The parent of Applebee’s and IHOP reported Thursday that same-store sales declined at both restaurant chains but its shares rose as profit topped analysts’ estimates.
DineEquity said domestic comparable store sales fell 6.2% at Applebee’s and 2.6% at IHOP in the second quarter compared with the year-ago period. Overall revenue edged down to $155.2 million from $160.3 million, just below the FactSet consensus of $156 million.
On the profit side, the company posted net income of $20.9 million, or $1.18 a share, down from $26.4 million, or $1.45 a share. But adjusted per-share earnings came to $1.30, well ahead of the FactSet consensus of $1.19.
The earnings appeared to encourage investors as DineEquity shares rose 4% to $38.31. The company’s “earnings performance has been mostly encouraging over the past few quarters with the trailing four-quarter average earnings surprise coming in at a positive 1.68%,” Zacks.com noted.
Amid a difficult environment for family-oriented restaurant chains, DineEquity has been focusing on boosting its brands through food and menu innovation, remodeling efforts, and online ordering.
“We are focusing on operations and elevating the guest experience, whether in our restaurants or off-premise,” CEO Richard J. Dahl said in a news release. “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.”
He said IHOP “remains on solid ground, despite soft sales this quarter. I am optimistic about the growth in both effective franchise restaurants and system-wide sales.”
But for the full year, DineEquity is now expecting Applebee’s same-restaurant sales to range from down 6% to down 8%, compared with prior guidance of down 4% to down 8%. IHOP comps are expected to range from down 1% to down 3%, compared with prior guidance of flat to up 3%.
The company also announced Thursday it is accelerating its store closure program, with 105 to 135 Applebee’s restaurants and 20 to 25 IHOPs closing this year.
