GLENDALE, Calif. — Menu innovation is driving continued momentum at Applebee’s Neighborhood Grill & Bar and IHOP restaurants. Parent company DineEquity, Inc. reported same-store sales growth for both brands in the recent quarter.
Net income for the first quarter ended March 31 increased 36 percent to $28,412,000, equal to $1.49 per share on the common stock, which compared with $20,824,000, or $1.09 per share, in the prior-year period. Adjusted earnings per share grew 30 percent to $1.64.
Revenues totaled $175,814,000, up 5 percent from $167,201,000 the year before.
Domestic system-wide same-restaurant sales increased 4.8 percent at IHOP and 2.9 percent at Applebee’s compared with the first quarter of 2014.
“Additionally, both brands continue to lead their respective categories based on industry sales data,” said Julia Stewart, chairman and CEO, during an April 30 earnings call with financial analysts.
Behind the “brand reset” at Applebee’s are three strategic priorities: the menu, the guest experience and marketing.
“All of the consumer research and evaluations are complete, and we are now focused on achieving our brand promise of being a modern American grill and bar,” Stewart said. “Let me explain what that means and how we are going after it: Modern — meaning elevated and contemporary food offerings and improved pace of service. American — it is faithful to our brand heritage and who we are with a view to the future. Grill and bar — it is driving mastery with our grill platform and making the bar increasingly relevant.”
The casual dining chain plans to evolve its core food offering throughout the year “to be more signature, meaning Applebee’s-exclusive and very craveable,” Stewart said.
During the first quarter, the chain launched the Pub Diet menu, featuring classic pub-style dishes made healthier. Options include pepper-crusted sirloin with whole grains, shrimp and broccoli cavatappi, cedar grilled lemon chicken, and savory cedar salmon. The items contain fewer than 600 calories.
“Our focus on core menu innovation will continue throughout the year and will even include testing more new equipment platforms to deliver breakthrough flavors,” Stewart said. “Additionally, we expect a newly designed menu will roll out this year nationwide. The new menu will be accompanied by national launches across a variety of signature food platforms such as new sandwiches and handhelds, reinterpretations of classic items.”
At IHOP, recent menu innovation includes Criss-Croissants, a line of waffle-croissant hybrids in blackberry lemonade and strawberry rhubarb flavors. Stewart noted the product was a solid contributor to comparable sales.
“Through limitless innovation we are driving menu relevance by introducing new menu items to attract new guests and entice repeat visits,” Stewart said.
The company also announced a new president for the IHOP brand. Darren Rebelez, formerly CEO of 7-Eleven, Inc., will oversee the pancake chain, effective May 4. Stewart led the restaurant for three years as interim brand president.
For 2015, DineEquity management has reiterated its full-year targets. The company continues to expect domestic system-wide sales to increase 1 percent to 4 percent at Applebee’s and 2 percent to 5 percent at IHOP.
DineEquity’s share price closed at $96.43 on April 30, down nearly 4 percent, or $3.99, from the previous close of $100.42.
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