Applebee’s and IHOP owners Dine brands believes its offerings can lure away fast-food customers frustrated with menu prices.
The company reported first-quarter earnings that fell short of Wall Street estimates, and both Applebee’s and IHOP’s same-store sales fell more than expected. Still, Dine reiterated its full-year outlook and said sales improved from the previous quarter. Shares of the company rose less than 1% in afternoon trading on Wednesday.
As Applebee’s pushes for value with a series of promotions that include the return of Dollaritas, Dine Brands CEO John Peyton is confident the chain can beat fast-food chains vying for customers.
“The Whole Lotta Burger for $9.99 – if you can have our $10 burger, which is great quality and plentiful and can be eaten in our restaurant, then in our experience why would you want a $10 burger from one “Eat paper bag in your car?” he told CNBC.
As consumers cut back on restaurant spending, Applebee’s and IHOP are battling a larger group of competitors than usual for a smaller customer base. Peyton said full-service restaurants, fast-food chains and even at-home dining are competitors for diners’ money.
Peyton said low-income consumers visited less often in the first quarter and spent more cautiously when eating out. Consumers with incomes under $50,000 make up about 40% to 50% of Dine’s customers, he said.
Applebee’s isn’t the only casual dining chain it’s targeting MC Donalds and the rest of the fast food category. Chili’s, owned by Brinker Internationalrecently launched an advertising campaign that praises the Big Mac and other fast food burgers because of their prices.
And McDonald’s is certainly feeling the heat. CEO Chris Kempczinski told analysts on the company’s most recent earnings call that “everyone has a value message out there,” which is why the chain is trying to create a national value-added menu.
In addition to making deals, Applebee’s could also gain an edge over the competition through a triad of current pop culture moments: a pivotal cameo in the tennis drama “Challengers,” an Applebee’s-motivated meltdown on “Survivor.” and a shout-out from football legend Peyton Manning during the Netflix series “Roasting” about his former rival Tom Brady.
Not since Beyoncé mentioned Red Lobster by name in her hit “Formation” has a casual dining chain felt so relevant in pop culture.
“This is close to a lot of people’s hearts, and that’s because they grew up with Applebee’s,” Peyton said.
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2024-05-08 18:55:11
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