GLENDALE, CALIF. – Dine Brands Global Inc., the owner of the Applebee’s and IHOP restaurant businesses, is focused on recovery. Following the shutdown of dine-in service across most of the nation that affected first-quarter results, management is looking ahead to growing off-premises occasions and the eventual reopening of its restaurants.
“Our industry is certainly in uncharted territory,” said Thomas H. Song, chief financial officer and principal accounting officer for the company, during an April 28 conference call with financial analysts.
Net income for the first quarter ended March 31 was $22.3 million, equal to $1.33 per share on the common stock, a decline when compared to the same period of the previous year when Dine Brands earned $30.5 million, or $1.76 per share.
Quarterly sales fell to $83.3 million from $96.3 million the year prior.
Context provided by John C. Cywinski, president of Dine Brands’ Applebee’s business unit, showed how rapidly the coronavirus (COVID-19) decelerated the brand’s quarterly performance.
“Comp sales results through the week ending March 8 were positive 3.2%, rolling a positive 1.4% from the same time frame a year ago,” he said. “In total, Applebee's posted 10 consecutive weeks of positive comp sales to start the year and meaningfully outperformed the casual dining category before the downturn began the week ending March 15.”
Sales during the week ended March 15 fell 15.8% and the decline accelerated to 76% for the week ended March 22 and 80.6% for the week ended March 29.
“Applebee's is currently capturing approximately 35% of last year's average restaurant (sales) volume,” Cywinski said. “From absolute dollar perspective, Applebee’s average weekly off-premise sales have now almost tripled from about $6,500 per restaurant at the start of Q1 to approximately $17,700 this past week, keeping in mind our average restaurant volume of approximately $2.4 million at the end of 2019.”
IHOP’s comp sales fell 14.7% in the first quarter as traffic decelerated in March due to dine-in restrictions.
Approximately 82% of Dine Brands’ domestic restaurants remained open for to-go and delivery services at the end of the first quarter.
“Since the beginning of the second quarter, we started to see consistent improvement in April's weekly sales,” said Jay D. Johns, president of the IHOP business unit. “For the week ending April 5, sales were down 81.5%. By the week ending April 26, sales were down 75.4%.”
The coronavirus has provided one benefit to the company — It has significantly accelerated the company’s implementation of off-premises services companywide.
“After transitioning to the off-premise-only model, we have seen our domestic systemwide off-premises sales grow by 71% between the week ended March 1 and the week ended April 26,” said Stephen P. Joyce, chief executive officer. “Growing our off-premises business at both Applebee's and IHOP has been part of our long-term growth plans over the last three years. As a result, our franchisees were able to pivot to a to-go and delivery-only model with minimal operational disruption.”
Management did not provide guidance for the second quarter or full year.