IHOP changes its name to IHOb: International House of Burgers
More wealthy people are beginning to downgrade their dining options to chains like Applebee's and IHOP as they struggle to cope with soaring inflation.
The family restaurant chains that are known for their hearty breakfasts and classic burgers have noticed a major boost in the number of customers whose income was more than $75,000, as noted by the chains' 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," said John Peyton, Dine Brands chief executive, during a Tuesday analyst call.
He also said that is "why we perform well during tough times like this," before adding that the brands had pretty decent results during the 2008 financial crisis.
However, Peyton admitted that the downside to this is that customers who make less than $50,000 a year are most likely opting for cheaper alternatives such as meals at home and visits to fast-food restaurants.
"We assume that they've left us for lower-cost options," he said.
Peyton also said that that is still happening at a much slower pace than the influx of more affluent diners.
The chains further incentivised diners with different promotions, including 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.
The Applebee's discounts also come with a free entree for kids associated with a Minions promotion, although there are reports of food poisoning tied to the "Minions Menu."
Still, the company's customers are taking in price increases of 7 per cent at Applebees and 10 percent at IHOP without diminishing the check averages.
Elsewhere, comparable sales at Applebee's locations grew by 1.8% during the most recent quarter and by 3.6 per cent at IHOP.
The sales for the company are also 97 per cent of what they were before the coronavirus pandemic.
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