Dine Brands reports ‘tough’ quarter for Applebee’sDine Brands reports ‘tough’ quarter for Applebee’s

Applebee’s continued to experience dinner headwinds during the second quarter, though both the casual-dining chain and sister brand IHOP saw growth in off-premise sales, parent company Dine Brands Global Inc. said Wednesday.

Domestic systemwide comparable restaurant sales for Applebee's fell 0.5% during the June 30-ended quarter, while IHOP saw a 2% increase. Net income for the second quarter of 2019 increased 68.3% year-over-year to $21.4 million. Adjusted earnings per diluted share for the quarter increased 66% year-over-year to $1.71.

“While I am pleased with our overall financial performance, this was a tough quarter for Applebee’s comp sales,” said Dine Brands CEO Steve Joyce during a call with Wall Street analysts.

“The brand sales were primarily driven by underperformance in our dinner daypart, as well as industry volatility and competition during the quarter. Make no mistake, we certainly do not believe that our second-quarter comp sales are indicative in a shift in Applebee’s fundamentals or brand relevance. Both of which remain strongly intact. Additionally, we continue to see strong growth potential in our off-premise business at both Applebee’s and IHOP with each brand experiencing heavy growth in off-premise comp sales and traffic for the second quarter.”

At Applebee’s, the restaurants had success with their fajita menu launch, but generally “failed to attract that very important value-seeking guest,” said brand president John Cywinski.

Value seekers represent 20% of guests, and he pledged to be more “overt” with the value message going forward. 

Still, off-premise comp sales were up 27%, and catering will be available in all Applebee’s restaurants next month, he said.

On the IHOP side, it was new brand president Jay Johns' first time on the call, and he had good news to share: It was the sixth consecutive quarter of comparative-sales growth.

IHOP has been building its dinner business, he said. The steakburgers menu, first introduced in June 2018, expanded last month. And the brand recently introduced milkshakes and buttermilk crispy chicken.

“Best of all these new items are all available to go as well,” he noted. Off-premise comp sales increased by about 39% at IHOP.

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