As economic headwinds continue to buffet the restaurant industry, two major national chains have announced that they are exploring the possibility of a new presentation to customers.
Breakfast spot IHOP and dinner chain Applebee's may begin a major consolidation and diners may soon find them both under the same roof.
The two chains are owned by Dine Brands Global. CEO John Peyton recently noted that the company is "contemplat[ing] introducing this concept" of combining both restaurants into a single location, similar to the way Taco Bell and KFC have launched dual locations, the New York Post reported.
The concept would feature "a shared back of house and a combined and blended front of house for the two brands," Peyton said.
The company has already opened several locations along these lines, with one of them in Leon, Mexico. Payton added the concept, "represents a compelling opportunity for further growth since Mexico is one of our largest international markets."
The Mexico location is a test case, the company said.
Dine Brands said they "will continue to monitor the success of this test concept and will consider options for further expansion in the US in select locations if and when it makes sense to do so."
To date, there are eight locations with the IHOP/Applebee's combination in international markets.
Dine Brands recently posted a video showing the operations of the Mexico-based location.
The video shows servers bringing out pancakes, coffee and juice right alongside steaks, hamburgers, french fries and beer.
https://youtu.be/Ex2M00mvdLA?si=wVGF_RgR9B3tVNiH
On a recent investor call, Peyton added that the combined locations seem to be better than the individual ones, because the location can serve morning, noon and night customers.
Of the combined locations, Peyton said, "on average … revenues for the same size box as one brand or the other is two times or more what it was before -- what you would expect -- because with the two brands, we can address all four day parts."
IHOP currently sports 1,800 restaurants worldwide, according to Dine Brands, and, Applebee’s has more than 1,600 locations.
Revenues are mixed for the brands separately. IHOP reported a rise in sales of 1.6 percent in the fourth quarter of last year, while Applebee's saw a drop of 0.5 percent.
As mentioned above, Yum Brands also consolidated many Taco Bell and KFC locations into single outlets several years ago, but last August the company missed its revenue estimates, according to CNBC.
After suffering immensely from the COVID lockdowns, the restaurant industry saw a resurgence in 2023, and according to Nation's Restaurant News, expected to hit a high in sales that year of $997 billion, a 6.4 percent growth over 2022 as the pandemic was winding down.
However, as CNBC noted last June, as the Biden economy burdens them, most consumers said that eating out less often was on the table to help balance their budgets.
