Stephen Joyce, CEO of DineEquity Inc., expressed optimism for the future during his first earnings call at the helm of the California-based parent of the Applebee’s Neighborhood Grill & Bar and IHOP brands, despite sales and profit declines in the third quarter.
Adjusted net income for DineEquity slid to $16.1 million, or $0.91 adjusted earnings per diluted share for the quarter ended Sept. 30. It’s a more than 39-percent drop from $26.4 million, or adjusted earnings per diluted share of $1.46, year over year.
Total revenue declined more than 7 percent, to about $145 million from $156 million a year ago, as the company works to rebuild after a stretch of poor sales performances.
Applebee’s and IHOP each posted lower same-store sales in the quarter, falling 7.7 percent and 3.2 percent, respectively.
“The initial progress we have made and the positive same-restaurant sales performance of both brands in October are encouraging,” said Joyce in a statement. “I am very optimistic about realizing the company's full potential.”
The market rewarded the new CEO’s optimism as the stock jumped about 10 percent shortly after the results were released, finishing a more modest 5 percent higher on the day.
But Joyce, who took over the CEO role on Sept. 12, stressed during the earnings call that change “won’t happen overnight.”
“We will establish a performance-driven culture here at Dine,” Joyce said, stressing a need for sustainable positive sales at both Applebee’s and IHOP.
Applebee’s President John Cywinski underscored Joyce’s bullish outlook for a restaurant that saw positive traffic and sales growth in October.
“We remain focused on our 2018 turnaround plan as we expect to see our initiatives take hold beginning in Q1,” he said. “While 2017 is a transitional year for Applebee’s, we once again have clarity on who we are and what we stand for.”
In the previous quarter’s conference call in August, Cywinski admitted that Applebee’s management had taken their “eye off the ball” by straying from its core-customer base in search of a new audience.
Meanwhile, IHOP is in the midst of a transformation as it turns its focus to a refreshed look and off-premise strategies. The brand is updating its website and expects to launch a mobile app in the current quarter.
Brand President Darren Rebelez said that IHOP’s online ordering platform is almost fully deployed.
Though a potential expansion of the company’s unofficial delivery trials was not discussed during the call, Rebelez told NRN in August that the decision to test the service in a few locations was “rooted in guest insights.”
Rebelez also said that IHOP is “more in tune with [its] guests than ever before,” thanks to a dedicated consumer insights team that is conducting in-depth analysis of patrons.
The company said it expects to have the remodel of 300 IHOP stores finished by the end of 2017.
Finally, DineEquity announced the promotion of Kevin Carroll to chief operations officer at Applebee’s. Carroll joined the brand in June as vice president of operations after 27 years with Brinker International Inc.’s Chili’s Grill & Bar.
Applebee’s has about 2,000 franchise locations throughout worldwide, and IHOP has about 1,700 global locations.
Contact: [email protected]