GLENDALE Calif. DineEquity Inc., parent to the IHOP and Applebee’s brands, swung to a second quarter net loss on large one-time charges related to both the Applebee’s acquisition, which was funded heavily by debt, and recent sale-leaseback transactions on Applebee’s corporate assets.
For the quarter ended June 30, DineEquity booked a net loss of $19.4 million, or $1.42 per share, compared with year-ago profit of $14.1 million, or 82 cents per share. The latest quarter included a non-cash impairment charge of $41.1 million related to the sale-leaseback of 181 corporate Applebee’s restaurant properties, an amount DineEquity said reflected the “deterioration in domestic real estate and credit markets.” The company also logged interest expense of $51.6 million, up from $3.3 million a year ago.
Latest-quarter revenue increased to $424.1 million, from year-ago revenue of $89.5 million. The jump was driven mostly by the Applebee’s acquisition, which increased the DineEquity system to more than 3,300 restaurants, including both the 1,990-unit Applebee’s and the 1,353-unit IHOP chains.
Quarterly same-store sales increased 2.6 percent at IHOP units systemwide, and fell 1.7 percent at domestic Applebee’s restaurants. DineEquity said Applebee’s promotions did not “perform as expected” this quarter, and that the chain would introduce more value-oriented offerings next month to help increase traffic at the struggling casual-dining chain.
