* 3rd-qtr adjusted earnings/shr $1.10 vs est $0.92
* Revenue falls 25 pct
* Shares rise as much as 12 pct
Oct 29 DineEquity Inc said its costs
nearly halved in the third quarter after it sold more of its
Applebee's and IHOP restaurants to franchisees, following a
model that has helped U.S. restaurant chains through an economic
DineEquity's shares rose as much as 12 percent on Tuesday
after the company reported a better-than-expected adjusted
Companies such as DineEquity and Burger King Worldwide Inc
, which on Monday reported a better-than-expected
quarterly profit, are moving to a mostly franchise model that
provides a steady and lower-risk stream of revenue.
Franchisees pay royalties based on overall sales, and also
take on operating costs ranging from worker pay and food to rent
and supplies, such as straws and paper wrappers.
A 43 percent decline in expenses helped DineEquity to post a
third-quarter profit that topped Wall Street estimates, even as
revenue fell 25 percent.
More than 94 percent of Glendale, California-based
DineEquity's 3,600 restaurants were owned by franchisees at the
end of the third quarter to Sept. 30, up from 91 percent a year
DineEquity forecast full-year adjusted profit of $4.14 to
$4.24 per share, above analysts' average estimate of $4.00 per
share, saying it expected higher comparable-store sales in the
current quarter than it had previously forecast.
The company's U.S. same-restaurant sales rose 3.6 percent at
IHOP outlets, but fell 0.4 percent at Applebee's restaurants in
the third quarter.
Analysts polled by Consensus Metrix had expected a rise of 1
percent at IHOP outlets and an increase of 0.4 percent at
Excluding items, DineEquity earned $1.10 per share, beating
the average analyst estimate of 92 cents, according to Thomson
Net income fell to $18.7 million, or 97 cents per share,
from $60.6 million, or $3.14 per share, a year earlier.
DineEquity's shares, which had risen about 25 percent in the
year to Monday's close, were up 12 percent at $80.02 in late
morning trade on the New York Stock Exchange.