Dine Brands believes it’s found a growth driver in its dual-branded Applebee’s/IHOP concept.
The group is still on pace to open 14 U.S. dual-branded restaurants this year. The first one in Seguin, Texas, is performing above expectations and earning roughly three times the sales compared to when it was a standalone IHOP. The franchisee who owns the store recently signed up to open eight more dual-branded locations in the San Antonio market over the next two years.
Dine CEO John Peyton said the company continues to receive interest from new and existing franchisees to build or convert to this new concept. For instance, a current Applebee’s and IHOP operator acquired six more Applebee’s units and another IHOP franchisee bought five Applebee’s. These Applebee’s restaurants will either be converted into dual-branded outlets or be part of Applebee’s “Looking Good” remodeling program.
“These deals in particular are positive indicators that our development strategy is resonating with our franchisees for two reasons,” Peyton said during Dine’s Q1 earnings call. “First, it’s a great example of franchisee cross-pollination between our brands. And second, it shows that our franchisees are engaged and interested in growing our brands, particularly with our new restaurant formats that are demonstrating great results.”
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Dine expects to open single Applebee’s and IHOP restaurants alongside dual-branded stores. Peyton said it will be based on several factors, including which territories work.
He added that not every IHOP can take an Applebee’s and not every Applebee’s can take an IHOP because of where they may be situated in the market.
“We are being very respectful of our existing franchisees, territories, and making sure that the dual brands, when we add an extra brand, that it doesn’t infringe on either restaurant that’s in the territory,” Peyton said.
Outside of the U.S., Dine is leaning into the dual-branded idea even more. In March, the company unveiled its plan to more than double its international dual-branded restaurant count to 41. This includes the first dual-branded store in Costa Rica, which will open in Q3, and the opening of the first nontraditional restaurant in Mexico.
“I expect going forward that you’ll see a healthy mix of dual brands as well as continuing single brands. Internationally, you’re more likely to see dual brands as the primary vehicle,” Peyton said.
As for single-concept growth, IHOP plans to open 40 restaurants in 2025, a mark it’s hit for the past couple of years.
Meanwhile, Applebee’s is beginning to see its franchisees build new stores again, including some of the largest ones. The chain expects to remodel approximately 100 franchise and corporate restaurants by the end of the year, with an average investment of $200,000 to $300,000. The package features a refresh of the exterior, awnings, lighting, flooring, wall covering, tables, and upholstery, among other improvements. The ones that have already been remodeled are “showing more than the lift required to justify the ROI there, which is exactly what it’s intended to do,” Peyton said.
Applebee’s also just completed the work on its prototype and managed to remove $1 million out of the building costs. Dine will open a company-operated Applebee’s in the back half of 2025 to showcase the cost model and serve as a catalyst for franchisees.
IHOP finished Q1 with 1,682 U.S. stores while Applebee’s had 1,489.
Both brands suffered from customer pullback in the quarter. Applebee’s same-store sales dropped 2.2 percent. It earned $54,700 in average weekly sales, or $2.84 million in annualized AUV. Of that, 23 percent was off-premises (12.5 percent to-go and 10.9 percent delivery).
Despite the challenging environment, Applebee’s saw improvements in March, including positive comp sales and better traffic. This was driven by off-premises growth—thanks to demand for its Really Big Meal Deal and 50-cent boneless wings campaign—and its Big Easy menu innovation promotion with two new Bourbon Street Cajun pasta dishes. The momentum continued into April, which Peyton attributed to innovation, investments in social media, and the launch of Applebee’s new guest training initiative.
“For Applebee’s, we learned a lot last year about what drives our customer in terms of value,” Peyton said. “We dipped our toe into a couple of different offerings, and what we concluded and is really influencing us this year is that, we really got back to the basics of what our guests tell us they love most about us. We got back to what our menu analysis tells us sells best and what we’ve been long known for. And so, by leaning into the Bourbon Street portion of our menu, that’s not an accident, right? That is one of the most favorite segments of our menu. By introducing two new Bourbon Street dishes, we drove traffic and sales in a way that we haven’t in several quarters. And that’s why I think we were able to hold our own at a time when, as we all know, that our guest is watching his or her wallet more than ever.”
IHOP’s same-store sales declined 2.7 percent. Average weekly sales were $36,500, or $1.90 million in annualized AUV. Of that, 21 percent was off-premises (8 percent to-go and 13 percent delivery). Although there were headwinds, the breakfast giant beat the family dining segment on traffic in Q1—something the chain hasn’t done in years—thanks to its House Faves value menu. Visitation was up in March and continued into April.
“The plan is coming together, and we’re seeing it in these numbers,” Peyton said.
The chain is also focused on breakfast—which mixes 80 percent overall and nearly 65 percent during the dinner daypart—increasing speed of service, reducing wait times, and boosting social media to become a bigger part of ongoing culture.
