Dine Brands Global, Inc. Q2 FY2025 earnings call

• Applebee's: Menu innovation with new entrees paired with 2 for $25 value platform driving traffic and sales. Strengthened social media capabilities with engagement numbers multiplying on TikTok, X, and Meta. Lookin' Good remodel program progressing, with over 100 remodels expected by year-end.
• IHOP: House Faves menu continued to drive traffic and dollar margin. Check trends improved as the quarter progressed. Expanded the House Faves' value platform from 5 to 7 days after a successful in-market test. Enhanced social media engagement with over 400% more engagement quarter-over-quarter on TikTok and Meta.
• Other Segments: Fuzzy's launched first fast casual plus location; international business saw unit growth with dual brand pipeline expansion; company-owned portfolio showed solid progress with comp sales improving and performing near system average; dual brand growth continued with domestic dual brands opening and showing higher sales than stand-alone restaurants.

Applebee's: Reported a 4.9% increase in comp sales. Off-premise sales saw a positive 7.6% lift in Q2, with value mix approximately 30% in Q2. Introduced new menu items via the '2 for' section, and off-premise has posted positive sales and traffic every month YTD. IHOP: Comp sales were negative 2.3% but showed sequential improvement from Q1. The House Faves menu drove incremental traffic and dollar margin. Value mix was about 19% in Q2. Off-premise sales for IHOP were 20% of total sales, with 8% from to-go and 12% from delivery.

• For Applebee's domestic system-wide comp sales, now expect between positive 1% and positive 3% compared to previous range of negative 2% to positive 1%.
• For IHOP domestic system-wide comp sales, now expect between negative 1% and positive 1% compared to previous range of negative 1% to positive 2%.
• Raised G&A guidance to $205 million to $210 million from prior range of $200 million to $205 million.
• Reduced EBITDA guidance to $220 million to $230 million from prior range of $235 million to $245 million.
• Increased CapEx spend to range of $30 million to $40 million from prior range of $20 million to $30 million.

• Consumers still feeling macroeconomic pressure, leading guests to manage checks by ordering fewer beverages/appetizers and trading down. - Commodity cost uncertainties, with Applebee's commodity costs down 0.8% in Q2 and IHOP's up 8% versus prior year; IHOP expects commodity costs to increase by mid-single digits full year. - Tariff situation remains fluid, affecting commodity cost forecasts.

Q: Pratik Mahendra Patel asked about sustaining good operations with frequent changes to the 2 for $25 platform, the optimal value mix, and guest feedback.

A: John W. Peyton responded that franchisees have processes and training to handle new items, value mix was slightly down but historically higher, and guest feedback is positive with traffic driven by new entrees.

Q: Brian Hugh Mullan asked about IHOP's House Faves platform impact on franchisee profitability and expanding it to 7 days.

A: Lawrence Y. Kim replied that the House Faves platform tested well, showing positive traffic and sales, and the expansion to 7 days is due to successful in-market tests.

Q: Todd Morrison Brooks asked about the timeline for corporate-owned stores to reach neutral profitability on the income statement.

A: Vance Yuwen Chang explained that factors like liquor sales, construction, and staffing are causing choppy performance currently, but with progress in getting liquor licenses, completing remodels, and improving staffing, profitability will improve quarter-by-quarter over time.