Opinions expressed by Entrepreneur contributors are their own.
Talk about a winning combo. The first dual-brand IHOP-Applebee’s location opened in Seguin, Texas, and nearly tripled sales compared to what the standalone IHOP was doing before, according to FSR Magazine. Dine Brands, the parent company of both chains, is betting the format can do that again and again, targeting 80 combined locations by year’s end. That’s nearly double its current 45, and CEO John Peyton projects room for 900 dual-branded units over the next decade.
The layout shares one entrance, with Applebee’s and IHOP each getting their own seating zone, red for Applebee’s, blue for IHOP, and one streamlined menu organized by daypart. It’s part of a broader co-branding trend sweeping the restaurant industry, similar deals have paired Buffalo Wild Wings with Jimmy John’s, and Dunkin’ with Baskin-Robbins. Converting a single-brand restaurant into a dual-brand location can roughly double its revenue, Peyton said, though it costs about $1 million to do.
Combining forces is coming at a tricky moment. Applebee’s same-store sales fell 1.8% this quarter despite raising menu prices, hurt by inflation, rising gas prices and more cautious consumer spending. IHOP, meanwhile, outperformed industry benchmarks for a third straight quarter, with same-store sales up 1.5% and its catering business surging 22%.
Dine’s overall revenue grew 4.4% to $240.9 million in the second quarter. But its profits actually dipped 3.6%, since the company is spending heavily right now on renovations and the IHOP-Applebee’s rollout.