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Applebee's expects to close at least 60 more restaurants

Between 60 and 80 Applebee’s restaurants could be closed this year as part of the brand’s rejuvenation effort, the brand’s parent said this morning.

It also noted that 30 to 40 units of IHOP, the company’s second brand, will also be shuttered, but will be offset by the opening of 85 to 100 stores, most of them in the United States.

The company, formerly known as DineEquity, also revealed that its name has changed as of today to Dine Brands Global. The rechristening is part of an effort to give each brand more autonomy and accountability, CEO Steve Joyce said in announcing the company’s fourth quarter and 2017 results.  

The renamed company intends to acquire "tuck-in" brands as soon as its two current brands are stabilized, Joyce added during a follow-up call with analysts. The purchases would likely be outside casual and family dining, though not necessarily so, he suggested. "Though we are just beginning that search, we hope to find something that fits us," he said. "Fast casual is obviously attractive to us. We like ethnic. We like healthy. You can see us have conversations with people with small brands in those categories."

He predicted that a deal would likely be announced toward the end of this year or during the beginning of 2019.

Dine Brands' fourth quarter results show “excellent progress against our plan to stabilize and grow performance at both brands,” Joyce said. Applebee’s reported a same-store sales gain of 1.3% for the fourth quarter, the concept's first positive comps since the second quarter of 2015. The upswing held the casual-dining brand’s comp sales decline for 2017 to 5.3%.

Comps remained positive in the first quarter, said Applebee's President John Cywinski, and the brand enjoyed an increase in traffic during the fourth quarter of 2017 and year-to-date in 2018, the first growth in customer count since late 2014.

IHOP’s fourth quarter comps slipped 0.4%, easing the annual same-store decline to 1.9% for the full fiscal year.

Yet a difficult first nine months of 2017 left Dine Brands with a loss of $330.5 million for the year on a 4.6% decline in revenues, to $634 million. The company reported a net profit of about $98 million for 2016.

Dine Brands posted a net profit for the fourth quarter of $85.5 million, a 300% jump from the year-earlier period, on revenues of $148.8 million, down 3.5%.

Applebee’s had 1,936 franchised restaurants in operation during the fourth quarter, or 84 fewer than were in business during the year-ago period. Virtually every franchisee has closed units as part of an effort to prune the system of weak stores, according to executives.

Sixty to 80 more stores are expected to close this year as franchisees and the franchisor work to strengthen the system. “The expected closures will be based on several criteria, including meeting our brand and image standards as well as operational results,” Dine Brands said in the announcement of financial results.

About 15 units will open, but most of those will be located abroad, the franchisor said.

Applebee’s has been reeling for several years from a downturn in casual dining and a disastrous repositioning as a more upscale, steak-focused brand. The concept has been scrambling to win back lost customers, resurrecting onetime signatures such as its Riblets ribs and low-cost bar drinks.

Going forward, "we wouldn’t pretend to be a hip or overly trendy brand. We know who we’re targeting," said Cywinski. "Our guests’ household income ranges from $50,000 to $100,000, which guides our culinary development efforts. We’re not about niche or polarizing flavors. You’re not about to see Sriracha, quinoa or pomegranate on the menu anytime soon."

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