While earnings for Dine Brands' companies tell two different stories, returns from off-premise sales for both are too big to ignore.
— Danni Santana
It’s the same earnings story for Dine Brands again: Applebee’s sales continue to climb, while IHOP’s remain stagnant.
Applebee’s, on Wednesday, reported a domestic system-wide store sales increase of 7.7 percent, marking the fourth consecutive quarter of growth for the company. Sustained gains in the third quarter are attributed to a boost in customer traffic in and a 37 percent spike in off-premise orders, according to President John Cywinski.
Total same-store sales for the restaurant chain are up 5.5 percent this year, a far cry from where the company stood 18 months ago when Applebee’s same store sales declined nearly 8 percent in the first quarter. What ensued was Dine Brands’ worst stock decline in two months.
“Upon reflection, our turnaround has happened a bit faster than some anticipated, and we’re now on a path of stability and predictability,” said Cywinski. “At this point, our franchisees have delivered 43 consecutive weeks of positive comp sales this year.”
The casual dining chain added that delivery and takeout earnings now account for approximately 10 percent of its total sales, and forecasts the number should double in the next three-to-four years. Applebee’s also anticipates it will offer delivery services to its customers in 1,000 restaurants locations by year’s end, up from 500 currently.
IHOP’s Long-Term Growth Strategy
IHOP’s to-go business is also an integral part of its future plans, according to Darren Rebelez, the company’s president.
IHOP’s comparable same-restaurant sales increased a moderate 1.2 percent compared to its suddenly thriving sister chain. However, a bright spot is off-premise comp sales, which increased 35 percent for the breakfast chain in the third quarter. To-go orders now account for 7 percent of overall sales, up from nearly 5 percent a year ago, according to Rebelez.
“We’re confident that we can grow this business to the mid-teens over the next few years,” he said.
To complement its growing off-premise segment, IHOP recently announced the rollout of its delivery program in partnership with DoorDash. There are currently over 700 IHOP restaurants working with the on-demand courier, the company disclosed. IHOP also works with other major delivery partners, such as GrubHub and Amazon.
Don’t Forget About the Burgers
IHOP is looking to change the narrative around its lunch and dinner offerings. Known predominantly as a breakfast chain, Rebelez says the restaurant has proven it can attract guests throughout the day.
Since the launch of its Ultimate Steakburgers platform in June, as an example, its dinner daypart has delivered positive comp sales every week. Not surprisingly, the rollout of the revamped burger menu also coincided with the company’s temporary name change to IHOb over the summer.
“Having great tasting, quality burgers is how we break out from the clutter and start to grow our business beyond breakfast, while continuing to take share from the competition,” Rebelez said.
Some diners are also finding new-look restaurants when satisfying their pancake and burger cravings, as part of IHOP’s Rise N’ Shine remodel program. To date, 800 restaurants, or approximately 47 percent of its domestic footprint, have completed construction. Remodels include “no wait tools” for more accurate wait times for customers on weekends, as well as server tablets and wireless credit card readers for faster bill payment.