This past May, Dine Brands CEO Stephen Joyce hinted that the parent company of Applebee’s and IHOP was in the market for a third brand. It appears that hasn’t changed. Joyce told Bloomberg Tuesday that “several conversations” are going on right now in regards to purchasing another chain. “We’re looking at a number of different concepts,” Joyce said.
And as Joyce mentioned in May, Dine Brands will likely scoop a brand outside the casual space. He told Bloomberg the company was targeting a founder-led chain with potential to hit 1,000 locations. “What we bring to that founder is the opportunity to take their dream from a regional brand to a nationwide, and potentially global brand,” he said.
It’s a growth path not all that different from the one unfurling at Inspire Brands. The Roark-backed company, founded in the wake of Arby’s Restaurant Group’s $2.9 billion acquisition of Buffalo Wild Wings, is looking at diversification as the ideal path to capturing customers. It already owns Sonic Drive-In, fast casual Rusty Taco, BWW, and Arby’s.
“We believe the time is right to create a different kind of restaurant company— one with a broad portfolio of distinct brands across a full spectrum of restaurant occasions,” Inspire CEO Paul Brown said back in February.
What this suggests is Dine Brands could jump into the quick-service arena with its purported acquisition. This reflects the May conversation Joyce had with Business Insider. “We're going to find the right brand and the right opportunity, but more than likely it's going to be fast casual,” he said.
At the time, Joyce noted Dine Brands would make 100 phone calls, have 20 meetings, and perhaps land on a single brand to acquire. He also said that Dine Brands wanted to stray from the common categories, like pizza, burgers, sandwiches, and so on. Electing instead for an ethnic or health-driven chain.
There’s no update on whether or not that target has changed. What appears clear, however, is that Dine Brands is ready to deal. Thomas Song, Dine Brands chief financial officer and a former Choice Hotels colleague of Joyce’s, who joined the company in May, has been called a “deals guy” by Joyce in the past.
What’s also interesting is the parallel between Joyce, Inspire’s Brown, and some of the recent hires each company has made. The hotel connection speaks to this sort of diversification. Brown said he liked the idea of organizing Inspire Brands like Hilton Hotels & Resorts, which uses one loyalty program for all its different properties, but plays in multiple spaces and serves a bevy of consumers.
Joyce was the former CEO of Choice Hotels before taking the job at Dine Brands last September. Song was SVP of corporate development and innovation at Choice Hotels since 2013.
Brown served as senior vice president of global brand services at InterContinental Hotels Group before Arby’s. Additionally, he worked as president of brands and commercial services and executive vice president at Hilton Worldwide Holdings Inc., as well as positions with Northwest Airlines, Expedia, and McKinsey & Co.
Then, in September, Inspire tapped Seth Freeman as the next CMO of Buffalo Wild Wings. Like Brown, Freeman clocked time at InterContinental, where he worked across several brands, “leading high-profile guest experience and design initiatives, partnering with franchisees across over 2,000 locations to drive growth, and overseeing award-winning marketing campaigns for Holiday Inn Express,” the company said. Most recently, Freeman was head of global brand and commercial performance for Holiday Inn.
Joyce has seen success in his brief tenure leading Dine Brands, especially in regards to Applebee’s. The brand reported its highest quarterly domestic sales increase in more than a decade in Q2 with same-store sales gains of 5.7 percent, year-over-year. Shares have increased more than 50 percent so far this year on the stock market.
As of March 31, there were 1,923 Applebee's franchises in all 50 states, Puerto Rico, Guam, and 13 other countries. IHOP’s Q2 comps gained 0.7 percent.
As a company, total revenues were about $184 million in Q2 compared to $189 million in the year-ago period, a decrease primarily due to the refranchising of nine IHOP company-run stores in June 2017.