Nearly 100 IHOP locations will close across the US in the coming months, as the chain's sales slump amid the pandemic
- IHOP is planning to close nearly 100 restaurants over the next six months.
- The chain is reviewing underperforming restaurants, as sales slump during the pandemic.
- IHOP's comparable restaurants were down 23.5% in the third quarter, the company reported on Wednesday.
IHOP is closing restaurants as the breakfast chain struggles to win over customers during the pandemic.
Dine Brands, the parent company of IHOP and Applebee's, announced on Thursday that it is planning net closures of "less than 100" IHOP locations over the next six months. A representative for the company told Business Insider that the chain will close "just under 100 of our underperforming restaurants."
"We're confident we will eventually replace these severely under-performing restaurants with better-performing restaurants," IHOP president Jay Johns said on a call with investors on Wednesday.
The closures are part of the company's evaluation of the viability of underperforming restaurants among IHOP's 1,683 locations. Sixteen IHOP locations closed during the most recent quarter, with 35 restaurants closing so far in 2020.
IHOP's comparable restaurants were down 23.5% in the third quarter, the company reported on Wednesday. Dine Brands emphasized this was an improvement for the chain, where comparable sales fell 40.4% in the second quarter.
"The brand's performance continued to be impacted by the effects of governmental mandated restrictions on dining room operations and soft traffic across day parts, as consumers continue to mainly work from home," Johns said. "I'd like to highlight that the overall breakfast category in general remains challenged, as the morning meal has been oftentimes replaced at home, due to the diminished work transit."
With most dining rooms closed or operating at a limited capacity for much of the quarter, it was difficult for IHOP's sales to reach pre-pandemic levels. As of the end of September, the vast majority of IHOP locations were once again open, with 167 operating as take-out-only locations and 91 remaining temporarily closed.
Chains have closed hundreds of locations amid the pandemic
"Closures are part of the normal course of business in the industry, especially for a company of our size and footprint, and occur for many reasons – including a restaurant being in a lapsed trade area – where once vibrant traffic characteristics are no longer present – or as a result of leases expiring, among other reasons," a Dine Brands representative said in a statement.
"These closures will allow us to remain focused on continuing to close the gap on sales, as well as focus on key priorities including expanding off-premise, ensuring restaurant safety and providing compelling value and innovation," the statement continued.
Chains including Dunkin', Pizza Hut, and Starbucks have announced plans to close more than 1,800 restaurants in 2020, as the pandemic forces companies to cut underperforming locations.
Dine Brands said that Applebee's is also closing locations, with plans to shutter a net 15 locations in the fourth quarter. Applebee's closed 20 locations in the US in the last quarter, with 52 restaurants closing so far across the nation in 2020.