Applebee’s is accelerating store closures in 2026 while simultaneously rolling out a bold dual-branding strategy with IHOP, aiming to optimize its portfolio and capture value-conscious diners in a tough economic climate.
The restaurant industry is contracting as economic pressures force chains to reevaluate their physical footprints. Applebee’s, the nostalgic casual dining chain, is at the forefront, announcing multiple store closures while pioneering a new dual-branding model with IHOP. This dual strategy of pruning underperforming locations and experimenting with combined restaurants reflects a broader trend of consolidation and innovation in response to rising costs and changing consumer behavior.
Recent closures include:
- Evansville, Indiana: Both locations (5100 E. Morgan Ave. and 5727 Pearl Drive) closed on February 19 after nearly 30 years of operation.
- Glenville, New York: The site at 268 Saratoga Road will close on April 12, with the franchise owner citing rising food, utility, and labor costs as primary factors.
- Columbia, Missouri: The restaurant at 2010 Interstate 70 Dr. SW closed on February 18; two other locations in the area remain open.
These moves align with Dine Brands Global‘s earlier projection of 20 to 35 closures in 2025 as part of a plan to exit unprofitable markets. The parent company, which also owns IHOP, is simultaneously expanding through an innovative partnership: dual-branded Applebee’s/IHOP locations. Approximately 80 such combined restaurants are expected to be open or under construction by the end of 2026, sharing kitchens and staff to offer both menus under one roof. This aims to reduce overhead and attract a broader customer base seeking value.
The economic rationale is clear. Data from the National Restaurant Association shows food and labor expenses have risen about 35% over the past five years, squeezing profit margins. For Applebee’s specifically, same-store sales dipped 0.4% in the fourth quarter but rose 1.3% for the full year, indicating mixed performance. Chief Executive John Peyton emphasized that “guests remain highly intentional about how they spend their discretionary dollars,” underscoring the focus on value pricing and portion size. The brand is also expecting increased commodity costs this year, particularly from beef and tariffs, as noted by CFO Vance Chang.
This isn’t Dine Brands‘ first bold maneuver. During the pandemic, the company pivoted to off-premise sales through ghost kitchens and virtual brands, which temporarily boosted sales by 200% to 300% from 2020 to 2021. Now, the dual-branding strategy represents another aggressive bet on operational efficiency and brand synergy.
For investors, the key question is whether this two-pronged approach—closing weak stores while launching combined concepts—will stabilize and grow the business. With Applebee’s location count down from 1,642 in 2024 to 1,567 by the end of 2025, the portfolio rationalization is underway. The success of the IHOP duos will be critical in driving same-store sales growth and offsetting revenue loss from closures. Early openings, such as in Mount Pleasant, New York, provide initial test cases.
Consumer trends support the value focus. Households are increasingly mindful of dining out costs, with many turning to guides on ways to stretch a restaurant budget and saving money to eat out more. Applebee’s dual-branding could tap into this demand by offering more options at competitive prices, potentially increasing foot traffic and check averages.
As the first dual-branded locations open, investors should monitor same-store sales trends and customer feedback. The strategy carries risks, including brand dilution and operational complexity, but if executed well, it could redefine casual dining economics and position Dine Brands for sustainable growth in a challenging environment.
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