How Dine Brands is Using Deals and Pop Culture to Attract Customers
In the highly competitive restaurant industry, Applebee’s and IHOP, owned by Dine Brands, are facing a challenge to attract customers who have become more price-conscious. With consumers cutting back on their restaurant spending, these chains are not only competing against each other but also against fast-food chains and the option of eating at home.
To stand out from the competition, Applebee’s has been focusing on value promotions. One of their successful strategies has been the return of Dollaritas, a promotion that offers $1 margaritas. Dine Brands CEO John Peyton is confident that these deals can entice customers away from fast-food chains. He argues that for the same price, customers can enjoy a quality burger in a restaurant setting rather than settling for a paper bag in their car.
However, Dine Brands has faced challenges in attracting low-income consumers who make up a significant portion of their customer base. These consumers visit less frequently and spend more carefully when they do eat out. Incomes under $50,000 account for about 40% to 50% of Dine’s customers. This decline in customer spending has impacted Dine Brands’ first-quarter earnings, with both Applebee’s and IHOP reporting lower same-store sales than expected.
Despite these challenges, Dine Brands remains optimistic about its full-year outlook and believes that sales have improved sequentially. However, analysts caution that Dine Brands will need to significantly improve its same-store sales to meet its projections for the year. In the first quarter, same-store sales fell by 4.6% at Applebee’s and 1.7% at IHOP. Raymond James analyst Brian Vaccaro suggests that Dine Brands will need to increase their sales growth to match their projected range of flat to 2% for the year.
Applebee’s is not the only casual dining chain targeting fast-food giants like McDonald’s. Chili’s, owned by Brinker International, has also launched an advertising campaign that challenges the prices of popular fast-food burgers, including the Big Mac. This increased competition has prompted McDonald’s to consider creating a nationwide value menu to compete with these casual dining chains.
In addition to value promotions, Applebee’s has been benefiting from recent pop-culture moments that have given the brand increased visibility. The chain had a cameo appearance in the tennis drama film “Challengers,” was the cause of a meltdown on the show “Survivor,” and received a shoutout from football legend Peyton Manning during Netflix’s roast of Tom Brady. These pop-culture references have made Applebee’s more relevant and top of mind for many people.
Dine Brands’ strategy of focusing on deals and leveraging pop culture to attract customers is an interesting approach in a highly competitive market. While it remains to be seen if these efforts will translate into increased sales, Dine Brands is determined to win over diners and investors alike. With the combination of value promotions and memorable pop-culture moments, Dine Brands aims to differentiate itself from fast-food chains and create a unique dining experience for its customers.
