Applebee’s To Close Multiple Locations: What You Need To Know

If you’re a fan of Applebee’s Dollarita, you may want to enjoy it while you can! Recent announcements reveal that Dine Brands Global, the parent company of Applebee’s and IHOP, has plans to close several Applebee’s locations across the United States this year. This news comes from a fourth-quarter earnings call held by Applebee’s president Tony Moralejo, who provided insights into the company’s current status and future direction.

During the earnings call, Moralejo indicated that the company anticipates a reduction of approximately 25 to 35 Applebee’s restaurants in the domestic market. Despite this, there is some positivity on the horizon, as the company is also planning to open up to 25 new IHOP restaurants within the same timeframe. This dual approach reveals a strategy aimed at addressing both the challenges of closing underperforming locations and expanding in other areas.

As Moralejo articulated, “With our new development strategy in place, we feel confident in our ability to continue to open up new restaurants and scale the footprint of our brands over time.” This statement reflects the company’s commitment to adapting its business model while navigating through changing market conditions.

Understanding the Reasons Behind the Closures

The closures of Applebee’s restaurants are not merely a reaction to poor performance, but rather a strategic decision in response to evolving market dynamics. Moralejo clarified that these closures do not signify struggling franchisees but rather highlight challenges in specific trade areas. “These closures, these closures aren’t a sign of struggling franchisees. They’re offering a sign of struggling trade areas,” he noted.

Historically, Applebee’s faced significant closures; back in 2017, the chain shuttered over 100 restaurants nationwide. In the most recent earnings call, it was revealed that Applebee’s had net domestic closings of 33 restaurants in 2023. However, while Applebee’s struggles with closures, IHOP continues to flourish, having opened 46 restaurants last year alone.

The company aims to stabilize its presence in the market while maintaining a healthy growth trajectory. Moralejo emphasized, “Applebee’s is a mature brand, and it is natural to have closures with changing trade areas and franchisee agreement expiration.” This acknowledgment of the brand’s maturity highlights the need for continual adaptation and strategic planning.

The Future of Applebee’s and IHOP

Looking ahead, Dine Brands Global is focused on returning to net unit growth in the coming years. The company plans to introduce a new value-engineered prototype to enhance its brand offerings, aiming to improve both top-line sales and franchisee margins. Moralejo expressed optimism about franchisee interest in growing the brand, as demonstrated by a recent partnership with the Flynn Group, their largest franchisee.

Applebee’s currently boasts over 1,500 locations, and the closure rate of 1% to 2% of its system is considered typical for a brand of its age. This strategic approach will help Applebee’s remain competitive in a challenging dining landscape.

As consumers continue to seek convenient dining options, Applebee’s and IHOP are looking to innovate and adapt. They are also exploring hybrid locations that combine both brands, allowing them to capitalize on shared customer bases while diversifying their offerings.

In summary, while the closure of multiple Applebee’s locations can be concerning for fans of the brand, the company’s strategic initiatives and ongoing development plans indicate a commitment to long-term growth and adaptability in the fast-casual dining market.