IHOP profit jumps 37% as sales increase

Pancake-house operator IHOP Corp., which is acquiring casual-dining chain Applebee’s International Inc., said Wednesday that its second-quarter earnings rose 37%, helped by franchise restaurant openings, growth in same-store sales and cost controls.

Net income for the quarter rose to $14.1 million, or 82 cents a share, from $10.3 million, or 56 cents, a year earlier.

Analysts surveyed by Thomson Financial had expected profit of 59 cents a share.

Revenue climbed to $89.5 million from $85.1 million a year earlier, above the $87.3 million analysts had projected.

The company said it was paying a dividend of 25 cents a share.

Shares of Glendale-based IHOP gained $1.10, or almost 1.7%, to $66.12 on Wednesday.

Julia A. Stewart, IHOP’s chairwoman and chief executive, said the company continued to drive sales by opening 15 franchise restaurants, increasing same-store sales and moderating expenses. She said the pending Applebee’s acquisition would not be a serious distraction.

For the three months ended June 30, sales at stores open for at least a year increased 2.5% as higher average customer checks offset lower dining-room traffic. The company said it was continuing to battle a sluggish restaurant market, brought about by higher fuel prices and changing consumer behavior as well as increased competition for breakfast customers.

IHOP reiterated its existing guidance for 2007 as it related to its IHOP business, saying it expected same-store sales growth of 2% to 4% and the addition of 61 to 66 restaurants.

But it said it was suspending its fiscal 2007 profit outlook because current guidance didn’t account for the effect of the Applebee’s acquisition on results.

The company said last week that it planned to buy Overland Park, Kan.-based Applebee’s, the nation’s largest casual-dining restaurant chain, for $2.1 billion in cash and assumption of debt in a deal expected to be completed in the fourth quarter.