- More customers coming from $100,000 households, Dine CEO says
- Restaurants are racing to create new low-cost menu items
Wealthier Americans are visiting IHOP and Applebee’s more often, and they’re looking for deals on their pancakes and wings.
Dine Brands Global Inc., the two chains’ parent company, has experienced a drop in visits from lower-income customers in recent quarters. At the same time, it’s attracting more guests from households that make $100,000 and up, Chief Executive Officer John Peyton said in an interview Wednesday.
All diners, regardless of much they make, are gravitating to value offerings, he said. New deals have included unlimited riblets at Applebee’s and a breakfast combo at IHOP.
“Some higher-earning guests are finding us as they also think about managing their wallet,” Peyton said.
The trend at Dine underscores how stretched Americans’ budgets have become after years of elevated prices. The company’s lower-income consumers aren’t trading down to cheaper restaurants, Peyton said, but rather eating at home to save money.
Dine, which also owns Fuzzy’s Taco Shop, has responded with new offerings at lower prices, as many competitors have. The company normally plans promotions more than a year in advance, but, given the demand weakness, some of its recent launches were put together in about five weeks, Peyton said.
In the second quarter, same-restaurant sales at both IHOP and Applebee’s unexpectedly fell, and the company cut one if its annual profitability targets. The rise in higher-income guests wasn’t enough to prevent a traffic decline, which the company said primarily drove the drop in sales. The results suggest the increased focus on value has yet to bear fruit, Bloomberg Intelligence analyst Michael Halen wrote.
The shares fell as much as 4.5% Wednesday in New York trading.
Written by: Daniela Sirtori @Bloomberg
The post “Richer Americans Are Turning to IHOP, Applebee’s for Cheap Eats” first appeared on Bloomberg