By Svea Herbst-Bayliss

BOSTON, April 2 (Reuters) - Activist investment firm JCPInvestment Partnership is urging Dine Brands Global Incto spin off its IHOP pancake house restaurant chain at a timerestaurants have largely been ordered to shut in order to helpslow the spread of the coronavirus.

The Houston-based investment firm told the Glendale,California-based company that its two chains - IHOP andApplebee's Grill & Bar - do not fit together and IHOP should beturned into a standalone company.

JCP made a shareholder proposal which was made public in aregulatory filing by Dine late on Wednesday. The company'sshareholder meeting is scheduled for May 12.

"We believe that a spin-off of IHOP into a separately tradedpublic company could create significant stockholder value andurge stockholders to vote FOR this proposal," JCP's shareholderproposal said. In the same filing, the company's board urgedshareholders to vote against the proposal.

JCP argues that Applebee's has been a drag on growth andthat other restaurant chains have successfully spun offsegments, including Darden Restaurants Inc which soldRed Lobster to a private equity company in 2014.

"We believe that the valuation increase and potentialearnings increase for IHOP would vastly outweigh the existingsynergies associated with keeping IHOP and Applebee's together,"JCP said in the filing.

JCP is run by James Pappas whose family has deep roots inthe restaurant business as his father, Christopher Pappas, ispresident and chief executive officer of restaurant chain Luby'sInc, which operates the Fuddruckers chain among others.

JCP did not immediately respond to a request for comment anda spokesman for Dine Brands declined to comment beyond thefiling.

Any spinoff would come with considerable costs and alsoaccelerate the repayment of debt. It would come with amake-whole premium of more than $90 million, which is roughlyone-third of the company's current $369 million marketcapitalization. The company has $1.3 billion in senior securednotes.

The shareholder proposal was publicized just hours beforethe U.S. government announced that jobless claims surged to 6.6million people last week. Restaurant workers have been hit hardas restaurants across the country have been forced to closedining rooms in observance of "social distancing" used to slowthe spread of the coronavirus.

(Reporting by Svea Herbst-Bayliss in BostonEditing by Matthew Lewis)