(Bloomberg) — Wealthier Americans are visiting IHOP and Applebee’s more often, looking for specials on their pancakes and chicken wings.
Dine Brands Global Inc., the parent company of the two chains, has seen a decline in visits from low-income customers in recent quarters, while the chain is attracting more diners from households earning $100,000 and more, CEO John Peyton said in an interview Wednesday.
All guests, no matter how much they earn, gravitate toward value deals, he said. New deals include unlimited riblets at Applebee’s and a breakfast combo at IHOP.
“Some higher-income guests come to us because they also think about managing their wallets,” Peyton said.
The trend at Dine underscores how tight Americans’ budgets have become after years of high prices. The company’s lower-income customers aren’t going to cheaper restaurants, Peyton says, preferring to eat at home to save money.
Dine, which also owns Fuzzy’s Taco Shop, has responded like many competitors with new offers at lower prices. The company typically plans promotions more than a year in advance, but given the weak demand, some of its recent launches have been put together in about five weeks, Peyton said.
In the second quarter, sales at IHOP and Applebee’s restaurants unexpectedly fell, and the company lowered one of its annual profitability targets. The increase in higher-income guests was not enough to prevent a decline in guest volume, which the company said was largely responsible for the revenue decline. The results suggest the increased focus on value is yet to bear fruit, wrote Bloomberg Intelligence analyst Michael Halen.
Shares fell as much as 4.5 percent in New York trading on Wednesday.
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