Dine Brands, the owner of Applebee’s and IHOP, is focusing on attracting fast-food customers who may be frustrated with menu prices. As consumers are cutting back on their restaurant spending, full-service restaurants like Applebee’s and IHOP are facing tougher competition from fast-food chains and dining at home. Dine Brands CEO John Peyton believes that by offering value promotions such as Dollaritas and the Whole Lotta Burger for $9.99, Applebee’s can win out over fast-food chains for customers.
Low-income consumers, who make up a significant portion of Dine’s customer base, are visiting less frequently and spending more cautiously when they do eat out. In the first quarter, Dine Brands reported lower-than-expected earnings, with both Applebee’s and IHOP experiencing shrinking same-store sales. Despite this, the company reiterated its full-year outlook and noted that sales have been improving sequentially. However, analysts believe that Dine will need to significantly increase its same-store sales growth to meet its full-year outlook.
Applebee’s is not the only casual dining chain taking aim at fast-food giants like McDonald’s. Chili’s, owned by Brinker International, recently launched an ad campaign targeting the Big Mac and other fast-food burgers for their prices. McDonald’s CEO Chris Kempczinski acknowledged the competition, stating that “everybody’s out there with a value message” and that the chain is looking to create a nationwide value menu in response. This reflects the increasing competition in the fast-food industry.
In addition to offering deals, Applebee’s is leveraging recent pop-culture moments to stay relevant and attract customers. The chain has been featured in the tennis drama film “Challengers,” mentioned on “Survivor,” and received a shoutout from football legend Peyton Manning during Netflix’s roast of Tom Brady. This increased visibility in popular culture helps to keep Applebee’s top of mind for consumers and differentiate it from other casual dining chains. Peyton believes that Applebee’s resonates with many people because they have grown up with the brand.
It remains to be seen whether Dine Brands will be successful in winning over diners and investors with its strategy. As competition in the restaurant industry intensifies, Dine will need to continue improving its same-store sales growth to meet its financial targets. Despite the challenges, Dine Brands is optimistic about its ability to attract customers away from fast-food chains and capitalize on the current dining landscape. Time will tell if Applebee’s and IHOP can maintain their relevance and compete effectively in the evolving restaurant industry.
