DineEquity Inc. has named convenience store executive Darren Rebelez president of its IHOP division, the company said Thursday after reporting first-quarter earnings.
Rebelez was previously chief operating officer of 7-Eleven Inc. He replaces DineEquity chairman and CEO Julia Stewart, who has been leading IHOP’s turnaround for three years as interim president. The family-dining chain reported a same-store sales increase of 4.8 percent during the first quarter ended March 31.
During his seven years with 7-Eleven, Rebelez led a drive to improve operations and change its culture, DineEquity said. He was responsible for more than 8,300 units and 5,000 franchisees.
“Throughout our search process, we’ve focused on finding a very specific person to fill the president’s role and continue the fantastic results and momentum we’ve built over the past few years,” Stewart said in a statement. “What was most important, and what we’ve found in Darren, is someone with superior leadership qualities, extensive experience and a unique understanding of the franchisor/franchisee relationship. I look forward to partnering with him as we continue to ensure the IHOP brand’s position as the number one choice for breakfast.”
Prior to 7-Eleven, Rebelez was with ExxonMobil’s On the Run convenience store division. He also worked with Dunkin’ Donuts’ Fresh Serve Bakeries for Thornton Oil Corp., and the Fuddruckers and KFC brands.
“IHOP is a one-of-a-kind brand that has endured as a beloved dining option for more than five decades,” Rebelez said in a statement. “I’m excited by the opportunity to work alongside Julia in leading a great team and franchise system, and a brand that has both a tremendous history as well as a future that is built on fantastic recent results.”
DineEquity’s net income for the first quarter increased 36 percent, to $28.4 million, or $1.47 per share, compared with $20.5 million, or $1.08 per share a year ago.
Revenue rose 5 percent, to $175.8 million, due in part to IHOP’s 4.8-percent domestic same-store sales increase, and a 2.9-percent domestic same-store sales increase at sister brand Applebee’s.
For IHOP, it was the eighth consecutive quarter of positive same-store sales and the third straight quarter of increases in traffic, Stewart said during a call Thursday with analysts.
In 2014, IHOP reported its strongest results in a decade, with same-store sales rising 3.9 percent for the year.
Stewart said the introduction of Criss Croissants at IHOP helped boost sales during the quarter. The chain’s ongoing menu innovation is also bringing in new guests and encouraging repeat visits.
A focus on training has helped franchisees reach stronger operational standards. Traffic was also bolstered by brand buzz surrounding the chain’s annual National Pancake Day event in March, when it gave away free free buttermilk pancakes and raised $3.5 million for children’s hospitals and other charities, Stewart said.
Mark Kalinowski, an analyst with Janney Montgomery Scott LLC, said in a report Thursday that IHOP may continue to benefit from the closure of 75 Coco’s Bakery and Carrows restaurants in California, two family-dining brands operated by Carlsbad, Calif.-based Catalina Restaurant Group Inc., which was acquired last month by San Antonio-based Food Management Partners.
On Thursday, Food Management Partners confirmed the closure of two more Coco’s units, in Santa Maria and Manhattan Beach, Calif.
Applebee's 'brand reset'
Stewart said DineEquity is moving forward with Applebee’s “brand reset” after completing extensive consumer research on the brand.
The goal is to better position the casual-dining chain as “a modern American grill and bar,” with contemporary food offerings and a more relevant bar emphasis that maintains the brand’s heritage.
This year, the company plans to continue menu innovation, with a focus on exclusive, craveable dishes and redefined classics, like Applebee’s Pub Diet, introduced earlier this year, which includes more healthful dishes.
Stewart said Applebee’s same-store sales increase during the quarter was driven by a climbing average check and menu mix.
This year, new equipment will be brought in to deliver new flavor profiles, though Stewart did not say what type, and the company will add new menu platforms, like sandwiches and hand-held items.
In addition to improving operations, the company also plans to rework its marketing mix. It launched a new advertising campaign during the quarter highlighting the food and guest experience. The company is investing more in reaching the Hispanic market, as well as emphasizing digital and mobile media.
Stewart said there is no imminent news on the company’s planned acquisition of a third brand, but she reiterated that it will be something in the fast-casual space with a smaller box that will be right for the needs of franchisees.
“There’s a lot of fast casual out there,” she said. “It’s about finding the right thing for us.”
DineEquity ended the quarter with 2,015 Applebee’s locations and 1,649 IHOP units. Both brands are nearly fully franchised.
This story has been revised to reflect the following update:
Update: April 30, 2015 This story has been updated with additional information about DineEquity's first-quarter performance and Applebee's branding.
Contact Lisa Jennings at [email protected].
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