Dine Brands (DIN), the parent company behind iHop and Applebee’s, recently reported second-quarter earnings that missed Wall Street estimates, sending the stock tumbling.
The earnings miss came to a surprise to some, given the strength of reports issued by fast-food brands such as McDonald’s (MCD), Starbucks (SBUX), and Chipotle (CMG). Dine Brands’ CEO Stephen Joyce joined Yahoo Finance’s The Final Round to discuss the company’s lackluster earnings report, and intensifying competition in the casual dining sector.
‘There is not a lot of growth’ in casual dining
While sales at the company’s iHop locations proved strong, another of its other well-known subsidiaries did not fare quite as well.
“The issue for us was a tough quarter with Applebee’s,” explained Joyce. “For the second-quarter, it was slightly negative ... As a result of the performance, we lowered our revenue comp sales guidance for the year.
However, Joyce remains optimistic about the second half of the year.
“We’re expecting Applebee’s to move back into positive territory,” says Joyce. “We know what the issues were on the Applebee’s side, and it’s really about driving more aggressive value, which we’re planning on doing ... We think the second half [of the year] will be a good turnaround for us.”
How can the casual dining sector compete against the bundle deals and delivery possibilities offered by fast-food chains?
“Casual dining business has always been, for the last several years, a share game,” explained Joyce. “There is not a lot of growth in that marketplace. We are competing directly against the other brands, and the competition is pretty fierce. In our case, we know we’ve got to drive value, and we are planning on doing that for the rest of the quarter, and expecting a return.”