GLENDALE Calif. DineEquity Inc. downgraded its full-year sales outlook for the Applebee’s chain after reporting a drop of 1.7 percent in systemwide same-store sales for the second quarter. The company reiterated positive sales growth expectations for sister brand IHOP, officials said Thursday.
The news of a slower-than-expected turnaround at Applebee’s sent DineEquity shares plunging as much as 30 percent to a new annual low during trading early Friday. The stock rebounded later that day and closed at $27.02, down 21 percent from the day before.
Applebee’s parent DineEquity said the casual-dining chain’s same-store sales for the six months ended June 30 were down 0.6 percent from the same period a year ago, despite efforts to re-energize the brand after buying it in November. The company now expects systemwide same-store sales for Applebee’s to range between a 1-percent decline and a 1-percent increase for the year, compared with previous expectations of a rise between 1 percent and 2 percent.
“We are still in the early stages of implementing brand and operational improvements, which we believe will ultimately lead to longer-term sustainable same-store sales growth with the Applebee’s system,” said Julia Stewart, DineEquity's chairman and chief executive. “We are establishing a pipeline of new and appealing, value-oriented offerings based on our guests’ favorite items and will begin to promote these promising performers in the second half of the year.”
The revised outlook, however, reflects “conservative performance expectations” for those value-oriented strategies, she added.
Applebee’s latest same-store sales drop reflected year-to-year traffic declines at corporate restaurants, which offset an increased average guest check driven by a menu price increase of nearly 3 percent, Stewart said.
DineEquity’s family-dining chain IHOP saw systemwide same-store sales increase 2.6 percent for the quarter and 3.2 percent for the first half of the year on higher check averages and modest guest traffic growth. IHOP sales were driven by limited-time offers including the Tour de French Toast and Discover America Pancakes series, as well as new advertising to support non-breakfast offerings and Minor League Baseball-tied promotions, the company reported. For the year, DineEquity reiterated earlier projections of same-store sales growth at IHOP ranging between 2 percent and 4 percent.
Full quarterly results for DineEquity, which franchises or operates 1,361 IHOP restaurants and 1,993 Applebee’s locations, are expected July 29.