Two major U.S. chain restaurants could combine and share dining spaces
Two of America's large chain restaurants may soon be combined. Applebee's and IHOP, both owned by Dine Brands Inc., may soon have dual-branded locations that share a back-of-house and a blended front-of-house, according to an earnings call from the company last week.
Dine Brands CEO John Peyton said they've already tested out the model on eight "prototypes" internationally, including the newest Applebee's-IHOP restaurant in Leon, Mexico.
In a statement to CBS News, Peyton said Mexico is one of the company's largest international markets. The dual location in Leon, which opened in January 2024, "presents a compelling opportunity for further growth," he said.
"We will continue to monitor the success of this test concept and will consider options for further expansion in the U.S. in select locations if and when it makes sense to do so," Peyton said, echoing his remarks on the earnings call.
In an interview with Nation's Restaurant News, Peyton said the hybrid restaurants will have "discrete entrances" that allow guests to flow between Applebee's and IHOP. "At breakfast, when there are more IHOP customers, customers can be seated in the Applebee's area and vice versa at dinner," he said.
On the earnings call, he said the dual-branded restaurants are making twice as much money as the traditional, standalone Applebee's and IHOP locations. "Which you would expect," he told NRN. "They continue to perform well in their markets because they address all four dayparts."
"It's a fantastic opportunity because the two brands are complementary," he said.
Several other companies with various food chains under its umbrella have combined brands. Focus Brands, which owns Auntie Anne's, Carvel, Cinnabon, Jamba, McAlister's Deli, Moe's Southwest Grill and Schlotzsky's, announced in 2023 that it had more than 175 dual-branded locations and was expanding that number.
For example, Auntie Anne's and Jamba might share a space, or even three brands – Auntie Anne's, Cinnabon and Carvel – might share a space.
In 2019, IHOP Corp. agreed to buy Applebee's International Inc. for about $1.9 billion in cash. At the time, IHOP's market capitalization was roughly half of Applebee's and the pancake house was going to take on debt to fund the purchase, the Wall Street Journal first reported.
IHOP paid $25.50 per share for Applebee's, the country's largest sit-down restaurant chain. Dine Brands was formed as a result of the purchase.
Dine Brands, which owns Fuzzy's Taco Shop in addition to Applebee's and IHOP, says these three brands have more than 3,500 locations combined over 18 countries. Dine Brands Inc. had a total revenue of $831.1 million for 2023, down from $909.4 million the previous year.
In 2023, they developed 72 new Applebee's and IHOP franchisees but closed 75 restaurants.