The CEO of Applebee’s and IHOP parent company Dine Brands says you are still likely to leave his restaurants feeling very full in a time where other restaurants are cutting portion sizes to shave off inflationary costs.
“Absolutely not,” Dine Brands CEO John Peyton said on Yahoo Finance Live if shrinking food sizes — a practice undertaken by food companies during inflationary periods known as “shrinkflation” — would be raining down on his chains. “One of our core values is both of our brands have always been — and will always be — value-oriented brands. Fabulous food, great service in a a warm and welcoming environment. It will never be about reducing portion sizes, that’s sacrosanct for us.”
It may not be sacrosanct for rivals of Dine Brands, however.
Shrinkflation has become one of the most common gripes from inflation-battered this year, according to data from Yelp.
“In Q2 2022, consumers are talking about shrinkflation-related experiences most commonly at restaurants serving more affordable offerings like hot dogs, hamburgers, pizza, followed by seafood restaurants, Italian food, and Chinese food,” Yelp said in its new report.
Consumers appear to be rewarding Dine Brands for keeping its menu large untouched.
Peyton said that guest frequency fell a “couple” percentage points in the second quarter for those households earning less than $50,000 a year. But those earning above $75,000 saw a “significant” increase in guest frequency.
Same-stores sales at Applebee’s and IHOP rose 1.8% and 3.6%, respectively in the quarter.
Dine Brands reiterated its full year operating profit outlook, striking a hopeful tone on a traffic rebound amid falling gas prices.
“Gas prices have fallen the last 50 days, and that is encouraging for the back half of the year and why we say that we are cautiously optimistic,” Peyton told Yahoo Finance Live. “We know that gas prices do correlate — we do believe that will encourage some of those lower income guests to return to IHOP more frequently and Applebee’s more frequently than they have.”
Gasbuddy notes the national average of gas has fallen under the $4 a gallon mark for the first time since early March. Since hitting a peak of $5.03 on average on June 14, gas prices have fallen over $1. Gasbuddy estimates Americans are spending nearly $400 million less on gas than they did in mid-June.
Now queue that 12oz steak order at Applebee’s — it’s unlikely to come out of the oven at 8oz.
Brian Sozzi is an editor-at-large and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.
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