DineEquity tweaks value strategy at Applebee's, IHOP
Applebee’s Neighborhood Grill & Bar and IHOP restaurants will continue to emphasize value, but IHOP plans to move away from limited-time-offers, executives of parent DineEquity Inc. said in a call Thursday discussing fourth quarter earnings.
DineEquity swung to a profit in the fourth quarter ended Dec. 31, earning $27.3 million, or $1.51 a share, compared with a loss of $58.1 million, or $3.33 a share, in the same quarter last year. Revenue fell 19.3 percent, to $242.2 million from $299.9 million in the prior year period.
Excluding a one-time tax benefit, the company said earnings would have been $16.4 million, or 91 cents a share.
Same-store sales at Applebee’s U.S. units rose 1 percent over last year’s quarter, and fell 1 percent at domestic IHOP restaurants.
“Clearly, IHOP is not where we want it to be, but we’re seeing some progress,” said Julia A. Stewart, chairman and chief executive of DineEquity. Sales showed an improved trend in the quarter, she said.
The economy will continue to influence consumer discretionary spending, Stewart said, and “offering value must remain paramount.”
Family-dining brand IHOP saw “initial good results” from the introduction of its new “7 for $7” menu in January, she said, which was supported for three weeks by television advertising. That has now been supplanted by tie-ins with “The Lorax” movie.
Watch a commercial for IHOP’s “Lorax” promotion; story continues below
“We recognize that we must continue to be innovative with creative, enticing offerings that satisfy the value-oriented guest,” Stewart said.
Part of IHOP’s strategy will be “transitioning our promotional platform away from the limited-time-offer strategy to using featured items for longer periods of time,” Stewart said, as well as increasing the use of digital and social media marketing.
IHOP “had sort of been notorious … for historically doing six limited-time offers on television and in-store,” she said. Starting in April, IHOP restaurants will feature the regular menu with a separate handout menu with value items, new items and under-600-calorie items for kids.
Casual-dining chain Applebee’s will continue its “sizzling entrées” platform, including the Double-Barrel Whiskey Sirloin, and value-oriented 2 for $20 offers, Stewart said.
Watch Applebee’s latest 2 for $20 commercial; story continues on next page