Dine Brands hasn’t shied from sharing its long-term plans to fix what ails Applebee’s and IHOP. These broad customer-facing and executive changes, the company hopes, will allow the nation’s largest casual-dining chain to return to growth by the end of 2019. But in the interim? It appears CEO Stephen Joyce has a different card to play.
Joyce, the former CEO of Choice Hotels who joined Dine Brands in his current role in September, told Business Insider that the company wants to acquire another brand by the end of the year—and it’s probably not another casual chain.
“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 in the story.
Joyce added that Dine Brands wants to leverage its expertise into a category growing faster than the one it currently resides. He also said Thomas Song, a former Choice Hotels colleague brought on as Dine Brands CFO, is a “deals guy,” capable of expanding the company’s portfolio beyond just IHOP and Applebee’s.
He predicted Dine Brands would “make 100 phone calls,” have 20 meetings, and perhaps land on a single brand to acquire. As far as what Joyce is looking for, he told Business Insider Dine Brands would stray from the common categories, like pizza, burgers, sandwiches, and so on. Rather, the company would elect for an ethnic or health-driven chain, like Mexican, Spanish, Mediterranean, etc. For scale, Dine Brands is targeting “someone who has 70 restaurants,” and that the company wants to keep a piece of it as the chain moves toward 700 units. In other words: an emerging, established brand with national scalability that could benefit from the sizable structure and finances Dine Brands wields.
As for Applebee’s and IHOP, Dine Brands has already seen tangible success since Joyce took the reins. Applebee’s domestic systemwide comparable same-store sales increased 3.3 percent versus the prior-year period (a 7.9 percent decline in Q1 2017). This was the chain’s highest quarterly comp sales increase since the first quarter of 2011. It was also the second consecutive quarter of positive sales and traffic for Applebee’s. Over the past six months, Applebee’s has enjoyed its best sustained traffic performance in more than a decade. IHOP got back in the green with 1 percent same-store sales growth, year-over-year. There are 1,791 (1,679 domestic) IHOPs and 1,912 (1,760 domestic) Applebee’s.