* Q1 adj EPS $1.42 vs Street view $1.16
* Raises Applebee's 2011 same-restaurant sales target
* Shares up 4.4 percent
(Recasts first sentence, adds executive and analyst comments;
updates share activity)
By Lisa Baertlein
LOS ANGELES, May 3 DineEquity Inc (DIN.N)
raised a key full-year sales target for its Applebee's
restaurant chain as an increase in visits to franchised outlets
boosted results, and shares jumped 4.4 percent.
The bar and grill chain has posted nine consecutive monthly
increases in same-restaurant sales and those results suggest
that DineEquity has successfully turned around the business at
Applebee's, which it bought in a $2 billion leveraged buyout in
Applebee's closely watched sales at established restaurants
increased 3.9 percent during the first quarter.
Citing that result and the three-month trend, DineEquity
upped its same-restaurant sales forecast at Applebee's to an
expected rise of 2 to 4 percent. It previously forecast an
increase of 1 to 3 percent.
Without giving specific numbers, DineEquity Chief Executive
Julia Stewart said traffic increased at franchised Applebee's
restaurants at all meal times in every month during the first
quarter. Traffic was down at company-owned Applebee's units.
"We are outperforming all of our direct competitors in bar
and grill and casual dining," Stewart told Reuters.
When asked if improving industry trends were lifting
Applebee's results, she said: "That's about us. That's about
all we're doing."
Applebee's same-restaurant sales gain in the first quarter
outpaced the industry's 2 percent rise and the chain has been
"a clear market share gainer for three consecutive quarters,"
Raymond James analyst Bryan Elliott said in a client note.
DineEquity's results landed almost a week after rival
Brinker International Inc (EAT.N) reported a quarterly profit
that also beat Wall Street estimates and posted a long-awaited
increase in visits to its Chili's Grill & Bar chain.
Applebee's contributes about two-thirds of DineEquity's
income before interest, taxes, depreciation and amortization.
DineEquity recently updated the menu at Applebee's,
expanding its offering for diet-conscious customers with its
Weight Watchers offerings. Its "Two for $20" and
all-you-can-eat offer on soups and salads did well, too.
On the other hand, IHOP same-store sales fell 2.7 percent
during the first quarter, as a decline in visits offset the
benefit of diners spending more per meal.
An "All You Can Eat Pancakes" limited-time deal produced
disappointing results early in the quarter, but a new "Chicken
& Waffles" special introduced mid-quarter produced promising
results, the company said.
Stewart also said IHOP frozen breakfasts, including stuffed
French toast, would debut at 3,000 Wal-Mart Stores Inc (WMT.N)
locations this quarter under a new, nonexclusive licensing
deal. She declined to give additional terms at this time.
For the first quarter, Glendale, California-based
DineEquity's net income more than doubled to $28.1 million, or
$1.53 per share.
Excluding items, earnings were $1.42 per share, handily
topping the analysts' average estimate of $1.16, according to
Thomson Reuters I/B/E/S.
Shares of DineEquity were up 4.4 percent at $51.99 in
afternoon trading, while Brinker shares slipped 1.5 percent to
(Reporting by Lisa Baertlein and Nivedita Bhattacharjee;
Editing by Gopakumar Warrier, Lisa Von Ahn and Matthew Lewis)