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With sales down 75%, IHOP looks to Applebee's for a boost

The pancake chain is copying its sister chain's curbside to-go program.
Photograph: Shutterstock

Seeing the success Applebee’s Neighborhood Grill and Bar has had with curbside pickup during the pandemic, IHOP is doing what many an envious sibling might have: copycatting its big sister.

The family chain has added Carside To Go—essentially the delivery of takeout orders to patrons’ cars—at 1,000 units in a stab at boosting off-premise sales while most of its dining rooms remain closed. The contactless off-premise service was crucial in holding the fall in Applebee’s same-store sales to 64.4% for the week ended April 26. IHOP’s comparable sales were down 75.4% for the same period.

Both brands are owned and franchised by Dine Brands Global. Both have been forced by the COVID-19 pandemic to subsist on takeout and delivery sales, a particular challenge for IHOP because of its perception as a place to get breakfast, according to Dine Brands executives.

With consumers staying home because of social distancing directives, “they're not working, they're not at offices, they're staying at home [instead of] on the way to work, to get breakfast, et cetera,” IHOP President Jay Johns told financial analysts. “That meal is now gone.”

Also, he said, “ It's very easy for parents that are busy working at home watching the kids to give them cereal or toaster pastries, et cetera. So it's an easy meal to replace yourself. If you're only going to order out one time a day, the places that are doing dinner replacement look like they're winning more than some of the others.”

He also noted that Applebee’s has been offering curbside to-go for more than a decade, so customers are familiar with the service and presumably know about its availability.

“Plus, after a bit of prolonged cabin fever, I believe our guests really enjoy getting out of their homes and hopping in their cars for a little indulgence and escape to their neighborhood Applebee's,” said brand President John Cywinski. “We're seeing this across the country.”

About 76% of Applebee’s sales per unit are currently coming from Carside To Go, up from 70% at mid-March, said Cywinski. The 1,482 units offering food and beverages for off-site consumption are taking in an average of $17,700 per week, or the equivalent of about $920,000 a year. Cywinski noted that Applebee’s annual unit volumes for 2019 averaged $2.4 million.

IHOP has a long way to go to catch its big sister. The chain’s curbside pickup service was accounting for about 8% of total sales for the week ended April 19 at the 1,400 IHOPs that are open for off-premise business. In contrast, delivery generates about 39% of sales. The remainder of a restaurant’s sales at present apparently come from traditional walk-up to-go service.

Johns said the chain is tweaking operations to provide more obvious cues to customers that the concept is a safe source of food.

About 175 of Applebee’s 1,675 domestic locations remain closed. Cywinski said. He noted that as many as 200 stores could reopen their dining rooms by next week as more states join Georgia and Tennessee in easing stay-at-home policies.

Asked why Applebee’s same-store sales have slid more than some competitors’, Cywinski pointed to the decision by other brands to continue advertising. Applebee’s has suspended virtually all of its traditional marketing, in part to spare franchisees from having to contribute.

About 21% of IHOP’s units remain closed because of the COVID-19 pandemic, Johns said.

Dine Brands said it has about $395.1 million in cash, with general and administrative costs running at about $35 million per quarter.

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