DineEquity to 'push reset button' on Applebee's

DineEquity Inc. said it will “push the reset button” on plans for Applebee’s with a comprehensive reassessment of the brand this year.

In a call with Wall Street analysts, Julia Stewart, DineEquity’s chair and chief executive, said the company will take time this year to focus on being “bolder than ever” about differentiating Applebee’s, which was acquired in 2007 for about $2 billion.

Over the past five years, DineEquity has completed the refranchising of about 475 restaurants, recreating Applebee’s as an almost entirely franchised chain. The company also launched a comprehensive remodel program, and 95 percent of the chain’s restaurants will sport the new look by the end of 2014.

Still, Stewart said 2,011-unit Applebee’s needs work.

“We have the largest casual-dining brand in the U.S., and we have to continue to evolve,” she said.

In February, DineEquity promoted former operations vice president Steven Layt to the role of president of Applebee’s, replacing Michael Archer, who stepped down.

Last year, Applebee’s announced plans to roll out the use of tabletop tablets to speed the ordering and payment process, a move that was to begin last month. Describing the effort as a “work in progress,” Stewart said the company has had some delays and is just beginning to roll out the technology to the next 100 to 200 units.

Applebee’s also tested a fast-casual-like “express” service option last year in its corporate locations.

“There’s no question speed of service at lunch at Applebee’s is more important than other dayparts,” she said, though she offered no details on what was being tested.

The casual-dining chain recorded a 0.5-percent decrease in domestic systemwide same-store sales for the March 31-ended first quarter.

Meanwhile, improvements at 1,627-unit sister brand IHOP have resulted in four consecutive quarters of same-store sales growth, with an increase of 3.9 percent in the first quarter, and Stewart said the chain has outperformed the family-dining category.

IHOP redesigned its menu last year, and guests began buying more appetizers and higher-priced dishes, which have boosted the average check. The chain also began tweaking aspects of operations and advertising, focusing on improving the brand’s overall value proposition.

Stewart said the company would continue to rework the look and feel of the menu with the goal of simplification, reducing the number of single-use items and looking for opportunities to cross-utilize ingredients.

In the first quarter, IHOP added new crepe offerings, both sweet and savory, as well as new omelets and a chicken-and-chorizo burrito. New sandwiches, a burger and salads are coming, and the chain will add more customizable offerings for kids that will appeal to parents looking for more healthful options.

Last year the company also created a new international division designed to grow both Applebee’s and IHOP overseas. On Thursday, however, Stewart said the company is continuing to assess its international development strategy.

Glendale, Calif.-based DineEquity reported a 14-percent increase in net income of $20.8 million, or $1.08 per share, compared with $18.2 million, or 93 cents per share a year ago.

Revenue rose 2.5 percent to $167.2 million, though traffic fell for both brands.

Contact Lisa Jennings at [email protected].
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