Applebee’s-IHOP dual restaurants boost franchise profits, Dine Brands CEO says

Dine Brands’ latest strategy goes beyond menu revamps, restaurant redesigns and social media campaigns, according to its CEO John Peyton.

Instead, the company is focused on strategically combining its morning-focused brand, IHOP, with its evening-centric one, Applebee’s. The goal is to create a dual-branded model that allows it to capture and serve customers throughout every daypart – breakfast, lunch, dinner and late night – in a way that, as Peyton puts it, “no other restaurant company can.”

By merging Applebee’s and IHOP under one roof, Peyton told FOX Business that it had created a more profitable dual-branded model, which it now plans to expand nationwide. 

The company first launched the concept overseas and already has 20 locations open across the Middle East, Mexico, and Canada. Dine Brands has seen tremendous success with its dual-branded Applebee’s and IHOP location in Texas that opened earlier this year, and it is looking to test the concept in additional U.S. markets.

The first U.S. joint Applebee’s-IHOP restaurant is located in Seguin, Texas. (Dine Brands Global)

Dine Brands aims to have 10 to 12 dual-brands by the end of the year, though there will be “significantly more than that in 2026,” Peyton said. 

FIRST IHOP-APPLEBEE’S JOINT RESTAURANT COMING TO US: WHERE AND WHEN IT OPENS

Peyton described the dual-branded restaurant as a “beautiful integration” of the two concepts. It features a single kitchen, cross-trained front- and back-of-house staff, and a streamlined, combined menu. The menu includes 105 of the top-selling items from each brand.

With the new model, Peyton said franchise owners are now making two to three times more money from the combined Applebee’s-IHOP locations compared to what they previously earned from a single IHOP. He said that with every extra dollar of income, about 40 cents ends up as pure profit. 

Peyton attributed part of the dual-model’s success to the fact that customers order both breakfast and dinner items throughout the day. That added flexibility is boosting overall sales and increasing the visibility of the Applebee’s brand.

The inside of the first Applebee’s-IHOP dual-branded restaurant in Texas. (Dine Brands Global)

The move comes as Dine Brands aims to gain a competitive edge in an industry that is still grappling with pandemic-era debt, slowing foot traffic, labor shortages and rising costs. A growing number of restaurant brands have either been trying to reinvent themselves with things such as slimmer and new menus, changed appearances and a new brand voice following years of financial difficulties. 

Chains including Chili’s, TGI Friday’s, Denny’s, Ruby Tuesday, Rubio’s Coastal Grill and Red Lobster, have either shuttered locations or filed for protection in bankruptcy court to manage the debt accumulated, particularly during the pandemic.

APPLEBEE’S BONELESS WINGS, $1 MARGARITAS A PROFITABLE STRATEGY IN TOUGH ECONOMY: DINE BRANDS CEO

One notable challenge the restaurant industry faces is figuring out how to bring back cost-conscious customers as they contend with higher prices and economic uncertainty, which have made them more selective about spending.

While the company saw encouraging signs, including an increase in the number of higher-income guests and an increase in its most loyal customers at Applebee’s during the most recent fiscal quarter, Peyton acknowledged that customers are still feeling the pinch.

Signage for the Applebee’s and IHOP dual-branded restaurant in Texas. (Dine Brands Global)

Both IHOP and Applebee’s core customers earn less than $100,000 a year, according to Peyton. 

“We’re seeing some encouraging progress, but certainly, you have to fight for every dollar that the guests choose to spend outside their house,” Peyton said. 

CLICK HERE TO READ MORE ON FOX BUSINESS

While Peyton said this new concept is a “significant growth engine for both brands,” it won’t entirely replace its old standalone Applebee’s or IHOP locations. 

“There’s room for both. It depends on the market, it depends on what restaurants are already in that market and what the competition is,” Peyton said. “There are some markets that make a lot of sense for dual brands and there are markets where Applebee’s or an IHOP can do $5 million or $6 million in revenue and don’t mess that up.”