Applebee’s is shrinking. Its parent company may open joint restaurants with IHOP

Applebee’s is shrinking. Its parent company may open joint restaurants with IHOP - Business and Finance - News

Exploring the Possibility of Applebee’s and IHOP Dual-Branded Restaurants in the US

Dual-branded restaurants have become a common sight in the food industry, with combinations such as Taco Bell and KFC or Auntie Anne’s and Cinnabon gracing the dining landscape. Now, another potential duo could join this list – Applebee’s and IHOP, both of which are owned by Dine Brands Global.

During an earnings call on February 28, 2023, Dine Brands discussed the possibility of combining Applebee’s and IHOP. The parent company noted that Applebee’s has been shrinking, with only 10 new locations opening in the US compared to the addition of 33 IHOP restaurants. To promote growth for Applebee’s, Dine Brands is exploring alternative options, including the development of a new prototype.

The Financial Benefits of Joint Restaurants

Co-branding restaurants can lead to substantial revenue gains. In the case of Applebee’s and IHOP, their menus cater to various meal times – pancakes for breakfast and boneless wings in the evening. By combining these restaurants, the potential revenue could more than double compared to standalone locations.

This financial advantage is not lost on other companies. Focus Brands, the owner of Auntie Anne’s, Carvel, Cinnabon, Jamba, Moe’s Southwest Grill, McAlister’s Deli, and Schlotzsky’s, has seen significant growth in its dual-branded locations. In January 2023, Focus Brands reported having 175 of these restaurants under its portfolio, with an additional 65 in development.

Combination locations enable restaurants to expand their presence beyond mall areas and into busier streetside spots. Brian Krause, Chief Development Officer at Focus Brands, emphasized the potential for increased revenue in a 2023 statement: “There will always be a place in malls, but there is an immense amount of growth opportunity in streetside venues, and, by dual branding, there is more opportunity for enhanced revenue.”

The Success Story of IHOP-Applebee’s International Combinations

The concept of combining Applebee’s and IHOP is not new. International locations of the duo have been successful, with a shared back-of-house area and a blended front-of-house for customers. Dine Brands CEO John Peyton revealed that the company had recently opened its eighth IHOP-Applebee’s in Leon, Mexico.

These international prototypes provide valuable insights for potential US expansion. Peyton stated during the earnings call that the company was “gaining experience and knowledge as we contemplate introducing this concept in the US.” Mexico is one of Dine Brands’ largest international markets, making it an essential testing ground for this innovative restaurant model.

Considering the Future of Dual-Branded Applebee’s and IHOP in the US

As international success stories continue to emerge, Dine Brands is weighing the potential for introducing this concept in the US. While no definitive plans have been announced, Peyton expressed optimism: “We will continue to monitor the success of this test concept and will consider options for further expansion in the US in select locations if and when it makes sense to do so.”

The combination of Applebee’s and IHOP offers an exciting prospect for customers who dream of savoring a pancake stack alongside a Dollarita. As the concept continues to evolve and gain traction, it may soon become a welcome addition to dining establishments across the US.