheduled to close in the fourth quarter of 2007. NY REPORT editor Rob Levin sat down with Tankel at the 42nd Street Applebee’s to discuss how that will impact his company, how a veteran entrepreneur decided to become a franchisee, and how running a business is a lot like climbing a mountain.

The IHOP Deal

RL: Let’s get right to the news: IHOP is buying Applebee’s International. How will that affect your business?

ZT: We know the chairman and CEO of IHOP, Julia Stewart, very well. She was president of Applebee’s domestic division at the time we introduced Applebee’s to New York City, so we have a strong relationship with her. IHOP has said that they’ll be selling most of the company-owned restaurants after they take over, so I think we have some tremendous opportunities to buy blocks of Applebee’s restaurants. We’d like to buy the 66 New England restaurants. That would more than double our units. It’s funny. If you’d asked me a month ago what my plans for the near future were, I’d have had a very different answer. I always say the restaurant business is a tremendously opportunistic one.

Becoming a Franchisee

RL: You’ve started and run several businesses before Apple-Metro. How did you decide to get out of the printing business and into the restaurant business, and what made you decide to buy a franchise as opposed to starting or buying another business?

ZT: Actually, it wasn’t by design. Getting out of the graphic arts business was due to a couple of things. We were one of the top printer color separators in America, but it was such a capital-intensive business that we were [financially] marginal.

We owned a building on 40th, between Seventh and Eighth Avenue. We were going to move out of New York City, but I heard about the city’s initiative to try to keep businesses in New York. So we applied and got the very first Industrial Revenue Bond in the city. Three years later, the 42nd Street redevelopment was announced, and everybody was knocking on our door to buy our building.

I bought it with zero cash. I owed about $900,000 on it, and I was offered $3, $4 million and $5 million for the building. I thought I’d died and gone to heaven. I had been living from payroll to payroll for 30 years and here these guys are throwing money at us. I took one of those offers, and we sold the building.

At that time I was a mountain climber. I would take off for a month every year and do an expedition, mostly down in the Andes and South America. I was invited to go to Everest with a Canadian team that was going in 1986 on a first-time lightweight expedition from the Chinese side. It was going to be a lightweight climb, just 12 climbers carrying our own loads — no sherpas.

It was a huge challenge. Believe it or not, one of the motivating factors for me to sell was this opportunity. I thought it was a life-defining thing to go to Everest.