Applebee’s A+

Owner reverses slump

Applebee’s is heading back to its roots in high-calorie comfort food and cheap booze — and that’s plumping up the stock of its parent company.

Shares of Dine Brands, which owns Applebee’s and IHOP, surged more than 12 percent Thursday, to $99.49, after the company’s fourthquarter results showed unmistakable signs of a comeback at both chains.

With same-restaurant sales at Applebee’s and IHOP up 3.5 percent and 3 percent, respectively, Mark Kalinowski of Kalinowski Equity Research called both brands “revitalized.” Applebee’s, in particular, demonstrated that “the worst is over,” he said.

That’s because Applebee’s has ditched an ill-fated, threeyear experiment in which it catered to health-conscious millennials, rationing out skimpier portions of healthier fare like grilled chicken and seared tuna.

The botched strategy, which the company gave up last year, helped spur more than 100 store closings as former customers, as well as millennials, indulged themselves elsewhere.

“Applebee’s has never been about culinary trends and hard-to-put-out food,” Kalinowski said. “It’s about cheese and bacon and stuff that 99 percent of Americans love to eat.”

It’s also about alcohol — as in a $1 margarita, dubbed the “Dollarita,” that Dine Brands CEO Steve Joyce introduced a month after joining the company in September 2017.

The so-called “Neighborhood Drink of the Month” now changes 12 times a year, but it continues to draw stressed-out customers who need to unwind.

“And what do they do while they’re unwinding?” Kalinowski asked. “They order food.”

Applebee’s assured investors during its Thursday earnings call that the eatery chain will never stray again.

“Without question, ‘Eatin’ Good in the Neighborhood’ remains the centerpiece of our success,” President John Cywinski said of the chain’s motto, which it trademarked in 2001.

Dine Brands management also talked up IHOP, saying last summer’s burger rollout and temporary rebranding as IHOb (“b” for burger) has not only boosted foot traffic at restaurants but also takeout orders.

Improvements at Applebee’s and IHOP generated surprisingly strong earnings per share of $1.70 on revenue of $214.2 million.

Wall Street had been expecting Dine Brands to post an EPS of $1.57 on revenue of $197.3 million.