Adding a Second Brand Instead of Closing the Restaurant: Dine Brands’ Dual-Brand Model

If a restaurant location is not generating enough revenue, the options are usually limited: revamping the concept, reducing costs, transferring to another operator, or closing. Dine Brands, the owner of Applebee’s and IHOP, is trying a different approach at some of its restaurants. It is adding the group’s second brand to the existing location.

In the company’s dual-brand model, Applebee’s and IHOP operate at the same physical location. According to Dine Brands’ official definition, although the two concepts operate under separate franchise agreements, they share a single restaurant address. As of June 28, 2026, there were 44 such restaurants in the U.S. According to a news report from Restaurant Dive dated August 13, the number has reached 45 with the openings after the quarter.

The appeal of the model for the company is not just about bringing two strong brands side by side. According to initial results shared by Dine Brands CEO John Peyton, revenue can nearly double in restaurants undergoing conversion. For this reason, the company is considering the dual-brand model as an alternative to closing some underperforming locations.

Morning IHOP, Evening Applebee’s

The fundamental logic of the dual-brand model is based on the complementary strengths of the two brands during different parts of the day.

While IHOP’s demand is primarily concentrated in breakfast and morning hours, Applebee’s is stronger in lunch, dinner, and bar usage. Having two brands in a single location allows the same rent and property to generate income for a larger part of the day.

The customer behavior reported by the company also shows that these boundaries are not as clear-cut as we might think. About two out of three customers at dual-brand restaurants order items from both brands’ menus. In the morning, a table might have ribs alongside an omelet, while in the evening, pancakes may be seen next to Applebee’s offerings.

This is an important outcome from a restaurant management perspective. The model does not just create two separate operations of "breakfast brand in the morning, casual dining brand in the evening"; it can also expand the product mix on the same table.

Conversion cost is approximately 1 million dollars

The dual-brand model is not just about adding a sign to an existing restaurant.

According to Peyton, the cost of converting a single-branded restaurant to an Applebee’s-IHOP dual-brand location is approximately 1 million dollars. The company is currently working on the kitchen layout, employee efficiency, and a new version of the combined menu.

To evaluate whether this investment makes sense, it is not enough to look solely at revenue increases.

Key questions in the return on a one million dollar conversion investment include:

How much of the rising revenue translates into additional profit? Does it reduce the need for shared kitchen staff, or does the complexity of two menus increase labor costs? Is new equipment investment required? How does stock diversity and waste change? How are service times affected by both brands coming from the same kitchen?

Dine Brands has not yet publicly answered all these questions on a location-by-location basis. Therefore, interpreting the statement of double revenue directly as double profitability would not be accurate.

The company also does not yet know which restaurants are the most suitable

One of the striking aspects of the dual-brand model is that the company is still testing and developing the model.

Sales at a dual-brand restaurant opened in Los Angeles reportedly doubled in a short time. Nevertheless, Peyton states that there is not enough data to determine which locations—downtown, suburban, or rural—are more suitable for the model.

Similarly, it has not yet been determined whether underperforming restaurants or already strong-performing high-volume locations are more suitable for conversion.

This uncertainty is significant. Because the assumption that strong pilot performance will reflect the same way across the entire restaurant network can lead to costly mistakes in franchise systems.

Dine Brands’ data currently indicates that the initial conversions in different store types have shown similar performance. However, the system is still in the scaling process.

Franchise owners' interest is increasing

One of the parties that will determine the future of the model is franchise operators.

According to Restaurant Dive, about 12 franchise operators participated in the initial waves of dual-branding. With the first results starting to appear in 45 locations, interest from other franchise owners in the program is increasing.

Dine Brands’ second-quarter results confirm that growth is accelerating. As of June 28, there were a total of 44 dual-brand restaurants in the U.S., consisting of 37 franchises and seven company-operated locations. In just the second quarter, 10 dual-brand openings occurred.

The company had 27 dual-brand locations by the end of 2025. By the end of March 2026, the number increased to 35, and by the end of June, it reached 44. This progress indicates that the model has transitioned from pilot level to a broader franchise program.

Not all of Dine Brands’ restaurants are growing

The strong results at dual-brand restaurants should not be confused with the company’s overall sales performance.

According to Dine Brands’ second-quarter results for 2026, comparable restaurant sales for Applebee’s in the U.S. declined by 1.8% year-on-year, while IHOP recorded a 1.5% increase. In the same quarter, Applebee’s and IHOP opened a total of 13 restaurants and closed 30.

Therefore, behind the dual-brand program, there is not only a growth opportunity but also a need for efficiency within the existing restaurant network.

Peyton does not attribute all restaurant closures to the industry crisis. He notes that some locations have been operating for 20, 30, or 40 years; that rental conditions, markets, and real estate dynamics have changed over time. The dual-brand conversion could create a new option to extend the economic life of some locations that do not generate sufficient revenue.

Dine Brands is also running a renovation program called "Lookin’ Good" at Applebee’s restaurants.

Under the program, the exterior, lighting, landscaping, and brand elements, as well as the interior walls, artwork, lights, tables and chairs, upholstery, flooring, and bar areas are being renovated.

According to Peyton, renovated restaurants see an average sales increase of about 5%. The company also states that employees have provided positive feedback regarding the renovated physical environment.

Physical renovation also brings sales

Dine Brands aims to renovate about one-third of the Applebee’s network by the end of the year and 80% within two years. A similar renovation effort is being planned for IHOP, but a final package or timeline has not yet been determined.

Lessons for restaurant operators in Turkey

The Applebee’s-IHOP model is not a ready-made recipe that can be directly applied to Turkey. The fact that both brands belong to the same group, that their menus complement each other, and that the franchise infrastructure can be managed jointly are significant advantages for this model.

However, the fundamental business idea is also valuable from a Turkish perspective: the problem of a low-performing location may not always be the location itself.

A restaurant may be empty in the morning and busy in the evening. A hotel restaurant’s kitchen may be idle during certain parts of the day. A café may produce strong breakfast sales but may not generate revenue in the evening.

In these cases, a new concept, virtual brand, different daypart, or shared kitchen model can increase the productivity of the existing real estate. However, the decision should be made based on location economics before the excitement of the concept.

Stafflink’s view

The most important aspect of the Dine Brands example is not "putting two brands in the same shop"; it is its effort to extract more efficiency from the existing restaurant asset.

In restaurant management, rent, kitchen infrastructure, and dining area are already fixed costs that are being paid. If this capacity generates strong revenue for only a few hours of the day, a complementary concept may be economically meaningful.

However, the statement of double revenue alone is not a sufficient measure of success. If a dual-branded kitchen requires more SKUs, training, equipment, preparation, and coordination, operational complexity also increases.

According to Stafflink, businesses evaluating a similar model should not settle for the question, "How much sales does the second concept bring?" The contribution margin of additional revenue, the payback period of the investment, sales per employee, kitchen capacity, service time, stock turnover rate, and guest satisfaction should all be measured together.

The real lesson Dine Brands will provide in the upcoming period will be whether dual-brand restaurants can double their sales and whether they can convert that increase into a sustainable restaurant economy.