Applebee's and IHOP are gaining wealthier consumers whose dining-out habits are being impacted by inflation.
Dine Brands, which owns both restaurant chains, saw sales among higher-income households making over $75,000 a year grow by 6% to 8% in the last quarter.
In a recent call to discuss the company's earnings, Dine's CEO, John Peyton, said this "suggests to us that guests that often dine at more expensive restaurants are finding Applebee's and IHOP because of their well-known value position."
Peyton said Applebee's and IHOP had a similar experience during the 2008 financial crisis.
But among households earning less than $50,000 a year, sales dropped. The drop didn't do much to impact the overall quarterly results, though.
"We assume that they've left us for lower-cost options," Peyton said about lower-income consumers.
Both restaurants increased prices this year, but "position themselves as value-oriented," Peyton said. Value-oriented, meaning more deals like Applebee's charging only $1 for a dozen shrimp if you buy a steak entrée, and IHOP's IHOPPY hour, where food items are cheaper starting at 3 pm.
Inflation isn't only affecting consumers at Applebee's and IHOP. Chipotle also saw an increase in sales among customers from high-income households who make up a majority of its customer base.
McDonald's CFO Kevin Ozan said it's "seeing customers, particularly lower-income customers, trade down to value offerings and fewer combo meals."
Overall, Applebee's restaurants that have been open for at least a year saw a 1.8% increase in its sales in the last quarter, while IHOP restaurants open for the same time period saw a 3.6% increase.
