Dine Brands Global, Inc. Q1 FY2025 earnings call

• John Peyton provided updates on Applebee's leadership, noting continuity is key for now while developing growth plans. Q1 results were discussed, with consumer caution influencing spending. Brand priorities include elevating guest experience, enhancing menu and value programs, and better communicating value. Applebee's saw improvement in sales and traffic in March, with off-premise comp sales up 3.7% driven by campaigns. Launched Big Easy menu and brought back viral date night pass. IHOP focused on House Faves value menu, core breakfast equities, streamlining operations, and culture-centric marketing, including setting a Guinness World Record for pancakes. Fuzzy's faced comp sales pressure but implemented initiatives like system-wide happy hour and online ordering updates. International business saw development discussions for dual brand expansion, aiming to open 13 additional dual brands and complete 10 dual conversions. Company-owned portfolio had 10 IHOPs taken back in Q1 and 47 Applebee's in Q4 2024, with remodeling and operational improvements underway.

In Q1, consolidated revenues were $214.8 million, up 4% from the prior year. EBITDA was $54.7 million, down from $60.8 million in the same quarter last year. Applebee's Q1 same-stores restaurant sales were negative 2.2%, with off-premise sales making up over 23% of total sales, including 12.5% from to-go and 10.9% from delivery. IHOP's Q1 same-stores restaurant sales were negative 2.7%, with off-premise sales accounting for over 21% of total sales, including 8% from to-go and 13% from delivery.

• Maintained full year financial guidance. Plan to refinance remaining Series 2019 bonds in the next several months. Organic investments, balance sheet management, and returning capital to shareholders remain focus. Remodeling Applebee’s system with early adopter incentive for franchisees impacts P&L. Repurchased $1.6 million in shares and paid $7.8 million in dividends in Q1.

• Tariffs introducing uncertainty in operating environment, though only small portion of market basket sourced internationally. Commodity cost fluctuations, with IHOP expecting mid-single digit increase due to avian influenza impact on egg pricing. Macro headwinds affecting consumer spending and brand performance.

Q: Eric Gonzalez asked about Applebee's performance in April and value incidence trend.

A: Vance Chang and John Peyton responded that there was momentum continuing into April despite tough compares, and John noted Applebee's returned to basics of what guests love, leaning into Bourbon Street menu, and value incidence at 34% is at high end of historic range, expecting it to adjust with guest wallet pressure.

Q: Jake Bartlett inquired about IHOP's same-store sales acceleration.

A: Vance Chang mentioned momentum in Q1 continuing, and Lawrence Kim detailed IHOP's four key priorities: core breakfast equities, value with House Faves, simplifying operations, and culture-driven marketing, noting IHOP comp traffic beat Black Box and had absolute traffic growth.

Q: Dennis Geiger asked about value proposition evolution.

A: Lawrence Kim discussed testing everyday value programs for IHOP, and John Peyton said Applebee's is evolving value through two for $25 campaign and refining value proposition.

Q: Brian Vaccaro asked about Applebee's remodel package and average check.

A: Vance Chang said remodel package varies by location, $200,000 to $300,000 range, and John Peyton mentioned Applebee's check increased slightly due to new menu launch, while IHOP's check dropped due to P mix drop from House Faves but traffic improved.

Q: Brian Mullan asked about IHOP's operations and franchisee receptivity.

A: Lawrence Kim gave examples of operational simplification like tablet modifications and training with short-form videos, and noted franchisee engagement has been fantastic with task force feedback.

Q: Todd Brooks asked about Club Applebee's path forward.

A: John Peyton said Club Applebee's is being leaned into for insider access, special privileges, and will leverage data across platforms, differing from IHOP's points-based loyalty.