Applebee’s and IHOP claim they are reeling in richer customers who are feeling the pinch of inflation as they look to dine out.
The family restaurant chains known for their burgers and hearty breakfasts saw a major boost in the number of customers whose income is greater than $75,000, according to executives corporate parent Dine Brands.
“Guests that often dine at more expensive restaurants, are finding Applebee’s and IHOP because of their well-known value position,” Dine Brands chief executive John Peyton said on the Tuesday call. “We perform well during tough times like this.”
On the downside, consumers who earn less than $50,000 a year are likely defecting for cheaper alternatives such as fast-food joints and dinner at home to offset inflation pressures, Peyton admitted.
“We assume that they’ve left us for lower-cost options,” Peyton said.
Still, he added, that’s happening at a slower pace than the increase in wealthier diners. Applebees and IHOP saw a 6% to 8% increase in diners who earn more versus a “slight decline of a couple percentage points” of the diners who earn less than $50,000,” Peyton said.
The chains lured diners in with a variety of promotions, including one featuring a dozen shrimp for $1 with a steak entree at Applebee’s and discounts on appetizers and side dishes during IHOPPY hour, which starts at 3 PM as well as a free entree for kids tied to a Minions promotion — despite reports of food poisoning tied to “Minions Menu.”
Overall, the company’s customers are absorbing price increases of between 7% at Applebees and 10% at IHOP without check averages declining.
“Our average check has remained steady,” Peyton said.
The brands are “safe havens” for consumers during recessions, Peyton said, pointing to the company’s growth during the the 2008 and 2009 downturn.
The wealthier customers are “a server’s dream,” said Zane Tankel, chief executive of Apple-Metro, which owns 28 Applebee’s restaurants in the New York metro area.
“We identify the wealthier customers by the proteins they order like baby back ribs and sirloin steaks,” Tankel told The Post. “They also order their own appetizers instead of sharing them.”
Comparable sales at Applebee’s restaurants rose by 1.8% during the most recent quarter and by 3.6% at IHOP. The company sales are 97% of what they were pre-pandemic.
Dine Brands’ revenues grew by nearly 2% to $237.8 million in the quarter ended June 30, beating Wall Street’s expectations.
Dine Brands’ shares were up by more than 4% to $74.60 on Wednesday morning.