Applebee's, IHOP to close as many as 160 restaurants

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This March 8, 2016 staff file photo shows cooks prepare pancakes at an International House of Pancakes in the San Fernando Valley.
This March 8, 2016 staff file photo shows cooks prepare pancakes at an International House of Pancakes in the San Fernando Valley. Photo by Dean Musgrove, Los Angeles Daily News/SCNG/File

Aging casual dining brands Applebee’s and IHOP, both owned by Glendale-based DineEquity, announced plans to close as many as 160 restaurants.

Closures at Applebee’s, which has four Orange County locations, could range from 105 to 135 restaurants, DineEquity said Thursday. That’s more than double the number of closures previously stated by the chain. IHOP, which has several more locations in Orange County, will shutter 20 to 25 restaurants.

The news comes as both brands reported negative same-store sales for the second quarter. Same-store sales, a key indicator of a restaurant’s financial health, decreased 2.6 percent at IHOP and dropped 6.2 percent at Applebee’s.

“We are investing in the empowerment of our brands by improving overall franchisee financial health, closing underperforming restaurants and enhancing the supply chain,” Richard J. Dahl, interim Chief Executive of DineEquity, told investors on Thursday. “We are focusing on operations and elevating the guest experience, whether in our restaurants or off-premise. We believe 2017 will be a transitional year for Applebee’s and we are making the necessary investments for overall long-term brand health and expect to see improvement over the next year.”

The company did not disclose which locations would close.

The diminishment of both brands comes as older casual dining chains look for a magic formula to attract diners who’ve fled to more relevant brands favored by young families and millennials.

“Applebee’s continues to struggle with consumer relevancy – both a brand-specific challenge and something that the chain bar-and-grill segment as a whole continues to face,” Mark Kalinowski, a Nomura Instinet analyst, said in an earnings report.

It’s been a tough year for Applebee’s.

In 2016, the company and franchisees invested more than $75 million installing American-made, wood-fired grills at 2,000 restaurants. The restaurants began grilling bone-in pork chops, salmon (over cedar wood) and chicken breast.

But, the investment didn’t move the needle on Applebee’s slumping sales. In 2016, Applebee’s reported a 5 percent decrease in domestic same-store sales.

In the last two years, IHOP has closed two locations in Irvine. An eatery at Parkview Center had been there since 1992. It closed because its lease was up.

It’s unclear if IHOP chose to leave, or if it was denied a lease renewal.

“The way things worked out, things are not continuing on that location,” a DineEquity spokesman told The Register in 2016.

Later that year, another IHOP closed in Irvine at The Market Place. The Irvine Co. replaced it with Cha Cha’s Latin Kitchen, a popular gourmet Mexican restaurant with a location in downtown Brea. The Irvine Co. has been replacing older food brands with fresher concepts at its retail centers.



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