Why are Applebee's and IHOP more expensive now?

Applebee's and IHOP have raised their menu prices this year while also reporting an increase in sales.

Applebee's and IHOP have raised their menu prices this year while also reporting an increase in sales. (Business Wire via Associated Press)



Estimated read time: 2-3 minutes

GLENDALE, Calif. β€” Applebee's and IHOP have raised their menu prices this year while also reporting an increase in sales.

The reason? Instead of focusing on absolute prices this year, the restaurants are moving to make an emphasis on the value of their products, according to CNN.

At all times, "both of our brands ... position themselves as value-oriented," Dine Brands CEO John Peyton said while discussing quarterly results during an analyst call.

"Delicious food and generous portions in a wonderful environment at an affordable and approachable price at times like these, when economics are tough for our guests, our brands have particular expertise," Peyton said.

In April, May and June, sales at the two chains, owned by Dine Brands, grew about 6% to 8% among households earning over $75,000 per year, according to Peyton.

The rise in business "suggests to us that guests that often dine at more expensive restaurants are finding Applebee's and IHOP because of their well-known value position," Peyton said in the analyst call. Their emphasis on value is "why we perform well during tough times like this," he said.

Peyton also said that both of the brands had relatively good results during the 2008 recession.

Both restaurants saw their sales drop a few percentage points for people earning under $50,000 a year.

"We assume that they've left us for lower-cost options," Peyton said, adding that those losses didn't drag down the company's quarterly results. CNN reported that sales at Applebee's rose 1.8% in the quarter, and IHOP restaurants saw sales go up to 3.6% in that period.

Nation's Restaurant News reported that Applebee's President John Cywinski said that franchisees have raised prices about 7% over 2021.

"Pricing does not occur in a vacuum in the restaurant industry," Cywinski told analysts, "and our franchisees remain fully aware of the market share opportunity this current environment represents."

While the chains are upping their prices they continue to bring in guests with a variety of promotions. The New York Post reported that one of Applebee's promotions includes featuring a dozen shrimp for $1 with a steak entree.

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InflationU.S.Business & Tech
Madison Selcho

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