Applebee’s and IHOP Owner Catering brand Think its deals could attract fast-food customers frustrated by menu prices.
The company’s first-quarter earnings fell short of Wall Street’s expectations, with Applebee’s and IHOP both missing estimates. Same-store sales shrink beyond expectation. Still, Dine reiterated its full-year outlook and said sales had improved sequentially. The company’s shares were up less than 1% in afternoon trading Wednesday.
As Applebee’s rolls out a series of promotions including the return of Dollaritas, Dine Brands Chief Executive John Peyton is confident it can beat the fast-food chain for customers.
“The whole Lotta burger is $9.99 – if you can get our burgers for $10, which are of great quality and huge portions, and eat them in our restaurants, in our experience, why would you eat them in your car?” What about the $10 burger in the paper bag? he told CNBC.
as Consumer retreat Restaurant spending at Applebee’s and IHOP is competing with more competitors than usual for a smaller group of customers. Full-service restaurants, fast-food chains and even eating at home are all competing for diners’ dollars, Payton said.
Payton said that in the first quarter, low-income consumers ate out less frequently and spent more cautiously. Consumers with incomes below $50,000 account for about 40% to 50% of Dine customers, he said.
Applebee’s isn’t the only casual dining chain taking aim McDonald’s and other fast food categories. Chili’s is owned by Brink Internationalrecently launched an ad campaign touting the price of Big Macs and other fast-food burgers.
McDonald’s is certainly feeling the craze, too. “Everyone is sending a value message,” which is why the chain is looking to create a national value menu, CEO Chris Kempczinski told analysts on the company’s latest earnings call.
In addition to leaning toward deals, Applebee’s may also gain a competitive edge from a string of recent pop culture moments: a key cameo in the tennis drama “Contenders,” an Applebee’s-fueled meltdown on “Survivor” and a shout-out saga from football Character Peyton Manning in Netflix’s mockery of his former rival Tom Brady.
Not since Beyoncé referenced Red Lobster in her hit song “Formation” has a casual dining chain been so relevant to pop culture.
“That’s something that’s top of mind for a lot of people because they grew up with Applebee’s,” Payton said.
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