Consumers may be feeling uncertain about the state of the economy and the world, but there’s at least one thing they’re still sure of: Cheese is good.
That proved to be a boon for Applebee’s over the past several months as a pair of cheesy new burgers helped it weather what has been an uneven winter.
The casual-dining chain’s Grilled Cheese Cheeseburger brought in new customers at the end of 2025 on its way to becoming Applebee’s best-selling burger ever. But its reign did not last long: It has already been unseated by the new O-M-Cheeseburger, a burger cut in half and served in a skillet of sizzling cheese.
The eye-catching burger caught fire on social media, with more than 400 food influencers giving it their two cents, generating 65 million views in the process.
“It's experiential and it's unique and it's hard to do at home, and that's exactly what guests are looking for right now in terms of innovation,” said John Peyton, CEO of Applebee’s owner Dine Brands, in an interview Wednesday.
The O-M-Cheeseburger launched in January. | Photo courtesy of Applebee's
The two burgers are emblematic of Applebee’s strategy over the past year. In an effort to revive sluggish traffic and sales, it ramped up its menu development and cycled the new items through its 2 for $25 value menu, offering customers interesting new items at reasonable prices.
The strategy largely paid off, propelling Applebee’s to its first positive same-store sales result in two years last spring. For the full year, same-store sales increased 1.3%, compared to a 4.2% decline in 2024.
But even the gooey Grilled Cheese Cheeseburger could not help Applebee’s overcome an industrywide slowdown in December: Same-store sales in the fourth quarter declined 0.4% on traffic of negative 3%, mirroring reports from other casual-dining chains in recent weeks.
Peyton described the quarter as a “blip” and said the chain has not seen any significant changes from consumers.
“We had momentum from Q2 and Q3 that rolled into the beginning of the quarter,” he said. “The whole category slowed down at the end of the quarter. And then [in] January and February, the momentum is back.”
On an earnings call Wednesday, Dine executives indicated that same-store sales are trending positive following a stretch of bad weather in January.
But the company still sees a cautious consumer, and it is planning accordingly: It’s expecting same-store sales growth of 0% to 2% for 2026.
The modest forecast “represents a combination of the momentum that we think we're building based upon our results in 2025 and early ’26, mitigated somewhat by the uncertain economic environment,” Peyton said.
One area in which consumers have been more willing to spend is takeout and delivery. Applebee’s off-premise same-store sales accelerated in each quarter of 2025 for annual growth of 6.5%, and delivery alone was up 10.5%.
“Those numbers are really notable for us,” Peyton said. “[Off-premise] had been consistently between 23%, 24% of sales, and we were wondering if that's a ceiling or not. And what we demonstrated last year was that there's still room to grow.”
Peyton credited a few small adjustments for the improvement. For the first time, Applebee’s made national promotions available for to-go. It also added an AI-powered suggestive selling feature to its website to boost check averages.
IHOP’s growth continues
At Applebee’s full-service sister brand, same-store sales turned positive for the first time in two years. They rose 0.3% in the fourth quarter on positive traffic.
Like Applebee’s, IHOP spent 2025 refining its value proposition, settling on the IHOP Value Menu, a selection of four breakfasts for $6, now available every day.
Though its same-store sales for the full year were still negative, down 1.5%, traffic accelerated and outpaced the competition every month, based on Black Box Intelligence data, Peyton said. The value menu “was absolutely the driver” of that, he said.
Off-premise has also been a bright spot at the pancake chain, notching 4.5% same-store sales growth in the fourth quarter.
Like Applebee’s, IHOP is expecting same-store sales to be flat to positive 2% in 2026.
Prepare for more AppleHOPs
Dine remains bullish on its dual-branded Applebee’s-IHOP locations. It now has 32 of them in the U.S. and plans to open 50 more in 2026.
These locations are generating 1.5 to 2.5 times the revenue of a stand-alone restaurant by virtue of offering breakfast, lunch and dinner. Customers can order from either brand, and 62% of tickets include items from both, Peyton said.
The combined stores have helped spark Dine’s development plans. The company opened a total of 68 new locations in 2024, 80 last year and will open more this year. It will also continue to close weaker locations, but the opportunity to co-brand is saving some units from going dark.
“Restaurants that are maybe on the bubble from a profitability standpoint that owners might have closed in the past, they can add a second brand, and we not only save a closure, but we add all that extra revenue,” Peyton said.
Pasadena, California-based Dine Brands posted a net loss of $12.3 million in the fourth quarter, compared to net income of $5 million a year ago, driven by a $29 million non-cash impairment charge on an intangible asset.
Total revenues for the quarter were $217.6 million, a 6.25% increase from the prior year.
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