Dine Brands Global Inc. DIN has inked a deal with a leading logistics, and Food and Beverage joint, Gerry’s Group, to launch its International House of Pancakes (“IHOP”) brand in Pakistan.
Per the deal, the company will open 19 IHOP restaurants all over the country over the next nine years. The first restaurant is likely to be opened in Karachi by the end of 2019. Moreover, out of these 19 locations, nine will be franchised by Gerry’s Group itself and rest of them will be sub-franchised.
Founded in 1958, IHOP has a global presence since 1969 and has its franchisee in Asia-Pacific, Latin America, Canada and the Middle East. Additionally, it has plans to open new locations in South America by 2019, specifically in Peru and Ecuador. The company also plans to open franchisee in the United Kingdom.
Solid Brand Presence to Drive Growth
Dine Brands, a Glendale, CA-based restaurants franchisee company, has 1,831 IHOP franchised and area licensed restaurants along with 1,768 Applebee’s franchised restaurants, as of Dec 31, 2018. The company keeps on introducing locations in order to expand its global presence, thereby adding to its growth strategy.
We believe the deal will boost sales of IHOP restaurants. IHOP restaurant sales in 2018 increased 4.4% from the year-ago period. Also, its domestic system-wide comparable same-restaurant sales grew 1.5% in the same period. The company expects comps at IHOP to rise 2-4% and expects to open 35-55 IHOP restaurants globally in 2019.
Share Price Performance
Shares of this Zacks Rank #3 (Hold) company have gained 32.3% in the past year, broadly outperforming the industry’s growth of 15.6% and the S&P 500’s rally of 4.2%. Earnings estimates for 2019 have also moved 2.1% north over the past 30 days. The upside was driven by the company’s efforts to accelerate growth by focusing on key areas across the organization, including brand leadership, culinary, operations and marketing.
The company currently flaunts a Growth Score of A, which reflects the company is having a solid growth potential going forward.
Stocks to Consider
Some better-ranked stocks from the same space are Good Times Restaurants Inc. GTIM, Darden Restaurants, Inc. DRI and Starbucks Corp. SBUX. While Good Times Restaurants sports a Zacks Rank #1 (Strong Buy), Darden Restaurants and Starbucks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Good Times Restaurants has an impressive long-term earnings growth rate of 30%.
Darden Restaurants and Starbucks’ current year earnings are expected to increase 18.3% and 12.4%, respectively.
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