One of the takeaways from Dine Brands’ earnings call is that its Applebee’s system plans to close 25 to 35 restaurants this year. Dine Brands CEO John Peyton notes that this is not a right-sizing effort but rather a “deliberate effort to allow franchisees to close unprofitable restaurants, where the market may have moved away from them.”
Given the chain’s 1,660-ish-unit footprint, this 1-2% closure rate is common among brands this size and age, Peyton said during an interview.
“We see this with restaurants that have been open for 10, 20, 30 years, their developments expired. This closure rate is a historic rate,” he said.
Still, the company has an urgency to get back to net new unit growth, similar to its sister brand IHOP, which is forecasting between 15 and 25 net new openings. To do that, Applebee’s is creating a new prototype with a stronger return on investment for franchisees.