Applebee’s is shrinking. Its parent company may open joint restaurants with IHOP

By Ramishah Maruf, CNN

New York (CNN) — We’ve all seen the combination Taco Bell and KFC, or the joint Auntie Anne’s and Cinnabon. Now another dual-branded restaurant could enter the US dining landscape.

Dine Brands Global is considering an Applebee’s and IHOP combination, according to an earnings call on February 28. Dine Brands is the parent company of both restaurant chains.

Applebee’s is shrinking. While Dine Brands added a net 33 IHOP restaurants domestically in 2023, the company closed 46 Applebee’s locations and only opened 10 new ones, according to the company’s 10-K.

Dine Brands wants Applebee’s to return to growth, the company said during its earnings call. Because of the cost to build an Applebee’s, Dine Brands is “assembling a prototype” for another option.

The revenue for the joint restaurants could double that of the standalone restaurants, the company said in the earnings call. That’s because the two restaurants’ menus hit all parts of the day (such as pancakes for breakfast and boneless wings at night).

Other companies are leaning into the idea of joint restaurants. Many combination fast food restaurants that customers see are owned by Focus Brands, which has Auntie Anne’s, Carvel, Cinnabon, Jamba, Moe’s Southwest Grill, McAlister’s Deli and Schlotzsky’s under its umbrella.

In January 2023, Focus Brands said these combination locations are the future of fast-food joints, and said it had 175 of these restaurants under its portfolio, with 65 more on the way.

Focus Brands also saw the revenue potential. Combination locations allowed these restaurants, such as Auntie Anne’s and Cinnabon, to expand past malls and into busier streetside spots.

“There will always be a place in malls, but there is an immense amount of growth opportunity in streetside venues, and, by dual branding, there is more opportunity for enhanced revenue,” said Brian Krause, Focus Brands chief development officer, in a 2023 statement.

Prototypes abroad

The IHOP-Applebee’s combination already exists for those who are dreaming of a pancake stack with a Dollarita on the side. International locations of the combo exist, and Dine Brands CEO John Peyton said the company just opened its eighth IHOP-Applebee’s in Leon, Mexico.

At international locations already established, the two brands share a back of house and have a blended front of house for diners.

With the international prototypes, Peyton said the company is “gaining experience and knowledge as we contemplate introducing this concept in the US.”

Mexico is one of the brand’s largest international markets, Peyton said in the earnings call.

“We will continue to monitor the success of this test concept and will consider options for further expansion in the US in select locations if and when it makes sense to do so,” said Peyton in an emailed statement.

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