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Dine Brands: Applebee’s faces 'challenging' quarter

Company touts new agreement between IHOP and TravelCenters of America

It was during the third quarter last year that Applebee's brought back its all-you-can-eat riblets and chicken tenders, and IHOP "changed" its name to IHOb to promote its steak burgers. Those proved to be tough promotions to beat for parent company Dine Brands Global Inc.

"The industry continued to face difficult comparisons coupled with challenging traffic trends during the quarter this year," Steve Joyce, CEO of Glendale, Calif.-based Dine Brands, said at the top of the third-quarter earnings call Wednesday. 

Applebee's comparable same-restaurant sales decreased 1.6%, and IHOP’s comps were basically flat — up 0.03% — for the third quarter, ended September 30, 2019. Total revenue for the quarter, excluding advertising revenue, increased 21.8% to $149.9 million. Net income increased 1.4% to $23.9 million, or $1.55 a share, up from $23.6 million, or $1.53 a share, in the same period a year earlier.

Some of the company's challenges were industry-wide, while others were "self-inflicted," said Applebee's brand president John Cywinski. 

Take the brand's fajita launch, for example. 

"Our failure to launch that product with a trial incentive or 'starting at price point,' from the data that we see, led to a misstep," said Cywinski during the call. "We didn't secure the value seekers. Trust me when I say we've applied that learning to our tactical plans moving forward. So, as we normalize here and we reduce bad debt, and we've closed our restaurants, honestly, for the first time in three years, I feel like I don't have a hand tied behind my back. And the brand is poised for predictable, stable growth, and we won't have those missteps with respect to value as we turn the corner on 2020." 

In addition to announcing quarterly earnings, on Wednesday morning, the company also announced the largest multi-unit development deal in IHOP's history. The brand plans to develop nearly 100 IHOP restaurants with TravelCenters of America

"More IHOPs in more places is the final push to grow the brand and drive traffic," said Jay Johns, brand president of IHOP.

At the end of the quarter, IHOP had 1,708 restaurants in the U.S., while Applebee's ended the quarter with 1,804.

Contact Gloria Dawson at [email protected]

Follow her on Twitter: @GloriaDawson

Correction: October 31, 2019
An earlier version of this article inverted the name of IHOP's brand president. He is Jay Johns, not John Jays.
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