Two years ago, Dine Brands set out an ambitious menu development goal for Applebee's to debut a new item every quarter. Today, after a year and a half of work, the chain has built an eight quarter pipeline of new entrees and appetizers that is already yielding traffic and sales boosts.
It wanted to build an eight-quarter pipeline of new entrees and appetizers for Applebee’s so that it could debut an item every quarter, CEO John Peyton said.
“What you see is that pipeline is now built and it’s continuous,” Peyton said. “We’ll keep adding to it and now we can roll out more food more often.”
Applebee's menu pipeline is largely linked to its 2 for $25 menu, and Dine Brands tests items with guests to ensure they are profitable for franchisees.
During the third quarter, Applebee’s rolled out various innovations as part of that plan, including Bacon Cheeseburger Wonton Tacos and O-M-Cheese-adilla burgers. The Bacon Cheeseburger Wonton Tacos, which were an extension of Applebee’s taco platform, was one of its strongest appetizer launches since the pandemic, outperforming its Best Loaded Potato Waves that debuted earlier this year, Peyton said during an earnings call.
So far, the innovation strategy is paying off. In the third quarter, Applebee’s returned to same-store sales growth of 0.9%, and traffic improved compared to the prior year, Peyton said during an earnings call
New items will continue to be tied to specific menu platforms, such as Applebee's popular Bourbon Street, which includes a variety of cajun-spiced dishes. Expanding platforms allows Applebee's to provide two to four versions within that submenu, which helps “make it more desirable for guests to want to come back to that platform over and over again,” Peyton said.
Applebee’s will also add new platforms in 2027, each offering two to three items, Peyton said. The platforms are meant to be long-term additions to the menu, but Peyton said the chain was not ready to provide further details on the type of food.
Dine Brands analyzes consumer trends to determine what types of menu platforms will resonate with guests, he said. Its O-M-Cheese Burger that launched earlier this year stemmed from a trend it saw in Japan, for example, in which burgers are halved and dunked in a skillet of cheese. Dine Brands also is considering what Gen Z and younger generations want, including customization, sharability and meals that photograph well for social media.
The O-M-Cheese Burger performed so well that it became Applebee’s most-ordered burger. Content associated with the burger generated over 9 billion impressions and reached 96 million people on social media.
Dine also regularly holds focus groups with guests and consumers to see what food trends interest them, Peyton said.
“And looking ahead, we expect to have more new food items launching over the next 12 months than we have had in the last few years,” Peyton said during the earnings call.
Balancing premium with value
Dine Brands takes a similar approach to figuring out new flavors to serve at IHOP. For example, the chain rolled out Dubai Chocolate Pancakes this summer to tie a specialty pancake to a growing trend. IHOP also linked that launch to a campaign across three restaurants, where it offered a $100 version of the pancake with gold flakes to generate excitement, Peyton said.
Dubai Pancakes are part of IHOP’s Spotlight Pancakes, which offer new flavors at a slightly higher price than everyday pancakes. These premium pancakes helped drive incremental engagement and trade-up opportunities during the quarter, Peyton said.
While guests will continue to gravitate toward Applebee's 2 for $25 menu and IHOP’s everyday $6 value menu, restaurants will merchandise premium items in the menu and at the table top to market higher-margin new items, Peyton said, adding that its Stuffed French Toast at IHOP was a great example of that strategy.
The mix of guests purchasing value items is also shrinking. During the third quarter, 25% of Applebee’s tickets and 22% of IHOP tickets included a value item. Those are a bit lower than previous quarters and around “the middle of the normal range,” Peyton said.
“[This] suggests to us the potential very early beginnings of guests being a little bit more willing to spend a dollar or two,” Peyton said.
Guests are also trading up at a higher rate within Applebee’s 2 for $25 platform. Diners can spend a few dollars more to go up to two additional tiers in that menu. During the first quarter, 61% of Applebee’s traded up within that menu, which increased to 68.5% in the third quarter, Peyton said.
He added that Applebee’s also reported quarter-over-quarter and year-over-year growth among Gen Z consumers, which were among the cohort of consumers spending less on full-service dining, he said.
“We think that’s a result of not only our great food innovation, but getting better and better at finding Gen Z and telling the story on social channels,” Peyton said.
