News Mar 07, 2024 07:23 AM EST

Dine Brands Inc. Tests Sharing Space Between Applebee's and IHOP

By April Fowell

There's a chance that two major chain restaurants in America will merge shortly. According to a business earnings call last week, Applebee's and IHOP, both owned by Dine Brands Inc., may soon have dual-branded locations that share a back-of-house and a mixed front-of-house.

Dine Brands Inc. Tests Sharing Space Between Applebee's and IHOP

There's a chance that two major chain restaurants in America will merge shortly. According to a business earnings call last week, Applebee's and IHOP, both owned by Dine Brands Inc., may soon have dual-branded locations that share a back-of-house and a mixed front-of-house.
(Photo : by Scott Olson/Getty Images)

According to John Peyton, CEO of Dine Brands, eight "prototypes" have already been tested out globally, including the newest Applebee's-IHOP location in Leon, Mexico.

Peyton stated in a statement to CBS News that one of the company's biggest overseas markets is Mexico. The January 2024 opening of the twin facility in Leon "presents a compelling opportunity for further growth," he stated.

"We will continue to assess the success of this test concept and explore potential expansion opportunities in the U.S. in specific locations if and when it aligns with our strategic objectives," stated Peyton, reiterating his comments from the earnings call.

In an interview with Nation's Restaurant News, Peyton elaborated on the hybrid restaurant concept, mentioning the presence of "separate entrances" to facilitate guest movement between Applebee's and IHOP. "During breakfast hours, when IHOP sees more customers, patrons can be seated in the Applebee's section, and vice versa during dinner," he explained.

During the earnings call, Peyton noted that the dual-branded restaurants are outperforming traditional standalone Applebee's and IHOP locations, generating double the revenue. "This is expected," he remarked to NRN, "as they effectively cater to all four dayparts."

Describing the collaboration as a "fantastic opportunity," Peyton emphasized the complementary nature of the two brands.

Focus Brands Leads the Way in Dual-Branded Locations

Other businesses that fall under its purview and operate different food chains have merged their brands. Focus Brands, the parent company of Moe's Southwest Grill, Auntie Anne's, Carvel, Cinnabon, Jamba, McAlister's Deli, and Schlotzsky's, declared in 2023 that it had over 175 dual-branded locations and was planning to add more.

A shared area might be occupied by Auntie Anne's and Jamba, or perhaps by the three brands Auntie Anne's, Cinnabon, and Carvel.

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A Strategic Move in the Restaurant Industry

2019 saw the agreement for IHOP Corp. to purchase Applebee's International Inc. for around $1.9 billion in cash. The Wall Street Journal was the first to announce that IHOP was intending to take on debt to fund the purchase, and that its market value at the time was around half that of Applebee's.

The largest sit-down restaurant chain in the US, Applebee's, was acquired by IHOP for $25.50 per share. The acquisition led to the creation of Dine Brands.

Together, Applebee's, IHOP, and Fuzzy's Taco Shop have more than 3,500 locations in 18 countries, according to Dine Brands, the company that owns all three of these businesses. In 2023, Dine Brands Inc.'s total sales was $831.1 million, a decrease from $909.4 million the year before.

They shut 75 locations in 2023 but opened 72 new franchisees for IHOP and Applebee's.

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