Dine Brands Global Inc. is considering opening co-branded IHOP/Applebee’s Neighborhood Grill + Bar restaurants in the United States.
The hybrid eateries are already open in eight international locations, including in Leon, Mexico, the site of the newest co-branded eatery.
“(We are) gaining experience and knowledge as we contemplate introducing this concept in the U.S.,” Dine Brands Chief Executive John Peyton said in a conference call last month to discuss fourth-quarter earnings.
In an interview with Nation’s Restaurant News, Peyton said there was a lot to like about the dual-branded concept, starting with the shared back-of-house space.
Such a shared space can maximize efficiency for the two brands. The co-branded location prototypes have “discrete entrances,” while inside, guests can flow between the two spaces, Peyton said.
“At breakfast, when there are more IHOP customers, customers can be seated in the Applebee’s area, and vice versa at dinner,” Peyton said.
He also claimed on the conference call that revenues for the co-branded locations are double what is seen at a one-brand, typical location.
“Because with the two brands, we can address all four dayparts,” Peyton said during the call.
The Street, in a story on its website, likened the move by Dine Brands as taking a page out of Dunkin’ Brands’ book when it began opening new stores between 2013 and 2015 that combined Dunkin’ Donuts and Baskin-Robbins ice cream into dual-branded locations.
Why the expansion may happen
Putting Applebee’s and IHOP under one roof also comes amid Dine Brands’ battle with declining revenue, The Street said.
In the company’s fourth-quarter earnings report, it revealed that total revenue for 2023 was $831 million, a decrease from the $909 million it earned in 2022.
The company said in the report that the decline in revenue “was primarily due to the refranchising of the 69 company-operated Applebee’s units in October 2022 and the negative comparable same-restaurant sales growth at Applebee’s, offset by the positive comparable same-restaurants sales growth at IHOP and a full-quarter’s revenue contribution from Fuzzy Taco Shops, acquired in December 2022.”
