Owner of Applebee's and IHOP dine brands believes its offerings can appeal to fast-food customers who have become frustrated with menu prices.
The company reported first-quarter earnings that missed Wall Street estimates, and same-store sales at both Applebee's and IHOP fell more than expected. Still, Dine reiterated his full-year outlook and said sales have improved sequentially. The company's shares rose less than 1% in afternoon trading Wednesday.
As Applebee's leans into value with a series of promotions including the return of Dollaritas, Dine Brands CEO John Peyton is confident the chain can beat out fast-food chains competing for its customers.
“The Whole Lotta Burger for $9.99. If you can eat our burger for $10, which is high quality, filling and eaten in our restaurant, in our experience, why would you eat a $10 burger in a paper bag in your car?” she told CNBC.
As consumers reduce their spending at restaurants, Applebee's and IHOP are fighting a larger-than-usual pool of rivals for a smaller pool of customers. Peyton said full-service restaurants, fast-food chains and even dine-in are rivals for diners' dollars.
According to Peyton, low-income consumers visited less frequently and spent more carefully when eating out in the first quarter. Consumers with incomes less than $50,000 represent about 40% to 50% of Dine's customers, she said.
Applebee's isn't the only casual dining chain targeting McDonald's and the rest from the fast food category. Chili's, owned by Brinker Internationalrecently launched an ad campaign highlighting the prices of the Big Mac and other fast-food burgers.
And McDonald's is certainly feeling the pressure. CEO Chris Kempczinski told analysts on the company's latest earnings call that “everyone is there with a value message,” which is why the chain is looking to create a nationwide value menu .
In addition to leaning into deals, Applebee's could also get a leg up on the competition thanks to a triad of recent pop culture moments: a pivotal cameo in the tennis drama film “Challengers,” an Applebee's-motivated meltdown in “Survivor” and a recognition. of football legend Peyton Manning during the Netflix roast of his former rival Tom Brady.
Not since Beyonce mentioned Red Lobster in her hit “Formation” has a casual dining chain felt so relevant in pop culture.
“It's the biggest thing for a lot of people, and it's because they grew up with Applebee's,” Peyton said.
