Applebee's plans more drive-thrus as sister brand IHOP eyes virtual concepts

Meanwhile, parent Dine Brands is about to consider "all options to optimize shareholder return."
Photograph: Shutterstock

Aiming to sustain its pandemic-elevated level of takeout sales, Applebee’s Neighborhood Grill is planning to outfit six more of its casual restaurants with drive-thru pickup lanes during the fourth quarter.

But the casual segment’s sales leader is slowing the expansion of a key initiative for boosting delivery sales, the rollout of a virtual concept called Cosmic Wings, because of difficulties in sourcing enough wings.

But more virtual concepts are coming for parent company Dine Brands Global, at least initially through Applebee’s sister concept, IHOP.

“We believe the time is appropriate for evaluating third parties with several brands to partner with,” Jay Johns, IHOP’s president, said during Dine Brands’ virtual conference with financial analysts on Thursday.

He declined to say what sort of delivery-only concept would be a good fit, noting that the hunt for a suitable brand has just begun.

The initiatives are part of what Dine Brands CEO John Peyton described as a pivot “from triage to acceleration.”

A “restaurant renaissance is clearly driving our rebound at Dine Brands, and Americans are returning to indoor dining,” said Peyton, both of whose charges are full-service operations that generated only a small portion pre-pandemic of their current off-premise sales.  “Both brands are beating their comp sets.”

For the second quarter, Applebee’s generated a same-store sales gain of 10.5% over the comparable level of 2019, the biggest quarterly gain for the brand since becoming part of Dine Brands 14 years ago, according to President John Cywinski.

IHOP’s comparable sales for Q2 remained negative but rose to 96.6% of the figure of two years.

Among the factors that dampened results was having only 27% of domestic units open around the clock, compared with a pre-pandemic incidence of around 50%, Johns said. The challenge is finding sufficient labor, a difficulty cited by arch-rival Denny’s two days earlier as a curb on its sales rebound.

With operations normalizing, the company intends to air an updated strategy in the coming weeks for maximizing shareholders’ returns, revealed the company’s new CFO, Vance Chang. “We’re considering all options to optimize shareholder return and deliver sustained long-term growth for the system,” he said.

In the meantime, the company’s leaders stressed, both Applebee’s and IHOP will focus on innovation, including the adoption of more technology. One goal, according to Peyton, is to put both chains on the same technology platforms. 

Yet the brands are also acting individually on that front.  About 500 Applebee’s units are now outfitting their servers with handheld ordering devices, with positive effects, said Cywinski.

IHOP is about to plug in a new POS system and add kitchen display devices.

Applebee’s is currently testing a pickup station a la Chipotle’s Chipotlane at one unit, with six more to follow toward the end of the year.

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