Dine Brands Inc. CEO Steve Joyce is on the lookout for a third restaurant brand to add to the current portfolio of Applebee’s and IHOP, and Joyce outlined some of the criteria he’d want in a third brand.
The target chain would be regional with potential to grow nationally, under $100 million in revenue with 40 to 80 units, Joyce said in an earnings call on Thursday.
“It has to come with a management team that is self-contained because we are not going to distract from our major brands bringing in a new brand. So, we need a founder and team that’s coming in that wants to grow their concept nationally with us,” Joyce, left, said.
“What we provide is franchising expertise, capital and franchisees,” he added.
The timeline for the acquisition is loose at 18 months, but Joyce stressed that the Glendale, Calif.-based Dine Brands would only pull the trigger on an acquisition that franchisees are enthusiastic about building.
Dine Brands ended its 2018 fiscal year on a high note and predicted strong sales in 2019 — growth of 2 percent to 4 percent in comparable-store sales for both Applebee’s and IHOP.
Net income increased to $80.3 million in 2018, an significant increase from 2017’s $342.8 million loss.
Following a Thursday morning earnings call, Dine Brands’ stock increased almost 12 percent by mid-afternoon.
“We had a strong year and we continue to make significant progress in returning Dine Brands to a growth company. We have the right plans in place and we are executing on a multi prong strategy that has produced results,” said Joyce.
The formerly struggling Applebee’s reported positive comparable-store growth of 3.5 percent for the fourth quarter ended Dec. 31 — with a 5-percent increase for the full year.
Applebee’s president John Cywinski, left, attributes the growth to the brand’s local positioning — Eating Good in the Neighborhood.
Applebee’s neighborhood pasta and breadstick program — serving up items like Creamy Penne Pasta with Sliced Prime Rib and Four Cheese Mac & Cheese with Honey Pepper Chicken Tenders — have been popular with customers, he said.
“We simply love our position in the market. We set a bold goal of being the most improved restaurant in 2018, and we absolutely delivered on that goal,” Cywinski said.
Cynwinski expects beverage and off-premise programs, both delivery and catering, to drive sales in 2019.
IHOP also saw growth in its comparable-store sales, 3 percent in the fourth quarter and 1.5 percent increase for the year. IHOP has been pushing “PM” dayparts, off-premise meals and its steakburger platform that launched with the viral “IHOb” advertising campaign last summer.
Burger sales are double what they were before the launch, said IHOP president Darren Rebelez, left.
IHOP executives were also optimistic about off-premise sales, especially online orders, which have a 31-percent higher check.
“Online ordering isn’t just more efficient, it’s more profitable,” said Rebelez.
IHOP started partnering with DoorDash in July with plans to expand partners, marketing around delivery and participating locations this year. To-go business already represents 8 percent of sales for IHOP.
Currently 1,000 IHOP locations have the Rise N’ Shine remodel, which executives call a more modern, comfortable restaurant experience. The second version of the remodel including no-wait tools, wireless card devices and tablets.
Both Applebee’s and IHOP have approximately 1,800 restaurants each, for a total of 3,600 in all 50 states.
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