IHOP’s Profit Surges on Franchise Revenue

IHOP Corp., which owns and franchises IHOP restaurants, said its first-quarter profit rose 25%, aided by higher franchise revenue, lower restaurant expenses and other costs.

Results breezed past analyst estimates, sending shares of the Glendale-based company up 80 cents to $47.10.

For the quarter ended March 31, IHOP reported net income of $12.6 million, or 68 cents a share, compared with $10.1 million, or 50 cents, a year earlier. Revenue rose 3.1% to $88.5 million.

Wall Street had forecast a profit of 54 cents a share on sales of $88.2 million, according to Thomson Financial.

Sales in restaurants open at least one year, a closely watched performance gauge called same-store sales, rose 5.1%.

IHOP credited the profit rise to improvement in franchise operations, driven by higher same-store sales. It also attributed the quarter’s results to reduced general and administrative expenses and a lower number of outstanding shares after share buybacks.

The company forecast 2006 earnings of $2.25 to $2.35 a share, including stock option and other expenses. Analysts’ consensus view for the year is $2.37 a share.

Same-store sales for the year are expected to increase 2% to 4%.