The company, which has been paying down debt as it tries to turn around its Applebee’s business, also reported a lower quarterly net loss as reduced labor costs from more thinly staffed restaurants and increased discounts on food and beverages helped offset lackluster sales.

“We remain guardedly optimistic about the U.S. economy and are encouraged by improving same-store sales,” Chief Executive Officer Julia Stewart said in a statement.

IHOP’s domestic systemwide same-restaurant sales, or sales at restaurants open at least 18 months, decreased 3.1 percent during the recently completed fourth quarter, while those at Applebee’s fell 4.5 percent, but DineEquity said it expected sales trends to improve.

The company forecast 2010 same-restaurant sales to be flat to 3 percent lower at Applebee’s and to range from a rise of 1 percent to a fall of 1 percent at IHOP.

The company is in the middle of a turnaround of Applebee’s, which like Brinker International Inc’s Chili’s, operates in the crowded and weak bar and grill restaurant segment. Such restaurants have offered traffic-generating but potentially profit-squeezing special deals as consumer spending remains unpredictable.

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