Dine Brands Expands Applebee's-IHOP Combo Model to Boost Profitability

What's Happening?

Dine Brands is implementing a strategic initiative to combine its morning-focused brand, IHOP, with its evening-centric brand, Applebee's, into a dual-branded restaurant model. This approach aims to serve customers throughout all dayparts—breakfast, lunch, dinner, and late night—under one roof. The model has already been launched overseas and in select locations in the U.S., such as Texas, where it has shown significant profitability. The combined model features a single kitchen, cross-trained staff, and a streamlined menu that includes popular items from both brands. Franchise owners have reported increased earnings, with the dual-branded locations generating two to three times more revenue compared to standalone IHOPs.

Why It's Important?

The expansion of the Applebee's-IHOP combo model is a strategic move by Dine Brands to gain a competitive edge in the restaurant industry, which is facing challenges such as pandemic-era debt, labor shortages, and rising costs. By offering a diverse menu throughout the day, the company aims to attract a broader customer base and increase sales. This model also addresses the industry's need to adapt to changing consumer spending habits, as customers become more selective due to economic uncertainty. The success of this initiative could set a precedent for other restaurant chains seeking innovative solutions to financial difficulties.

What's Next?

Dine Brands plans to expand the dual-branded model to additional U.S. markets, with a goal of establishing 10 to 12 locations by the end of the year and significantly more in 2026. While the new concept is seen as a growth engine, it will not replace standalone Applebee's or IHOP locations entirely. The company will assess market conditions and competition to determine the feasibility of dual-branded restaurants in specific areas. Continued success in existing locations will likely influence the pace and scale of future expansions.

Beyond the Headlines

The dual-branded model represents a shift in the restaurant industry's approach to customer engagement and operational efficiency. By integrating two distinct brands, Dine Brands is leveraging synergies to optimize resource utilization and enhance customer experience. This approach may inspire other companies to explore similar strategies, potentially leading to a transformation in how restaurants operate and compete in the market.