UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q


(Mark  One) [ X ]  QUARTERLY  REPORT  PURSUANT  TO  SECTION  13 OR  15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended                   September 26, 2004
                               -------------------------------------------------

                                       OR

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934

For the transition period from                        to
                               -----------------------   -----------------------

Commission File Number:             000-17962
                       -----------------------------------


                         Applebee's International, Inc.
             ------------------------------------------------------
             (Exact name of registrant as specified in its charter)

            Delaware                                     43-1461763
-------------------------------------       ------------------------------------
 (State or other jurisdiction of            (I.R.S. Employer Identification No.)
  incorporation or organization)

                4551 W. 107th Street, Overland Park, Kansas 66207
             -------------------------------------------------------
              (Address of principal executive offices and zip code)

                                 (913) 967-4000
             ------------------------------------------------------
              (Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days.     Yes    X       No
                                           -------       -------

Indicate  by check mark  whether  the  registrant  is an  accelerated  filer (as
defined by Rule 12b-2 of the Act).     Yes    X       No
                                           -------       -------

The number of shares of the registrant's  common stock outstanding as of October
25, 2004 was 81,075,984.


                                      -1-
<PAGE>


                         APPLEBEE'S INTERNATIONAL, INC.
                                    FORM 10-Q
                     FISCAL QUARTER ENDED SEPTEMBER 26, 2004
                                      INDEX

<TABLE>
<CAPTION>
                                                                                                                Page
<S>                <C>                                                                                          <C>

Part I             Financial Information

Item 1.            Consolidated Financial Statements:

                   Consolidated Balance Sheets as of September 26, 2004
                        and December 28, 2003................................................................      3

                   Consolidated Statements of Earnings for the 13 Weeks and 39 Weeks
                        Ended September 26, 2004 and September 28, 2003......................................      4

                   Consolidated Statement of Stockholders' Equity for the
                        39 Weeks Ended September 26, 2004....................................................      5

                   Consolidated Statements of Cash Flows for the 39 Weeks
                        Ended September 26, 2004 and September 28, 2003......................................      6

                   Notes to Consolidated Financial Statements................................................      8

Item 2.            Management's Discussion and Analysis of
                        Financial Condition and Results of Operations........................................     15

Item 3.            Quantitative and Qualitative Disclosures About Market Risk................................     26

Item 4.            Controls and Procedures...................................................................     26


Part II            Other Information

Item 1.            Legal Proceedings.........................................................................     27

Item 2.            Unregistered Sales of Equity Securities and Use of Proceeds...............................     27

Item 6.            Exhibits..................................................................................     27


Signatures ..................................................................................................     28

Exhibit Index................................................................................................     29
</TABLE>



                                      -2-
<PAGE>


                 APPLEBEE'S INTERNATIONAL, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                                   (Unaudited)
                      (in thousands, except share amounts)

<TABLE>
<CAPTION>
                                                                                           September 26,        December 28,
                                                                                               2004                 2003
                                                                                         ----------------     ----------------
<S>                                                                                      <C>                  <C>

                                     ASSETS
Current assets:
    Cash and cash equivalents........................................................      $        441         $     17,867
    Short-term investments, at market value..........................................               281                   27
    Receivables (less allowance for bad debts of $4,290 in 2004 and $4,117 in 2003)..            37,079               31,950
    Receivables related to captive insurance subsidiary..............................             3,107                  450
    Inventories......................................................................            33,950               20,799
    Prepaid income taxes.............................................................             7,704                5,800
    Other current assets related to captive insurance subsidiary.....................               850                  657
    Prepaid and other current assets.................................................             9,943                9,072
                                                                                         ----------------     ----------------
         Total current assets........................................................            93,355               86,622
Property and equipment, net..........................................................           457,071              421,536
Goodwill.............................................................................           116,344              105,326
Restricted assets related to captive insurance subsidiary............................            18,311               10,763
Other intangible assets, net.........................................................             5,564                1,137
Other assets.........................................................................            23,403               18,617
                                                                                         ----------------     ----------------
                                                                                           $    714,048        $     644,001
                                                                                         ================     ================

                      LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
    Current portion of long-term debt................................................     $         213        $         192
    Notes payable....................................................................             3,000                 --
    Accounts payable.................................................................            36,870               37,633
    Accrued expenses and other current liabilities...................................            81,678               96,637
    Loss reserve and unearned premiums related to captive insurance subsidiary.......            20,864               11,007
    Accrued dividends................................................................              --                  3,863
                                                                                         ----------------     ----------------
         Total current liabilities...................................................           142,625              149,332
                                                                                         ----------------     ----------------
Non-current liabilities:
    Long-term debt - less current portion............................................            43,529               20,670
    Deferred income taxes............................................................            32,141                5,880
    Other non-current liabilities....................................................            11,286                8,387
                                                                                         ----------------     ----------------
         Total non-current liabilities...............................................            86,956               34,937
                                                                                         ----------------     ----------------
         Total liabilities...........................................................           229,581              184,269
                                                                                         ----------------     ----------------
Commitments and contingencies (Note 3)
Stockholders' equity:
    Preferred stock - par value $0.01 per share: authorized - 1,000,000 shares;
       no shares issued..............................................................              --                   --
    Common stock - par value $0.01 per share:  authorized - 125,000,000 shares;
       issued - 108,503,243 shares...................................................             1,085                1,085
    Additional paid-in capital.......................................................           213,928              200,574
    Retained earnings................................................................           609,925              523,954
                                                                                         ----------------     ----------------
                                                                                                824,938              725,613
    Treasury stock - 27,514,031 shares in 2004 and 25,715,767 shares in 2003, at
       cost..........................................................................          (340,471)            (265,881)
                                                                                         ----------------     ----------------
         Total stockholders' equity..................................................           484,467              459,732
                                                                                         ----------------     ----------------
                                                                                           $    714,048         $    644,001
                                                                                         ================     ================
</TABLE>

                 See notes to consolidated financial statements.


                                      -3-

<PAGE>


                 APPLEBEE'S INTERNATIONAL, INC. AND SUBSIDIARIES
                       CONSOLIDATED STATEMENTS OF EARNINGS
                                   (Unaudited)
                    (in thousands, except per share amounts)
<TABLE>
<CAPTION>
                                                                 13 Weeks Ended                    39 Weeks Ended
                                                         ------------------------------    -----------------------------
                                                         September 26,    September 28,    September 26,   September 28,
                                                             2004             2003              2004            2003
                                                         -------------    -------------    -------------   -------------
<S>                                                      <C>              <C>              <C>             <C>
Revenues:
    Company restaurant sales..........................     $ 247,173        $ 222,429        $ 738,502       $ 650,946
    Franchise royalties and fees......................        30,105           27,594           91,656          82,088
    Other franchise income............................         3,913            2,972           10,427           8,881
                                                         -------------    -------------    -------------   -------------
         Total operating revenues.....................       281,191          252,995          840,585         741,915
                                                         -------------    -------------    -------------   -------------
Cost of company restaurant sales:
    Food and beverage.................................        65,115           57,200          195,277         169,086
    Labor.............................................        79,599           73,018          240,344         213,186
    Direct and occupancy..............................        61,642           55,869          180,951         160,816
    Pre-opening expense...............................           998              576            1,939           1,131
                                                         -------------    -------------    -------------   -------------
         Total cost of company restaurant sales.......       207,354          186,663          618,511         544,219
                                                         -------------    -------------    -------------   -------------
Cost of other franchise income........................         3,521            2,837           11,493           8,510
General and administrative expenses...................        26,669           23,589           77,118          69,096
Amortization of intangible assets.....................           199               87              443             278
Loss on disposition of restaurants and equipment......           441              116            1,520           1,314
                                                         -------------    -------------    -------------   -------------
Operating earnings....................................        43,007           39,703          131,500         118,498
                                                         -------------    -------------    -------------   -------------
Other income (expense):
    Investment income.................................           325              227              566           1,048
    Interest expense..................................          (379)            (330)          (1,139)         (1,369)
    Impairment of Chevys note receivable (Note 9).....           --               --              --            (8,803)
    Other income......................................           568              395            1,410             601
                                                         -------------    -------------    -------------   -------------
         Total other income (expense).................           514              292              837          (8,523)
                                                         -------------    -------------    -------------   -------------
Earnings before income taxes..........................        43,521           39,995          132,337         109,975
Income taxes..........................................        15,232           14,398           46,318          39,591
                                                         -------------    -------------    -------------   -------------
Net earnings..........................................     $  28,289        $  25,597        $  86,019       $  70,384
                                                         =============    =============    =============   =============

Basic net earnings per common share...................     $    0.35        $    0.31        $    1.05       $    0.85
                                                         =============    =============    =============   =============
Diluted net earnings per common share.................     $    0.34        $    0.30        $    1.02       $    0.82
                                                         =============    =============    =============   =============

Basic weighted average shares outstanding.............        81,511           83,334           81,759          83,132
                                                         =============    =============    =============   =============
Diluted weighted average shares outstanding...........        83,503           85,777           84,079          85,482
                                                         =============    =============    =============   =============
</TABLE>





                 See notes to consolidated financial statements.


                                      -4-
<PAGE>



                 APPLEBEE'S INTERNATIONAL, INC. AND SUBSIDIARIES
                 CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
                                   (Unaudited)
                      (in thousands, except share amounts)


<TABLE>
<CAPTION>
                                                   Common Stock        Additional                                   Total
                                            -------------------------    Paid-In      Retained      Treasury    Stockholders'
                                               Shares       Amount       Capital      Earnings       Stock          Equity
                                            ------------ ------------ ------------- ------------ ------------- --------------
<S>                                         <C>          <C>          <C>           <C>          <C>           <C>

Balance, December 28, 2003.............      108,503,243   $  1,085    $   200,574    $ 523,954   $  (265,881)  $    459,732

    Net earnings.......................             --         --             --         86,019          --           86,019
    Purchases of treasury stock........             --         --             --           --         (88,224)       (88,224)
    Stock options exercised and
       related tax benefit.............             --         --            9,675         --          11,306         20,981
    Shares issued under employee
       benefit plans...................             --         --            3,150         --           1,784          4,934
    Restricted shares awarded
       under equity incentive plan,
       net of cancellations............             --         --             (544)        --             544           --
    Amortization of unearned
       compensation relating to
       restricted shares...............             --         --            1,073         --            --            1,073
    Dividends paid for fractional
       shares..........................             --         --             --            (48)         --              (48)
                                            ------------ ------------ ------------- ------------ ------------- --------------
Balance, September 26, 2004...........       108,503,243   $  1,085    $   213,928    $ 609,925   $  (340,471)  $    484,467
                                            ============ ============ ============= ============ ============= ==============
</TABLE>



                 See notes to consolidated financial statements.

                                      -5-
<PAGE>



                 APPLEBEE'S INTERNATIONAL, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)
                                 (in thousands)
<TABLE>
<CAPTION>
                                                                                                     39 Weeks Ended
                                                                                           -----------------------------------
                                                                                            September 26,       September 28,
                                                                                                2004                2003
                                                                                           ---------------     ---------------
<S>                                                                                        <C>                 <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
    Net earnings.....................................................................        $    86,019         $    70,384
    Adjustments to reconcile net earnings to net cash provided by operating
      activities:
         Depreciation and amortization...............................................             33,708              30,091
         Amortization of intangible assets...........................................                443                 278
         Amortization of unearned compensation.......................................              1,073                 785
         Other amortization..........................................................                242                 146
         Inventory impairment........................................................              2,100                --
         Deferred income tax provision (benefit).....................................             26,638                (541)
         Gain on sale of investments.................................................               --                   (24)
         Loss on disposition of restaurants and equipment............................              1,520               1,314
         Impairment of Chevys note receivable........................................               --                 8,803
         Income tax benefit from exercise of options.................................              7,610               5,536
    Changes in assets and liabilities (exclusive of effects of acquisitions or
      disposition):
         Receivables.................................................................             (4,916)             (5,890)
         Receivables related to captive insurance subsidiary.........................             (2,657)               (290)
         Inventories.................................................................            (15,039)             (2,454)
         Prepaid income taxes........................................................             (1,904)              5,002
         Other current assets related to captive insurance subsidiary................               (193)             (1,134)
         Prepaid and other current assets............................................             (1,185)              1,554
         Accounts payable............................................................               (763)              7,300
         Accrued expenses and other current liabilities..............................            (15,275)             (1,798)
         Loss reserve and unearned premiums related to captive insurance subsidiary..              9,857              10,073
         Accrued income taxes........................................................               --                   457
         Other.......................................................................             (1,010)                 68
                                                                                           ---------------     ---------------
         NET CASH PROVIDED BY OPERATING ACTIVITIES...................................            126,268             129,660
                                                                                           ---------------     ---------------
CASH FLOWS FROM INVESTING ACTIVITIES:
    Purchases of property and equipment..............................................            (68,224)            (54,893)
    Restricted assets related to captive insurance subsidiary........................             (7,548)             (8,830)
    Acquisition of restaurants.......................................................            (13,817)            (21,557)
    Lease acquisition costs..........................................................             (4,857)               --
    Purchases of short-term investments..............................................               (253)               --
    Proceeds from sale of restaurants and equipment..................................               --                 8,579
    Maturities and sales of short-term investments...................................               --                   480
    Other investing activities.......................................................             (1,045)               --
                                                                                           ---------------     ---------------
         NET CASH USED BY INVESTING ACTIVITIES.......................................            (95,744)            (76,221)
                                                                                           ---------------     ---------------
CASH FLOWS FROM FINANCING ACTIVITIES:
    Purchases of treasury stock......................................................            (88,224)            (49,757)
    Dividends paid...................................................................             (3,911)             (3,323)
    Issuance of common stock upon exercise of stock options..........................             13,371              11,269
    Shares issued under employee benefit plans.......................................              4,934               2,134
    Proceeds from issuance of notes payable..........................................              3,000               4,800
    Net long-term debt proceeds (payments)...........................................             22,880             (30,372)
                                                                                           ---------------     ---------------
         NET CASH USED BY FINANCING ACTIVITIES.......................................            (47,950)            (65,249)
                                                                                           ---------------     ---------------
NET DECREASE IN CASH AND CASH EQUIVALENTS............................................            (17,426)            (11,810)
CASH AND CASH EQUIVALENTS, beginning of period.......................................             17,867              15,169
                                                                                           ---------------     ---------------
CASH AND CASH EQUIVALENTS, end of period.............................................        $       441         $     3,359
                                                                                           ===============     ===============
</TABLE>


                 See notes to consolidated financial statements.

                                      -6-
<PAGE>


                 APPLEBEE'S INTERNATIONAL, INC. AND SUBSIDIARIES
               CONSOLIDATED STATEMENTS OF CASH FLOWS - (Continued)
                                   (Unaudited)
                                 (in thousands)
<TABLE>
<CAPTION>
                                                                                                    39 Weeks Ended
                                                                                         -------------------------------------
                                                                                           September 26,       September 28,
                                                                                               2004                2003
                                                                                         -----------------   -----------------
<S>                                                                                      <C>                 <C>
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the 39 week period for:
       Income taxes..................................................................       $    13,561         $    29,494
                                                                                         =================   =================
       Interest......................................................................       $       544         $       887
                                                                                         =================   =================
</TABLE>

SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING AND FINANCING ACTIVITIES:

We issued  restricted common stock of $1,772,000 and $1,836,000 for the 39 weeks
ended September 26, 2004 and September 28, 2003, respectively.

On March 24, 2003, we assumed a loan of  approximately  $1,400,000 in connection
with the acquisition of 11 restaurants.

As of September  28, 2003,  we recorded a receivable of $1,125,000 in connection
with the sale of a restaurant.

DISCLOSURE OF ACCOUNTING POLICY:

For  purposes of the  consolidated  statements  of cash flows,  we consider  all
highly liquid  investments  purchased with a maturity of three months or less to
be cash equivalents.


                 See notes to consolidated financial statements.

                                      -7-
<PAGE>


                 APPLEBEE'S INTERNATIONAL, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

1.  Basis of Presentation

Our  consolidated  financial  statements  included  in this  Form 10-Q have been
prepared without audit (except that the consolidated  balance sheet  information
as of December 28, 2003 has been derived from consolidated  financial statements
which  were  audited)  in  accordance  with the  rules  and  regulations  of the
Securities and Exchange  Commission.  Although certain  information and footnote
disclosures  normally  included in financial  statements  prepared in accordance
with accounting  principles  generally  accepted in the United States of America
have been condensed or omitted,  we believe that the disclosures are adequate to
make the information  presented not misleading.  The  accompanying  consolidated
financial  statements  should be read in conjunction with the audited  financial
statements and notes thereto  included in our Annual Report on Form 10-K for the
fiscal year ended December 28, 2003.

We  believe  that  all   adjustments,   consisting  only  of  normal   recurring
adjustments,  necessary  for a fair  presentation  of the results of the interim
periods  presented  have been made.  The results of  operations  for the interim
periods  presented are not necessarily  indicative of the results to be expected
for the full year.

We have  made  certain  reclassifications  to the  prior  periods'  consolidated
financial statements to conform to the 2004 presentation.

2.  Stock-Based Compensation

We have adopted the disclosure  provisions of Statement of Financial  Accounting
Standards  ("SFAS")  No.  148,   "Accounting  for  Stock-Based   Compensation  -
Transition  and  Disclosure,  an  amendment  of FASB  Statement  No.  123."  The
Statement  requires  prominent  disclosures in both annual and interim financial
statements   regarding  the  method  of  accounting  for  stock-based   employee
compensation and the effect of the method used on reported  results.  We account
for  stock-based  compensation  awards under the intrinsic  method of Accounting
Principles  Board Opinion No. 25,  "Accounting  for Stock Issued to  Employees."
Opinion No. 25 requires  compensation cost to be recognized based on the excess,
if any,  between the quoted  market  price of the stock at the date of grant and
the amount an employee must pay to acquire the stock.  All options awarded under
all of our plans are  granted  with an  exercise  price equal to the fair market
value on the date of the grant.  The following  table presents the effect on our
net  earnings  and  earnings  per share had we adopted the fair value  method of
accounting for  stock-based  compensation  under SFAS No. 123,  "Accounting  for
Stock-Based Compensation" (in thousands, except for per share amounts).


                                      -8-
<PAGE>




<TABLE>
<CAPTION>
                                                                    13 Weeks Ended                  39 Weeks Ended
                                                            ------------------------------- -------------------------------
                                                             September 26,   September 28,   September 26,   September 28,
                                                                 2004            2003            2004            2003
                                                            --------------- --------------- --------------- ---------------
<S>                                                           <C>             <C>             <C>             <C>
Net earnings, as reported.............................         $  28,289       $  25,597       $  86,019       $  70,384
Add: Stock-based employee compensation
    expense included in net earnings,
    net of related taxes..............................               327             433             616           1,393
Less: Total stock-based employee
    compensation expense determined under
    fair value based methods for all awards,
    net of related taxes..............................             2,220           2,159           6,719           7,088
                                                            --------------- --------------- --------------- ---------------
Pro forma net earnings................................         $  26,396       $  23,871       $  79,916       $  64,689
                                                            =============== =============== =============== ===============
Basic net earnings per common share,
    as reported.......................................         $    0.35       $    0.31       $    1.05       $    0.85
                                                            =============== =============== =============== ===============
Basic net earnings per common share,
    pro forma.........................................         $    0.32       $    0.29       $    0.98       $    0.78
                                                            =============== =============== =============== ===============
Diluted net earnings per common share,
    as reported.......................................         $    0.34       $    0.30       $    1.02       $    0.82
                                                            =============== =============== =============== ===============
Diluted net earnings per common share,
    pro forma.........................................         $    0.32       $    0.28       $    0.95       $    0.76
                                                            =============== =============== =============== ===============
</TABLE>

3.  Commitments and Contingencies

Litigation,  claims and disputes: We are involved in various legal actions which
include,  without limitation,  employment law related matters, dram shop claims,
personal injury claims and other such normal restaurant  operational matters. In
each instance,  we believe that we have meritorious  defenses to the allegations
made and we are vigorously defending these claims.

While the  resolution of the matters  described  above may have an impact on our
financial results for the period in which they are resolved, we believe that the
ultimate  disposition  of  these  matters  will  not,  individually  or  in  the
aggregate,  have a material  adverse  effect upon our  business or  consolidated
financial statements.

Lease guarantees:  In connection with the sale of restaurants to franchisees and
other parties, we have, in certain cases,  remained  contingently liable for the
remaining  lease  payments.  As of September 26, 2004,  the aggregate  amount of
these lease payments totaled approximately  $19,200,000.  These leases expire at
various times  throughout the next several years with the final lease  agreement
expiring in 2025.  The buyers  have  indemnified  us from any losses  related to
these  guarantees.  We have not recorded a liability as of September 26, 2004 or
December 28, 2003.

Franchisee guarantees:  In November 2003, we arranged for a financing company to
provide up to $75,000,000 to qualified  franchisees for short-term loans to fund
remodel investments.  Under the terms of this financing program, we will provide



                                      -9-
<PAGE>


a limited  guarantee  pool for the loans advanced  during the three-year  period
ending December 2006. There was one loan outstanding for approximately  $800,000
under this program as of September 26, 2004. The fair value of our guarantee was
immaterial and accordingly, we have not recorded a liability as of September 26,
2004.

In May 2004, we arranged for a financing  company to provide up to  $250,000,000
to  qualified  franchisees  for  loans to fund  development  of new  restaurants
through  October  2007.  We will provide a limited  guarantee  of certain  loans
advanced  under this  program.  As of  September  26,  2004,  there was one loan
outstanding for approximately  $2,400,000 under this program.  The fair value of
our guarantee was immaterial and  accordingly,  we have not recorded a liability
as of September 26, 2004.

Severance  agreements:  We have severance and employment agreements with certain
officers  providing for severance  payments to be made in the event the employee
resigns or is terminated  related to a change in control.  The agreements define
the  circumstances  which will constitute a change in control.  If the severance
payments had been due as of September  26, 2004,  we would have been required to
make payments totaling approximately $12,300,000. In addition, we have severance
and  employment   agreements  with  certain  officers  which  contain  severance
provisions  not  related to a change in  control.  Those  provisions  would have
required  aggregate  payments of  approximately  $7,200,000 if such officers had
been terminated as of September 26, 2004.

4.  Earnings Per Share

We compute  basic  earnings  per share by dividing  income  available  to common
shareholders by the weighted average number of common shares outstanding for the
reporting  period.  Diluted  earnings per share reflects the potential  dilution
that could occur if holders of options or other  contracts to issue common stock
exercised or converted  their  holdings  into common  stock.  Outstanding  stock
options and  equity-based  compensation  represent the only dilutive  effects on
weighted average shares. The chart below presents a reconciliation between basic
and diluted  weighted  average shares  outstanding and the related  earnings per
share.  All amounts in the chart,  except per share  amounts,  are  expressed in
thousands.
<TABLE>
<CAPTION>

                                                               13 Weeks Ended                  39 Weeks Ended
                                                       ------------------------------- -------------------------------
                                                        September 26,   September 28,   September 26,   September 28,
                                                            2004            2003            2004            2003
                                                       --------------- --------------- --------------- ---------------
<S>                                                    <C>             <C>             <C>             <C>
Net earnings.........................................     $  28,289       $  25,597       $  86,019       $  70,384
                                                       =============== =============== =============== ===============

Basic weighted average shares outstanding............        81,511          83,334          81,759          83,132
Dilutive effect of stock options and
  equity-based compensation..........................         1,992           2,443           2,320           2,350
                                                       --------------- --------------- --------------- ---------------
Diluted weighted average shares outstanding..........        83,503          85,777          84,079          85,482
                                                       =============== =============== =============== ===============

Basic net earnings per common share..................     $    0.35       $    0.31       $    1.05       $    0.85
                                                       =============== =============== =============== ===============
Diluted net earnings per common share................     $    0.34       $    0.30       $    1.02       $    0.82
                                                       =============== =============== =============== ===============
</TABLE>

We excluded  stock options with exercise  prices greater than the average market
price of our common stock for the  applicable  periods from the  computation  of
diluted weighted average shares outstanding.  There were approximately 1,520,000
and  5,000 of  these  options  for the 13 weeks  ended  September  26,  2004 and
September 28, 2003, respectively,  and 1,400,000 and 10,000 of these options for
the 39 weeks ended September 26, 2004 and September 28, 2003, respectively.

                                      -10-
<PAGE>



5.  Stock Split

On May 13, 2004, we declared a three-for-two  stock split,  effected in the form
of a 50% stock dividend,  to shareholders of record on May 28, 2004,  payable on
June 15, 2004. We issued  approximately  36,200,000  shares of common stock as a
result of the stock split.  All references to the number of shares and per share
amounts of common stock have been  restated to reflect the stock split.  We have
reclassified  an amount equal to the par value of the number of shares issued to
common stock from retained earnings.

6.  Acquisitions

On April 26, 2004, we completed our  acquisition of the operations and assets of
10  Applebee's  restaurants  located in Southern  California  for  approximately
$13,700,000 in cash. Our financial  statements reflect the results of operations
for these restaurants subsequent to the date of acquisition.  The purchase price
was  allocated  to the fair  value of  property  and  equipment  of  $2,500,000,
goodwill of $10,800,000 and other net assets of  approximately  $400,000.  We do
not expect this transaction to have a significant impact on our net earnings for
fiscal 2004.

On March 24,  2003,  we  acquired  the  operations  and assets of 11  Applebee's
restaurants located in Illinois,  Indiana, Kentucky and Missouri for $21,800,000
in cash and $1,400,000 in assumed debt from a franchisee. The total cash payment
included $20,800,000 paid at closing,  approximately  $200,000 paid as a deposit
in fiscal 2002 and  approximately  $800,000 paid in the second  quarter of 2003.
Our financial statements reflect the results of operations for these restaurants
subsequent to the date of  acquisition.  The purchase price of  $23,200,000  was
allocated to the fair value of property and equipment of $7,900,000, goodwill of
$16,600,000, and other net liabilities of $1,300,000.

The following table is comprised of actual company  restaurant sales included in
our  consolidated  financial  statements for each period presented and pro forma
company  restaurant  sales assuming the two  acquisitions  above occurred at the
beginning of each respective period (in thousands):
<TABLE>
<CAPTION>

                                                               13 Weeks Ended                  39 Weeks Ended
                                                           ------------------------------- -------------------------------
                                                            September 26,   September 28,   September 26,   September 28,
                                                                2004            2003            2004            2003
                                                           --------------- --------------- --------------- ---------------
<S>                                                        <C>             <C>             <C>             <C>
Actual company restaurant sales
    for acquired restaurants..........................        $  12,500       $   6,100       $  30,000       $  13,100
                                                           =============== =============== =============== ===============

Pro forma company restaurant sales
    for acquired restaurants..........................        $  12,500       $  11,600       $  38,800       $  35,600
                                                           =============== =============== =============== ===============
</TABLE>

7.  Disposition

On July 20, 2003,  we completed  the sale of eight  company  restaurants  in the
Atlanta,   Georgia  market  to  an  affiliate  of  an  existing  franchisee  for
$8,000,000.  In  connection  with the sale of these  restaurants,  we closed one
restaurant in the Atlanta market in June 2003.  This  transaction did not have a
significant  impact  on  our  net  earnings  for  fiscal  2003.  Actual  company
restaurant sales included in our consolidated  financial statements for the nine
restaurants were approximately  $900,000 and $10,300,000 for the 13 weeks and 39
weeks ended September 28, 2003, respectively.


                                      -11-
<PAGE>


8.  Inventory Impairment

In the second quarter of 2004, we determined  that we had excess  inventories of
riblets that no longer met our quality  standards.  Accordingly,  we recorded an
inventory  impairment  of  $2,100,000  (approximately  $1,400,000  net of income
taxes)  in our  consolidated  financial  statements  during  the 39 weeks  ended
September 26, 2004. The portion of the riblet  inventory  impairment  related to
the company's  historical usage of  approximately  $500,000 was recorded in food
and beverage cost and the portion related to the  franchisee's  historical usage
of  approximately  $1,600,000 was recorded in cost of other franchise  income in
the consolidated statements of earnings.

9.  Impairment of Chevys Note Receivable

In 1999, we received a $6,000,000,  8% subordinated  note in connection with the
sale of the Rio Bravo concept to Chevys Holdings, Inc ("Chevys") due in 2009. In
June  2003,  Chevys  announced  the  sale of the  majority  of its  restaurants.
Subsequent to the announcement, we received Chevys' audited financial statements
for the fiscal year ended  December 31, 2002.  During the fiscal  quarter  ended
June 29,  2003,  we  fully  impaired  the  principal  and  accrued  interest  of
approximately  $8,800,000.  A charge for the impairment of this note is included
in our consolidated  statements of earnings for the 39 weeks ended September 28,
2003.  In October  2003,  Chevys Inc.  filed a voluntary  petition to reorganize
under  Chapter 11 of the U.S.  Bankruptcy  Code.  We no longer  accrue  interest
receivable on this note and will record future interest income on this note only
upon the receipt of any related cash payments.

10. Goodwill and Other Intangible Assets

Changes in goodwill are summarized below (in thousands):
<TABLE>
<CAPTION>

                                                               September 26,            December 28,
                                                                   2004                    2003
                                                           ----------------------  ----------------------
<S>                                                        <C>                     <C>
Carrying amount, beginning of the year..................        $    105,326            $     88,715
Goodwill acquired during the period.....................              11,018                  16,611
                                                           ----------------------  ----------------------
                                                                $    116,344            $    105,326
                                                           ======================  ======================
</TABLE>

Intangible  assets subject to amortization  pursuant to SFAS No. 142,  "Goodwill
and Other Intangible Assets," are summarized below (in thousands):
<TABLE>
<CAPTION>

                                                                  September 26, 2004
                                             ------------------------------------------------------------
                                               Gross Carrying         Accumulated           Net Book
                                                   Amount            Amortization            Value
                                             ------------------   ------------------   ------------------
<S>                                          <C>                   <C>                 <C>
Amortized intangible assets:
    Franchise interest and rights.......        $      6,371          $    5,482          $       889
    Lease acquisition costs.............               4,857                 182                4,675
                                             ------------------    ----------------    -----------------

Total...................................        $     11,228          $    5,664          $     5,564
                                             ==================    ================    =================

                                                                  December 28, 2003
                                             -----------------------------------------------------------
                                               Gross Carrying         Accumulated           Net Book
                                                   Amount            Amortization            Value
                                             ------------------    ----------------    -----------------
Amortized intangible assets:
    Franchise interest and rights.......        $      6,371          $    5,234          $     1,137
                                             ==================    ================    =================
</TABLE>

                                      -12-
<PAGE>


In  the  second  quarter  of  2004,  we  acquired  six  restaurant   leases  for
approximately  $4,900,000  in  cash.  The  lease  acquisition  costs  are  being
amortized over the next 8 to 20 years and the franchise  interest and rights are
being amortized over the next two to four years.

We expect annual  amortization  expense for all  intangible  assets for the next
five fiscal years to range from approximately $500,000 to $800,000.

11. Captive Insurance Subsidiary

In 2002, we formed  Neighborhood  Insurance,  Inc., a Vermont  corporation and a
wholly-owned captive insurance  subsidiary to provide Applebee's  International,
Inc. and qualified  franchisees with workers' compensation and general liability
insurance.  Applebee's International,  Inc. and covered franchisees make premium
payments to the captive  insurance  company which pays  administrative  fees and
insurance claims, subject to individual and aggregate maximum claim limits under
the captive insurance company's reinsurance policies. Franchisee premium amounts
billed by the captive  insurance  company are established based upon third-party
actuarial  estimates of settlement costs for incurred claims and  administrative
fees. The  franchisee  premiums are included in other  franchise  income ratably
over the policy year.  The related  offsetting  expenses are included in cost of
other franchise income.  Accordingly,  we do not expect franchisee participation
in the captive insurance company to have a material impact on our net earnings.

As of September 26, 2004, our consolidated  balance sheet includes the following
balances  related  to  the  captive  insurance  subsidiary:
    o    Deferred policy acquisition costs of approximately $900,000 included in
         other current assets related to captive insurance subsidiary.
    o    Franchise premium  receivables of approximately  $3,100,000 included in
         receivables related to captive insurance subsidiary.
    o    Cash equivalent investments  restricted  for the  payment  of claims of
         approximately  $17,600,000  included in  restricted  assets  related to
         captive insurance subsidiary.
    o    Loss  reserve  and  unearned  premiums  related  to  captive  insurance
         subsidiary of approximately $20,900,000.
    o    Other miscellaneous  items, net, of approximately  $700,000 included in
         several line items in the consolidated balance sheet.

12. Deferred Income Taxes

In  2004,  we  implemented  new  tax  planning   strategies   that   accelerated
depreciation on restaurant  assets which resulted in an increase in our deferred
income tax  liability.  Deferred  income taxes of  $32,141,000  are reflected in
non-current  liabilities in our  consolidated  balance sheet as of September 26,
2004.


                                      -13-
<PAGE>


13. New Accounting Pronouncement

In  December  2003,  the  FASB  issued  FASB  Interpretation  No.  ("FIN")  46R,
"Consolidation of Variable Interest Entities and  Interpretation of ARB No. 51."
This interpretation,  which replaces FASB Interpretation No. 46,  "Consolidation
of Variable Interest Entities," clarifies the application of Accounting Research
Bulletin No. 51,  "Consolidated  Financial  Statements," to certain  entities in
which  equity  investors  do  not  have  the  characteristics  of a  controlling
financial  interest or do not have  sufficient  equity at risk for the entity to
finance its activities without additional  subordinated  financial support. This
interpretation  is required in  financial  statements  for periods  ending after
March 15, 2004 for those  companies that have yet to adopt the provisions of FIN
46. We adopted FIN 46R in January  2004 and the initial  adoption did not have a
material impact on our consolidated financial statements.



                                      -14-
<PAGE>


Item 2.  Management's Discussion and Analysis of Financial Condition and Results
of Operations

Overview

Our revenues are generated from three primary sources:

    o    Company restaurant sales (food and beverage sales)
    o    Franchise royalties and fees
    o    Other franchise income

Beverage  sales  consist of sales of alcoholic  beverages,  while  non-alcoholic
beverages  are included in food sales.  Franchise  royalties are generally 4% of
each franchise  restaurant's monthly gross sales. Franchise fees typically range
from  $30,000 to $35,000 for each  restaurant  opened.  Other  franchise  income
includes  insurance  premiums  from  franchisee  participation  in  our  captive
insurance company and revenue from information  technology products and services
provided to certain franchisees.

Comparable  restaurant sales are based upon those  restaurants open for at least
18 months and are compared from period to period.

Certain expenses relate only to company operated restaurants. These include:

    o    Food and beverage costs
    o    Labor costs
    o    Direct and occupancy costs
    o    Pre-opening expenses

Cost of  other  franchise  income  includes  the  costs  related  to  franchisee
participation in our captive  insurance company and costs related to information
technology products and services provided to certain  franchisees.  In addition,
cost of other franchise income in fiscal 2004 includes the franchisee portion of
the riblet inventory impairment (see Note 8).

Other expenses,  such as general and administrative  and amortization  expenses,
relate to both company operated restaurants and franchise operations.

We operate on a 52 or 53 week fiscal year ending on the last Sunday in December.
Our fiscal  quarters  ended  September  26,  2004 and  September  28,  2003 each
contained 13 weeks and are  referred to hereafter as the "2004  quarter" and the
"2003 quarter,"  respectively.  Our 39 week periods ended September 26, 2004 and
September 28, 2003 are referred to hereafter as the "2004  year-to-date  period"
and the "2003 year-to-date period," respectively.

In 2002, we formed  Neighborhood  Insurance,  Inc., a Vermont  corporation and a
wholly-owned captive insurance  subsidiary to provide Applebee's  International,
Inc. and qualified  franchisees with workers' compensation and general liability
insurance.  Applebee's International,  Inc. and covered franchisees make premium
payments to the captive  insurance  company which pays  administrative  fees and
insurance claims, subject to individual and aggregate maximum claim limits under
the captive insurance company's reinsurance policies. Franchisee premium amounts
billed by the captive  insurance  company are established based upon third-party
actuarial  estimates of settlement costs for incurred claims and  administrative


                                      -15-
<PAGE>


fees. The  franchisee  premiums are included in other  franchise  income ratably
over the policy year.  The related  offsetting  expenses are included in cost of
other franchise income.  Accordingly,  we do not expect franchisee participation
in the captive insurance company to have a material impact on our net earnings.

As of September 26, 2004, our consolidated balance sheet includes the following
balances related to the captive insurance subsidiary:
    o    Deferred policy acquisition costs of approximately $900,000 included in
         other current assets related to captive insurance subsidiary.
    o    Franchise premium  receivables of approximately  $3,100,000 included in
         receivables related to captive insurance subsidiary.
    o    Cash  equivalent  investments  restricted  for the payment of claims of
         approximately  $17,600,000  included in  restricted  assets  related to
         captive insurance subsidiary.
    o    Loss  reserve  and  unearned  premiums  related  to  captive  insurance
         subsidiary of approximately $20,900,000.
    o    Other miscellaneous  items, net, of approximately  $700,000 included in
         several line items in the consolidated balance sheet.

Application of Critical Accounting Policies

Management's  Discussion  and  Analysis of  Financial  Condition  and Results of
Operations  is based  upon our  consolidated  financial  statements,  which were
prepared in accordance  with  accounting  principles  generally  accepted in the
United  States of America.  These  principles  require us to make  estimates and
assumptions  that  affect the  reported  amounts in the  consolidated  financial
statements  and notes thereto.  Actual results may differ from these  estimates,
and such differences may be material to our consolidated  financial  statements.
We believe that the following  significant  accounting policies involve a higher
degree of judgment or complexity.

Franchise revenues: Franchise revenues consist of franchise royalties, franchise
fees and other franchise income. We recognize  royalties on a franchisee's sales
in the period in which the sales are reported to have occurred.  We also receive
a franchise fee for each restaurant that a franchisee  opens. The recognition of
franchise  fees is deferred  until we have  performed  substantially  all of our
related  obligations as franchisor,  typically when the restaurant opens.  Other
franchise income includes  insurance  premiums from franchisee  participation in
our captive insurance company and revenue from information  technology  products
and services provided to certain franchisees. Income from franchise premiums and
information  technology services is recognized ratably over the related contract
period.  Income from  information  technology  products is  recognized  when the
products are installed at the restaurant.

Inventory  valuation:  We state  inventories  at the  lower of cost,  using  the
first-in,  first-out  method,  or market.  Market is  determined  based upon the
estimated net realizable value.

We purchase and maintain  inventories  of certain  specialty  products to assure
sufficient   supplies  to  the  system.  We  review  and  make  quality  control
inspections of our  inventories to determine  obsolescence  on an ongoing basis.
These reviews require management to make certain estimates and judgments.

Property  and   equipment:   Property  and  equipment  are   depreciated   on  a
straight-line  basis over the estimated  useful lives of the assets.  The useful
lives of the assets are based upon  management's  expectations.  We periodically
review the assets for changes in  circumstances  which may impact  their  useful
lives.

Impairment of long-lived  assets: We periodically  review property and equipment
for impairment on a restaurant by restaurant  basis using  historical cash flows
as well as current  estimates  of future  cash  flows  and/or  appraisals.  This
assessment  process  requires the use of  estimates  and  assumptions  which are


                                      -16-
<PAGE>


subject to a significant degree of judgment. In addition, we periodically assess
the recoverability of goodwill and other intangible assets, which requires us to
make assumptions  regarding the future cash flows and other factors to determine
the fair value of the assets. If these assumptions  change in the future, we may
be required to record impairment charges for these assets.

Legal and  insurance  reserves:  We are  periodically  involved in various legal
actions.  We are required to assess the probability of any adverse  judgments as
well as the potential range of loss. We determine the required  accruals after a
review of the facts of each legal action.

We use estimates in the determination of the appropriate liabilities for general
liability,  workers' compensation and health insurance.  The estimated liability
is  established  based upon  historical  claims data and  third-party  actuarial
estimates of  settlement  costs for incurred  claims.  Unanticipated  changes in
these factors may require us to revise our estimates.

Employee  incentive  compensation  plans:  We have  various  long-term  employee
incentive compensation plans which require us to make estimates to determine our
liability  based  upon  projected   performance  of  plan  criteria.  If  actual
performance  against the criteria  differs from our estimates in the future,  we
will be required to adjust our liability accordingly.

Receivables:   We  continually   assess  the  collectibility  of  our  franchise
receivables.  We establish our allowance for bad debts based on several factors,
including historical collection experience, the current economic environment and
other  specific  information  available to us at the time. The allowance for bad
debts may change in the future  due to  changes  in the  factors  above or other
developments.

We periodically reassess our assumptions and judgments and make adjustments when
significant facts and circumstances dictate. A change in any of the above
estimates could impact our consolidated statements of earnings and the related
asset or liability recorded in our consolidated balance sheets would be adjusted
accordingly. Historically, actual results have not been materially different
than the estimates that are described above.

Acquisitions

On April 26, 2004, we completed our  acquisition of the operations and assets of
10  Applebee's  restaurants  located in Southern  California  for  approximately
$13,700,000 in cash. Our financial  statements reflect the results of operations
for these restaurants subsequent to the date of acquisition.  The purchase price
was  allocated  to the fair  value of  property  and  equipment  of  $2,500,000,
goodwill of $10,800,000 and other net assets of  approximately  $400,000.  We do
not expect this transaction to have a significant impact on our net earnings for
fiscal 2004.

On March 24,  2003,  we  acquired  the  operations  and assets of 11  Applebee's
restaurants located in Illinois,  Indiana, Kentucky and Missouri for $21,800,000
in cash and $1,400,000 in assumed debt from a franchisee. The total cash payment
included $20,800,000 paid at closing,  approximately  $200,000 paid as a deposit
in fiscal 2002 and  approximately  $800,000 paid in the second  quarter of 2003.
Our financial statements reflect the results of operations for these restaurants
subsequent to the date of  acquisition.  The purchase price of  $23,200,000  was
allocated to the fair value of property and equipment of $7,900,000, goodwill of
$16,600,000, and other net liabilities of $1,300,000.


                                      -17-
<PAGE>


The following table is comprised of actual company  restaurant sales included in
our  consolidated  financial  statements for each period presented and pro forma
company  restaurant  sales assuming the two  acquisitions  above occurred at the
beginning of each respective period (in thousands):
<TABLE>
<CAPTION>

                                                                     13 Weeks Ended                  39 Weeks Ended
                                                             ------------------------------- -------------------------------
                                                              September 26,   September 28,   September 26,   September 28,
                                                                  2004            2003            2004            2003
                                                             --------------- --------------- --------------- ---------------
<S>                                                          <C>             <C>             <C>             <C>
Actual company restaurant sales
    for acquired restaurants..........................          $  12,500       $   6,100       $  30,000       $  13,100
                                                             =============== =============== =============== ===============

Pro forma company restaurant sales
    for acquired restaurants..........................          $  12,500       $  11,600       $  38,800       $  35,600
                                                             =============== =============== =============== ===============
</TABLE>

Disposition

On July 20, 2003,  we completed  the sale of eight  company  restaurants  in the
Atlanta,   Georgia  market  to  an  affiliate  of  an  existing  franchisee  for
$8,000,000.  In  connection  with the sale of these  restaurants,  we closed one
restaurant in the Atlanta market in June 2003.  This  transaction did not have a
significant  impact  on  our  net  earnings  for  fiscal  2003.  Actual  company
restaurant sales included in our consolidated  financial statements for the nine
restaurants were approximately $900,000 and $10,300,000 for the 13 weeks and the
39 weeks ended September 28, 2003, respectively.


                                      -18-
<PAGE>


Results of Operations

The  following  table  contains   information   derived  from  our  consolidated
statements of earnings  expressed as a percentage of total  operating  revenues,
except where otherwise noted. Percentages may not add due to rounding.
<TABLE>
<CAPTION>

                                                                 13 Weeks Ended                          39 Weeks Ended
                                                      ------------------------------------    -----------------------------------
                                                       September 26,       September 28,       September 26,      September 28,
                                                           2004                2003                2004               2003
                                                      ----------------    ----------------    ---------------    ----------------
<S>                                                         <C>                 <C>                <C>                 <C>
Revenues:
    Company restaurant sales......................            87.9%               87.9%              87.9%               87.7%
    Franchise royalties and fees..................            10.7                10.9               10.9                11.1
    Other franchise income........................             1.4                 1.2                1.2                 1.2
                                                      ----------------    ----------------    ---------------    ----------------
         Total operating revenues.................           100.0%              100.0%             100.0%              100.0%
                                                      ================    ================    ===============    ================
Cost of sales (as a percentage of company
  restaurant sales):
    Food and beverage.............................            26.3%               25.7%              26.4%               26.0%
    Labor.........................................            32.2                32.8               32.5                32.8
    Direct and occupancy..........................            24.9                25.1               24.5                24.7
    Pre-opening expense...........................             0.4                 0.3                0.3                 0.2
                                                      ----------------    ----------------    ---------------    ----------------
         Total cost of sales......................            83.9%               83.9%              83.8%               83.6%
                                                      ================    ================    ===============    ================
Cost of other franchise income (as a percentage
  of other franchise income)......................            90.0%               95.5%             110.2%               95.8%
General and administrative expenses...............             9.5                 9.3                9.2                 9.3
Amortization of intangible assets.................             0.1                  --                0.1                  --
Loss on disposition of restaurants and equipment..             0.2                  --                0.2                 0.2
                                                      ----------------    ----------------    ---------------    ----------------
Operating earnings................................            15.3                15.7               15.6                16.0
                                                      ----------------    ----------------    ---------------    ----------------
Other income (expense):
    Investment income.............................             0.1                 0.1                0.1                 0.1
    Interest expense..............................            (0.1)               (0.1)              (0.1)               (0.2)
    Impairment of Chevys note receivable..........              --                  --                 --                (1.2)
    Other income..................................             0.2                 0.2                0.2                 0.1
                                                      ----------------    ----------------    ---------------    ----------------
         Total other income (expense).............             0.2                 0.1                0.1                (1.1)
                                                      ----------------    ----------------    ---------------    ----------------
Earnings before income taxes......................            15.5                15.8               15.7                14.8
Income taxes......................................             5.4                 5.7                5.5                 5.3
                                                      ----------------    ----------------    ---------------    ----------------
Net earnings......................................            10.1%               10.1%              10.2%                9.5%
                                                      ================    ================    ===============    ================
</TABLE>





                                      -19-
<PAGE>


The following table sets forth certain unaudited financial information and other
restaurant data relating to company and franchise restaurants, as reported to us
by franchisees:
<TABLE>
<CAPTION>

                                                               13 Weeks Ended                     39 Weeks Ended
                                                       -------------------------------    -------------------------------
                                                       September 26,     September 28,    September 26,     September 28,
                                                           2004              2003             2004              2003
                                                       -------------     -------------    --------------    -------------
<S>                                                    <C>               <C>              <C>               <C>
Number of restaurants:
    Company:
         Beginning of period.......................            405               373               383              357
         Restaurant openings.......................              9                 8                21               15
         Restaurants closed........................             (1)             --                  (1)              (2)
         Restaurants acquired from franchisees.....           --                --                  10               11
         Restaurants acquired by franchisees.......           --                  (9)              --                (9)
                                                       -------------     -------------    --------------    -------------
         End of period.............................            413               372               413              372
                                                       -------------     -------------    --------------    -------------
    Franchise:
         Beginning of period.......................          1,207             1,155             1,202            1,139
         Restaurant openings.......................             21                12                40               41
         Restaurants closed(1).....................             (4)               (5)               (8)              (7)
         Restaurants acquired from franchisees.....           --                --                 (10)             (11)
         Restaurants acquired by franchisees.......           --                   9               --                 9
                                                       -------------     -------------    --------------    -------------
         End of period.............................          1,224             1,171             1,224            1,171
                                                       -------------     -------------    --------------    -------------
    Total:
         Beginning of period.......................          1,612             1,528             1,585            1,496
         Restaurant openings.......................             30                20                61               56
         Restaurants closed........................             (5)               (5)               (9)              (9)
                                                       -------------     -------------    --------------    -------------
         End of period.............................          1,637             1,543             1,637            1,543
                                                       =============     =============    ==============    =============

Weighted average weekly sales per restaurant:
    Company........................................     $   46,365        $   45,976        $   47,489       $   45,356
    Franchise......................................     $   47,253        $   45,760        $   48,258       $   45,637
    Total..........................................     $   47,027        $   45,812        $   48,067       $   45,569

Change in comparable restaurant sales:(2)
    Company........................................           1.1%              5.9%              5.0%             5.2%
    Franchise......................................           3.1%              4.4%              5.9%             3.5%
    Total..........................................           2.7%              4.8%              5.6%             3.9%

Total operating revenues (in thousands):
    Company restaurant sales.......................     $  247,173        $  222,429        $  738,502       $  650,946
    Franchise royalties and fees(3)................         30,105            27,594            91,656           82,088
    Other franchise income(4)......................          3,913             2,972            10,427            8,881
                                                       -------------     -------------    --------------    -------------
    Total..........................................     $  281,191        $  252,995        $  840,585       $  741,915
                                                       =============     =============    ==============    =============
</TABLE>

(1) Subsequent  to the  end of the  quarter,  12  franchise  restaurants  in the
    Memphis, Tennessee area were closed.
(2) When computing comparable restaurant sales, restaurants open for at least 18
    months are compared from period to period.
(3) Franchise royalties are generally 4% of each franchise restaurant's reported
    monthly gross sales.  Reported franchise sales, in thousands,  were $746,239
    and $687,292 in the 2004  quarter and the 2003  quarter,  respectively,  and
    $2,274,777 and  $2,047,735 in the 2004  year-to-date  and 2003  year-to-date
    period, respectively. Franchise fees typically range from $30,000 to $35,000
    for each restaurant opened.
(4) Other  franchise   income  includes   insurance   premiums  from  franchisee
    participation in our captive  insurance company and revenue from information
    technology products and services provided to certain franchisees.


                                      -20-
<PAGE>


Company Restaurant Sales.  Total company restaurant sales increased  $24,744,000
(11%) from  $222,429,000 in the 2003 quarter to $247,173,000 in the 2004 quarter
and  increased  $87,556,000  (13%) from  $650,946,000  in the 2003  year-to-date
period to  $738,502,000  in the 2004  year-to-date  period.  Company  restaurant
openings  contributed   approximately  8%  of  the  increase  in  total  company
restaurant  sales in both the 2004  quarter  and the 2004  year-to-date  period.
Increases in weighted average weekly sales  contributed  approximately 1% and 5%
of the total  company sales  increase in the 2004 quarter and 2004  year-to-date
period,  respectively.   Both  periods  were  also  favorably  impacted  by  the
acquisition  of 10  restaurants  in Southern  California in April 2004 which was
partially  offset by the  impact of the sale of 8  restaurants  in the  Atlanta,
Georgia market in July 2003.

Comparable restaurant sales at company restaurants increased by 1.1% and 5.0% in
the  2004  quarter  and the 2004  year-to-date  period,  respectively.  Weighted
average weekly sales at company  restaurants  increased 0.8% from $45,976 in the
2003 quarter to $46,365 in the 2004 quarter and  increased  4.7% from $45,356 in
the 2003 year-to-date period to $47,489 in the 2004 year-to-date  period.  These
increases  were due primarily to increases in the average guest check  resulting
from a menu price increase of  approximately  1.5% in both periods and increases
in guest traffic in the 2004 year-to-date  period. In addition, a portion of the
increase resulted from the  implementation of our Carside To Go(TM)  initiative.
Carside To Go(TM) sales mix increased from 6.9% of company  restaurant  sales in
the 2003 quarter to 8.9% of company restaurant sales in the 2004 quarter.

Franchise  Royalties and Fees.  Overall  franchise  royalties and fees increased
$2,511,000 (9%) from  $27,594,000 in the 2003 quarter to $30,105,000 in the 2004
quarter and increased $9,568,000 (12%) from $82,088,000 in the 2003 year-to-date
period to $91,656,000 in the 2004 year-to-date  period. These increases were due
primarily to the increased number of franchise  restaurants operating during the
2004  quarter and 2004  year-to-date  period as compared to the same  periods in
2003 and increases in comparable restaurant sales. Weighted average weekly sales
at franchise  restaurants  increased  3.3% and 5.7% in the 2004 quarter and 2004
year-to-date period,  respectively,  and franchise  comparable  restaurant sales
increased  3.1% and  5.9% in the 2004  quarter  and  2004  year-to-date  period,
respectively.

Other Franchise  Income.  Other franchise income  increased  $941,000 (32%) from
$2,972,000  in the 2003 quarter to  $3,913,000 in the 2004 quarter and increased
$1,546,000 (17%) from $8,881,000 in the 2003 year-to-date  period to $10,427,000
in the 2004 year-to-date  period due primarily to revenues recognized related to
the franchise premium amounts billed by the captive insurance company. Franchise
premiums are included in other franchise income ratably over the policy year.

Cost of Company  Restaurant  Sales. Food and beverage costs increased from 25.7%
in the 2003 quarter to 26.3% in the 2004 quarter and increased from 26.0% in the
2003 year-to-date period to 26.4% in the 2004 year-to-date period. The increases
in both the 2004  quarter and 2004  year-to-date  period were due  primarily  to
higher  commodity costs and higher food costs related to new menu items and were
partially offset by menu price increases.  The 2004 year-to-date period was also
unfavorably  impacted by the company portion of the impairment of  approximately
$500,000  for  excess  riblet  inventories  which  no  longer  met  our  quality
standards.

Labor  costs  decreased  from  32.8%  in the 2003  quarter  to 32.2% in the 2004
quarter and decreased from 32.8% in the 2003 year-to-date period to 32.5% in the
2004 year-to-date  period.  The decreases were due to lower management costs due
to higher sales volumes at company  restaurants in the 2004 year-to-date  period
and lower  management  incentive  compensation  in both the 2004 quarter and the
2004 year-to-date  period. These decreases were partially offset by higher costs
related to the addition of dedicated  Carside To Go(TM)  hourly labor at most of
our  restaurants  beginning in the second half of 2003,  increased  hourly labor
wage rates and higher workers' compensation costs.


                                      -21-
<PAGE>


Direct and occupancy costs decreased from 25.1% in the 2003 quarter and 24.7% in
the 2003 year-to-date  period to 24.9% in the 2004 quarter and 24.5% in the 2004
year-to-date period. The decrease in the 2004 quarter was due primarily to lower
advertising  costs,  as a  percentage  of sales,  due to the  timing of our menu
promotions.  The decrease in the 2004  year-to-date  period was due primarily to
higher  sales  volumes  at  company  restaurants  which  resulted  in  favorable
depreciation  expense,  rent expense and repairs and maintenance  expense,  as a
percentage  of  sales,  due to  their  relatively  fixed  nature.  In  addition,
decreases in both periods were partially  offset by higher  packaging costs as a
result of increased Carside To Go(TM) sales volumes.

Cost of  Other  Franchise  Income.  Cost of  other  franchise  income  increased
$684,000  (24%) from  $2,837,000  in the 2003 quarter to  $3,521,000 in the 2004
quarter and increased  $2,983,000 (35%) from $8,510,000 in the 2003 year-to-date
period to $11,493,000 in the 2004  year-to-date  due primarily to an increase in
costs  related  to the  operation  of our  captive  insurance  company  and  the
franchisee  portion of the inventory  impairment of approximately  $1,600,000 in
the 2004 year-to-date  period for excess riblet  inventories which no longer met
our quality standards.

General  and  Administrative  Expenses.   General  and  administrative  expenses
increased  from  9.3%  in the  2003  quarter  to 9.5% in the  2004  quarter  and
decreased  from  9.3%  in the  2003  year  to date  period  to 9.2% in the  2004
year-to-date period. General and administrative expenses were favorably impacted
in both periods by the absorption of general and administrative  expenses over a
larger revenue base and lower incentive compensation.  In addition, both periods
were unfavorably  impacted by higher compensation expense due to staffing levels
and costs associated with compliance with Section 404 of the Sarbanes-Oxley Act.

Impairment of Chevys Note Receivable. In June 2003, Chevys announced the sale of
the majority of its  restaurants.  Subsequent to the  announcement,  we received
Chevys'  audited  financial  statements  for the fiscal year ended  December 31,
2002.  During the fiscal  quarter  ended June 29,  2003,  we fully  impaired the
principal and accrued  interest of  approximately  $8,800,000.  In October 2003,
Chevys Inc.  filed a voluntary  petition to  reorganize  under Chapter 11 of the
U.S. Bankruptcy Code.

Income Taxes.  The effective income tax rate, as a percentage of earnings before
income  taxes,  decreased  from  36.0%  in both the  2003  quarter  and the 2003
year-to-date  period to 35.0% in both the 2004 quarter and the 2004 year-to-date
period due to a reduction in state and local income taxes.

Liquidity and Capital Resources

Our need for  capital  historically  has  resulted  from  the  construction  and
acquisition of  restaurants,  the repurchase of our common shares and investment
in information technology systems. In the past, we have obtained capital through
public stock offerings,  debt financing, and our ongoing operations.  Cash flows
from our ongoing  operations  include cash  generated from company and franchise
operations,  credit from trade  suppliers,  real  estate  lease  financing,  and
landlord contributions to leasehold  improvements.  We have also used our common
stock as consideration in the acquisition of restaurants.  In addition,  we have
assumed  debt or  issued  new  debt  in  connection  with  certain  mergers  and
acquisitions.

Capital  expenditures  were $82,562,000 in 2003 (excluding the acquisition of 11
restaurants)  and  $68,224,000 in the 2004  year-to-date  period  (excluding the
acquisition of 10 restaurants and lease acquisition  costs). We currently expect
to open at least 32 company  restaurants,  and capital  expenditures,  excluding
acquisitions,  are expected to be between  $95,000,000 and $105,000,000 in 2004.
These  expenditures  will primarily be for the  development of new  restaurants,


                                      -22-
<PAGE>


refurbishment and capital replacement for existing restaurants,  the enhancement
of  information  systems  and  lease  acquisition  costs.  Because  we expect to
continue  to  purchase  a portion of our  sites,  the  amount of actual  capital
expenditures  will be dependent  upon,  among other  things,  the  proportion of
leased versus owned properties. In addition, if we open more restaurants than we
currently anticipate or acquire additional restaurants, our capital requirements
will increase accordingly.

On April 26, 2004, we completed our  acquisition of the operations and assets of
10  Applebee's  restaurants  located in Southern  California  for  approximately
$13,700,000 in cash. Our financial  statements reflect the results of operations
for these  restaurants  subsequent to the date of acquisition.  In addition,  we
acquired six restaurant leases for approximately  $4,900,000 in cash in the 2004
year-to-date period.

On July 20, 2003,  we completed  the sale of eight  company  restaurants  in the
Atlanta,   Georgia  market  to  an  affiliate  of  an  existing  franchisee  for
$8,000,000.  In  connection  with the sale of these  restaurants,  we closed one
restaurant in the Atlanta market in June 2003.

On March 24,  2003,  we  acquired  the  operations  and assets of 11  Applebee's
restaurants located in Illinois,  Indiana, Kentucky and Missouri for $21,800,000
in cash and $1,400,000 in assumed debt from a franchisee. The total cash payment
included $20,800,000 paid at closing,  approximately  $200,000 paid as a deposit
in fiscal 2002 and  approximately  $800,000 paid in the second  quarter of 2003.
Our financial statements reflect the results of operations for these restaurants
subsequent to the date of acquisition.

Our bank credit agreement, as amended,  expires in November of 2005 and provides
for a $150,000,000 unsecured revolving credit facility, of which $25,000,000 may
be used for the  issuance  of  letters  of credit.  The  facility  is subject to
various  covenants  and  restrictions  which,  among other  things,  require the
maintenance  of  stipulated   fixed  charge,   leverage  and   indebtedness   to
capitalization ratios, as defined, and limit additional indebtedness and capital
expenditures  in excess of  specified  amounts.  Cash  dividends  are limited to
$10,000,000  annually.   The  facility  is  subject  to  standard  other  terms,
conditions,  covenants,  and  fees.  We are  currently  in  compliance  with the
covenants  contained in our credit  agreement.  As of September 26, 2004, we had
borrowings of $41,000,000,  which included $3,000,000 in short-term  borrowings,
and had standby letters of credit of approximately $11,970,000 outstanding under
our revolving credit facility.

Our Board of  Directors  authorized  repurchases  of our  common  stock of up to
$75,000,000 and $80,000,000 in 2002 and 2003,  respectively.  As of December 28,
2003,  we had  $99,800,000  remaining  on our  authorizations.  During  the 2004
year-to-date  period, we repurchased  3,504,970 shares of our common stock at an
average price of $25.17 for an aggregate  cost of  $88,200,000.  As of September
26, 2004, we had $11,500,000  remaining under our repurchase  authorization.  In
October 2004, our Board of Directors authorized additional  repurchases of up to
$150,000,000  beginning in 2005 and approved a written plan for  repurchases  of
our  common  stock in the open  market in  accordance  with  Rule  10b5-1 of the
Securities Exchange Act of 1934.

As of September  26, 2004,  our liquid  assets  totaled  $722,000.  These assets
consisted of cash and cash  equivalents in the amount of $441,000 and short-term
investments in the amount of $281,000.  The working  capital  deficit  decreased
from  $62,710,000  as of December 28, 2003 to  $49,270,000  as of September  26,
2004.  This decrease was due  primarily to the  redemption of gift cards in 2004
sold in 2003,  repurchases of our common stock and increases in inventories  and
receivables  and was partially  offset by increases in loss reserve and unearned
premiums related to the captive insurance subsidiary.


                                      -23-
<PAGE>


Our deferred income taxes liability increased from $5,880,000 as of December 28,
2003 to $32,141,000 as of September 26, 2004 which contributed to an increase in
our cash flows from  operating  activities of  $26,638,000  in our  consolidated
statement of cash flows for the 39 weeks ended  September  26, 2004. In 2004, we
implemented  new  tax  planning  strategies  that  accelerated  depreciation  on
restaurant assets.

We believe that our liquid assets and cash generated from  operations,  combined
with borrowings  available under our credit facilities,  will provide sufficient
funds for our  operating,  capital and other  requirements  for the  foreseeable
future.

The following table shows our debt amortization  schedule,  future capital lease
commitments (including principal and interest payments),  future operating lease
commitments  and  future  purchase  obligations  as of  September  26,  2004 (in
thousands):
<TABLE>
<CAPTION>
                                                                           Payments due by period
                                                   ----------------------------------------------------------------------
                     Certain                                       Less than 1       1-3           3-5       More than 5
             Contractual Obligations                   Total           year         Years         years         years
-------------------------------------------------  -------------  ------------- ------------- ------------- -------------
<S>                                                <C>            <C>           <C>           <C>          <C>
Long-term Debt (excluding capital
  lease obligations).............................    $ 42,575       $  3,121      $ 38,227      $     87      $  1,140
Capital Lease Obligations........................       9,388            760         1,602         1,671         5,355
Operating Leases.................................     256,248         22,968        44,802        41,832       146,646
Purchase Obligations - Company(1)................     223,771        176,369        31,432        12,043         3,927
 Purchase Obligations - Franchise(2).............     529,551        419,532        76,768        21,613        11,638
</TABLE>

(1) The amounts for company purchase  obligations  include  commitments for food
    items  and  supplies,   severance  and  employment  agreements,   and  other
    miscellaneous commitments.
(2) The amounts for franchise purchase  obligations include commitments for food
    items  and  supplies  made  by  Applebee's   International,   Inc.  for  our
    franchisees. Applebee's International, Inc. contracts with certain suppliers
    to  ensure  competitive  pricing.  These  amounts  will only be  payable  by
    Applebee's  International,  Inc.  if our  franchisees  do not  meet  certain
    minimum contractual requirements.

Other Contractual Obligations

We  have  outstanding  lease  guarantees  of  approximately  $19,200,000  as  of
September  26,  2004 (see Note 3). We have not  recorded a  liability  for these
guarantees as of September 26, 2004 or December 28, 2003.

We have severance and employment  agreements with certain officers providing for
severance payments to be made in the event the employee resigns or is terminated
related to a change in control.  The agreements define the  circumstances  which
will constitute a change in control.  If the severance  payments had been due as
of September 26, 2004,  we would have been  required to make  payments  totaling
approximately  $12,300,000.  In  addition,  we  have  severance  and  employment
agreements with certain officers which contain severance  provisions not related
to a change in control.  Those provisions would have required aggregate payments
of approximately $7,200,000 if such officers had been terminated as of September
26, 2004.

In  November  2003,  we  arranged  for a  financing  company  to  provide  up to
$75,000,000  to  qualified  franchisees  for  short-term  loans to fund  remodel
investments.  Under  the  terms of this  financing  program,  we will  provide a
limited  guarantee  pool for the loans  advanced  during the  three-year  period


                                      -24-
<PAGE>


ending December 2006. There was one loan outstanding for approximately  $800,000
under this program as of September 26, 2004. The fair value of our guarantee was
immaterial and accordingly, we have not recorded a liability as of September 26,
2004.

In May 2004, we arranged for a financing  company to provide up to  $250,000,000
to  qualified  franchisees  for  loans to fund  development  of new  restaurants
through  October  2007.  We will provide a limited  guarantee  of certain  loans
advanced  under this  program.  As of  September  26,  2004,  there was one loan
outstanding for approximately  $2,400,000 under this program.  The fair value of
our guarantee was immaterial and  accordingly,  we have not recorded a liability
as of September 26, 2004.

Inflation

Substantial  increases in costs and expenses could impact our operating  results
to the extent such increases cannot be passed along to customers. In particular,
increases  in  food,  supplies,  labor  and  operating  expenses  could  have  a
significant  impact on our operating  results.  We do not believe that inflation
has materially affected our operating results during the past three years.

A majority of our  employees  are paid hourly rates related to federal and state
minimum  wage laws and  various  laws that allow for  credits to that wage.  The
Federal  government  continues  to consider  an  increase  in the minimum  wage.
Several  state  governments  have  increased  the  minimum  wage and other state
governments are also considering an increased minimum wage. In the past, we have
been able to pass along cost  increases to  customers  through food and beverage
price  increases,  and  we  will  attempt  to do so in  the  future.  We  cannot
guarantee,  however,  that all future cost  increases  can be  reflected  in our
prices or that increased  prices will be absorbed by customers  without at least
somewhat diminishing customer spending in our restaurants.

New Accounting Pronouncement

In  December  2003,  the  FASB  issued  FASB  Interpretation  No.  ("FIN")  46R,
"Consolidation of Variable Interest Entities and  Interpretation of ARB No. 51."
This interpretation,  which replaces FASB Interpretation No. 46,  "Consolidation
of Variable Interest Entities," clarifies the application of Accounting Research
Bulletin No. 51,  "Consolidated  Financial  Statements," to certain  entities in
which  equity  investors  do  not  have  the  characteristics  of a  controlling
financial  interest or do not have  sufficient  equity at risk for the entity to
finance its activities without additional  subordinated  financial support. This
interpretation  is required in  financial  statements  for periods  ending after
March 15, 2004 for those  companies that have yet to adopt the provisions of FIN
46. We adopted FIN 46R in January  2004 and the initial  adoption did not have a
material impact on our consolidated financial statements.

Forward-Looking Statements

The  statements  contained  in the  "Management's  Discussion  and  Analysis  of
Financial  Condition and Results of  Operations"  section  regarding  restaurant
development,  capital expenditures and financial commitments are forward-looking
and based on current  expectations.  There are several  risks and  uncertainties
that could cause actual results to differ materially from those described. These
risks  include  but are not  limited  to our  ability  and  the  ability  of our
franchisees to open and operate additional restaurants  profitably,  the ability


                                      -25-
<PAGE>


of our franchisees to obtain financing, the continued growth of our franchisees,
our ability to attract and retain qualified  franchisees,  the impact of intense
competition  in the casual dining segment of the  restaurant  industry,  and our
ability to control  restaurant  operating  costs  which are  impacted  by market
changes, minimum wage and other employment laws, food costs and inflation. For a
more  detailed  discussion  of the  principal  factors  that could cause  actual
results to be materially  different,  you should read our current report on Form
8-K which we filed with the Securities  and Exchange  Commission on February 11,
2004. We disclaim any obligation to update forward-looking statements.

Item 3.  Quantitative and Qualitative Disclosures About Market Risk

We are exposed to market risk from fluctuations in interest rates and changes in
commodity  prices.  Our revolving  credit  facility bears interest at either the
bank's prime rate or LIBOR plus 0.625%, at our option. As of September 26, 2004,
the total amount of debt subject to interest rate  fluctuations  was $41,000,000
which was outstanding on our revolving credit facility.  A 1% change in interest
rates would  result in an  increase or decrease in interest  expense of $410,000
per year. We may from time to time enter into  interest rate swap  agreements to
manage the impact of interest  rate  changes on our  earnings.  Many of the food
products we purchase  are subject to price  volatility  due to factors  that are
outside of our control such as available  supply,  weather and  seasonality.  As
part of our  strategy to moderate  this  volatility,  we have entered into fixed
price purchase commitments.

Item 4.  Controls and Procedures

As of September 26, 2004, we have evaluated the  effectiveness of the design and
operation of our disclosure  controls and procedures  under the  supervision and
with  the  participation  of the  Chief  Executive  Officer  ("CEO")  and  Chief
Financial Officer ("CFO"). Based on this evaluation,  our management,  including
the CEO and CFO,  concluded  that our disclosure  controls and  procedures  were
effective.  During our most recent fiscal quarter, there have been no changes in
our internal control over financial  reporting that have materially  affected or
are reasonably  likely to materially  affect our internal control over financial
reporting.


                                      -26-
<PAGE>


                           PART II. OTHER INFORMATION

Item 1.  Legal Proceedings

We are involved in various  legal  actions which  include,  without  limitation,
employment law related  matters,  dram shop claims,  personal  injury claims and
other such normal restaurant  operational matters. In each instance,  we believe
that we have meritorious  defenses to the allegations made and we are vigorously
defending these claims.

While the  resolution of the matters  described  above may have an impact on our
financial results for the period in which they are resolved, we believe that the
ultimate  disposition  of  these  matters  will  not,  individually  or  in  the
aggregate,  have a material  adverse  effect upon our  business or  consolidated
financial statements.

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds

(c) Issuer Purchases of Equity Securities.
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------
                                            Purchases of Equity Securities(1) (2)
------------------------------------------------------------------------------------------------------------------------------
-------------------------------- ------------------ ---------- ---------------------------- ----------------------------------
                                         (a)           (b)                  (c)                             (d)
-------------------------------- ------------------ ---------- ---------------------------- ----------------------------------
<S>                              <C>                <C>        <C>                          <C>
                                                     Average      Total Number of Shares      Maximum Dollar Value of Shares
                                                      Price        Purchased as Part of       that May Yet Be Purchased Under
                                  Total Number of    Paid Per    Publicly Announced Plans          the Plans or Programs
             Period               Shares Purchased    Share            or Programs                    (in thousands)
-------------------------------- ------------------ ---------- ---------------------------- ----------------------------------
June 28, 2004 through July 27,
2004                                     3,850(3)     $25.81                 --                          $46,532
-------------------------------- ------------------ ---------- ---------------------------- ----------------------------------
July 28, 2004 through August
27, 2004                               597,906(4)     $25.25              594,115                        $31,532
-------------------------------- ------------------ ---------- ---------------------------- ----------------------------------
August 28, 2004 through
September 26, 2004                     813,405        $24.59              813,405                        $11,532
-------------------------------- ------------------ ---------- ---------------------------- ----------------------------------
             Total                   1,415,161
================================ ================== ========== ============================ ==================================
</TABLE>

(1) In May  2002,  our  Board of  Directors  authorized  a  repurchase  of up to
    $75,000,000  of our common stock  through May 2005.  In December  2003,  our
    Board of Directors authorized an additional  repurchase of up to $80,000,000
    of our common  stock.  The May 2002  authorization  limit was met in January
    2004.  The December  2003  authorization  has no  expiration  date.
(2) All  references  to the  number of shares  have been  restated  to reflect a
    three-for-two  stock split,  effected as a 50% stock dividend,  paid on June
    15,  2004.
(3) Represents  shares received as partial payment for shares issued under stock
    option plans.
(4) Included  3,791 shares  received as partial  payment for shares issued under
    stock option plans.

Item 6.  Exhibits

The Exhibits listed on the accompanying  Exhibit Index are filed as part of this
report.


                                      -27-
<PAGE>


                                   SIGNATURES


Pursuant to the  requirements of Section 13 or 15(d) of the Securities  Exchange
Act of 1934,  the  registrant  has duly  caused  this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

                         APPLEBEE'S INTERNATIONAL, INC.
                                  (Registrant)


<TABLE>
<CAPTION>
<S>     <C>                                         <C>
Date:    October 27, 2004                            By:  /s/    Lloyd L. Hill
         ---------------------------                     ---------------------------------------------------------
                                                         Lloyd L. Hill
                                                         Chairman and Chief Executive Officer
                                                         (principal executive officer)

Date:    October 27, 2004                            By:  /s/    Steven K. Lumpkin
         ---------------------------                     ---------------------------------------------------------
                                                         Steven K. Lumpkin
                                                         Executive Vice President and
                                                         Chief Financial Officer
                                                         (principal financial officer)

Date:    October 27, 2004                            By:  /s/    Beverly O. Elving
         ---------------------------                     ---------------------------------------------------------
                                                         Beverly O. Elving
                                                         Vice President, Accounting
                                                         (principal accounting officer)
</TABLE>


                                      -28-
<PAGE>



                         APPLEBEE'S INTERNATIONAL, INC.
                                  EXHIBIT INDEX



<TABLE>
<CAPTION>
   Exhibit
   Number                                          Description of Exhibit
------------- ------------------------------------------------------------------------------------------------
<S>   <C>     <C>

      10.1    Form of Nonqualified Stock Option Agreement

      10.2    Form of Incentive Stock Option Agreement

      10.3    Form of Restricted Stock Award Agreement

      10.4    New Form of Change in Control and Noncompete Agreement and schedule
              of parties thereto.

      10.5    Amendment No. 2 to the Revolving Credit Agreement dated as of November 5, 2001

      31.1    Certification of Chairman and Chief Executive Officer Pursuant to SEC Rule 13a-14

      31.2    Certification of Chief Financial Officer Pursuant to SEC Rule 13a-14

        32    Certification  of Chairman and Chief Executive  Officer and Chief Financial  Officer Pursuant
              to 18 U.S.C. Section 1350
</TABLE>


                                      -29-