The parent companies of brands including Taco Bell, KFC, IHOP and Applebee’s are adding locations despite lingering construction delays, as sales hold steady amid tightening consumer budgets.

During their third-quarter earnings calls this week, Yum Brands and Dine Brands Global emphasized moves toward automation and smaller formats in response to staffing challenges. And conversion of existing buildings rather than ground-up construction is a top priority for IHOP and Applebee’s parent Dine Brands.

Executives of Pasadena, California-based Dine Brands Global, which operates more than 3,500 global locations of IHOP, Applebee’s and Fuzzy’s Taco Shop, said conversions of buildings vacated by other companies accounted for 70% of IHOP’s 29 new restaurant openings so far in 2023.

“However, as we enter the fourth quarter, our franchisees are still experiencing some near-term development headwinds including permitting and construction delays, which could cause some openings to slip to 2024,” Dine Brands Chief Financial Officer Vance Chang told analysts. “As a result, we now expect IHOP development to be between 20 to 30 net openings for 2023, compared to 45 to 60 net openings that we previously stated.”

Automation and small formats are among development priorities for Louisville, Kentucky-based Yum Brands, which added 1,130 new stores in 65 countries, a third-quarter record for the company that operates mostly franchised brands, including Taco Bell, KFC, Pizza Hut and Habit Burger Grill. The company’s global restaurant count grew 6% during the quarter and is now well over 57,000, making Yum among the world’s largest restaurant operators.

“We are on track to finish 2023 with net new unit development similar to the record-breaking performances of the last two years,” Yum Brands Chief Financial Officer Christopher Turner said during his company’s earnings call. Officials noted the bulk of current growth is coming from overseas regions, including China, Australia, Africa, Latin America and the Caribbean.

Much of Yum’s U.S. development focus is on automation and small formats that minimize labor requirements at a time of lingering staffing challenges and construction delays. Turner said Taco Bell’s newest small-box design, called GoMobile 2.0, recently debuted at a location in El Paso, Texas, and builds on the company’s original GoMobile concept that de-emphasizes dining rooms while focusing on drive-thru pickup of food ordered and paid for online or through mobile apps.

Yum’s future new restaurants will be testing or ramping up automated systems for supply ordering, already in place at over 7,000 U.S. restaurants. Another system called Dragontail, which uses artificial intelligence technology to aid production and delivery scheduling at 1,400 U.S. Pizza Hut stores, is on track for deployment in 8,000 Yum-operated restaurants globally by year’s end. Turner said Yum is also testing a voice-enabled, AI-driven drive-thru service system in a few California restaurants designed to increase speed and generate automated up-sell recommendations.

Dine Brands Global’s Chang said restaurant staffing “continues to steadily improve as more and more people return to the workforce,” and commodity cost inflation has eased from year-ago levels. The development focus for Applebee’s is renovating and updating existing locations rather than adding new restaurants, while IHOP is more focused on extending its footprint by converting existing buildings vacated by other firms.

“IHOP still has a strong development pipeline as franchisees are excited to expand the brand, and we remain bullish on IHOP’s long-term growth,” Chang said. However, IHOP President Jay Johns said it has been “tough in this environment” to predict when new stores will open because of lingering construction and permitting delays now facing many restaurant chains.

In addition to location growth, Johns said IHOP is looking to expand sales at existing locations by increasing operating hours as workers become available. Over the last few quarters, he said IHOP added 24-hour service at more than 50 locations, bringing the total to 800 system-wide, offering those hours at least part of the week. “We’re still probably 100 or 200 restaurants below where we were pre-pandemic,” Johns said.

For its third quarter ended Sept. 30, Yum Brands reported total revenue of $1.7 billion, up 10% from a year earlier, as same-store sales rose 6%. Net income was $416 million, up 26% from a year earlier.

Dine Brands Global reported total third-quarter revenue of $202.6 million, down 13% from a year earlier, primarily because the company turned 69 company-operated Applebee’s over to franchisees during the past year. Dine Brands’ net income was $18.5 million, down 12% from a year earlier. Same-store sales declined 2.4% from a year earlier at Applebee’s and increased 2% at IHOP.