With restaurant industry sales expected to hit some $632 billion this year, DineEquity Inc., owner of IHOP and Applebee’s brands, is aiming to take a piece of the pie with new restaurants and advertising campaigns. The Glendale-based company announced on March 1 plans to open as many as 95 new restaurants this year. For the Applebee’s brand, 30 to 40 locations are slated to open, half of which will be in the U.S. As for IHOP, 45 to 55 are scheduled to open, primarily in the U.S. Applebee’s also announced its partnership with advertising agency Crispin Porter + Bogusky. Company officials said the agency will help accelerate the momentum Applebee’s has built around its brand. The brand, which saw an uptick of 2 percent in sales over the past year, is in the process of a multi-year revitalization effort that has so far included 500 store revamps and new menu items. According to public records, a .3 percent increase in domestic same-store sales in 2010 marked the first full-year of positive results for the brand since 2005. “We continue to progress with our ongoing efforts to deliver value to consumers, driving menu innovation and advancing operational excellence to enhance the guest experience,” said Julia Stewart, chairman and CEO of DineEquity, during a quarterly earnings call on March 1. The restaurant industry has been hard hit by the economic downturn, creating a more cautious consumer. For the 12 months ended Dec. 31, the company saw total segment revenues decrease 19 percent. For the full-year 2011, it had a net income of $75.2 million. Patrick Lenow, spokesman for DineEquity, said the company’s revenues, which have consistently dropped over the past three years, can be attributed to DineEquity’s re-franchising activity and its efforts to be a primarily franchised system. To date, the company is 95 percent franchised. The initiative has primarily focused on the Applebee’s brand, which was a company-owned chain before it was purchased by DineEquity in 2007. Last year, the company franchised 132 Applebee’s restaurants. When looking for a franchisee, DineEquity considers candidates with restaurant operating experience, financial qualifications and a shared vision in the brand, Lenow said. “When we have the right opportunity that’s when we sell restaurants,” he said. IHOP has stacked up its franchise opportunities and has reached the company’s desired number of restaurant openings. DineEquity opened an average of 55 to 60 IHOP locations each year for the past several years, Lenow said. Last year, the IHOP brand announced plans to open 40 restaurants in nine Middle Eastern countries. In November, the company rolled out a new concept in San Diego’s Gas Lamp District, the IHOP Express, a “quicke” concept to make menu items available to the consumer on the go. While no specific plans have been announced, he said franchisees are “constantly looking” for new opportunity. DineEquity’s plans for growth come at a time when the restaurant industry is experiencing “moderate growth” and is expected to grow by 3.5 percent this year, said Hudson Riehle, senior vice president of research for the National Restaurant Association.
DineEquity on Feeding Frenzy
