California-based DineEquity, Inc. (DIN) — parent company of the Applebee's Neighborhood Grill & Bar and IHOP Restaurants — continues to expand its IHOP Restaurants brand through its Bahrain debut. The new restaurant – located in Bahrain City Centre – features IHOP Restaurants’ signature menu of breakfast favorites, such as pancakes, waffles, omelets as well as lunch and dinner items.
The opening marks the sixth of a 40-restaurant development agreement between DineEquity and M.H. Alshaya Company — a leading international franchise restaurant operator. The deal pertains to restaurant openings across the Middle East and North Africa region. Under this deal, future openings are expected in Lebanon, Qatar, Oman and Egypt.
DineEquity’s expansion in the Middle East marks the first major expansion of the brand outside the U.S. The company conventionally focused on the North American market, with franchises in the U.S., Canada and Mexico. However, lately, the company expanded the brand to Puerto Rico, the U.S. Virgin Islands and Guatemala, and has been looking beyond the shores of North America.
Since the brand’s entry into the Middle East with the opening of a restaurant in the UAE, it has grown by leaps and bounds. Currently, IHOP-branded restaurants are successfully operating at locations like Dubai, Kuwait and the Kingdom of Saudi Arabia.
In a bid to boost business, several U.S.-based restaurateurs are currently focusing on unit expansions internationally. Among these, The Cheesecake Factory Inc. (CAKE) inked a licensing agreement with Alshaya to develop restaurants in the UAE, Kuwait, Bahrain, Qatar and the Kingdom of Saudi Arabia and other markets in the Middle East and North Africa.
In our view, DineEquity’s recent expansion reflects its effort to tap the growth potential of the Bahraini economy, which has been recognized by the World Bank as a high income economy. Further, the company seeks to cash in on Alshaya’s expertise as one of the largest retailers in the Middle East which has been working with major brands like Starbucks Corporation (SBUX) and American Eagle Outfitters, Inc. (AEO).
DineEquity currently carries a Zacks Rank #3 (Hold).