Dine Brands, the owner of Applebee’s and IHOP, aims to attract customers who are growing frustrated with menu prices at fast-food chains. As consumers cut back on their restaurant spending, both Applebee’s and IHOP face increased competition from a variety of dining options, including fast-food chains and eating at home. To stand out, Applebee’s has focused on offering value, such as its Dollaritas promotion and the Whole Lotta Burger for $9.99, which Dine Brands CEO John Peyton believes can draw customers away from fast-food chains.
In the first quarter, low-income consumers visited restaurants less often and spent more carefully, impacting Dine Brands’ earnings. Customers with incomes under $50,000 make up a significant portion of Dine’s customer base, and their cautious spending habits have influenced the company’s same-store sales. Despite reporting lower-than-expected same-store sales and earnings in the first quarter, Dine Brands reaffirmed its full-year outlook and noted sequential improvement in sales. However, to meet its full-year goals, the company will need to boost its same-store sales growth significantly.
Dine Brands faces stiff competition from fast-food giants like McDonald’s, which are also focusing on delivering value to customers. Chili’s, another casual dining chain, recently launched an ad campaign targeting the prices of fast-food burgers, including the Big Mac. McDonald’s CEO Chris Kempczinski noted that the fast-food industry is highly competitive in terms of pricing and value, prompting the company to consider a nationwide value menu. In response to the competitive landscape, Applebee’s has ramped up its promotional efforts and is leveraging recent pop-culture moments for additional brand visibility.
In addition to value promotions, Applebee’s is benefitting from recent pop-culture references, such as a cameo in the film “Challengers,” a memorable moment on “Survivor” involving the chain, and a shoutout from football legend Peyton Manning during a roast of Tom Brady on Netflix. These pop-culture moments have helped Applebee’s stay top-of-mind for consumers and reinforce its place in popular culture. According to CEO John Peyton, Applebee’s resonates with many people due to its familiarity and nostalgic associations. By capitalizing on these pop-culture moments and offering compelling value deals, Applebee’s aims to retain and attract customers in a competitive dining landscape.
Overall, Dine Brands is working to differentiate its offerings from fast-food chains and other dining options by emphasizing value and leveraging pop-culture moments to increase brand visibility and appeal. The company’s performance in the first quarter was impacted by cautious spending among low-income consumers, resulting in lower-than-expected earnings and same-store sales. However, Dine Brands remains optimistic about its full-year outlook and is focused on driving improved same-store sales growth to meet its goals. With a competitive dining industry landscape and a renewed focus on value and promotions, Dine Brands seeks to win over diners and investors through strategic initiatives and operational improvements.
