The first combined IHOP-Applebee’s restaurant in the US will soon open in Texas
By Jordan Valinsky, CNN
New York (CNN) — Craving a stack of IHOP pancakes with a side of Applebee’s riblets? That will soon become a reality in Texas with a new restaurant that unites the two chains under the same roof.
Dine Brands, which owns the two restaurants, announced that the combined Applebee’s-IHOP restaurant will open approximately 35 miles west of San Antonio early next year, marking the first time the company has brought the concept to the United States.
Plans for the dual-branded restaurant were announced earlier this year as part of Dine Brand’s plan to grow the two restaurants, which both reported lackluster earnings Wednesday. Applebee’s same-store sales fell nearly 6% in the third quarter, while IHOP’s slumped 2.1%.
Newly released renderings show two distinct parts, with a traditional IHOP interior on one side and an Applebee’s, featuring a large bar with TVs, on the other. Both of the chains’ menus are available on either side, and the restaurants share a kitchen.
The idea is to maximize revenue with the same footprint of a traditional restaurant. That’s because the two restaurants’ menus encompass all parts of the day (pancakes and eggs Benedict for breakfast and steak and wings for dinner) and will have staff trained to work with both.
“The idea behind the dual-branded IHOP-Applebee’s is pretty straightforward: getting better utilization out of a store by combining brands that traditionally serve different dayparts,” R.J. Hottovy, head of analytical research at Placer.ai, told CNN. “By operating both brands out of a single store and utilizing a shared kitchen, the company is looking to drive visits throughout the full day and reduce the costs of operating two separate restaurants.”
So far, 13 of the dual-branded restaurants are open, including in Canada, Latin America and the Middle East. The company is “seeing a lot of success” with them and expects they “will also fuel our growth rate next year,” according to Dine Brands CEO John Peyton on an earnings call this week.
The hybrid restaurants are currently raking in 1.5 to 2-times the revenue of a traditional outlet. However, Peyton admitted that the combination isn’t necessarily to appeal to consumers but to be a financially sustainable concept for franchisees who are seeing customers cut back on spending.
“Having two iconic brands in our portfolio that complement each other is a competitive advantage, and we plan to leverage this to improve the economics and drive growth across our system,” Peyton said.
The challenge with the concept is “managing the complexity of the different menus, but the company has some experience dealing with this in its international dual-branded locations,” Hottovy noted.
Other companies are leaning into the idea of joint restaurants. Many combined fast-food restaurants that customers see are owned by GoTo Foods, which often builds joint Auntie Anne’s and Cinnabon, and Inspire Brands, which has a few combined Jimmy John’s-Dunkin’ outlets.
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