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Tuesday, May 17, 2022

Dine Brands Looks to Close Sites

IHOP’s parent company said it expects to close “up to 100” of the chain’s restaurants over the next six months, a direct result of the pandemic’s chokehold on the food service industry.Dine Brands Global Inc., based in Glendale, franchises the IHOP and Applebee’s banners. The company revealed in a quarterly report with the Securities and Exchange Commission it is conducting financial evaluations of IHOP franchisees and individual restaurants whose viability has been threatened by the virus.The company stipulated, “the timing and extent of any closures resulting from these evaluations are uncertain.”In an earnings call with investors, IHOP President Jay Johns said “we’re confident we will eventually replace these severely underperforming restaurants with better-performing restaurants.”The downturn has already claimed several locations. During the third quarter, 16 IHOP restaurants shut down permanently, bringing to 35 the total number of IHOP closures this year.

The chain has 1,683 restaurants, but not all are currently active. According to the quarterly filing, 91 remained closed indefinitely as of September’s end. That measurement includes 49 outlets throughout Tennessee, Virginia and North and South Carolina owned by a holding company that filed to reorganize under Chapter 11 in May. After the filing, Dine Brands said in a statement it had “terminated franchise agreements” with the operating entities, CFRA Holdings LLC and CFRA Tri-Cities LLC, in April.

Of the 49 restaurants, 41 were acquired in October by a subsidiary of Dallas-based franchise giant Sun Holdings named Suncakes LLC, and many have since reopened.

What will happen to CFRA’s eight other IHOP locations isn’t clear.  As for Applebee’s, Dine Brands said in the quarterly report it expects to close 15 of the chain’s restaurants during the fourth quarter.That would add to the 52 Applebee’sclosures in the U.S. so far this year, 20 of which came since July 1.

Those interruptions have made it difficult for the brands to meet sales expectations.

IHOP posted third-quarter sales of $555 million, down more than 34 percent from $845 million in the same period last year.Applebee’s recorded nearly $806 million in sales for the third quarter, down almost 17 percent from $967 million last year.On the earnings call, Dine Brands Chief Executive Stephen Joyce said there is cause for hope in that takeout and delivery orders skyrocketed when restaurants reopened.“Off-premise comp sales increased by an impressive 144 percent at Applebee’s and 154 percent at IHOP,” he said.“During September, both brands posted their best weekly comp sales performance since the week ended March 1,” added Chief Financial Officer Thomas Song.

Dine Brands in the third quarter logged net income of more than $10 million, down more than 58 percent from nearly $24 million in the same quarter last year. That’s on quarterly revenue of more than $176 million, down from $217 million year-over-year.

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