DineEquity Releases 2012 Results and Forecasts Growth Through 2014
DineEquity Inc. the parent company of Applebee’s Neighborhood Grill & Bar and IHOP Restaurants, released its financial results for the 2012 fiscal year which ended December 31 and announced projected development plans.
In fiscal 2012, Applebee’s showed a 1.2 percent increase in domestic same-restaurant sales from the previous fiscal year while IHOP experienced a 1.6 percent decline in same-restaurant sales for the same period. Both brands experienced a higher average guest check, offset by a decline in traffic.
Applebee’s company-operated restaurants experienced an operating margin of 16.3 percent for 2012, up from 14.5 percent for 2011. The increase was primarily due to the refranchise and sale of less profitable Applebee’s company-operated restaurants.
“For Dine Equity, 2012 was a year of milestones,” says Julia A. Stewart, chairwoman and CEO of DineEquity, Inc. “The year was marked by accomplishing what we set out to do when we acquired Applebee’s, completing the transition to a 99 percent franchised restaurant system. In addition, we reduced total debt by over $1 billion since the acquisition in 2007. We remain steadfast in managing our capital structure with a long-term view to maximize shareholder value. ”
Development activity during 2012 produced net growth in the number of Applebee’s and IHOP restaurants. Applebee’s closed 19 restaurants and opened 34 locations in 2012, ending the year with 2,034 locations. IHOP opened 48 locations in 2012 and closed 17 to end 2012 with 1,581 locations.
A critical aspect of Dine Equity’s strategic business model—the refranchising and sale of related restaurant assets of 154 Applebee’s company-operated restaurants—was completed in 2012. The remaining 23 Applebee’s company-operated restaurants are located in the Kansas City market area and the company intends to operate these restaurants primarily to test new remodel programs, operating procedures, products, technology, cooking platforms, and service models.
Similarly, there are 10 IHOP restaurants that remain company-owned, all located in the Cincinnati market, and these will also serve as test models.
In its 2013 fiscal year, DineEquity expects franchisees to open between 40 and 50 new Applebee’s restaurants. There are 35 domestic development agreements and 11 international agreements for 2013, and 51 domestic development agreements and 5 international development agreements for 2014.
During 2013, IHOP expects franchisees to open a total of 50 to 60 new restaurants, primarily in the domestic market.
Other highlights of 2012 include the opening of 48 new restaurants worldwide by IHOP franchisees and area licensees, and 34 new restaurants by Applebee’s franchisees. IHOP also expanded to the Middle East and the Dominican Republic.
In addition, more than 560 restaurants system-wide were remodeled during 2012. In the past two years, 51 percent of Applebee’s restaurants and approximately one-third of IHOP restaurants have been remodeled.