Dine Brands Global Inc. is pushing ahead with its dual-branded restaurant model, announcing that 45 combined Applebee's and IHOP locations are now operating as the company targets roughly 200 such sites by the end of 2027.
Speaking at the Barclays 19th Annual Global Consumer Conference, CEO John Peyton highlighted strong franchisee interest in the concept. "When these guys see a product like this and they want to build it, that's an endorsement," Peyton said. "It's about people who really know the business well are converting."
The company expects about 80 dual-branded units to be open by the end of 2026. Over a longer horizon, Dine Brands identified roughly 900 opportunities across the U.S., split evenly between 450 new builds and 450 conversions of existing restaurants.
The incremental investment to add a second brand to an existing location runs approximately $1 million, though adding an Applebee's to an IHOP site costs slightly more due to bar build-out requirements, while the reverse direction runs somewhat less, according to executives.
Financial returns from the model appear compelling. Dual-branded locations generate base revenue of 1.5 to 2.5 times that of a standalone restaurant, with incremental revenue flowing through at two to three times the normal margin rate because fixed costs are shared. New dual-branded units are expected to produce annual unit volumes above $3 million, in the rough $4 million range. About 65% of tickets at dual-branded sites include items from both menus, Peyton noted.
"No one asked us to put IHOP and Applebee's together," Peyton said. "No one knows the same company owns both brands. But 65% of the tickets in the dual-branded restaurants include items from both sides of the menu."
Dine Brands' portfolio spans approximately 1,550 Applebee's locations, roughly 1,800 IHOPs, about 110 Fuzzy's Taco Shop units—with half in Texas—and 240 licensed international units, totaling more than 3,000 restaurants across nearly every U.S. zip code. Around 130 restaurants, or about 5% of the system, are company-operated; the target is to own 50 to 75 units at any given time.
On the balance sheet, Dine Brands carries approximately five times leverage, supported by securitization financing described as covenant-light and investment-grade in cost of capital. CFO Vance Chang said he does not "lose sleep" over the leverage level. The board approved a $100 million share repurchase authorization, with about $30 million used year-to-date. Chang emphasized that capital allocation hinges on return on capital, adding that buybacks are attractive if the stock appears undervalued relative to the cost of capital.
IHOP outperformed Black Box Intelligence comparable sales benchmarks for a third consecutive quarter and traffic for a sixth straight quarter. Its $6 everyday value menu accounts for about 20% of sales. Table turn times have improved by more than four minutes since December, and 80% of the system is up to date with remodels conducted on a five-year cycle. The brand is also rolling out protein pancakes featuring 37 grams of protein.
Applebee's is in the second year of a full remodel cycle, with about one-third of the system expected renovated by end of 2026 and 50% by end of 2027. More than 400 restaurants have already been remodeled, delivering sales lifts of 5% to 15%. The brand's 2-for-$25 value platform sits in the mid-20% range of sales, and about 65% of those orders are upgraded with premium proteins, pushing actual transaction prices to $28 to $36. Beef cost inflation was noted as pressuring margins more than a year ago.
Fuzzy's Taco Shop posted two straight quarters of positive comparable sales, marking the first such streak since Dine Brands acquired the chain. Franchisees have raised prices 2% to 3% while average checks remain relatively steady, Peyton said, with the core consumer household income spanning $50,000 to $100,000 annually.
