Peyton said Applebee’s plans to close fewer than 1 percent of its portfolio next year. The chain has deals in place for a number of franchisees to build more than 15 restaurants in the near-term, with some being traditional, and others being conversions.
He described operators as having a “high level of enthusiasm,” and he expects growth to accelerate moving forward.
“We've been building to this and setting the system up for this new level of growth and this very modest closure rate for quite a while; pandemic got in the way of us activating it,” Peyton said. “But we're ready now, and we're moving forward beginning next year.”
The enthusiasm Peyton referenced is best exemplified by Sun Holdings, a large franchisee that recently acquired 131 Applebee’s across 14 states, becoming the second-largest operator of the brand. The company certainly has the resources and scale to push for development; it operates more than 1,000 locations in over a dozen states, including Taco Bueno, Burger King, Arby's, McAlister's, IHOP, Popeyes, T-Mobile, GNC, and a number of airport restaurant locations.
“We are impressed with Applebee’s comeback and double digit same store sales growth in Q1,” Guillermo Perales, president and CEO of Sun Holdings, said in a statement. "Their long-term performance combined with a plan for continued growth, has not only cemented Applebee’s leadership position, but has prepared the brand for an expanded leadership role, in the segment.”
“We see tremendous opportunity in this premium brand, backed by an innovative culture and highly attractive economics,” he continued. “This vertical significantly expands Sun Holdings’ infrastructure and potential for future growth and expansion opportunities.”
For IHOP, development will become more strategic, brand president Jay Johns said. The executive explained it will be less about hitting numbers and more about how the chain is completing market planning for existing and new territories. Historically, IHOP has developed about 40 units per year, but the plan is to increase that to 80 by 2023.
In August, Johns revealed a four-platform growth strategy of traditional units, nontraditional stores, a smaller prototype that will start testing later this year, and the roll out of fast-casual spinoff Flip’d by IHOP.
The company has already made progress on more than one of those fronts. Earlier this year, IHOP announced that it signed a deal with investment company K2 Group to open at least five nontraditional restaurants across Ontario, Canada in the next five years. The first will be a truck stop location at the start of 2022.
Additionally, in September, the first Flip’d by IHOP outlet opened in Lawrence, Kansas, after plans for the first casual were initially unveiled at the end of 2019. The next location is expected to open in New York City in the “very near future,” Johns said. The original strategy was focused on metropolitan cities, but now the plan is to debut the concept in suburban areas and nontraditional locales, as well.