DineEquity Inc. Shaking Things Up Across the Board

DineEquity Inc., the parent company of IHOP and Applebee’s, reported a 5.5% increase in profits during the first quarter of 2012.  They also announced a purchase agreement for the sale of 39 Applebee’s locations that are currently company operated.  The units are being sold to the Potomac Family Dining Group LLC of Virginia.

 

Set to close in the third quarter, this deal is expected to net DineEquity about $25 million, reducing the firm’s sale-leaseback obligations to the tune of $40 million.  This is the second time that Potomac Family Dining has purchased restaurants.  Earlier purchases were made in the Washington, DC area.

 

DineEquity is moving towards refranchising and this sale will place about 96% of Applebee’s restaurants in franchise agreements.  This last transaction is part of an overall strategy and has helped boost numbers, but is only a portion of the total picture.

 

Julia Stewart, Chief Executive of DineEquity, states that the company is focused on innovative efforts that will help to differentiate each brand.  Applebee’s has replaced and upgraded almost everything on the menu in the last few years.  Particularly successful have been New Orleans-style dishes and the 2-for-$20 menu.  Additionally, 36% of the units have been renovated and more are due to be completed by the end of the year.

 

IHOP restaurants have not received as much attention, but DineEquity plans to continue work on the menu, focusing upon promoting the value message that’s so attractive to customers.  One such innovation was the recently revealed “7 for $7” menu selections.  These offer 7 meal options for only $7 each day.

 

IHOP will be launching a new marketing campaign in the second quarter.  The brand is moving towards healthier selections as well as low-calorie items so as to draw in a different demographic.  While DineEquity is still searching for the perfect value message for IHOP, franchise support remains strong.

Applebee’s to Add 550 Calorie Weight Loss Dishes to Menu

You may remember my blog post a little while back about Hungry Girl mastermind Lisa Lillien teaming up with Tyson Foods to help people keep their weight-loss new year’s resolutions. It turns out they’re not the only ones getting in on the act: Applebee’s is now offering full-size low calorie dishes to its guests. As with the Hungry Girl/Tyson venture, all dishes are 550 calories or less.

 

How the Menu Will Help Keep New Year’s Resolutions

 

Their strategy is also similar to the Hungry Girl/Tyson venture. The Applebee’s chain showed in a Harris Interactive survey that fully 90% of Americans break their weight loss resolutions.

 

Respondents claimed that often there simply were not enough flavors in their diets, and that their weight loss programs offered too many restrictions. These are issues tackled by the Hungry Girl plan.

 

(Let me say right now that I don’t want to give the wrong impression; I don’t think that Applebee’s is copying Hungry Girl/Tyson, nor do I believe it is the other way around. Instead, both groups are hitting on a common problem with New Year’s weight loss resolutions, and offering tasteful solutions to those problems.)

 

Interestingly, the most popular response to the survey was, “I want to eat what I want, when I want.” So what is Applebee’s offering?

 

Applebee’s Under 550 Menu Items

 

Here are two of the new items featured at Applebee’s restaurants:

 

• Sizzling Chili Lime Chicken. This dish features several flavors and modes of cooking, combining Asian-style skillet vegetables served with chili sauce over grilled chicken. The whole thing is laid out on a bed of rice, with fresh cilantro and a squeeze of lime.
• Roasted Garlic Sirloin. This is a 7oz. sirloin steak, topped with sautéed onions. Sides include creamed spinach inside a Portabella mushroom cap, as well as herbed potatoes.

 

Will the new menu help people meet their New Year’s weight loss resolutions? It will probably help some people. And even if it doesn’t, it’s virtually guaranteed to get more people through Applebee’s doors this year. It’s not too late to adopt this tactic for your own operation – just like it’s not too late to invest in parent company DineEquity (NYSE:DIN)>