Dine Brands Global Inc. recently divulged more information on the launch of its co-branded IHOP/Applebee’s Neighborhood Grill + Bar restaurants in the U.S. market.
The hybrid eateries are already open in 10 international locations, including in its latest in Leone, Mexico, according to the Pasadena-based restaurant chain.
In a recent interview with Nation’s Restaurant News, Dine Brands Chief Executive John Peyton said the company’s plan is to have a few of the locations open in the U.S. in the first quarter of next year.
“We’ve got 10 open overseas and another 10 or so will open this year overseas, and so our plan now is to bring that to the U.S.,” he told the publication for a story published on June 20.
Peyton said in the interview that the international locations have performed strongly, creating plenty of confidence about their potential here. He said there’s a lot to like about these models, including an efficient back-of-house “flow” that befits the two brands’ complementary dayparts. This is helping to generate twice as much revenue as a traditional standalone IHOP or Applebee’s restaurant with the same square footage, the publication reported.
“You’re getting two for the size and space of one. They have a shared kitchen and a red side and a blue side for Applebee’s and IHOP, and a purple in the middle, so when you walk into the restaurant, you’re greeted by a host who then seats you on either side depending on which restaurant you prefer,” Peyton explained in the interview.
In a conference call from May 8 with analysts to discuss first-quarter financials, Peyton said the interest the company is receiving from franchisees about the co-branded restaurants has been positive.
“Of course, there’s still plenty of work and research to be done around this concept and we’re glad to see positive engagement from guests and franchisees alike,” Peyton said during the call.
Still, there were some indications from guest visits that they were cautious with how they spent their money in the post-holiday period.
“As a result, the consumer has become more price sensitive as indicated by the response to our limited time promotions,” Peyton said.
For example, he continued, at Applebee’s 28% of the chain’s transactions in the first quarter were tied to a limited time offer or promotion, which was up from the 19% in the previous quarter and the prior year.
He said that Dine Brands also continued to see guests trade down from higher priced items at both Applebee’s and IHOP – another indicator that guests are managing their wallets.
“Despite the volatile macro environment causing a slower start to 2024 than we anticipated, we are encouraged to see that our value driven strategy helped to mitigate some of the challenges in Q1 and importantly, drive sequential improvements throughout the quarter,” Peyton added. “Our approach was validated by guest response to our (limited time offers) and enthusiastic reactions to our continued menu innovation and reinforced by strong marketing calendars and brand relevancy.”
