DIN

Macro Environment & Core Strategy

• Macroeconomic headwinds including food inflation, elevated gas prices, and weakening consumer sentiment have led to more deliberate guest spending on dining out, with guests making intentional choices about when and where to dine.
• All three brands follow a shared core strategy: build long-term brand equity around consistent everyday value, balance value menu offerings with premium options, and drive customer engagement through menu innovation (the 'barbell strategy').

Applebee's Operational Highlights

• Q2 performance was dragged down by a tough year-over-year comparison to a strong 2025 promotional campaign in April, but results improved sequentially through May and June, driven by successful All You Can Eat and Pulio with Don Julio promotions.
• Liquor comps rose 10.5% during the Q2 promotional period; off-premise delivered its fifth consecutive quarter of double-digit delivery comp growth, with 1.5% overall off-premise comp growth.
• 66 restaurant remodels were completed year-to-date under the Lookin' Good program, with over 100 planned for full-year 2026, putting the chain on track to have one-third of the system remodeled by year-end. Remodels deliver an average mid-single-digit sales lift.
• In-restaurant experience improved: manager-guest interactions reached 75% of dine-in guests (up from a 68% 2025 baseline), and average Google ratings rose to 4.4/5 (up from 4.1/5 a year ago) on a review base that grew 23% YoY.

IHOP Operational Highlights

• IHOP outperformed Black Box industry sales and traffic benchmarks for the third consecutive quarter, beating industry traffic by mid-single digits.
• The $6 value menu was expanded in April 2026, and the popular Dubai Chocolate Pancakes LTO was brought back nationally due to overwhelming fan demand, over-indexing on sales against internal forecasts in its first few weeks.
• Off-premise delivered its fifth consecutive quarter of positive comp growth, with a 3.5% lift in Q2.

Dual-Brand Initiative Highlights

• The dual-brand platform continues steady expansion, with 45 locations open (7 company-owned) as of Q2 2026, on track to hit the full-year target of 80 openings. The first dual-brand location opened in the competitive Los Angeles market in June 2026, and is already delivering strong sales.
• Franchisee interest remains high, with an increasing number of operators adding dual-brand conversions to their long-term development plans due to compelling incremental economics relative to standalone locations. Operational processes and construction timelines have been refined with each opening, leading to a faster path to steady-state performance.

Capital & Corporate Portfolio Updates

• Dine Brands returned $9 million in capital to shareholders in Q2 2026, including $7 million in share repurchases and $2 million in dividends. Year-to-date, $29 million in shares have been repurchased (~7% of beginning-of-year outstanding shares), and the board authorized an additional $100 million share repurchase program.
• As of Q2 end, the company owns 136 restaurants (~4% of the total system), mostly reacquired from franchisees, with a long-term goal to remodel and re-franchise these locations. 30 remodels and 7 dual-brand conversions have been completed on the company-owned portfolio to date.

• Management maintained its full-year 2026 financial guidance, with full-year results expected to land towards the lower end of the existing guidance range.
• Commodity cost guidance is maintained: 2026 full-year commodity costs are expected to increase mid-single digits for Applebee's and low single digits for IHOP, driven primarily by elevated beef prices (including lapping favorable 2025 beef contracts for Applebee's).
• Management confirmed that the company is on track to meet its 2026 full-year target of 80 dual-brand openings.

Total company revenue increased 4.4% year-over-year to $240.9 million in Q2 2026. Adjusted EBITDA was $54.2 million, down from $56.2 million in Q2 2025.

• Applebee's: Domestic same-restaurant comp sales decreased 1.8% YoY. Average weekly franchise sales per restaurant were $57,700; off-premise sales contributed $13,200 (22.8% of total sales), with 1.5% positive off-premise comp growth. Commodity costs increased 8.2% YoY.
• IHOP: Domestic same-restaurant comp sales increased 1.5% YoY. Average weekly franchise sales per restaurant were $39,700; off-premise sales contributed $8,000 (20.2% of total sales), with 3.5% positive off-premise comp growth. Commodity costs increased 1.6% YoY.
• Fuzzy's: Posted positive comp sales for the second consecutive quarter, outperforming its competitive set.
• Dual Brand: 45 domestic locations open as of Q2 2026, with 12 additional locations under construction. Converted dual-brand locations average approximately 2x the sales level of standalone single-brand locations.

• Sustained macroeconomic headwinds including food inflation, elevated energy prices, and weak consumer sentiment could continue to pressure consumer discretionary dining spending and negatively impact traffic and sales.
• Commodity price volatility, particularly for beef, creates input cost pressure for both brands.
• Construction and conversion-related closures have pressured near-term profitability of the company-owned restaurant portfolio, creating near-term noise in consolidated EBITDA.
• One-time costs including severance and transaction expenses associated with the Q2 2026 acquisition of 48 Applebee's restaurants pressured G&A in the quarter, though these costs are non-recurring.

Q: Nick St-Jean of Mizuho asked for more color on early Q3 trends following reported industry acceleration, and for details on dual-brand sales levels and profitability for franchisees. / A: Management confirmed that Dine Brands is also seeing positive early Q3 trends, with new menu items (cheeseburger wonton taco for Applebee's 2-for-$25, Dollarita promotion) performing as expected. For dual-brands, incremental revenue from adding a second brand is ~2x original standalone sales, with conversion costs stabilizing around ~$1 million per location. Management notes franchisee pipeline growth for 2027, and is currently refining operational processes, menu design, and cost models to improve incremental profitability, which is expected to be positive on incremental revenue.

Q: Todd Brooks of Benchmark StoneX asked for an update on profitability improvements for the reacquired company-owned restaurant portfolio, and clarification on full-year G&A guidance after the Q2 G&A increase. / A: Management confirmed the portfolio is on track to hit its three-year improvement timeline, with restaurants acquired at minimal to no cost, with the core goal of reinvesting, remodeling, and re-franchising back to the system. Progress on operational improvements and guest satisfaction is on track, with most 2026 construction work complete, and inbound franchisee interest for re-franchising already exists. G&A guidance remains within the existing range: Q2's G&A increase included one-time severance and transaction costs that will not recur, and EBITDA volatility from the company-owned turnaround is expected to moderate as the portfolio stabilizes. CapEx for remodels and conversions is also expected to ease as the program advances.

Q: Brian Vaccaro of Raymond James asked for confirmation of IHOP traffic trends and check growth for both brands, and for a ballpark expected full-year EBIT loss for the company-owned portfolio and G&A impact. / A: Management confirmed 3.4% menu pricing for Applebee's and 3.5% for IHOP, driving moderate year-over-year check growth. IHOP traffic was near flat (slightly down), while Applebee's traffic was down. The long-term target for the company-owned portfolio is near break-even EBITDA (including both direct and allocated corporate G&A). Incremental GNA for the company portfolio runs ~6-7% of company restaurant top-line as a rule of thumb for modeling, and current AUV for the portfolio is in the low $2 million range (vs a system average of ~$3 million), with management working to close that gap to improve profitability.

Q: Emily Lee of UBS asked for more detail on how recent value initiatives performed, how value mix has changed, and what is next for the barbell strategy. / A: For Applebee's, consistent investment in the 2-for-$25 everyday value platform has built guest awareness, with regular new item updates keeping the offering fresh. The Q2 All You Can Eat promotion drove traffic, while new full-priced, high-margin premium items were offered alongside to balance margins. Value mix has held steady, and the barbell structure will continue through the second half, balancing value with quality, portion, and service. For IHOP, the updated $6 everyday value menu has held steady at ~low 20% of total checks, consistent with prior levels, and the barbell strategy balances value with premium core items and successful LTOs like Dubai Chocolate Pancakes, with a strong innovation pipeline to continue the mix going forward.