Applebee’s and IHOP are more than restaurants. For decades, these establishments have been the places where families gathered after ballgames, where road trips stopped for pancakes, and where Main Street found an affordable night out. That nostalgia is real, and franchisees across the country still take pride in keeping those doors open every day.
However, nostalgia does not cover all expenses. Since early 2021 with the new management, Dine Brands’ stock has collapsed by more than 70 percent. Years of underinvestment, rising costs, and a board unwilling to confront structural issues have destroyed value. Franchisees know the strain, and investors see it in the numbers.
We have seen this movie before. TGI Fridays once stood as a pillar of casual dining, only to drift into irrelevance after years of inaction. Its bankruptcy should be a cautionary tale for anyone who believes iconic brands cannot fail.
What follows is not a hit piece. It is a personal view, shaped by our position as a shareholder and by conversations with franchisees who want better. The message is simple: change is not optional; it is essential.
The Case for Change at Applebee’s And IHOP
On paper, the parent company, Dine Brands, still appears to be producing enough cash. About $100 million in annual free cash flow covers its $30 million dividend. At first glance, that looks safe. But the cushion is thinner than it seems.
Adjusted net income in the first half of 2025 fell to $33 million from $45 million a year earlier. Costs are rising, guest traffic is uneven, and underinvestment has left the brands trailing peers. If same-store sales slip by 10 percent, EBITDA would fall below $200 million. That matters because dropping through that threshold triggers leverage above 5.25× and mandatory $10 million annual repayments.
In that stress case, free cash flow would shrink to about $80 million. Covering a $30 million dividend suddenly looks stretched. Management may be forced to cut as early as 2027, especially with a $1.3 billion refinancing looming in 2029. Lenders will demand stricter terms, higher coupons, and tighter covenants.
The math is clear. A dividend cut is not imminent, but the conditions that would force one are already forming.
Operational Underinvestment
Financial strain is only half the story. Operationally, Applebee’s and IHOP are slipping behind competitors. Olive Garden has driven traffic with menu focus and value. Chili’s has leaned into digital engagement. The Cheesecake Factory maintains industry-leading satisfaction scores through consistent reinvestment.
By contrast, Applebee’s and IHOP have bloated menus, outdated technology, and inconsistent execution. Franchisees are left juggling complexity without higher returns. Guests see it in clunky ordering, stale ambiance, and uneven service.
Casual dining is not broken. As I noted in a recent Forbes piece, it is booming for those who modernize. The problem is not demand; it is execution. Applebee’s and IHOP are being left behind.
Applebee’s AND IHOP Franchisee Concerns
Franchisees are the system’s lifeblood. I’ve sat across from operators who whisper their support but stop short of going public because they fear reprisal. That silence is not endorsement. It reflects a culture of fear. Operators worry about reprisal if they challenge management.
Without franchisee buy-in, no turnaround will succeed. Remodels stall, menu updates fall flat, and guest experience deteriorates. Disengaged operators take shortcuts and postpone investments, perpetuating the cycle that strains corporate cash flow.
For shareholders, this is the most important signal of all. Franchisee silence means something is broken. Until alignment is restored, value will continue to erode.
Private Equity Is Circling
Private equity is circling the casual dining sector. I’ve seen this playbook before: buy cheap, cut deep, dress it up, and sell later. It works for them, not for shareholders. Applebee’s and IHOP would fit neatly into the playbook: buy cheap, cut deeper, and extract returns.
But that path benefits new owners, not current shareholders. By the time a deal happens, the upside will belong to financial sponsors. Today’s investors will benefit from a modest premium on a depressed base. Weak boards and hesitant franchisees create that opening. The longer underinvestment and drift continue, the more likely outsiders will dictate the terms.
The Solution
The fixes are clear. They begin with strengthening the board. On June 12, The Edge engaged privately with Dine Brands. On August 14, we sent a detailed plan. Both were ignored. On September 12, we went public, calling for two directors whose experience matches the company’s needs.
- Chris Marshall has transformed balance sheets. At Mr. Cooper Group, he drove an 1,800 percent stock return through capital restructuring. He co-founded Capital Bank, turned around Ally with $1.2 billion in savings, and delivered multiple successful exits. He knows how to deleverage, manage refinancing, and unlock flexibility for reinvestment.
- Tom Lewison has fifty years in restaurants. At CKE, he improved the economics of 3,000 Hardee’s units. As Bojangles CEO, he doubled average unit volumes and expanded the chain to 400+ restaurants. Today, as a Burger King franchisee, he has delivered four straight years of double-digit growth. He understands both the boardroom and the operator’s front line.
Together, Lewison and Marshall address Dine Brands’ biggest gaps: operator credibility and financial discipline. With them, the board gains both practical alignment and restructuring expertise.
Strategic Fixes
Board change is the catalyst. Execution must follow. The strategy we propose is straightforward:
- Reignite Brand Relevance: simplify menus, sharpen marketing, and incentivize remodels.
- Repair Franchisee Alignment: empower advisory councils, tie support to KPIs, co-invest in capital improvements.
- Streamline Capital Allocation: cut millions in G&A, review dividends, and reinvest in stores.
- Portfolio Optimization: divest Fuzzy’s Taco Shop and focus on core brands.
- Balance Sheet Reset: reduce leverage below 3.5×, strengthening the position for 2029 refinancing.
These are not academic ideas. They are the same fixes I hear franchisees beg for when they think no one at corporate is listening.
The “Why” for Franchisees
Franchisees are the front line. Without them, shareholders have nothing. Better economics at the store level create higher volumes and a healthier system. Misaligned economics lead to deferred investment, weaker service, and brand erosion.
The proposed fixes—simpler menus, sharper marketing, and remodel incentives are about restoring pride and profitability at the operator level. Franchisees want to believe in the system again. With alignment, they will drive the growth that restores value. Without it, no financial engineering will matter.
The Outcome
The choice is clear. With change, Applebee’s and IHOP can thrive again. A credible turnaround could lift EBITDA by $55 million within two years and put the stock back on a path toward $100. Franchisees would re-engage, guests would return, and capital markets would regain confidence.
Without change, the outcome is predictable. There will be a dividend cut by 2027, a punitive refinancing in 2029, deeper franchisee frustration, unit closures, and a slow bleed into irrelevance. At that point, private equity will step in, but at the expense of current shareholders.
Personal Conclusion
I have seen this story before. At GE, at Boeing, and across countless other companies I’ve analyzed up close, hope was never a strategy.
Dine Brands finds itself at a crucial juncture. Act decisively now, with franchisees and shareholders aligned, or watch value slip away. Without change, dividends will be cut, franchisees will disengage, and iconic brands will fade. With change, Applebee’s and IHOP can be restored to relevance and strength. This is not a hit job. It is a plea for accountability. Franchisees deserve leadership that supports their investment. Shareholders deserve a board that grows their capital. Applebee’s and IHOP can be great again, but only if Dine Brands embraces real change. The time for that change is now.