Dine Brands Global Inc. on Wednesday reported another quarter of positive same-store sales for both its Applebee’s and IHOP brands, as CEO Steve Joyce outlined the company’s focus on delivery, data and driving traffic.
“Our performance reflects taking a long-term approach to managing the business and focusing on growth drivers that deliver sustainable positive results through industry and economic fluctuations,” Joyce said during the earnings call for the first quarter of 2019.
Applebee’s same-store sales increased 1.8% for the first quarter of 2019. It is the brand’s sixth consecutive quarter of sales growth. IHOP’s same-store sales increased 1.2% for the quarter, the fifth straight quarter of sales growth for the brand.
Net income was $31.6 million, or $1.73 per share, up 85.3% from $17.1 million, or 92 cents per share, in the same quarter a year earlier.
The quarter also marked the first full quarter that company, which prides itself on its asset-lite model, has owned any Applebee’s locations in three years. Late last year, Dine Brands purchased 69 locations from a North Carolina franchisee. The purchase was made, in part, to change the conversation, said Joyce.
The bidding for the locations was taking too long, according to Joyce.
“I was very intent on having everything from Applebee’s buttoned up by the end of ’18, so we weren’t talking about things from the past in ’19,” Joyce said in a follow-up interview after the earnings call.
The purchase came amid a months-long legal dispute between Applebee’s and another franchisee RMH Franchise Holdings Inc.
“The plan is not to operate them long-term,” he said. “The intent is not to change the model.”
Changes, though, can be expected in how the brand uses technology.
In the follow-up interview, Joyce said the No Wait system was a good example of the technology diners will see more of in the future. No Wait enables customers at both brands to reserve a spot for a certain time period. Systems like this help diners and Dine.
“When we reduce friction points for customers, we get their information, and that allows us to have a dialogue with them,” Joyce said.
Data is an essential part of how Dine will connect with guests but keeping customer data has been a pain-point, along with profitability, for restaurants working with third-party delivery partners. Dine is negotiating on both of these fronts, Joyce said.
But data ownership is a sticking point, he said. As for those third-party delivery companies that keep a tight grip on customer data?
“That’s not acceptable, and it won’t be for us,” Joyce said.
There are “big opportunities” in off-premise beyond delivery, said Joyce. Millennial parents are increasingly interested in family catering, for example.
But the company’s focus on off-premise sales hasn’t come at the expense of its physical restaurants, Joyce noted.
“We want to keep the restaurants interesting, so people are coming in, which is why you see us looking at different types of food innovation and programs,” Joyce said, noting the success of IHOP’s burger campaign and their tie-in with the movie the Grinch.
For Applebee’s, he said, it’s the commercials that have struck a chord with diners and brought them in the door, he said. That commercial formula is simply sizzling food, closely cropped over a catchy tune.
“What we highlight through the music is an emotional connection to the audience, and you’ll notice it’s all about food and the excitement of the food. The food is jumping off the plate,” Joyce said.
The commercials are engaging enough that Applebee’s has inadvertently helped move the Billboard charts with its commercial song choices.
Whether at home or onsite, whatever works for diners works for Joyce.
“We simplify people’s lives,” he said. “You can connect with us in lots of different ways, and we will provide you will a great experience on the terms you want.”
Contact Gloria Dawson at [email protected]
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