Fans of pancakes and $1 margaritas will soon be able to get both in one place.
Applebee’s and IHOP are opening a co-branded restaurant near San Antonio, Texas, where customers will have access to both restaurants in one building, parent company Dine Brands announced Wednesday.
It will be the company’s first such location in the U.S., Dine said. There are 13 Applebee’s-IHOP restaurants in other countries, including Canada, the United Arab Emirates and Mexico. Dine has been encouraged by their performance and views the format as a growth vehicle for domestic franchisees.
A rendering of the new co-branded restaurant. | Courtesy of Dine Brands
The new restaurant in Seguin, about 40 miles from San Antonio, will be operated by IHOP franchisee R. Hakim Group and will replace an existing IHOP. It is scheduled to open in February.
Food from both brands will be available all day, and customers will be able to order from both menus at once.
Applebee’s and IHOP will share a kitchen and other common areas such as the host stand and restrooms, but there will be two separate dining rooms for customers to choose from.
International co-branded locations have generated from 1.5 to 2 times the revenue of the original stand-alone restaurant without increasing their footprint and tend to see steadier traffic throughout the day, according to Dine.
“With two brands under one roof, it allows IHOP to shine in the morning and Applebee's to thrive in afternoons and evenings,” said Dine CEO John Peyton in a statement. “The menu leverages each brand’s unique offerings to maximize dayparts and provide more choices, variety, and value to guests.”
The co-branded format could provide a spark for Dine’s development plans. The company has been working to return Applebee’s to net new unit growth after years of store closures. IHOP has also fallen short of aggressive development targets.
The two brands came together when IHOP acquired Applebee's in 2007.
Co-branding was common in the early 2000s, but the operational and marketing challenges involved led to closures. The strategy has made a comeback in recent years, with brands such as Auntie Anne’s owner GoTo Foods (formerly Focus Brands) reviving the idea.
The initiative comes as Applebee's and IHOP continue to lose sales and traffic. Applebee's same-store sales declined 5.9% year over year in the third quarter and IHOP's fell 2.1%, Dine reported Wednesday. The company said ongoing pullback by consumers and a competitive promotional environment were factors.
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