More Restaurant Closings In 2020: IHOP, Applebee’s To Shutdown Locations

Franchisor Dine Brands Global (DIN) announced that up to 100 IHOP restaurants would close over the next six months, and 15 Applebee’s locations will shutter in the fourth quarter.

The company made the announcement as it released its Q3 2020 earnings report. Dine Brands Global said that due to the “impact of the pandemic on individual restaurant-level economics,” it is conducting an evaluation of the viability of those IHOP restaurants that are underperforming.

The Applebee’s restaurants that are slated to close are part of franchisees’ development activity in the states. Dine Brands Global closed 16 IHOP locations in the U.S. in the third quarter of 2020 and 20 Applebee’s restaurants during the same timeframe.

The company said that 97% of its U.S. restaurants have reopened during the pandemic, reporting a comparable same-restaurant sales decline for Applebee’s of 0.4% compared to a decline of 22.3% for the previous quarter. IHOP’s comparable same-restaurant sales declined by 23.5%, an improvement over 40.4% from Q2 2020.

Dine Brands Global cited the impact of COVID-19 on its restaurants as well as government restrictions on in-restaurant dining operations for the sales decline. The company also reported a net income of $10 million for the quarter compared to $23.9 million in the third quarter of 2019.

In a statement to Restaurant Business, a Dine Brands Global spokesperson said, “While IHOP anticipates closing just under 100 of our underperforming restaurants in the next 6 months, we are optimistic about the continued improvement in sales numbers and are continuing to see improvement in our off-premise business, which has nearly doubled since the start of the pandemic.

“Closures are part of the normal course of business in the industry, especially for a company of our size and footprint, and occur for many reasons – including a restaurant being in a lapsed trade area – where once vibrant traffic characteristics are no longer present – or as a result of leases expiring, among other reasons,” the spokesperson added.

The restaurant industry has been hit hard by the coronavirus pandemic as consumers shift to eating at home to prevent the spread of the virus. Takeout and delivery options have increased for some restaurant businesses in the wake of the pandemic but may have found themselves closing locations or filing for bankruptcy.

Since the pandemic hit, California Pizza Kitchen, Chuck E. Cheese, Ruby Tuesday’s, and Garden Fresh Restaurants’ Souplantation and Sweet Tomatoes, among others, have filed for Chapter 11 bankruptcy protection.

Shares of Dine Brands Global were trading at $53.94 as of 11:00 a.m. EDT, down $2.03 or 3.63%.