UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

~~__________________________________________________~~

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September~~June 30, ~~2022~~2023

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 001-15283

Dine Brands Global, Inc. IHOP and Fuzzy Logos.jpg

(Exact name of registrant as specified in its charter)

Delaware

95-3038279

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

~~450 North Brand Boulevard,~~10 West Walnut Street, 5th Floor

~~91203-2346~~91103

~~Glendale,~~Pasadena

(Address of principal executive offices)

(Zip Code)


(818)						240-6055
(Registrant’s telephone number, including area code)

______________________________________________________________

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value	DIN	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐

No ☒

As of ~~October~~July 25, ~~2022,~~2023, the Registrant had ~~15,678,481~~15,551,276 shares of Common Stock outstanding.

Table of Contents

Dine Brands Global, Inc. and Subsidiaries

Index


		Page
PART I.	FINANCIAL INFORMATION	3
	Item 1—Financial Statements	3
	Consolidated Balance Sheets - ~~September~~June 30 ~~2022~~, 2023 (unaudited) and December 31, ~~2021~~2022	3
	Consolidated Statements of Comprehensive Income (unaudited) - Three and ~~Nine~~Six Months Ended ~~September~~June 30 , 2023 and 2022 ~~and 2021~~	4
	Consolidated Statements of Stockholders' Deficit (unaudited) - Three and ~~Nine~~Six Months Ended ~~September~~June 30 , 2023 and 2022 ~~and 2021~~	5
	Consolidated Statements of Cash Flows (unaudited) - ~~Nine~~ Six Months Ended ~~September~~June 30 , 2023 and 2022 ~~and 2021~~	7
	Notes to Consolidated Financial Statements (unaudited)	8
	Item 2—Management’s Discussion and Analysis of Financial Condition and Results of Operations	2726
	Item 3—Quantitative and Qualitative Disclosures about Market Risk	4440
	Item 4—Controls and Procedures	4440
PART II.	OTHER INFORMATION	4541
	Item 1—Legal Proceedings	4541
	Item 1A—Risk Factors	4541
	Item 2—Unregistered Sales of Equity Securities and Use of Proceeds	4541
	Item 3—Defaults Upon Senior Securities	4541
	Item 4—Mine Safety Disclosures	4541
	Item 5—Other Information	4541
	Item 6—Exhibits	4642
	Signatures	4743

Table of Contents

Cautionary Statement Regarding Forward-Looking Statements

Statements contained in this Quarterly Report on Form 10-Q may constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements involve known and unknown risks, uncertainties and other factors, which may cause actual results to be materially different from those expressed or implied in such statements. You can identify these forward-looking statements by words such as “may,” “will,” “would,” “should,” “could,” “expect,” “anticipate,” “believe,” “estimate,” “intend,” “plan,” “goal” and other similar expressions. You should consider our forward-looking statements in light of the risks discussed under the heading “Risk Factors,” as well as our consolidated financial statements, related notes, and the other financial information appearing elsewhere in this report and our other filings with the United States Securities and Exchange Commission. The forward-looking statements contained in this report are made as of the date hereof and Dine Brands Global, Inc. does not intend to, nor does it assume any obligation to, update or supplement any forward-looking statements after the date of this report to reflect actual results or future events or circumstances.

~~Factors that could~~These statements involve known and unknown risks, uncertainties, and other factors, which may cause actual results to ~~differ~~be materially different from ~~the projections, forecasts, estimates and expectations discussed~~those expressed or implied in ~~this Quarterly Report on Form 10-Q~~such statements. These factors include, ~~among other things: uncertainty regarding the duration and severity of the ongoing COVID-19 pandemic (including the emergence of variant strains) and its ultimate impact on our business;~~but are not limited to: general economic conditions, including the impact of inflation; our level of indebtedness; compliance with the terms of our securitized debt; our ability to refinance our current indebtedness or obtain additional financing; our dependence on information technology; potential cyber incidents; the implementation of restaurant development plans; our dependence on our franchisees; the concentration of our Applebee’s franchised restaurants in a limited number of franchisees; the financial health of our franchisees, including any insolvency or bankruptcy; credit risks from our IHOP franchisees operating under our previous IHOP business model in which we built and equipped IHOP restaurants and then franchised them to franchisees; insufficient insurance coverage to cover potential risks associated with the ownership and operation of restaurants; our franchisees’ and other licensees’ compliance with our quality standards and trademark usage; general risks associated with the restaurant industry; potential harm to our brands’ reputation; risks of food-borne illness or food tampering; possible future impairment charges; trading volatility and fluctuations in the price of our stock; our ability to achieve the financial guidance we provide to investors; successful implementation of our business strategy; the availability of suitable locations for new restaurants; shortages or interruptions in the supply or delivery of products from third parties or availability of utilities; the management and

~~Table of Contents~~

forecasting of appropriate inventory levels; development and implementation of innovative marketing and use of social media; changing health or dietary preference of consumers; risks associated with doing business in international markets; the results of litigation and other legal proceedings; third-party claims with respect to intellectual property assets; delivery initiatives and use of third-party delivery vendors; our allocation of human capital and our ability to attract and retain management and other key employees; compliance with federal, state and local governmental regulations; risks associated with our self-insurance; natural disasters, pandemics, epidemics, or other serious incidents; our success with development initiatives outside of our core business; the adequacy of our internal controls over financial reporting and future changes in accounting standards; and other ~~matters~~factors discussed from time to time in the ~~“Risk Factors”~~"Risk Factors" section of ~~this report and our~~the Corporation's Annual Report on Form 10-K for the fiscal year ended December 31, ~~2021~~2022 and in ~~our~~the Corporation's other filings with the Securities and Exchange Commission, many of which are beyond our control.

Fiscal Quarter End

The Company’s fiscal quarters end on the Sunday closest to the last day of each calendar quarter. For convenience, the fiscal quarters of each year are referred to as ending on March 31, June 30, September 30 and December 31. The first fiscal quarter of 2023 began on January 2, 2023 and ended on April 2, 2023; the second fiscal quarter of 2023 ended on July 2, 2023. The first fiscal quarter of 2022 began on January 3, 2022 and ended on April 3, 2022; the second ~~and third fiscal quarters~~quarter of 2022 ended on July 3, 2022 and October 2, 2022, respectively. The first fiscal quarter of 2021 began on January 4, 2021 and ended on April 4, 2021; the second and third fiscal quarters of 2021 ended on July 4, 2021 and October 3, 2021, respectively.

2022.

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements.

Dine Brands Global, Inc. and Subsidiaries

Consolidated Balance Sheets

(In thousands, except share and per share amounts)

September 30, 2022 December 31, 2021
Assets (Unaudited)
Current assets:
Cash and cash equivalents $ 355,288 $ 361,412
Receivables, net of allowance of $4,205 (2022) and $4,959 (2021) 89,529 119,968
Restricted cash 52,517 47,541
Prepaid gift card costs 24,595 28,175
Prepaid income taxes 3,502 10,529
Other current assets 11,075 6,728
Assets held for sale 109,280 —
Total current assets 645,786 574,353
Other intangible assets, net 526,989 539,390
Operating lease right-of-use assets 298,102 335,428
Goodwill 247,002 251,628
Property and equipment, net 135,368 179,411
Deferred rent receivable 44,306 50,257
Long-term receivables, net of allowance of $5,498 (2022) and $6,897 (2021) 43,245 42,493
Non-current restricted cash 16,400 16,400
Other non-current assets, net 14,823 10,006
Total assets $ 1,972,021 $ 1,999,366
Liabilities and Stockholders’ Deficit
Current liabilities:
Current maturities of long-term debt $ 100,000 $ —
Accounts payable 40,781 55,956
Gift card liability 126,161 165,530
Current maturities of operating lease obligations 65,174 72,079
Current maturities of finance lease and financing obligations 8,402 10,693
Accrued employee compensation and benefits 20,786 40,785
Accrued advertising 38,804 33,752
Dividends payable — 6,919
Other accrued expenses 22,975 25,016
Liabilities held for sale 96,023 —
Total current liabilities 519,106 410,730
Long-term debt 1,281,318 1,279,623
Operating lease obligations, less current maturities 279,620 320,848
Finance lease obligations, less current maturities 31,439 59,625
Financing obligations, less current maturities 28,572 31,967
Deferred income taxes, net 74,681 76,228
Deferred franchise revenue, long-term 42,616 46,100
Other non-current liabilities 16,263 17,052
Total liabilities 2,273,615 2,242,173
Commitments and contingencies
Stockholders’ deficit:
Preferred stock, $1 par value, 10,000,000 shares authorized; no shares issued or outstanding — —
Common stock, $0.01 par value; shares: 40,000,000 authorized; September 30, 2022 - 24,966,452 issued, 15,682,061 outstanding; December 31, 2021 - 24,992,275 issued, 17,163,946 outstanding 250 250
Additional paid-in-capital 256,508 256,189
Retained earnings 81,179 35,415
Accumulated other comprehensive loss (68) (59)
Treasury stock, at cost; shares: September 30, 2022 - 9,284,391; December 31, 2021 - 7,828,329 (639,463) (534,602)
Total stockholders’ deficit (301,594) (242,807)
Total liabilities and stockholders’ deficit $ 1,972,021 $ 1,999,366


	June 30, 2023		December 31, 2022
Assets	(Unaudited)
Current assets:
Cash and cash equivalents	$	97,953	$	269,655
Receivables, net of allowance of $6,803 (2023) and $4,806 (2022)	90,596		119,981
Restricted cash	39,365		38,929
Prepaid gift card costs	23,623		30,235
Prepaid income taxes	4,917		3,063
Other current assets	13,352		17,901
Total current assets	269,806		479,764
Non-current restricted cash	19,500		16,400
Property and equipment, net	157,508		145,277
Operating lease right-of-use assets	283,892		289,123
Deferred rent receivable	37,678		42,329
Long-term receivables, net of allowance of $5,443 (2023) and $5,529 (2022)	35,984		39,697
Goodwill	254,057		253,956
Other intangible assets, net	591,437		597,028
Other non-current assets, net	16,691		17,917
Total assets	$	1,666,553	$	1,881,491
Liabilities and Stockholders’ Deficit
Current liabilities:
Current maturities of long-term debt	$	100,000	$	100,000
Accounts payable	33,466		52,067
Gift card liability	137,530		171,966
Current maturities of operating lease obligations	58,687		59,071
Current maturities of finance lease and financing obligations	7,090		7,542
Accrued employee compensation and benefits	15,493		23,456
Accrued advertising expenses	10,980		24,157
Dividends payable	7,980		8,017
Other accrued expenses	28,956		24,446
Total current liabilities	400,182		470,722
Long-term debt, net, less current maturities	1,083,527		1,241,914
Operating lease obligations, less current maturities	275,967		275,120
Finance lease obligations, less current maturities	31,759		30,377
Financing obligations, less current maturities	27,690		28,358
Deferred income taxes, net	70,036		74,651
Deferred franchise revenue, long-term	40,956		42,343
Other non-current liabilities	17,437		19,090
Total liabilities	1,947,554		2,182,575
Commitments and contingencies
Stockholders’ deficit:
Preferred stock, $1 par value, 10,000,000 shares authorized; no shares issued and outstanding	—		—
Common stock, $0.01 par value; shares: 40,000,000 authorized; June 30, 2023 - 24,890,199 issued, 15,587,934 outstanding; December 31, 2022 - 24,959,972 issued, 15,599,239 outstanding	249		250
Additional paid-in-capital	250,808		259,339
Retained earnings	114,226		84,538
Accumulated other comprehensive loss	(65)		(65)
Treasury stock, at cost; shares: June 30, 2023 - 9,302,265; December 31, 2022 - 9,360,733	(646,219)		(645,146)
Total stockholders’ deficit	(281,001)		(301,084)
Total liabilities and stockholders’ deficit	$	1,666,553	$	1,881,491

See the accompanying Notes to Consolidated Financial Statements.

Table of Contents

Dine Brands Global, Inc. and Subsidiaries

Consolidated Statements of Comprehensive Income

(In thousands, except per share amounts)

(Unaudited)


		Three Months Ended				Nine Months Ended					Three Months Ended				Six Months Ended
		September 30,				September 30,					June 30,				June 30,
		2022		2021		2022		2021			2023		2022		2023		2022
Revenues:	Revenues:									Revenues:
Franchise revenues:	Franchise revenues:									Franchise revenues:
Royalties, franchise fees and other	Royalties, franchise fees and other	$	93,215	$	90,417	$	277,712	$	265,138	Royalties, franchise fees and other	$	101,938	$	94,148	$	204,863	$	184,497
Advertising revenues	Advertising revenues	71,692		70,709		216,686		203,918		Advertising revenues	75,979		74,111		153,016		144,994
Total franchise revenues	Total franchise revenues	164,907		161,126		494,398		469,056		Total franchise revenues	177,917		168,259		357,879		329,491
Company restaurant sales	Company restaurant sales	38,248		35,275		117,175		109,418		Company restaurant sales	474		39,511		1,531		78,927
Rental revenues	Rental revenues	29,207		31,273		87,080		84,797		Rental revenues	29,440		29,066		61,391		57,873
Financing revenues	Financing revenues	858		1,045		2,784		3,266		Financing revenues	584		958		1,381		1,926
Total revenues	Total revenues	233,220		228,719		701,437		666,537		Total revenues	208,415		237,794		422,182		468,217
Cost of revenues:	Cost of revenues:									Cost of revenues:
Franchise expenses:	Franchise expenses:									Franchise expenses:
Advertising expenses	Advertising expenses	71,692		70,709		216,686		203,918		Advertising expenses	75,979		74,111		153,016		144,994
Bad debt credit		(77)		(1,962)		(523)		(4,246)
Bad debt expense (credit)										Bad debt expense (credit)	1,721		(147)		2,644		(446)
Other franchise expenses	Other franchise expenses	8,649		6,922		24,402		20,197		Other franchise expenses	10,580		8,305		19,986		15,753
Total franchise expenses	Total franchise expenses	80,264		75,669		240,565		219,869		Total franchise expenses	88,280		82,269		175,646		160,301
Company restaurant expenses	Company restaurant expenses	36,513		33,867		111,802		101,510		Company restaurant expenses	431		37,881		1,510		75,289
Rental expenses:	Rental expenses:									Rental expenses:
Interest expense from finance leases	Interest expense from finance leases	740		822		2,254		2,677		Interest expense from finance leases	695		746		1,404		1,514
Other rental expenses	Other rental expenses	21,268		23,645		63,720		63,359		Other rental expenses	21,573		21,097		42,472		42,452
Total rental expenses	Total rental expenses	22,008		24,467		65,974		66,036		Total rental expenses	22,268		21,843		43,876		43,966
Financing expenses	Financing expenses	104		113		317		356		Financing expenses	94		106		192		213
Total cost of revenues	Total cost of revenues	138,889		134,116		418,658		387,771		Total cost of revenues	111,073		142,099		221,224		279,769
Gross profit	Gross profit	94,331		94,603		282,779		278,766		Gross profit	97,342		95,695		200,958		188,448
General and administrative expenses	General and administrative expenses	46,335		43,704		131,946		122,891		General and administrative expenses	47,840		44,063		98,927		85,611
Interest expense, net	Interest expense, net	15,300		15,712		46,192		47,922		Interest expense, net	17,781		15,359		32,490		30,892
Closure and impairment charges	Closure and impairment charges	1,636		443		3,093		5,024		Closure and impairment charges	847		1,311		1,314		1,457
Amortization of intangible assets	Amortization of intangible assets	2,664		2,664		7,994		8,015		Amortization of intangible assets	2,719		2,665		5,493		5,330

Loss on extinguishment of debt	Loss on extinguishment of debt	1,161		9		1,161		34		Loss on extinguishment of debt	1,671		—		10		—
(Gain) loss on disposition of assets		(1,502)		1,299		(3,032)		1,436
Loss (gain) on disposition of assets										Loss (gain) on disposition of assets	2,047		(234)		2,118		(1,530)
Income before income taxes	Income before income taxes	28,737		30,772		95,425		93,444		Income before income taxes	24,437		32,531		60,606		66,688
Income tax provision	Income tax provision	(7,789)		(7,661)		(25,665)		(15,368)		Income tax provision	(6,189)		(8,569)		(14,948)		(17,876)
Net income	Net income	20,948		23,111		69,760		78,076		Net income	18,248		23,962		45,658		48,812
Other comprehensive income, net of tax:
Other comprehensive income net of tax:										Other comprehensive income net of tax:

Foreign currency translation adjustment	Foreign currency translation adjustment	(5)		(2)		(9)		(4)		Foreign currency translation adjustment	(1)		(3)		—		(4)
Total comprehensive income	Total comprehensive income	$	20,943	$	23,109	$	69,751	$	78,072	Total comprehensive income	$	18,247	$	23,959	$	45,658	$	48,808
Net income available to common stockholders:	Net income available to common stockholders:									Net income available to common stockholders:
Net income	Net income	$	20,948	$	23,111	$	69,760	$	78,076	Net income	$	18,248	$	23,962	$	45,658	$	48,812
Less: Net income allocated to unvested participating restricted stock	Less: Net income allocated to unvested participating restricted stock	(575)		(502)		(1,852)		(1,920)		Less: Net income allocated to unvested participating restricted stock	(446)		(673)		(1,125)		(1,273)
Net income available to common stockholders	Net income available to common stockholders	$	20,373	$	22,609	$	67,908	$	76,156	Net income available to common stockholders	$	17,802	$	23,289	$	44,533	$	47,539

Net income available to common stockholders per share:	Net income available to common stockholders per share:									Net income available to common stockholders per share:
Basic	Basic	$	1.32	$	1.34	$	4.23	$	4.55	Basic	$	1.16	$	1.45	$	2.91	$	2.90
Diluted	Diluted	$	1.32	$	1.33	$	4.22	$	4.52	Diluted	$	1.16	$	1.45	$	2.91	$	2.90
Weighted average shares outstanding:	Weighted average shares outstanding:									Weighted average shares outstanding:
Basic	Basic	15,377		16,911		16,049		16,752		Basic	15,308		16,050		15,304		16,386
Diluted	Diluted	15,403		16,971		16,079		16,858		Diluted	15,317		16,080		15,324		16,418

See the accompanying Notes to Consolidated Financial Statements.

Table of Contents

Dine Brands Global, Inc. and Subsidiaries

Consolidated Statements of Stockholders' Deficit

(In ~~thousands)~~thousands except shares)

(Unaudited)


		Three Months Ended September 30, 2022															Three Months Ended June 30, 2023
		Common Stock							Accumulated Other Comprehensive Loss		Treasury Stock						Common Stock							Accumulated Other Comprehensive Loss		Treasury Stock
		Shares Outstanding	Amount		Additional Paid-in Capital		Retained Earnings				Shares	Cost		Total			Shares Outstanding	Amount		Additional Paid-in Capital		Retained Earnings				Shares	Cost		Total
Balance at June 30, 2022		15,823	$	250	$	253,213	$	68,265	$	(63)	9,151	$	(630,321)	$	(308,656)
Balance at March 31, 2023																Balance at March 31, 2023	15,674,739	$	249	$	248,187	$	103,931	$	(64)	9,240,633	$	(640,986)	$	(288,683)
Net income	Net income	—	—		—		20,948		—		—	—		20,948		Net income	—	—		—		18,248		—		—	—		18,248
Other comprehensive loss		—	—		—		—		(5)		—	—		(5)
Purchase of common stock		(141)	—		—		—		—		141	(9,520)		(9,520)
Other comprehensive expense																Other comprehensive expense	—	—		—		—		(1)		—	—		(1)
Purchase of Company common stock																Purchase of Company common stock	(137,632)	—		—		—		—		137,632	(9,017)		(9,017)
Reissuance of treasury stock	Reissuance of treasury stock	8	—		(378)		—		—		(8)	378		—		Reissuance of treasury stock	76,000	—		(556)		—		—		(76,000)	3,784		3,228
Net issuance of shares for stock plans	Net issuance of shares for stock plans	(5)	—		—		—		—		—	—		—		Net issuance of shares for stock plans	(18,445)	—		—		—		—		—	—		—
Repurchase of restricted shares for taxes	Repurchase of restricted shares for taxes	(3)	—		(248)		—		—		—	—		(248)		Repurchase of restricted shares for taxes	(6,728)	—		(414)		—		—		—	—		(414)
Stock-based compensation	Stock-based compensation	—	—		3,801		—		—		—	—		3,801		Stock-based compensation	—	—		3,591		—		—		—	—		3,591
Dividends on common stock	Dividends on common stock	—	—		122		(8,034)		—		—	—		(7,912)		Dividends on common stock	—	—		—		(7,953)		—		—	—		(7,953)

Tax payments for share settlement of restricted stock units		—	—		(2)		—		—		—	—		(2)
Balance at September 30, 2022		15,682	$	250	$	256,508	$	81,179	$	(68)	9,284	$	(639,463)	$	(301,594)
Balance at June 30, 2023																Balance at June 30, 2023	15,587,934	$	249	$	250,808	$	114,226	$	(65)	9,302,265	$	(646,219)	$	(281,001)

Nine Months Ended September 30, 2022
Common Stock Accumulated
Other
Comprehensive
Loss Treasury Stock
Shares
Outstanding Amount Additional
Paid-in
Capital Retained Earnings Shares Cost Total
Balance at December 31, 2021 17,164 $ 250 $ 256,189 $ 35,415 $ (59) 7,828 $ (534,602) $ (242,807)
Net income — — — 69,760 — — — 69,760
Other comprehensive loss — — — — (9) — — (9)
Purchase of common stock (1,642) — — — — 1,642 (113,573) (113,573)
Reissuance of treasury stock 186 — (8,471) — — (186) 8,712 241
Net issuance of shares for stock plans 9 — — — — — — —
Repurchase of restricted shares for taxes (35) — (2,601) — — — — (2,601)
Stock-based compensation — — 12,128 — — — — 12,128
Dividends on common stock — — 218 (23,996) — — — (23,778)
Tax payments for share settlement of restricted stock units — — (955) — — — — (955)
Balance at September 30, 2022 15,682 $ 250 $ 256,508 $ 81,179 $ (68) 9,284 $ (639,463) $ (301,594)

~~See the accompanying Notes to Consolidated Financial Statements.~~


	Six Months Ended June 30, 2023
	Common Stock							Accumulated Other Comprehensive Loss		Treasury Stock
	Shares Outstanding	Amount		Additional Paid-in Capital		Retained Earnings				Shares	Cost		Total
Balance at December 31, 2022	15,599,239	$	250	$	259,339	$	84,538	$	(65)	9,360,733	$	(645,146)	$	(301,084)
Net income	—	—		—		45,658		—		—	—		45,658
Other comprehensive expense	—	—		—		—		—		—	—		—
Purchase of Company common stock	(212,492)	—		—		—		—		212,492	(14,017)		(14,017)
Reissuance of treasury stock	270,960	(1)		(9,131)		—		—		(270,960)	12,944		3,812
Net issuance of shares for stock plans	(16,415)	—		—		—		—		—	—		—
Repurchase of restricted shares for taxes	(53,358)	—		(3,941)		—		—		—	—		(3,941)
Stock-based compensation	—	—		5,309		—		—		—	—		5,309
Dividends on common stock	—	—		91		(15,970)		—		—	—		(15,879)
Tax payments for share settlement of restricted stock units	—	—		(859)		—		—		—	—		(859)
Balance at June 30, 2023	15,587,934	$	249	$	250,808	$	114,226	$	(65)	9,302,265	$	(646,219)	$	(281,001)

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Dine Brands Global, Inc. and Subsidiaries

Consolidated Statements of Stockholders' Deficit (Continued)

(In ~~thousands)~~thousands except shares)

(Unaudited)

Three Months Ended September 30, 2021
Common Stock Accumulated
Other
Comprehensive
Loss Treasury Stock
Shares
Outstanding Amount Additional
Paid-in
Capital (Accumulated Deficit) Retained Earnings Shares Cost Total
Balance at June 30, 2021 17,178 $ 250 $ 250,509 $ (588) -588000 $ (57) 7,833 $ (532,865) $ (282,751)
Net income — — — 23,111 — — — 23,111
Other comprehensive loss — — — — (2) — — (2)
Reissuance of treasury stock 50 — 422 — — (50) 2,083 2,505
Net issuance of shares for stock plans (6) — — — — — — —
Repurchase of restricted shares for taxes (2) — (140) — — — — (140)
Stock-based compensation — — 2,960 — — — — 2,960
Balance at September 30, 2021 17,220 $ 250 $ 253,751 $ 22,523 $ (59) 7,783 $ (530,782) $ (254,317)


																	Three Months Ended June 30, 2022
		Nine Months Ended September 30, 2021															Common Stock							Accumulated Other Comprehensive Loss		Treasury Stock
		Common Stock							Accumulated Other Comprehensive Loss		Treasury Stock						Shares Outstanding	Amount		Additional Paid-in Capital		Retained Earnings				Shares	Cost		Total
		Shares Outstanding	Amount		Additional Paid-in Capital		(Accumulated Deficit) Retained Earnings				Shares	Cost		Total
Balance at December 31, 2020		16,452	$	249	$	257,625	$	(55,553)	$	(55)	8,430	$	(556,917)	$	(354,651)
Balance at March 31, 2022																Balance at March 31, 2022	16,746,028	$	250	$	250,150	$	52,516	$	(60)	8,245,135	$	(568,028)	$	(265,172)
Net income	Net income	—	—		—		78,076		—		—	—		78,076		Net income	—	—		—		23,962		—		—	—		23,962
Other comprehensive loss	Other comprehensive loss	—	—		—		—		(4)		—	—		(4)		Other comprehensive loss	—	—		—		—		(3)		—	—		(3)

Purchase of Company common stock																Purchase of Company common stock	(912,992)	—		—		—		—		912,992	(62,608)		(62,608)
Reissuance of treasury stock	Reissuance of treasury stock	647	1		(1,120)		—		—		(647)	26,135		25,016		Reissuance of treasury stock	6,682	—		(315)		—		—		(6,682)	315		—
Net issuance of shares for stock plans	Net issuance of shares for stock plans	140	—		—		—		—		—	—		—		Net issuance of shares for stock plans	(7,533)	—		—		—		—		—	—		—
Repurchase of restricted shares for taxes	Repurchase of restricted shares for taxes	(19)	—		(1,543)		—		—		—	—		(1,543)		Repurchase of restricted shares for taxes	(8,795)	—		(608)		—		—		—	—		(608)
Stock-based compensation	Stock-based compensation	—	—		8,572		—		—		—	—		8,572		Stock-based compensation	—	—		3,986		—		—		—	—		3,986

Tax payments for share settlement of restricted stock units		—	—		(9,783)		—		—		—	—		(9,783)
Balance at September 30, 2021		17,220	$	250	$	253,751	$	22,523	$	(59)	7,783	$	(530,782)	$	(254,317)

Dividends on common stock																Dividends on common stock	—	—		—		(8,213)		—		—	—		(8,213)
Balance at June 30, 2022																Balance at June 30, 2022	15,823,390	$	250	$	253,213	$	68,265	$	(63)	9,151,445	$	(630,321)	$	(308,656)


	Six Months Ended June 30, 2022
	Common Stock							Accumulated Other Comprehensive Loss		Treasury Stock
	Shares Outstanding	Amount		Additional Paid-in Capital		Retained Earnings				Shares	Cost		Total
Balance at December 31, 2021	17,163,946	$	250	$	256,189	$	35,415	$	(59)	7,828,329	$	(534,602)	$	(242,807)
Net income	—	—		—		48,812		—		—	—		48,812
Other comprehensive loss	—	—		—		—		(4)		—	—		(4)
Purchase of Company common stock	(1,501,100)	—		—		—		—		1,501,100	(104,053)		(104,053)
Reissuance of treasury stock	177,984	—		(8,093)		—		—		(177,984)	8,334		241
Net issuance of shares for stock plans	14,327	—		—		—		—		—	—		—
Repurchase of restricted shares for taxes	(31,767)	—		(2,353)		—		—		—	—		(2,353)
Stock-based compensation	—	—		8,327		—		—		—	—		8,327
Dividends on common stock	—	—		96		(15,962)		—		—	—		(15,866)
Tax payments for share settlement of restricted stock units	—	$	—	$	(953)	$	—	$	—	—	$	—	$	(953)
Balance at June 30, 2022	15,823,390	$	250	$	253,213	$	68,265	$	(63)	9,151,445	$	(630,321)	$	(308,656)

See the accompanying Notes to Consolidated Financial ~~Statements.~~

Statements

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Dine Brands Global, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)


		Nine Months Ended					Six Months Ended
		September 30,					June 30,
		2022		2021			2023		2022
Cash flows from operating activities:	Cash flows from operating activities:					Cash flows from operating activities:
Net income	Net income	$	69,760	$	78,076	Net income	$	45,658	$	48,812
Adjustments to reconcile net income to cash flows provided by operating activities:	Adjustments to reconcile net income to cash flows provided by operating activities:					Adjustments to reconcile net income to cash flows provided by operating activities:
Depreciation and amortization	Depreciation and amortization	28,870		29,995		Depreciation and amortization	17,651		19,969
Non-cash closure and impairment charges	Non-cash closure and impairment charges	2,975		4,949		Non-cash closure and impairment charges	1,296		1,348
Non-cash stock-based compensation expense	Non-cash stock-based compensation expense	12,128		8,572		Non-cash stock-based compensation expense	5,309		8,327
Non-cash interest expense	Non-cash interest expense	2,210		2,112		Non-cash interest expense	1,935		1,436

Loss on extinguishment of debt						Loss on extinguishment of debt	10		—
Deferred income taxes	Deferred income taxes	(1,376)		(9,156)		Deferred income taxes	(2,939)		(773)
Deferred revenue	Deferred revenue	(3,773)		(5,808)		Deferred revenue	(1,730)		(2,396)
Loss on extinguishment of debt		1,161		34
(Gain) loss on disposition of assets		(3,032)		1,436

Loss (gain) on disposition of assets						Loss (gain) on disposition of assets	2,118		(1,530)
Other	Other	(3,816)		947		Other	88		(2,647)
Changes in operating assets and liabilities:	Changes in operating assets and liabilities:					Changes in operating assets and liabilities:
Accounts receivable, net	Accounts receivable, net	(734)		8,398		Accounts receivable, net	(285)		(1,114)
Deferred rent receivable	Deferred rent receivable	5,951		4,629		Deferred rent receivable	4,651		3,964
Current income tax receivables and payables	Current income tax receivables and payables	7,361		4,544		Current income tax receivables and payables	(3,006)		3,715
Gift card receivables and payables	Gift card receivables and payables	(16,752)		(9,215)		Gift card receivables and payables	(6,204)		(8,397)
Other current assets	Other current assets	(5,948)		(2,645)		Other current assets	4,502		(5,983)
Accounts payable	Accounts payable	(6,855)		9,678		Accounts payable	(13,307)		(9,656)
Operating lease assets and liabilities	Operating lease assets and liabilities	(8,286)		(13,994)		Operating lease assets and liabilities	3,806		(5,724)
Accrued employee compensation and benefits	Accrued employee compensation and benefits	(18,738)		9,569		Accrued employee compensation and benefits	(10,170)		(18,894)

Accrued advertising	Accrued advertising	5,052		32,232		Accrued advertising	(13,177)		(178)
Other current liabilities	Other current liabilities	(2,668)		(8,791)		Other current liabilities	6,478		(400)
Cash flows provided by operating activities	Cash flows provided by operating activities	63,490		145,562		Cash flows provided by operating activities	42,684		29,879
Cash flows from investing activities:	Cash flows from investing activities:					Cash flows from investing activities:
Principal receipts from notes, equipment contracts and other long-term receivables	Principal receipts from notes, equipment contracts and other long-term receivables	13,502		14,795		Principal receipts from notes, equipment contracts and other long-term receivables	6,261		9,476
Net additions to property and equipment	Net additions to property and equipment	(19,495)		(7,923)		Net additions to property and equipment	(22,787)		(12,749)
Proceeds from sale of property and equipment	Proceeds from sale of property and equipment	3,908		946		Proceeds from sale of property and equipment	—		3,658
Additions to long-term receivables	Additions to long-term receivables	(1,069)		—		Additions to long-term receivables	—		(1,069)
Other	Other	(255)		(357)		Other	(46)		(93)
Cash flows (used in) provided by investing activities		(3,409)		7,461
Cash flows used in investing activities						Cash flows used in investing activities	(16,572)		(777)
Cash flows from financing activities:	Cash flows from financing activities:					Cash flows from financing activities:

Proceeds from issuance of long-term debt						Proceeds from issuance of long-term debt	500,000		—
Repayment of long-term debt	Repayment of long-term debt	—		(9,750)		Repayment of long-term debt	(651,713)		—
Borrowing from revolving credit facility	Borrowing from revolving credit facility	100,000		—		Borrowing from revolving credit facility	15,000		—
Repayment of revolving credit facility	Repayment of revolving credit facility	—		(220,000)		Repayment of revolving credit facility	(15,000)		—
Payment of debt issuance costs	Payment of debt issuance costs	(6,286)		—		Payment of debt issuance costs	(7,967)		—
Dividends paid on common stock	Dividends paid on common stock	(30,765)		—		Dividends paid on common stock	(15,970)		(14,588)
Repurchase of common stock	Repurchase of common stock	(113,862)		—		Repurchase of common stock	(14,017)		(102,394)
Principal payments on finance lease obligations	Principal payments on finance lease obligations	(7,001)		(7,772)		Principal payments on finance lease obligations	(3,623)		(4,696)
Proceeds from stock options exercised	Proceeds from stock options exercised	241		25,016		Proceeds from stock options exercised	3,812		241
Repurchase of restricted stock for tax payments upon vesting	Repurchase of restricted stock for tax payments upon vesting	(2,601)		(1,543)		Repurchase of restricted stock for tax payments upon vesting	(3,941)		(2,353)
Tax payments for share settlement of restricted stock units	Tax payments for share settlement of restricted stock units	(955)		(9,783)		Tax payments for share settlement of restricted stock units	(859)		(953)
Cash flows used in financing activities	Cash flows used in financing activities	(61,229)		(223,832)		Cash flows used in financing activities	(194,278)		(124,743)
Net change in cash, cash equivalents and restricted cash	Net change in cash, cash equivalents and restricted cash	(1,148)		(70,809)		Net change in cash, cash equivalents and restricted cash	(168,166)		(95,641)
Cash, cash equivalents and restricted cash at beginning of period	Cash, cash equivalents and restricted cash at beginning of period	425,353		456,053		Cash, cash equivalents and restricted cash at beginning of period	324,984		425,353
Cash, cash equivalents and restricted cash at end of period	Cash, cash equivalents and restricted cash at end of period	$	424,205	$	385,244	Cash, cash equivalents and restricted cash at end of period	$	156,818	$	329,712
Supplemental disclosures:	Supplemental disclosures:					Supplemental disclosures:
Interest paid in cash	Interest paid in cash	$	47,478	$	49,366	Interest paid in cash	$	34,818	$	31,701
Income taxes paid in cash	Income taxes paid in cash	$	20,832	$	21,143	Income taxes paid in cash	$	21,400	$	16,065
Non-cash conversion of accounts receivable to notes receivable		$	84	$	3,748

See the accompanying Notes to Consolidated Financial Statements.

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Dine Brands Global, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

(Unaudited)

1. General

The accompanying unaudited consolidated financial statements of Dine Brands Global, Inc. (the “Company” or “Dine Brands Global”) have been prepared in accordance with United States generally accepted accounting principles (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. The operating results for the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 are not necessarily indicative of the results that may be expected for the twelve months ending December 31, ~~2022.~~

2023.

The consolidated balance sheet at December 31, ~~2021~~2022 has been derived from the audited consolidated financial statements at that date but does not include all of information and footnotes required by U.S. GAAP for complete financial statements.

These consolidated financial statements should be read in conjunction with the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2021.~~

2022.

2. Basis of Presentation

~~Basis of Presentation~~

The Company’s fiscal quarters end on the Sunday closest to the last day of each calendar quarter. For convenience, the fiscal quarters of each year are referred to as ending on March 31, June 30, September 30 and December 31. The first fiscal quarter of 2023 began on January 2, 2023 and ended on April 2, 2023; the second fiscal quarter of 2023 ended on July 2, 2023. The first fiscal quarter of 2022 began on January 3, 2022 and ended on April 3, 2022; the second ~~and third~~ fiscal ~~quarters~~quarter of 2022 ended on July 3, 2022 and October 2, 2022, respectively. The first fiscal quarter of 2021 began on January 4, 2021 and ended on April 4, 2021; the second and third fiscal quarters of 2021 ended on July 4, 2021 and October 3, 2021, respectively.

2022.

The accompanying consolidated financial statements include the accounts of the Company and its subsidiaries that are consolidated in accordance with U.S. GAAP. All intercompany balances and transactions have been eliminated.

The preparation of financial statements in conformity with U.S. GAAP requires the Company’s management to make assumptions and estimates that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities, if any, at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Significant estimates may include the calculation and assessment of the following: impairment of goodwill, other intangible assets and tangible assets; income taxes; allowance for credit losses on accounts and notes receivables; lease accounting estimates; contingencies; and stock-based compensation. On an ongoing basis, the Company evaluates its estimates based on historical experience, current conditions and various other assumptions that are believed to be reasonable under the circumstances. The Company adjusts such estimates and assumptions when facts and circumstances dictate. Actual results could differ from those estimates.

~~Risks and Uncertainties~~

The Company was subject to risks and uncertainties as a result of the continuing outbreak of a novel strain of coronavirus, designated “COVID-19,” and evolving variants thereof. The extent of the continued impact of the COVID-19 pandemic on the Company's business remains uncertain and difficult to predict, as measures taken in response to and the effect of the pandemic have varied and continue to vary by country, state and municipalities within states. The Company first began to experience impacts from the COVID-19 pandemic in March 2020, as federal, state, local and international governments reacted to the public health crisis by encouraging social distancing and requiring, in varying degrees, restaurant dine-in limitations and other restrictions that largely limited the restaurants of the Company's franchisees and its company-operated restaurants to take-out and delivery sales during the initial stages of the pandemic. Subsequently, government-imposed dine-in restrictions have been relaxed or removed in many of the locations in which the Company operates as incidents of infection decline and vaccination rates increase within the respective governmental jurisdictions. As of September 30, 2022, substantially all domestic Applebee's Neighborhood Grill & Bar® ~~(“Applebee's”) and International House of Pancakes~~® ~~(“IHOP”) were open and operating without government-mandated restrictions.~~

~~Table of Contents~~

~~Dine Brands Global, Inc. and Subsidiaries~~

~~Notes to Consolidated Financial Statements (Continued)~~

~~2. Basis of Presentation (Continued)~~

The severity of the continued impact of the COVID-19 pandemic on the Company's business will depend on a number of factors, including, but not limited to, how long the pandemic will last, whether/when recurrences of the virus and variants of the virus may arise, the availability and acceptance of vaccines, what restrictions on in-restaurant dining may be imposed or re-imposed, the timing and extent of customer re-engagement with the Company's brands and, in general, what the short- and long-term impact on consumer discretionary spending the COVID-19 pandemic might have on the Company and the restaurant industry as a whole, all of which are uncertain and cannot be predicted. The Company's future results of operations and liquidity could adversely be impacted by the resurgence of outbreaks of the virus and its variants that result in the re-imposition of dine-in restrictions, as well as the success of any initiatives or programs that the Company may undertake to address financial and operational challenges faced by itself and its franchisees. As such, the extent to which the COVID-19 pandemic may continue to materially impact the Company's financial condition, liquidity, or results of operations remains highly uncertain.

3. Accounting Standards Adopted and Newly Issued Accounting Standards Not Yet Adopted

Accounting Standards Adopted in the Current Fiscal Year

In July 2021, the Financial Accounting Standards Board (“FASB”) issued guidance which affect lessors with lease contracts that (i) have variable lease payments that do not depend on a reference index or a rate and (ii) would have resulted in the recognition of a selling loss at lease commencement if classified as sales-type or direct financing. The amendments are effective for fiscal years beginning after December 15, 2021. Adoption did not have any material effect on the consolidated financial statements.

Additional new accounting guidance became effective for the Company as of the beginning of fiscal ~~2022~~2023 that the Company reviewed and concluded was either not applicable to its operations or had no material effect on its consolidated financial statements in the current or future fiscal years.

Newly Issued Accounting Standards Not Yet Adopted

In March 2020, with an update in January 2021, the FASB issued guidance which provides optional expedients and exceptions for applying current U.S. GAAP to contracts, hedging relationships, and other transactions affected by the discontinuation of the London Interbank Offered Rate (“LIBOR”) or by another reference rate expected to be discontinued. The guidance can be adopted immediately and is applicable to contracts entered into on or before December 31, 2022. The Company is currently evaluating its contracts that reference LIBOR and the potential effects of adopting this new guidance.

The Company reviewed all other newly issued accounting pronouncements and concluded that they either are not applicable to the Company's operations or that no material effect is expected on the Company's financial statements when adoption is required in the future.

4. Revenue ~~Disclosures~~

Franchise revenue and revenue from company-operated restaurants are recognized in accordance with current guidance for revenue recognition as codified in Accounting Standards Topic 606 (“ASC 606”). Under ASC 606, revenue is recognized upon transfer of control of promised services or goods to customers in an amount that reflects the consideration the Company expects to receive for those services or goods.

Table of Contents

~~Franchising Activities~~Dine Brands Global, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

4. Revenue (Continued)

Franchise Revenues

The Company ~~owns,~~ franchises ~~and operates~~ the Applebee's Neighborhood Grill & Bar® (“Applebee's”) concept in the American full-service restaurant segment within the casual dining category of the restaurant industry, ~~and~~ the ~~Company owns and franchises the IHOP~~International House of Pancakes® (“IHOP”) concept in the family dining mid-scale full-service category of the restaurant industry, and the Fuzzy's Taco Shop® (“Fuzzy's”) concept in the Mexican food segment within the fast-casual dining category of the restaurant industry. The franchise arrangement for ~~both~~the brands is documented in the form of a franchise agreement and, in most cases, a development agreement. The franchise arrangement between the Company as the franchisor and the franchisee as the customer requires the Company to perform various activities to support the brands that do not directly transfer goods and services to the franchisee, but instead represent a single performance obligation, which is the transfer of the franchise license. The intellectual property subject to the franchise license is symbolic intellectual property as it does not have significant standalone functionality, and substantially all the utility is derived from its association with the Company’s past or ongoing activities. The nature of the Company’s promise in granting the franchise license is to provide the franchisee with access to the respective brand’s symbolic intellectual property

~~Table of Contents~~

~~Dine Brands Global, Inc. and Subsidiaries~~

~~Notes to Consolidated Financial Statements (Continued)~~

~~4. Revenue Disclosures (Continued)~~

over the term of the license. The services provided by the Company are highly interrelated with the franchise license and as such are considered to represent a single performance obligation.

The transaction price in a standard franchise arrangement for ~~both~~the brands primarily consists of (a) initial franchise/development fees; (b) continuing franchise fees (royalties); and (c) advertising fees. Since the Company considers the licensing of the franchising right to be a single performance obligation, no allocation of the transaction price is required. ~~All~~Additionally, all domestic IHOP franchise agreements require franchisees to purchase proprietary pancake and waffle dry mix from the Company.

The Company recognizes the primary components of the transaction price as follows:

•Franchise and development fees are recognized as revenue ratably on a straight-line basis over the term of the franchise agreement commencing with the restaurant opening date. As these fees are typically received in cash at or near the beginning of the franchise term, the cash received is initially recorded as a contract liability until recognized as revenue over ~~time.~~time;

•The Company is entitled to royalties and advertising fees based on a percentage of the franchisee's gross sales as defined in the franchise agreement. Royalty and advertising revenue are recognized when the franchisee's reported sales occur. Depending on timing within a fiscal period, the recognition of revenue results in either what is considered a contract asset (unbilled receivable) or once billed, accounts receivable, and are included in “receivables, net” inon the ~~Consolidated Balance Sheets.~~balance sheet;

•Revenue from the sale of proprietary pancake and waffle dry mix and other proprietary products is recognized in the period in which distributors ship the franchisee's order; recognition of revenue results in an accounts receivable included in “receivables, net” inon the ~~Consolidated Balance Sheets.~~

balance sheet.

In determining the amount and timing of revenue from contracts with customers, the Company exercises significant judgment with respect to collectability of the amount; however, the timing of recognition does not require significant judgments as it is based on either the term of the franchise agreement, the month of reported sales by the franchisee or the date of product shipment, none of which require estimation.

The Company does not incur a significant amount of contract acquisition costs in conducting franchising activities. The ~~Company's~~Company believes its franchising arrangements do not contain a significant financing component.

Company Restaurant Revenues

Company ~~Restaurant Revenue~~

restaurant revenues comprise retail sales at company-operated restaurants. Sales by company-operated restaurants are recognized when food and beverage items are sold. Company restaurant sales are reported net of sales taxes collected from guests that are remitted to the appropriate taxing ~~authorities.~~

~~The following table disaggregates franchise revenue by major type for the three and nine months ended September 30, 2022 and 2021:~~

Three Months Ended Nine Months Ended
September 30, September 30,
2022 2021 2022 2021
(In thousands)
Franchise Revenue:
Royalties $ 76,418 $ 75,098 $ 229,666 $ 217,499
Advertising fees 71,692 70,709 216,686 203,918
Pancake and waffle dry mix sales and other 14,563 12,782 41,571 37,197
Franchise and development fees 2,234 2,537 6,475 10,442
Total franchise revenue $ 164,907 $ 161,126 $ 494,398 $ 469,056

~~Accounts and other receivables related to franchise revenues as of September 30, 2022 and December 31, 2021 were $65.4 million (net of allowance of $0.6 million) and $66.0 million (net of allowance of $1.1 million), respectively, and were included in receivables, net in the Consolidated Balance Sheets.~~

authorities, with no significant judgements required.

109

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Dine Brands Global, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

4. Revenue ~~Disclosures~~ (Continued)

The following table disaggregates franchise revenue by major type for the three and six months ended June 30, 2023 and 2022:


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
	(In thousands)
Franchise Revenue:
Royalties	$	82,768	$	78,006	$	166,206	$	153,248
Advertising fees	75,979		74,111		153,016		144,994
Pancake and waffle dry mix sales and other	17,150		14,077		34,412		27,008
Franchise and development fees	2,020		2,065		4,245		4,241
Total franchise revenue	$	177,917	$	168,259	$	357,879	$	329,491

Accounts and other receivables from franchisees as of June 30, 2023 and December 31, 2022 were $71.0 million (net of allowance of $3.4 million) and $69.0 million (net of allowance of $1.3 million), respectively, and were included in receivables, net in the Consolidated Balance Sheets.

Changes in the Company's contract liability for deferred franchise and development fees during the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 were as follows:


	Deferred Franchise Revenue ~~(short-~~ (short- and long-term)
	(In thousands)
Balance at December 31, ~~2021~~2022	$	~~53,346~~49,493
Recognized as revenue during the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023	~~(6,169)~~(4,102)
Fees deferred during the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023	~~2,396~~2,371
Balance at ~~September~~June 30, ~~2022~~2023	$	~~49,573~~47,762

The short-term portion of deferred franchise revenue as of September 30, 2022 and December 31, 2021 was $7.0 million and $7.2 million, respectively, and was included in other accrued expenses in the Consolidated Balance Sheets.

The balance of deferred revenue as of ~~September~~June 30, ~~2022~~2023 is expected to be recognized as follows:


		(In thousands)			(In thousands)
2022 (remaining three months)		$	1,739
2023		6,950
2023 (remaining six months)				2023 (remaining six months)	$	4,199
2024	2024	6,341		2024	6,471
2025	2025	5,559		2025	5,712
2026	2026	4,736		2026	4,876
2027				2027	3,969
Thereafter	Thereafter	24,248		Thereafter	22,535
Total	Total	$	49,573	Total	$	47,762

5. Current Expected Credit Losses (“CECL”)

The CECL reserve methodology requires companies to measure expected credit losses on financial instruments based on the total estimated amount to be collected over the lifetime of the instrument. Under the CECL model, reserves may be established against financial asset balances even if the risk of loss is remote or has not yet manifested itself. The Company records specific reserves against account balances of franchisees deemed at-risk when a potential loss is likely or imminent as a result of prolonged payment delinquency (greater than 90 days past due) and where notable credit deterioration has become evident. For financial assets that are not currently deemed at-risk, an allowance is recorded based on expected loss rates derived pursuant to the Company's CECL methodology that assesses four components –- historical losses, current conditions, reasonable and supportable forecasts, and a reversion to history, if applicable.

The Company considers its portfolio segments to be the following:

Accounts Receivable (Franchise-Related)

Most of the Company’s short-term receivables due from franchisees are derived from royalty, advertising and other franchise-related fees.

Table of Contents

Dine Brands Global, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

5. Current Expected Credit Losses (Continued)

Gift Card Receivables

Gift card receivables consist primarily of amounts due from third-party vendors. Receivables related to gift card sales are subject to seasonality and usually peak around year-end as a result of the December holiday season.

Notes Receivable

Notes receivable balances primarily relate to the conversion of certain past due Applebee's franchisee accounts receivable to notes receivable, cash loans to franchisees for working capital purposes, a note receivable in connection with the sale of IHOP company restaurants, and IHOP franchise fee and other notes. The notes are typically collateralized by the franchise. A significant portion of these notes have specific reserves recorded against them amounting to ~~$8.8~~$8.6 million as of ~~September~~June 30, ~~2022.~~

~~Dine Brands Global, Inc. and Subsidiaries~~

~~Notes to Consolidated Financial Statements (Continued)~~

~~5. Current Expected Credit Losses (Continued)~~

2023.

Equipment Leases Receivable

Equipment leases receivable primarily relate to IHOP franchise development activity prior to 2003 when IHOP typically leased or purchased the restaurant site, built and equipped the restaurant, then franchised the restaurant to a franchisee. Equipment lease contracts are collateralized by the equipment in the restaurant. The estimated fair value of the equipment collateralizing these lease contracts are not deemed to be significant given the very seasoned and mature nature of this portfolio. The weighted average remaining life of the Company’s equipment leases is ~~4.1~~3.5 years as of ~~September~~June 30, ~~2022.~~

2023.

Real Estate Leases Receivable

Real estate leases receivable relate to IHOP franchise development activity prior to 2003. IHOP provided the financing for leasing or subleasing the site. Real estate leases at ~~September~~June 30, ~~2022,~~2023, comprised 5632 leases with a weighted average remaining life of ~~9.9~~10.8 years, and relate to locations that IHOP is leasing from third parties and subleasing to franchisees.

Distributor Receivables

Receivables due from distributors are related to the sale of IHOP’s proprietary pancake and waffle dry mix to franchisees through the Company’s network of suppliers and distributors and are included as part of Other receivables.


	June 30, 2023		December 31, 2022
	(In millions)
Accounts receivable	$	69.4	$	67.5
Gift card receivables	7.1		34.6
Notes receivable	16.3		17.2
Financing receivables:
Equipment leases receivable	23.4		26.6
Real estate leases receivable	16.2		18.5
Other	6.4		5.6
	138.8		170.0
Less: allowance for credit losses and notes receivable	(12.2)		(10.3)
	126.6		159.7
Less: current portion	(90.6)		(120.0)
Long-term receivables	$	36.0	$	39.7

September 30, 2022 December 31, 2021
(In millions)
Accounts receivable $ 61.5 $ 63.6
Gift card receivables 6.2 33.4
Notes receivable 17.9 19.7
Financing receivables:
Equipment leases receivable 28.4 33.4
Real estate leases receivable 19.9 16.7
Other 8.5 7.6
142.4 174.4
Less: allowance for credit losses (9.7) (11.9)
132.7 162.5
Less: current portion (89.5) (120.0)
Long-term receivables $ 43.2 $ 42.5

The Company's primary credit quality indicator for all portfolio segments is delinquency.

Changes in the allowance for credit losses during the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 were as follows:


		Accounts Receivable		Notes receivable, short-term		Notes receivable, long-term		Lease Receivables		Equipment Notes		Other (1)		Total			Accounts Receivable		Notes receivable, short-term		Notes receivable, long-term		Lease Receivables		Equipment Notes		Other (1)		Total
		(In millions)															(In millions)
Balance, December 31, 2021		$	1.0	$	3.8	$	6.6	$	0.2	$	0.1	$	0.2	$	11.9

Balance, December 31, 2022																Balance, December 31, 2022	$	1.2	$	3.5	$	5.3	$	0.1	$	0.1	$	0.1	$	10.3
Bad debt (credit) expense	Bad debt (credit) expense	(0.3)		1.0		(1.2)		(0.1)		0.1		0.0		(0.5)		Bad debt (credit) expense	1.5		1.2		(0.1)		(0.0)		(0.0)		0.0		2.6
Advertising provision adjustment	Advertising provision adjustment	0.1		(0.5)		(0.2)		—		—		—		(0.6)		Advertising provision adjustment	0.6		(0.0)		—		—		—		—		0.6
Write-offs	Write-offs	(0.2)		(0.7)		—		��		—		(0.2)		(1.1)		Write-offs	—		(1.3)		—		(0.0)		—		(0.0)		(1.3)
Recoveries		0.0		—		—		—		0.0		—		0.0
Balance, September 30, 2022		$	0.6	$	3.6	$	5.2	$	0.1	$	0.2	$	0.0	$	9.7

Balance, June 30, 2023																Balance, June 30, 2023	$	3.3	$	3.4	$	5.2	$	0.1	$	0.1	$	0.1	$	12.2

(1) Primarily distributor receivables, gift card receivables and credit card ~~receivables~~

receivables.

1211

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Dine Brands Global, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

5. Current Expected Credit Losses (Continued)

~~The Company's primary credit quality indicator for all portfolio segments is delinquency.~~ The delinquency status of receivables (other than accounts receivable, gift card receivables and distributor receivables) at ~~September~~June 30, ~~2022~~2023 was as follows:


		Notes receivable, short-term		Notes receivable, long-term		Lease Receivables		Equipment Notes		Other (1)		Total			Notes receivable, short-term		Notes receivable, long-term		Real Estate Lease Receivable		Equipment Notes		Other (1)		Total
		(In millions)													(In millions)
Current	Current	$	4.4	$	11.9	$	19.9	$	28.4	$	2.3	$	66.9	Current	$	4.3	$	11.9	$	16.2	$	23.4	$	0.0	$	55.8
30-59 days	30-59 days	0.0		—		—		—		—		0.0		30-59 days	0.0		—		—		—		—		—
60-89 days	60-89 days	0.0		—		—		—		—		0.0		60-89 days	0.0		—		—		—		—		—
90-119 days	90-119 days	0.1		—		—		—		—		0.1		90-119 days	0.0		—		—		—		—		—
120+ days	120+ days	1.5		—		—		—		—		1.5		120+ days	0.1		—		—		—		—		0.1
Total	Total	$	6.0	$	11.9	$	19.9	$	28.4	$	2.3	$	68.5	Total	$	4.4	$	11.9	$	16.2	$	23.4	$	0.0	$	55.9

(1) Primarily c~~redit~~credit card ~~receivables~~

receivables.

The year of origination of the Company's notes receivable and financing receivables is as follows:

Notes receivable, short and long-term Lease Receivables Equipment Notes Total
(In millions)
2022 $ 1.7 $ 8.4 $ — $ 10.1
2021 10.7 2.6 — 13.3
2020 0.4 1.4 — 1.8
2019 0.0 0.8 — 0.8
2018 — — — 0.0
Prior 5.1 6.7 28.4 40.2
Total $ 17.9 $ 19.9 $ 28.4 $ 66.2



	Notes receivable, short and long-term		Lease Receivables		Equipment Notes		Total
	(In millions)
2023	$	4.7	$	—	$	0.5	$	5.2
2022	1.4		8.2		—		9.6
2021	9.9		2.4		—		12.3
2020	0.3		1.3		—		1.6
2019	—		0.7		—		0.7
Prior	—		3.6		22.9		26.5
Total	$	16.3	$	16.2	$	23.4	$	55.9

The Company does not place its financing receivables in non-accrual status.

6. ~~Lease Disclosures~~

Leases

The Company engages in leasing activity as both a lessee and a lessor. The Company currently leases from third parties the real property on which approximately ~~530~~520 IHOP franchisee-operated restaurants and one Applebee's franchisee-operated restaurant are located; the Company (as lessor) subleases the property to the franchisees that operate those restaurants. The Company also leases property it owns to the franchisees that operate approximately 50 IHOP restaurants and one Applebee's restaurant. The Company leases from a third ~~parties~~party the real property on which ~~69 Applebee's~~one Fuzzy's company-operated ~~restaurants are~~restaurant is located. The Company also leases office space for its principal corporate ~~offices~~office in ~~Glendale, California and~~ Pasadena, California and restaurant support centers in Leawood, Kansas, and ~~Raleigh, North Carolina.~~Irving, Texas. The Company does not have a significant amount of non-real estate leases.

The Company's existing leases/subleases related to IHOP restaurants generally provide for an initial term of 20 to 25 years, with most having one or more five-year renewal options. Leases related to Applebee's restaurants generally have an initial term of 10 to 20 years, with renewal terms of five to 20 years. Option periods were not included in determining liabilities and right-of-use assets related to operating leases. Approximately 290 of the Company's leases met the sales levels that required variable rent payments to the Company (as lessor), based on a percentage of restaurant sales during the ~~nine~~six months ended ~~September~~June 30, ~~2022.~~2023. Approximately 6540 of the leases met the sales levels that required variable rent payments by the Company (as lessee), based on a percentage of restaurant sales during the ~~nine~~six months ended ~~September~~June 30, ~~2022.~~

2023.

1312

~~Dine Brands Global, Inc. and Subsidiaries~~

~~Notes to Consolidated Financial Statements (Continued)~~

~~6. Lease Disclosures (Continued)~~

~~The Company's lease cost for the three and nine months ended September 30, 2022 and 2021 was as follows:~~

Three Months Ended September 30, Nine Months Ended September 30,
2022 2021 2022 2021
(In millions)
Finance lease cost:
Amortization of right-of-use assets $ 0.7 $ 1.1 $ 2.9 $ 3.5
Interest on lease liabilities 1.2 1.3 3.7 4.2
Operating lease cost(1)
21.5 20.9 63.8 63.3
Variable lease cost 2.1 4.5 5.7 5.2
Short-term lease cost 0.0 0.0 0.0 0.0
Sublease income (26.8) (28.8) (79.9) (78.0)
Lease (income) cost $ (1.3) $ (1.0) $ (3.8) $ (1.9)

~~(1)~~Operating lease cost for the three and nine months ended September 30, 2021 previously disclosed as $24.4 million and $74.2 million, respectively, were overstated due to the inclusion of certain finance lease activity.The correct operating lease cost for the three and nine months ended September 30, 2021 was $20.9 million and $63.3 million, respectively, as reflected in the above table. The overstatement only impacted this note disclosure, and there was no impact to the Consolidated Statement of Comprehensive Income.

~~Future minimum lease payments under noncancelable leases as lessee as of September 30, 2022 were as follows:~~

Finance
Leases Operating
Leases
(In millions)
2022 (remaining three months) $ 3.6 $ 22.3
2023 12.1 71.1
2024 10.7 82.0
2025 9.2 70.1
2026 8.6 61.6
Thereafter 56.2 198.3
Total minimum lease payments 100.4 505.4
Less: interest/imputed interest (28.3) (98.4)
Total obligations 72.1 407.0
Less: current portion (9.2) (71.2)
Long-term lease obligations $ 62.9 $ 335.8

~~A portion of the lease obligations have been included in liabilities held for sale in the Consolidated Balance Sheets.~~

The weighted average remaining lease term as of September 30, 2022 was 10.0 years for finance leases and 7.2 years for operating leases. The weighted average discount rate as of September 30, 2022 was 9.8% for finance leases and 5.5% for operating leases.

~~During the three and nine months ended September 30, 2022 and 2021, the Company made the following cash payments for leases:~~

Three Months Ended September 30, Nine Months Ended September 30,
2022 2021 2022 2021
(In millions)
Principal payments on finance lease obligations $ 2.3 $ 2.5 $ 7.0 $ 7.8
Interest payments on finance lease obligations $ 1.2 $ 1.3 $ 3.7 $ 4.2
Payments on operating leases $ 23.7 $ 22.9 $ 70.0 $ 68.7
Variable lease payments $ 1.8 $ 4.4 $ 5.7 $ 5.0

~~Dine Brands Global, Inc. and Subsidiaries~~

~~Notes to Consolidated Financial Statements (Continued)~~

~~6. Lease Disclosures (Continued)~~

~~The Company's income from operating leases for the three and nine months ended September 30, 2022 and 2021 was as follows:~~

Three Months Ended September 30, Nine Months Ended September 30,
2022 2021 2022 2021
(In millions)
Minimum lease payments $ 24.1 $ 23.9 $ 71.9 $ 71.7
Variable lease income 4.0 6.8 12.5 11.1
Total operating lease income $ 28.1 $ 30.7 $ 84.4 $ 82.8

~~Minimum payments to be received as lessor under noncancelable operating leases as of September 30, 2022 were as follows:~~

(In millions)
2022 (remaining three months) $ 26.0
2023 101.7
2024 93.2
2025 80.6
2026 66.1
Thereafter 157.3
Total minimum rents receivable $ 524.9

~~The Company's income from real estate leases receivables for the three and nine months ended September 30, 2022 and 2021 was as follows:~~

Three Months Ended September 30, Nine Months Ended September 30,
2022 2021 2022 2021
(In millions)
Interest income $ 0.4 $ 0.5 $ 1.1 $ 1.6
Variable lease income 0.1 0.1 0.5 0.4
Selling profit 0.5 — 1.0 —
Total real estate lease income $ 1.0 $ 0.6 $ 2.6 $ 2.0

~~Minimum payments to be received as lessor under noncancelable real estate leases as of September 30, 2022 were as follows:~~

(In millions)
2022 (remaining three months) $ 1.8
2023 4.7
2024 2.6
2025 1.8
2026 1.8
Thereafter 14.1
Total minimum rents receivable 26.8
Less: unearned income (6.9)
Total net investment in real estate leases 19.9
Less: current portion (4.4)
Long-term investment in real estate leases $ 15.5

Table of Contents

Dine Brands Global, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

6. Leases (Continued)

The Company's lease (income) cost for the three and six months ended June 30, 2023 and 2022 was as follows:


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
	(In millions)
Finance lease cost:
Amortization of right-of-use assets	$	0.6	$	1.1	$	1.2	$	2.2
Interest on lease liabilities	0.7		1.2		1.4		2.5
Operating lease cost	18.9		21.2		38.1		42.3
Variable lease cost	2.2		1.9		4.1		3.6
Short-term lease cost	0.0		0.0		0.0		0.0
Sublease income	(27.0)		(26.6)		(56.5)		(53.1)
Lease income	$	(4.6)	$	(1.2)	$	(11.7)	$	(2.5)

Future minimum lease payments under noncancellable leases as lessee as of June 30, 2023 were as follows:


	Finance Leases		Operating Leases
	(In millions)
2023 (remaining six months)	$	3.8	$	31.6
2024	7.8		77.9
2025	6.4		67.4
2026	6.0		59.7
2027	4.9		41.4
Thereafter	20.3		126.5
Total minimum lease payments	49.2		404.5
Less: interest/imputed interest	(11.5)		(69.8)
Total obligations	37.7		334.7
Less: current portion	(5.9)		(58.7)
Long-term lease obligations	$	31.8	$	276.0

The weighted average remaining lease term as of June 30, 2023 was 6.1 years for finance leases and 6.1 years for operating leases. The weighted average discount rate as of June 30, 2023 was 9.3% for finance leases and 5.6% for operating leases.

During the three and six months ended June 30, 2023 and 2022, the Company made the following cash payments for leases:


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
	(In millions)
Principal payments on finance lease obligations	$	1.7	$	2.4	$	3.6	$	4.7
Interest payments on finance lease obligations	0.7		1.2		1.4		2.5
Payments on operating leases	20.4		22.8		41.3		45.8
Variable lease payments	2.1		1.8		4.2		3.9

The Company's income from operating leases for the three and six months ended June 30, 2023 and 2022 was as follows:


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
	(In millions)
Minimum lease payments	$	24.4	$	24.0	$	51.7	$	47.8
Variable lease income	4.6		4.6		8.9		8.5
Total operating lease income	$	29.0	$	28.6	$	60.6	$	56.3

Table of Contents

Dine Brands Global, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

6. Leases (Continued)

Minimum payments to be received as lessor under noncancellable operating leases as of June 30, 2023 were as follows:



	(In millions)
2023 (remaining six months)	$	52.5
2024	97.6
2025	85.1
2026	70.9
2027	53.2
Thereafter	141.3
Total minimum rents receivable	$	500.6

The Company's income from real estate leases for the three and six months ended June 30, 2023 and 2022 was as follows:


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
	(In millions)
Interest income	$	0.3	$	0.4	$	0.6	$	0.8
Variable lease income	0.1		0.2		0.2		0.4
Selling (loss) profit	—		(0.1)		—		0.4
Total real estate lease income	$	0.4	$	0.5	$	0.8	$	1.6

Minimum payments to be received as lessor under noncancellable real estate leases as of June 30, 2023 were as follows:



	(In millions)
2023 (remaining six months)	$	1.9
2024	2.6
2025	1.8
2026	1.8
2027	1.7
Thereafter	12.4
Total minimum rents receivable	22.2
Less: unearned income	(6.0)
Total net investment in real estate leases	16.2
Less: current portion	(2.5)
Long-term investment in real estate leases	$	13.7

7. Long-Term Debt

At ~~September~~June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, long-term debt consisted of the ~~following:~~following components:

September 30, 2022 December 31, 2021
(In millions)
Series 2019-1 4.194% Fixed Rate Senior Secured Notes, Class A-2-I $ 693.0 $ 693.0
Series 2019-1 4.723% Fixed Rate Senior Secured Notes, Class A-2-II 594.0 594.0
Series 2022-1 Variable Funding Class A-1, variable interest rate of 5.50% at September 30, 2022 100.0 —
Debt issuance costs (5.7) (7.4)
Long-term debt, net of debt issuance costs 1,381.3 1,279.6
Current portion of long-term debt (100.0) —
Long-term debt $ 1,281.3 $ 1,279.6


	June 30, 2023		December 31, 2022
	(In millions)
Series 2019-1 4.194% Fixed Rate Senior Secured Notes, Class A-2-I	$	—	$	653.0
Series 2019-1 4.723% Fixed Rate Senior Secured Notes, Class A-2-II	594.0		594.0
Series 2022-1 Variable Funding Senior Secured Notes, Class A-1, variable interest rate of 7.70% and 7.29% at June 30, 2023 and December 31, 2022, respectively	100.0		100.0
Series 2023-1 7.824% Fixed Rate Senior Secured Notes, Class A-2	500.0		—
Debt issuance costs	(10.5)		(5.1)
Long-term debt, net of debt issuance costs	1,183.5		1,341.9
Current portion of long-term debt	(100.0)		(100.0)
Long-term debt	$	1,083.5	$	1,241.9

On June 5, 2019, Applebee’s Funding LLC and IHOP Funding LLC (the “Co-Issuers”), each a special purpose, wholly-owned indirect subsidiary of the Company, issued two tranches of fixed rate senior secured notes, the Series 2019-1 4.194% Fixed Rate Senior Secured Notes, Class A-2-I (“2019 Class A-2-I Notes”) in an initial aggregate principal amount of $700

Table of Contents

Dine Brands Global, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

7. Long-Term Debt (Continued)

million and the Series 2019-1 4.723% Fixed Rate Senior Secured Notes, Class A-2-II (“2019 Class A-2-II Notes”) in an initial aggregate

principal amount of $600 million (the ~~“Class~~“2019 Class A-2-II Notes” and, together with the 2019 Class A-2-I Notes, the “2019 Class A-2 Notes”). The 2019 Class A-2 Notes were issued pursuant to an offering exempt from registration under the Securities Act of 1933, as amended.

On August 12, 2022, the Co-Issuers established a new revolving financing facility, the 2022-1 Variable Funding Senior Secured Notes, Class A-1 (the “Credit Facility”), that allows for drawings up to $325 million of variable funding notes on a revolving basis and the issuance of letters of credit. In connection with this transaction, the Co-Issuers terminated their $225 million revolving financing facility, the 2019-1 Variable Funding Senior Secured Notes, Class A-1 (the ~~"Previous~~“Previous Credit ~~Facility"~~Facility”).

On April 17, 2023, the Co-Issuers completed a refinancing transaction and issued $500 million of Series 2023-1 7.824% Fixed Rate Senior Secured Notes, Class A-2 (the “2023 Class A-2 Notes”).The 2023 Class A-2 Notes were issued pursuant to an offering exempt from registration under the Securities Act of 1933, as amended. The Company used the net proceeds of the 2023 Class A-2 Notes to repay the entire outstanding balance of approximately $585 million of the 2019 Class A-2-I Notes and to pay fees and expenses incurred in connection with the issuance of the 2023 Class A-2 Notes. The remaining 2019 Class A-2-II Notes and the Credit Facility, ~~and~~together with the ~~2019~~2023 Class A-2 Notes are referred to collectively herein as the “Notes.” The Notes were issued in securitization transactions pursuant to which substantially all the domestic revenue-generating assets and domestic intellectual property held by the Co-Issuers and certain other special-purpose, wholly-owned indirect subsidiaries of the Company (the “Guarantors”) were pledged as collateral to secure the Notes.

The Notes were issued under a Base Indenture, dated as of September 30, 2014, ~~and~~ amended and restated as of June 5, 2019 and further amended and restated as of April 17, 2023 (the “Base Indenture”). In addition, the 2019 Class ~~A-2~~A-2-II Notes were issued under the related Series 2019-1 Supplement to the Base Indenture, dated June 5, 2019 (the “Series 2019-1 Supplement”), among the Co-Issuers and Citibank, N.A., as the trustee (in such capacity, the “Trustee”) and securities intermediary, ~~and~~ the Credit Facility was issued under the related Series 2022-1 Supplement to the Base Indenture, dated August 12, 2022 (“Series 2022-1 Supplement”), among the Co-Issuers and Citibank, N.A., as Trustee and securities intermediary, and the 2023 Class A-2 Notes were issued under the related Series 2023-1 Supplement to the Base Indenture, dated April 17, 2023 (the “Series 2023-1 Supplement”), among the Co-Issuers and Citibank, N.A., as Trustee and securities intermediary. The Base Indenture, Series 2019-1 Supplement, Series 2022-1 Supplement, and Series ~~2022-1~~2023-1 Supplement (collectively, the “Indenture”) will allow the Co-Issuers to issue additional series of notes in the future subject to certain conditions set forth therein.

2019 Class A-2 Notes

The 2019 Class A-2-I Notes were voluntarily repaid in full on April 17, 2023, while the 2019 Class A-2-II Notes remain outstanding as of June 30, 2023. For a description of the 2019 Class A-2-I Notes, refer to Note 8 of the Notes to Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022. The legal final maturity of the 2019 Class ~~A-2~~A-2-II Notes is June 2049, but rapid amortization will apply if the 2019 Class ~~A-2-I~~A-2-II Notes are not repaid by June ~~2024 (the “Class A-2-I Anticipated Repayment Date”) and for the Class A-2-II Notes if not repaid by June~~ 2026 (the ~~“Class~~“2019 Class A-2-II Anticipated Repayment Date”). If the Co-Issuers have not repaid or refinanced the ~~Class A-2-I Notes by the Class A-2-I Anticipated Repayment Date or the~~2019 Class A-2-II Notes by the 2019 Class A-2-II Anticipated Repayment Date, then additional interest will accrue on the ~~Class A-2-I Notes and the~~2019 Class A-2-II Notes, as applicable, at the greater of: (A) 5.0% and (B) the amount, if any, by which the sum of the following exceeds the applicable ~~Series 2019-1~~2019 Class ~~A-2~~A-2-II Note interest rate: (x) the yield to maturity (adjusted to a quarterly bond-equivalent basis) on the ~~applicable anticipated repayment date~~2019 Class A-2-II Anticipated Repayment Date of the United States Treasury Security having a term closest to 10 years plus (y) ~~5.0%, plus (z) 2.15%~~7.64% for the ~~Series 2019-1 Class A-2-I Notes and 2.64% for the Series 2019-1~~2019 Class A-2-II Notes.

~~Table of Contents~~

~~Dine Brands Global, Inc. and Subsidiaries~~

~~Notes to Consolidated Financial Statements (Continued)~~

~~7. Long-Term Debt (Continued)~~

While the 2019 Class ~~A-2~~A-2-II Notes are outstanding, payment of principal and interest is required to be made on the 2019 Class ~~A-2~~A-2-II Notes on a quarterly basis. The quarterly principal payment of ~~$3.25~~$1.50 million on the 2019 Class ~~A-2~~A-2-II Notes may be suspended when the leverage ratio for the Company and its subsidiaries is less than or equal to 5.25x. Exceeding the leverage ratio of 5.25x does not violate any covenant related to the Notes. In general, the leverage ratio is the Company's indebtedness (as defined in the Indenture) divided by adjusted EBITDA (as defined in the Indenture) for the four preceding quarterly periods. The complete definitions of all calculation elements of the leverage ratio are contained in the Indenture.

As of ~~September~~June 30, ~~2022,~~2023, the Company's leverage ratio was ~~3.90x.~~approximately 4.5x. As a result, quarterly principal payments on the 2019 Class ~~A-2~~A-2-II Notes of ~~$3.25~~$1.50 million currently are not required.

The Company may voluntarily repay the 2019 Class ~~A-2~~A-2-II Notes at any ~~time; however, if the 2019 Class A-2~~ time without any associated make-whole premium.

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Dine Brands Global, Inc. and Subsidiaries

Notes ~~are repaid prior~~ to certain dates, the Company would be required to pay make-whole premiums. As of September 30, 2022, the make-whole premium associated with voluntary prepayment of the Class A-2-I Notes was zero and will remain as such. As of September 30, 2022, the make-whole premium associated with voluntary prepayment of the Class A-2-II Notes was approximately $0.5 million; this amount declines progressively each quarter to zero in June 2024. The Company also would be subject to a make-whole premium in the event of a mandatory prepayment required following a Rapid Amortization Event (as defined in the Indenture) or certain asset dispositions. The mandatory make-whole premium requirements are considered derivatives embedded in the Notes that must be bifurcated for separate valuation. The Company estimated the fair value of these derivatives to be immaterial as of September 30, 2022, based on the probability-weighted discounted cash flows associated with either event.Consolidated Financial Statements (Continued)

7. Long-Term Debt (Continued)

2019 Class A-1 Notes

The Previous Credit Facility allowed for drawings up to $225 million of variable funding notes on a revolving basis and the issuance of letters of credit. InThere were no outstanding borrowings since March ~~2020, the Company borrowed $220.0 million against~~2021 under the Previous Credit ~~Facility.~~ Facility until its termination in August 2022.

The ~~$220.0 million was repaid on March 5, 2021, and as of December 31, 2021, there were no outstanding~~interest rate for borrowings under the Previous Credit ~~Facility.~~

Facility was the three-month LIBOR rate plus 2.15% for 60% of the advances and the commercial paper funding rate of our conduit investor plus 2.15% for 40% of the advances.

2022 Class A-1 Notes

In August 2022, the Co-Issuers entered into the Credit Facility that allows for drawings up to $325 million of variable funding notes on a revolving basis and the issuance of letters of credit. The applicable interest rate under the Credit Facility depends on the type of borrowing by the Co-Issuers. The applicable interest rate for advances is generally calculated at a per annum rate equal to the commercial paper funding rate or one-, two-, three- or six-month Term SOFR Rate, in either case, plus 2.50%. The applicable interest rate for swingline advances and unreimbursed draws on outstanding letters of credit is a per annum base rate equal to the sum of (a) the greatest of (i) the Prime Rate in effect from time to time; (ii) the Federal Funds Rate in effect from time to time plus 0.50%; and (iii) Term SOFR for a one-month tenor in effect at such time plus 0.50% plus (b) 2.00%.

The legal final maturity of the Credit Facility is June 2052, but rapid amortization will apply if there are outstanding amounts under the Credit Facility after June 2027 (the “Class A-1 Renewal Date”). The Class A-1 Renewal Date may be extended at the Co-Issuers’ election for up to two successive one-year periods if certain conditions are met. If the Co-Issuers have not repaid or refinanced the Credit Facility by the Class A-1 Renewal Date (after giving effect to any extensions), then interest will accrue on the Credit Facility at a rate equal to 5.00% in addition to the regular interest rate applicable to the Credit Facility.

~~In August 2022,~~As of June 30, 2023, the ~~Company borrowed $100 million against~~outstanding balance of the Credit Facility ~~all of which~~ was ~~outstanding at September 30, 2022.~~$100 million. The amount of $3.4 million was pledged against the Credit Facility ~~at September 30, 2022~~ for outstanding letters of credit, leaving $221.6 million of the Credit Facility available for ~~borrowing.~~borrowing at June 30, 2023. It is anticipated that any principal and interest on the Credit Facility outstanding will be repaid in full on or prior to the quarterly payment date in June 2027, subject to two additional one-year extensions at the option of the Company upon the satisfaction of certain conditions. The letters of credit are used primarily to satisfy insurance-related collateral requirements. The weighted average interest rate for the period outstanding during the six months ended June 30, 2023 was 7.46%.

2023 Class A-2 Notes

The legal final maturity of the 2023 Class A-2 Notes is in March 2053, but it is anticipated that, unless repaid earlier to the extent permitted under the Indenture, the 2023 Class A-2 Notes will be repaid in June 2029 (the “2023 Class A-2 Anticipated Repayment Date”). If the Co-Issuers have not repaid or refinanced the 2023 Class A-2 Notes by the 2023 Class A-2 Anticipated Repayment Date, then additional interest will accrue on the 2023 Class A-2 Notes, as applicable, at the greater of: (A) 5.0% and (B) the amount, if any, by which the sum of the following exceeds the Series 2023-1 Class A-2 Note interest rate: (x) the yield to maturity (adjusted to a quarterly bond-equivalent basis) on the 2023 Class A-2 Anticipated Repayment Date of the United States Treasury Security having a term closest to 10 years plus (y) 9.24% for the 2023 Class A-2 Notes.

While the 2023 Class A-2 Notes are outstanding, payment of principal and interest is required to be made on the 2023 Class A-2 Notes on a quarterly basis. The payment of principal on the 2023 Class A-2 Notes may be suspended when the leverage ratio for the Company and its subsidiaries is less than or equal to 5.25x.

As of June 30, 2023, the Company's leverage ratio was approximately 4.5x. As a result, quarterly principal payments on the 2023 Class A-2 Notes of $1.25 million currently are not required.

The Company may voluntarily repay the 2023 Class A-2 Notes at any time; however, if the 2023 Class A-2 Notes are repaid prior to certain dates, the Company would be required to pay make-whole premiums. As of June 30, 2023, the make-whole premium associated with voluntary prepayment of the 2023 Class A-2 Notes was approximately $45.1 million. The Company also would be subject to a make-whole premium in the event of a mandatory prepayment required following a Rapid Amortization Event or certain asset dispositions. The mandatory make-whole premium requirements are considered derivatives embedded in the Notes that must be bifurcated for separate valuation. The Company estimated the fair value of these derivatives to be immaterial as of June 30, 2023, based on the probability-weighted discounted cash flows associated with either event.

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Dine Brands Global, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

7. Long-Term Debt (Continued)

Repurchase Program

On February 16, 2023, our Company's Board of Directors authorized a debt repurchase program of up to $100 million. Repurchases of the Company’s debt, if any, are expected to reduce future cash interest payments, as well as future amounts due at maturity or upon redemption. Under the authorization, the Company may make repurchases of the Company's debt from time to time in the open market or in privately negotiated transactions upon such terms and at such prices as management may determine.

Covenants and Restrictions

The Notes are subject to a series of covenants and restrictions customary for transactions of this type, including: (i) that the Co-Issuers maintain specified reserve accounts to be used to make required payments in respect of the ~~Notes;~~Notes, (ii) provisions relating to optional and mandatory prepayments, and the related payment of specified amounts, including specified call redemption premiums in the case of Class A-2 Notes under certain circumstances; (iii) certain indemnification payments in the event, among other things, the transfers of the assets pledged as collateral for the Notes are in stated ways defective or

~~Table of Contents~~

~~Dine Brands Global, Inc. and Subsidiaries~~

~~Notes to Consolidated Financial Statements (Continued)~~

~~7. Long-Term Debt (Continued)~~

~~ineffective;~~ ineffective and (iv) covenants relating to recordkeeping, access to information and similar matters. The Notes are subject to customary rapid amortization events provided for in the Indenture, including events tied to failure of the Securitization Entities (as defined in the Indenture) to maintain the stated debt service coverage ratio (“DSCR”), the sum of domestic retail sales for all restaurants being below certain levels on certain measurement dates, certain manager termination events, certain events of default and the failure to repay or refinance the Class A-2 Notes on the anticipated repayment dates. The Notes are also subject to certain customary events of default, including events relating to non-payment of required interest, principal or other amounts due on or with respect to the Notes, failure of the Securitization Entities to maintain the stated DSCR, failure to comply with covenants within certain time frames, certain bankruptcy events, breaches of specified representations and warranties and certain judgments.

In general, the DSCR ratio is Net Cash Flow (as defined in the Indenture) for the four quarters preceding the calculation date divided by the total debt service payments (as defined in the Indenture) of the preceding four quarters. The complete definitions of the DSCR and all calculation elements are contained in the Indenture. Failure to maintain a prescribed DSCR can trigger a Cash Flow Sweeping Event, A Rapid Amortization Event, a Manager Termination Event or a Default Event (each as defined in the Indenture) as described below. In a Cash Flow Sweeping Event, the Trustee is required to retain 50% of excess Cash Flow (as defined in the Indenture) in a restricted account. In a Rapid Amortization Event, all excess Cash Flow is retained and used to retire principal

amounts of debt. In a Manager Termination Event, the Company may be replaced as manager of the assets securitized under the Indenture. In a Default Event, the outstanding principal amount and any accrued but unpaid interest can be called to become immediately due and payable. Key DSCRs are as follows:

•DSCR less than 1.75x - Cash Flow Sweeping Event

•DSCR less than 1.20x - Rapid Amortization Event

•Interest-only DSCR less than 1.20x - Manager Termination Event

•Interest-only DSCR less than 1.10x - Default Event

The Company's DSCR for the reporting period ended ~~September~~June 30, ~~2022~~2023 was approximately ~~4.15x.~~

~~Loss on Extinguishment of Debt~~

In connection with the termination of the Previous Credit Facility during the three months ended September 30, 2022, the Company recognized a loss on extinguishment of debt of $1.2 million, representing the remaining unamortized debt issuance costs associated with the Previous Credit Facility.

3.7x.

Debt Issuance Costs

~~2019~~2023 Class A-2 Notes

~~Amortization~~The Company incurred costs of ~~costs incurred~~approximately $8.0 million in connection with the issuance of the ~~2019~~2023 Class A-2 ~~Notes of $0.6 million and $0.6 million were included in~~Notes. These debt issuance costs are being amortized using the effective interest ~~expense for~~method over the ~~three months ended September 30, 2022 and 2021, respectively. Amortization of costs incurred in connection with the issuance~~estimated life of the ~~2019~~2023 Class A-2 ~~Notes of $1.7 million and $1.7 million were included in interest expense for the nine months ended September 30, 2022 and 2021, respectively.~~Notes. Amortization costs ~~incurred in connection with the Previous Credit Facility~~ of ~~$0.0 million and~~ $0.2 million were included in interest expense for the three and six months ended ~~September~~June 30, ~~2022 and 2021, respectively. Amortization costs incurred in connection with the Previous Credit Facility~~2023. As of ~~$0.4 million and $0.5 million were included in interest expense for the nine months ended September~~June 30, ~~2022 and 2021, respectively.~~

~~At September 30, 2022, total~~2023, unamortized debt issuance costs ~~related to the 2019 Class A-2 Notes~~ of ~~$5.7~~$7.8 million are reported as a direct reduction of the ~~2019~~2023 Series Class A-2 Notes in the Consolidated Balance Sheets.

2022 Class A-1 Notes

In August 2022, the Company incurred costs of approximately $6.3 million in connection with the issuance of the Credit Facility. These debt issuance costs are being amortized over the estimated life of the Credit Facility. Amortization of ~~$0.1~~$0.3 million and $0.6 million, respectively, of these costs ~~was~~were included in interest expense for the three and ~~nine~~six months ended ~~September~~June 30, ~~2022. At September~~2023. As of June 30, ~~2022, total~~2023, unamortized debt issuance costs of ~~$6.1~~$5.3 million related to the Credit Facility are classified as other non-current assets in the Consolidated Balance Sheets.

1817

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Dine Brands Global, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

7. Long-Term Debt (Continued)

2019 Class A-2 Notes

The Company incurred costs of approximately $12.9 million in connection with the issuance of the 2019 Class A-2 Notes. These debt issuance costs are being amortized using the effective interest method over estimated life of each tranche of the 2019 Class A-2 Notes. Amortization costs of $0.2 million and $1.1 million were included in interest expense for the three and six months ended June 30, 2023, respectively. Amortization costs of $0.1 million and $1.1 million were included in interest expense for the three and six months ended June 30, 2022, respectively. In connection with the repayment of the 2019 Class A-2-I Notes discussed above, the Company recognized as a loss on extinguishment of debt of $1.7 million, representing the related remaining unamortized debt issuance costs. As of June 30, 2023, unamortized debt issuance costs of $2.7 million are reported as a direct reduction of the 2019 Class A-2-II Notes in the Consolidated Balance Sheets.

2019 Class A-1 Notes

Amortization costs incurred in connection with the Previous Credit Facility of $0.2 million were included in interest expense for the six months ended June 30, 2022. In connection with the termination of the Previous Credit Facility in August 2022, the Company recognized as a loss on extinguishment of debt of $1.2 million, representing the remaining unamortized debt issuance costs associated with the Previous Credit Facility.

Loss (Gain) on Extinguishment of Debt

The Company purchased $67.9 million of its 2019 Class A-2-I Notes under par and recognized a $1.7 million gain on extinguishment of debt during the six months ended June 30, 2023.

In connection with the repayment of the 2019 Class A-2-I Notes, the Company recognized a loss on extinguishment of debt of $1.7 million, representing the remaining unamortized costs related to the 2019 Class A-2-I Notes.

Maturities of Long-term Debt

•The final maturity of the 2019 Class A-2 Notes is in June 2049, but it is anticipated that, unless repaid earlier, the 2019 Class A-2-II Notes will be repaid in June 2026.

•The ~~anticipated repayment date~~final maturity of the 2023 Class ~~A-2-I~~A-2 Notes is in March 2053, but it is anticipated that, unless repaid earlier, the 2023 Class A-2 Notes will be repaid in June ~~2024.~~

•~~The anticipated repayment date of the Class A-2-II Notes is June 2026.~~2029.

•The renewal date of the Credit Facility is June ~~2027.~~2027, subject to two additional one-year extensions at the option of the Company upon the satisfaction of certain conditions.

•Quarterly principal payments on the ~~Class A-2-I and~~2019 Class A-2-II Notes totaling ~~$3.25~~$1.50 million ($~~13.0~~6.0 million per annum) are required if the Company's leverage ratio is greater than 5.25x.

•Quarterly principal payments on the 2023 Class A-2 Notes totaling $1.25 million ($5.0 million per annum) are required if the Company's leverage ratio is greater than 5.25x.

8. Stockholders' Deficit

Dividends

Dividends declared and paid per share for the ~~three and nine~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021~~2022 were as follows:

Three Months Ended September 30, Nine Months Ended September 30,
2022 2021 2022 2021
Dividends declared per common share $ 0.51 $ — $ 1.48 $ —
Dividends paid per common share $ 1.02 $ — $ 1.88 $ —


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Dividends declared per common share	$	0.51	$	0.51	$	1.02	$	0.97
Dividends paid per common share	$	—	$	—	$	1.02	$	0.86

On ~~October 28, 2021,~~December 2, 2022, the ~~Company's~~ Board of Directors declared a fourth quarter ~~2021~~2022 cash dividend of ~~$0.40~~$0.51 per share of common stock, paid on January ~~7, 2022~~6, 2023 to the stockholders of record as of the close of business on December 17, ~~2021.~~

2022.

On February ~~17, 2022,~~21, 2023, the ~~Company's~~ Board of Directors declared a first quarter ~~2022~~2023 cash dividend of ~~$0.46~~$0.51 per share of

common stock, paid on ~~April 1, 2022~~March 31, 2023 to the stockholders of record as of the close of business on March ~~21, 2022.~~

20, 2023.

On May ~~12, 2022,~~11, 2023, the ~~Company's~~ Board of Directors declared a second quarter ~~2022~~2023 cash dividend of $0.51 per share of

common stock, paid on July ~~8, 2022~~7, 2023 to the stockholders of record as of the close of business on June 20, ~~2022.~~2023.

~~On September 9, 2022, the Company's Board of Directors declared a third quarter 2022 cash dividend of $0.51 per share of~~

~~common stock, paid on September 30, 2022~~

Dine Brands Global, Inc. and Subsidiaries

Notes to ~~the stockholders of record as of the close of business on September 20, 2022.~~Consolidated Financial Statements (Continued)

8. Stockholders' Deficit (Continued)

Stock Repurchase Program

In February 2019, the Company’s Board of Directors approved a stock repurchase program authorizing the Company to repurchase up to $200 million of the Company’s common stock (the “2019 Repurchase Program”) on an opportunistic basis from time to time in the open market or in privately negotiated transactions based on business, market, applicable legal requirements and other considerations. The 2019 Repurchase Program, as approved by the Board of Directors, does not require the repurchase of a specific number of shares and can be terminated at any time.

On February 17, 2022, the Company's Board of Directors authorized a new share repurchase program, effective April 1, 2022, of up to $250 million (the “2022 Repurchase Program”). In connection with the approval of the 2022 Repurchase Program, the 2019 Repurchase Program terminated effective April 1, 2022. ~~Cumulatively,~~

During the six months ended June 30, 2023, the Company repurchased ~~588,108~~212,492 shares of common stock at a cost of ~~$41.4 million under the 2019 Repurchase Program through April 1, 2022.~~

~~During the three and nine months ended September 30, 2022,~~$14.0 million. Cumulatively, the Company repurchased ~~140,997 and 1,642,097~~1,362,081 shares ~~of common stock~~ at a cost of ~~$9.5~~$92.7 million ~~and $113.6 million, respectively. The amounts for the three months ended September 30, 2022 relate to~~under the 2022 Repurchase Program. For the nine months ended September 30, 2022, 588,108 shares of common stock at a cost of $41.4 million relate to the 2019 Repurchase Program and 1,053,989 shares of common stock at a cost of $72.1 million relate to the 2022 Repurchase Program. The Company did not repurchase any shares of common stock during the three and nine months ended September 30, 2021.

~~Dine Brands Global, Inc. and Subsidiaries~~

~~Notes to Consolidated Financial Statements (Continued)~~

~~8. Stockholders' Deficit (Continued)~~

Treasury Stock

Repurchases of the Company's common stock are included in treasury stock at the cost of shares repurchased plus any transaction costs. Treasury stock may be re-issued when stock options are exercised, when restricted stock awards are granted and when restricted stock units settle in stock upon vesting. The cost of treasury stock re-issued is determined using the first-in, first-out (“FIFO”) method. During the ~~nine~~six months ended ~~September~~June 30, ~~2022,~~2023, the Company re-issued ~~186,035~~270,960 shares of treasury stock at a total FIFO cost of ~~$8.7~~$12.9 million.

9. Income Taxes

The Company's effective tax rate was ~~26.9%~~24.7% for the ~~nine~~six months ended ~~September~~June 30, ~~2022,~~2023, as compared to ~~16.4%~~26.8% for the ~~nine~~six months ended ~~September~~June 30, ~~2021.~~2022. The effective tax rate for the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 was ~~higher~~different than the rate of the prior comparable period primarily due to the recognition of higher excess tax benefits onfrom stock-based compensation ~~related to the departure of the Company's previous chief~~and lower non-deductible executive ~~officer in the first quarter of 2021.~~

compensation.

The total gross unrecognized tax benefit as of ~~September~~June 30, ~~2022~~2023 and December 31, ~~2021~~2022 was ~~$2.2~~$2.6 million and ~~$1.9~~$2.1 million, respectively, excluding interest, penalties and related tax benefits. The Company estimates the unrecognized tax benefit as of ~~September~~June 30, ~~2022~~2023 may decrease over the upcoming 12 months by an amount up to ~~$0.3~~$0.5 million related to settlements with taxing authorities and expiring statutes of limitations. For the remaining liability, due to the uncertainties related to these tax matters, the Company is unable to make a reasonable estimate as to when cash settlement with a taxing authority will occur.

As of ~~September~~June 30, ~~2022,~~2023, accrued interest was ~~$0.7~~$0.8 million and accrued penalties were less than $0.1 million, excluding any related income tax benefits. As of December 31, ~~2021,~~2022, accrued interest was ~~$0.6~~$0.7 million and accrued penalties were less than $0.1 million, excluding any related income tax benefits. The Company recognizes interest accrued related to unrecognized tax benefits and penalties as a component of ~~its~~the income tax provision recognized in ~~its~~the Consolidated Statements of Comprehensive Income.

The Company files federal income tax returns and the Company or one of its subsidiaries file income tax returns in various state and international jurisdictions. With few exceptions, the Company is no longer subject to federal tax examinations by tax authorities for years before ~~2017~~2018 and state or non-United States tax examinations by tax authorities for years before 2011. The Company believes that adequate reserves have been provided related to all matters contained in the tax periods open to examination.

~~On August 16, 2022, the Inflation Reduction Act~~

Table of ~~2022 (“Inflation Reduction Act”) was signed into law in the United States. The Company will monitor regulatory developments~~Contents

Dine Brands Global, Inc. and ~~will continue~~Subsidiaries

Notes to ~~evaluate the impact, if any, on our consolidated financial statements.~~

Consolidated Financial Statements (Continued)

10. Stock-Based Compensation

The following table summarizes the components of stock-based compensation expense included in general and administrative expenses in the Consolidated Statements of Comprehensive Income:

Three Months Ended September 30, Nine Months Ended September 30,
2022 2021 2022 2021
Total stock-based compensation expense: (In millions)
Equity classified awards expense $ 3.8 $ 3.0 $ 12.2 $ 8.6
Liability classified awards expense 0.3 0.2 1.7 2.2
Total pre-tax stock-based compensation expense 4.1 3.2 13.9 10.8
Book income tax benefit (1.1) (0.8) (3.5) (2.7)
Total stock-based compensation expense, net of tax $ 3.0 $ 2.4 $ 10.4 $ 8.1



	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
	(In millions)
Equity classified awards expense	$	3.5	$	4.0	$	5.3	$	8.4
Liability classified awards (credit) expense	(1.3)		1.0		(0.6)		1.4
Total stock-based compensation expense	$	2.2	$	5.0	$	4.7	$	9.8

As of ~~September~~June 30, ~~2022,~~2023, total unrecognized compensation expense of ~~$19.7~~$22.3 million related to restricted stock and restricted stock units and ~~$3.3~~$3.6 million related to stock options are expected to be recognized over a weighted average period of 1.5 years for restricted stock and restricted stock units and 1.5 years for stock options.

~~Table of Contents~~

~~Dine Brands Global, Inc. and Subsidiaries~~

~~Notes to Consolidated Financial Statements (Continued)~~

~~10. Stock-Based Compensation (Continued)~~

Fair Value Assumptions

The following table summarizes the assumptions used in the Black-Scholes model for stock options granted during the ~~nine~~six months ended ~~September~~June 30, ~~2022.~~

2023:


Risk-free interest rate	~~1.7~~4.4	%
Historical volatility	~~70.1~~70.9	%
Dividend yield	~~2.6~~2.7	%
Expected years until exercise	4.5
Fair value of options granted	$~~33.23~~37.35

Equity Classified Awards - Stock Options

Stock option balances at ~~September~~June 30, ~~2022,~~2023, and activity for the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 were as follows:

Shares Weighted
Average
Exercise
Price Weighted Average
Remaining
Contractual Term
(in Years) Aggregate
Intrinsic
Value (in Millions)
Outstanding at December 31, 2021 475,904 $ 76.65
Granted 75,795 70.08
Exercised (3,505) 68.80
Expired (2,448) 94.43
Forfeited (6,171) 81.13
Outstanding at September 30, 2022 539,575 75.65 6.2 $ 1.3
Vested at September 30, 2022 and Expected to Vest 524,475 75.73 6.1 $ 1.3
Exercisable at September 30, 2022 378,811 $ 75.95 5.1 $ 1.2


	Number of Shares Under Option	Weighted Average Exercise Price Per Share		Weighted Average Remaining Contractual Term (in Years)	Aggregate Intrinsic Value (in Millions)
Outstanding at December 31, 2022	539,575	$	75.65
Granted	72,291	74.94
Exercised	(69,443)	54.90
Expired	(55,879)	82.17
Forfeited	(20,375)	79.22
Outstanding at June 30, 2023	466,169	77.69		6.2	$	0.3
Vested at June 30, 2023 and Expected to Vest	449,236	77.84		6.1	$	0.3
Exercisable at June 30, 2023	325,063	$	57.61	5.1	$	0.3

The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value (the difference between the closing stock price of the Company’s common stock on the last trading day of the ~~third~~second quarter of ~~2022~~2023 and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their options on ~~September~~June 30, ~~2022.~~2023. The aggregate intrinsic value will change based on the fair market value of the Company’s common stock and the number of in-the-money options.

~~Equity Classified Awards - Restricted Stock and Restricted Stock Units~~

~~Outstanding balances as of September 30, 2022, and activity related to restricted stock and restricted stock units for the nine months ended September 30, 2022 were as follows:~~

Restricted
Stock Weighted
Average
Grant Date
Fair Value Stock-Settled Restricted
Stock Units Weighted
Average
Grant Date
Fair Value
Outstanding at December 31, 2021 276,611 $ 80.85 105,592 $ 71.00
Granted 182,530 70.24 60,914 49.36
Released (87,779) 88.35 (42,180) 66.46
Forfeited (20,592) 77.24 — —
Outstanding at September 30, 2022 350,770 $ 73.67 124,326 $ 62.18

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Dine Brands Global, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

10. Stock-Based Compensation (Continued)

Equity Classified Awards - Restricted Stock and Restricted Stock Units

Outstanding balances as of June 30, 2023, and activity related to restricted stock and restricted stock units for the six months ended June 30, 2023 were as follows:


	Shares of Restricted Stock	Weighted Average Grant Date Fair Value		Stock-Settled Restricted Stock Units	Weighted Average Grant Date Fair Value
Outstanding at December 31, 2022	355,900	$	73.57	123,895	$	62.11
Granted	201,517	74.16		20,540	74.01
Released	(141,487)	75.01		(46,228)	63.66
Forfeited	(50,180)	73.05		(39,294)	77.23
Outstanding at June 30, 2023	365,750	$	73.41	58,913	$	54.62

Liability Classified Awards - Cash-settled Restricted Stock Units

The Company has granted cash-settled restricted stock units to certain ~~employees.~~employees in the past. These instruments ~~are~~were recorded as liabilities at fair value as of the respective period end.


						Cash-Settled Restricted Stock Units
~~Outstanding at December 31, 2021~~						~~12,799~~
~~Granted~~						67
~~Released~~						~~(12,866)~~

~~Outstanding at September~~There have been no liabilities related to cash-settled restricted stock units since the first quarter of 2022. For the six months ended June 30, 2022,						—

~~For the three months ended September 30, 2022 and 2021,~~ an expense of ~~zero and $0.1~~$0.2 million ~~respectively,~~ was included as stock-based compensation expense related to cash-settled restricted stock units. For the nine months ended September 30, 2022 and 2021, an expense of $0.2 million and a credit of $1.5 million, respectively, was included as stock-based compensation expense related to cash-settled restricted stock units. At September 30, 2022 and December 31, 2021, liabilities were zero and $0.9 million, respectively, related to cash-settled restricted stock units were included as part of accrued employee compensation and benefits in the Consolidated Balance Sheets.

Liability Classified Awards - Long-Term Incentive Awards

The Company has granted cash long-term incentive awards (“LTIP awards”) to certain employees. Annual LTIP awards vest over a three-year period and are determined using multipliers from 0% to 200% of the target award based on the total stockholder return of ~~the Company's~~Dine Brands Global common stock compared to the total stockholder returns of a peer group of companies. The awards are considered stock-based compensation and are classified as liabilities measured at fair value as of the respective period end. For the three months ended ~~September~~June 30, 2023 and 2022, a credit of $1.3 million and ~~2021,~~ an expense of ~~$0.2 million and $0.2~~$1.0 million, respectively, were included in total stock-based compensation expense related to LTIP awards. For the ~~nine~~six months ended ~~September~~June 30, 2023 and 2022, ~~and 2021, $1.5~~a credit of $0.6 million and ~~$0.7~~an expense of $1.3 million, respectively, ~~were~~was included in total stock-based compensation expense related to LTIP awards. At ~~September~~June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, liabilities of ~~$2.4~~$1.5 million and ~~$1.5~~$2.1 million, respectively, related to LTIP awards ~~were~~was included as part of accrued employee compensation and benefits ~~and for the long-term portion in other non-current liabilities~~ in the Consolidated Balance Sheets.

~~11. Net Income per Share~~

~~The computation of the Company's basic and diluted net income per share is as follows:~~

Three Months Ended September 30, Nine Months Ended September 30,
2022 2021 2022 2021
(In thousands, except per share data)
Numerator for basic and diluted income per common share:
Net income $ 20,948 $ 23,111 $ 69,760 $ 78,076
Less: Net income allocated to unvested participating restricted stock (575) (502) (1,852) (1,920)
Net income available to common stockholders - basic 20,373 22,609 67,908 76,156
Effect of unvested participating restricted stock in two-class calculation — 2 3 13
Net income available to common stockholders - diluted $ 20,373 $ 22,611 $ 67,911 $ 76,169
Denominator:
Weighted average outstanding shares of common stock - basic 15,377 16,911 16,049 16,752
Dilutive effect of stock options 26 60 30 106
Weighted average outstanding shares of common stock - diluted 15,403 16,971 16,079 16,858
Net income per common share:
Basic $ 1.32 $ 1.34 $ 4.23 $ 4.55
Diluted $ 1.32 $ 1.33 $ 4.22 $ 4.52

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Dine Brands Global, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

11. Net Income per Share

The computation of the Company's basic and diluted net income per share is as follows:



	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
	(In thousands, except per share data)
Numerator for basic and diluted income per common share:
Net income	$	18,248	$	23,962	$	45,658	$	48,812
Less: Net income allocated to unvested participating restricted stock	(446)		(673)		(1,125)		(1,273)
Net income available to common stockholders - basic	17,802		23,289		44,533		47,539
Effect of unvested participating restricted stock in two-class calculation	—		1		—		1
Net income available to common stockholders - diluted	$	17,802	$	23,290	$	44,533	$	47,540
Denominator:
Weighted average outstanding shares of common stock - basic	15,308		16,050		15,304		16,386
Dilutive effect of stock options	9		30		20		32
Weighted average outstanding shares of common stock - diluted	15,317		16,080		15,324		16,418
Net income per common share:
Basic	$	1.16	$	1.45	$	2.91	$	2.90
Diluted	$	1.16	$	1.45	$	2.91	$	2.90

12. Segments

The Company identifies its reporting segments based on the organizational units used by management to monitor performance and make operating decisions. The Company currently has ~~five~~six operating segments: Applebee's franchise operations, ~~Applebee's company-operated restaurant~~IHOP franchise operations, ~~IHOP~~Fuzzy's franchise operations, rental operations, financing operations, and ~~financing~~company-operated restaurant operations. The Company has four ~~reportable~~reporting segments: franchise operations (an aggregation of ~~Applebee's and IHOP~~each restaurant concept's franchise operations), company-operated restaurant operations, rental operations and financing operations. ~~The Company~~

~~considers these to be its reportable segments, regardless of whether any segment exceeds 10% of consolidated revenues, income before income tax provision or total assets.~~

As of ~~September~~June 30, ~~2022,~~2023, the franchise operations segment consisted of ~~(i) 1,601~~1,661 restaurants operated by Applebee’s franchisees in the United States, two U.S. territories and 1113 countries outside the United ~~States and (ii) 1,766~~States; 1,790 restaurants operated by IHOP franchisees and area licensees in the United States, two U.S. territories and ~~eight~~13 countries outside the United States; and 137 restaurants operated by Fuzzy's franchisees in the United States. Franchise operations revenue consists primarily of franchise royalty revenues, franchise advertising revenue, sales of proprietary products to franchisees (primarily pancake and waffle dry mixes for the IHOP restaurants), and other franchise fees. Franchise operations expenses include advertising ~~expenses,~~expense, the cost of ~~IHOP~~ proprietary products, ~~bad debt expense, franchisor contributions to marketing funds,~~ pre-opening training expenses and other franchise-related ~~costs.~~

Company restaurant sales are retail sales at 69 Applebee's company-operated restaurants. Company restaurant expenses are operating expenses at company-operated restaurants and include food, labor, utilities, rent and other restaurant operating costs.

Rental operations revenue includes revenue from operating leases and interest income from real estate leases. Rental operations expenses are costs of operating leases and interest expense from finance leases on which the Company is the lessee.

Financing ~~revenues~~operations revenue primarily ~~consist~~consists of interest income from the financing of IHOP equipment leases and franchise fees and interest income on Applebee's notes receivable from franchisees. Financing operations expenses primarily are the cost of taxes related to IHOP equipment leases.

During the three and six months ended June 30, 2023, the company restaurants segment consisted of three Fuzzy's restaurants that were acquired in December 2022 of which two were subsequently refranchised in 2023. During three and six months ended June 30, 2022, the Company operated 69 Applebee's restaurants that were refranchised in October 2022. All company-operated restaurants are located in the United States. Company-operated restaurant operation revenue consists of retail sales at company operated restaurants. Company-operated restaurant operation expenses are operating expenses such as food, beverage, labor, benefits, utilities, rent and other operating costs.

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Dine Brand Global, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

12. Segments (Continued)

Information on segments is as follows:


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
	(In millions)
Revenues from external customers:
Franchise operations	177.9		$	168.3	357.9		$	329.5
Rental operations	29.4		29.1		61.4		57.9
Company restaurants	0.5		39.5		1.5		78.9
Financing operations	0.6		0.9		1.4		1.9
Total	$	208.4	237.8		$	422.2	$	468.2

Interest expense:
Rental operations	$	1.0	$	1.0	$	2.0	$	2.2
Company restaurants	—		0.8		—		1.6
Corporate	17.8		15.4		32.5		30.9
Total	$	18.8	$	17.2	$	34.5	$	34.7

Depreciation and amortization:
Franchise operations	$	2.4	$	2.5	$	4.9	$	5.0
Rental operations	2.6		2.6		5.3		5.3
Company restaurants	0.0		1.9		0.0		3.8
Corporate	3.3		3.0		7.5		5.9
Total	$	8.4	$	10.0	$	17.7	$	20.0

Gross profit by segment:
Franchise operations	$	89.6	$	86.0	$	182.2	$	169.2
Rental operations	7.2		7.2		17.5		13.9
Company restaurants	0.0		1.6		0.0		3.6
Financing operations	0.5		0.9		1.2		1.7
Total gross profit	97.3		95.7		201.0		188.4
Corporate and unallocated expenses, net	(72.9)		(63.2)		(140.4)		(121.8)
Income before income taxes	$	24.4	$	32.5	$	60.6	$	66.7

Three Months Ended September 30, Nine Months Ended September 30,
2022 2021 2022 2021
(In millions)
Revenues from external customers:
Franchise operations $ 164.9 $ 161.2 $ 494.4 $ 469.1
Rental operations 29.2 31.3 87.1 84.8
Company restaurants 38.2 35.2 117.2 109.4
Financing operations 0.9 1.0 2.8 3.3
Total $ 233.2 $ 228.7 $ 701.4 $ 666.5
Interest expense:
Rental operations $ 1.1 $ 1.2 $ 3.2 $ 3.8
Company restaurants 0.7 0.8 2.4 2.4
Corporate 15.3 15.7 46.2 48.0
Total $ 17.1 $ 17.7 $ 51.8 $ 54.2
Depreciation and amortization:
Franchise operations $ 2.5 $ 2.5 $ 7.5 $ 7.6
Rental operations 2.7 2.8 8.0 8.3
Company restaurants 0.5 1.7 4.3 5.3
Corporate 3.2 3.0 9.1 8.8
Total $ 8.9 $ 10.0 $ 28.9 $ 30.0
Gross profit (loss), by segment:
Franchise operations $ 84.6 $ 85.5 $ 253.8 $ 249.2
Rental operations 7.2 6.8 21.1 18.8
Company restaurants 1.7 1.4 5.4 7.9
Financing operations 0.8 0.9 2.5 2.9
Total gross profit 94.3 94.6 282.8 278.8
Corporate and unallocated expenses, net (65.6) (63.8) (187.4) (185.4)
Income before income taxes $ 28.7 $ 30.8 $ 95.4 $ 93.4

13. Closure and Impairment Charges

Closure and impairment charges for the three and six months ended June 30, 2023 and 2022 were as follows:


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
	(In millions)
Closure charges	$	0.4	$	1.0	$	0.8	$	1.2
Long-lived tangible asset impairment	0.4		0.3		0.5		0.3



Total closure and impairment charges	$	0.8	$	1.3	$	1.3	$	1.5

The closure charges for the three and six months ended June 30, 2023 are related to revisions to existing closure reserves, including accretion, approximately 30 IHOP restaurants.

The closure charges for the three and six months ended June 30, 2022 are related to the establishment of or revisions to existing closure reserves for approximately 35 IHOP restaurants.

The long-lived asset impairment for the three and six months ended June 30, 2023 primarily related to technology that were developed in connection with the IHOP Flip'd initiative that was stopped. Long-lived intangible asset impairment charges for the three and six months ended June 30, 2022 related to the impairment of land and buildings for two IHOP restaurants located on sites owned by the Company.

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Dine Brands Global, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

~~13. Closure and Impairment Charges~~

~~Closure and impairment charges for the three and nine months ended September 30, 2022 and 2021 were as follows:~~

Closure and Impairment Charges Three Months Ended September 30, Nine Months Ended September 30,
2022 2021 2022 2021
(In millions)
Closure charges $ 0.5 $ 0.4 $ 1.7 $ 3.3
Long-lived tangible asset impairment 1.1 — 1.4 1.7
Total closure and impairment charges $ 1.6 $ 0.4 $ 3.1 $ 5.0

The closure charges for the three and nine months ended September 30, 2022 were for approximately 30 and 35 IHOP restaurants, respectively, and were primarily related to the revisions to existing closure reserves, including accretion. The closure charges for the three months ended September 30, 2021 related to revisions to existing closure reserves, including accretion, primarily for approximately 50 IHOP restaurants closed prior to June 30, 2021. The closure charges for the nine months ended September 30, 2021 related to approximately 25 IHOP restaurants closed in 2021 and the establishment of, or revisions to existing closure reserves, including accretion, primarily for approximately 30 IHOP restaurants.

Long-lived tangible asset impairment charges for the three months ended September 30, 2022 related to the Applebee's company-operated restaurants (see Note 17 - Assets and Liabilities Held for Sale). Long-lived tangible asset impairment charges for the nine months ended September 30, 2022 related to the Applebee's company-operated restaurants for $1.1 million and the impairment of land and buildings for two IHOP restaurants located on sites owned by the Company.Long-lived tangible asset impairment charges for the nine months ended September 30, 2021 related to four IHOP franchisee-operated restaurants. The impairment recorded represented the difference between the carrying value and the estimated fair value.

14. Fair Value Measurements

The Company does not have a material amount of financial assets or liabilities that are required under U.S. GAAP to be measured on a recurring basis at fair value. The Company is not a party to any material derivative financial instruments. The Company does not have a material amount of non-financial assets or non-financial liabilities that are required under U.S. GAAP to be measured at fair value on a recurring basis. The Company has not elected to use the fair value measurement option, as permitted under U.S. GAAP, for any assets or liabilities for which fair value measurement is not presently required.

The Company believes the fair values of cash equivalents, accounts receivable and accounts payable approximate their carrying amounts due to their short duration.

The fair values of the Company's ~~2019 Class A-2 Notes~~long-term debt, excluding the Credit Facility, at ~~September~~June 30, ~~2022~~2023 and December 31, ~~2021~~2022 were as follows:

September 30, 2022 December 31, 2021
(In millions)
Face Value of Class A-2 Notes $ 1,287.0 $ 1,287.0
Fair Value of Class A-2 Notes $ 1,213.7 $ 1,312.9


	June 30, 2023		December 31, 2022
	(In millions)
Face Value	$	1,094.0	$	1,247.0
Fair Value	$	1,042.4	$	1,736.9

The fair values were determined based on Level 2 inputs, including information gathered from brokers who trade in the Company’s ~~2019 Class A-2 Notes,~~long-term debt, as well as information on notes that are similar to those of the Company.

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~~Dine Brands Global, Inc. and Subsidiaries~~

~~Notes to Consolidated Financial Statements (Continued)~~

15. Commitments and Contingencies

Litigation, Claims and Disputes

The Company is subject to various lawsuits, administrative proceedings, audits and claims arising in the ordinary course of business. Some of these lawsuits purport to be class actions and/or seek substantial damages. The Company is required under U.S. GAAP to record an accrual for litigation loss contingencies that are both probable and reasonably estimable. Legal fees and expenses associated with the defense of all of the Company's litigation are expensed as such fees and expenses are incurred. Management regularly assesses the Company's insurance coverage, analyzes litigation information with the Company's attorneys and evaluates the Company's loss experience in connection with pending legal proceedings. While the Company does not presently believe that any of the legal proceedings to which it is currently a party will ultimately have a material adverse impact on the Company, there can be no assurance that the Company will prevail in all the proceedings the Company is party to, or that the Company will not incur material losses from them.

Lease Guarantees

In connection with the ~~sale~~refranchising of Applebee’s restaurants to franchisees, the Company has, in certain cases, guaranteed or has potential continuing liability for lease payments totaling ~~$212.0~~$424.2 million as of ~~September~~June 30, ~~2022.~~2023. This amount represents the maximum potential liability for future payments under these leases. These leases have been assigned to the buyers and expire at the end of the respective lease terms, which range from ~~2022~~2023 through ~~2048.~~2058. Excluding unexercised option periods, the Company's potential liability for future payments under these leases is ~~$42.8~~$95.8 million. In the event of default, the indemnity and default clauses in the sale or assignment agreements govern the Company's ability to pursue and recover damages incurred.

16. Cash, Cash Equivalents and Restricted Cash

Cash and Cash Equivalents

The Company considers all highly liquid investment securities with remaining maturities at the date of purchase of three months or less to be cash equivalents. These cash equivalents are stated at cost which approximates market value. Cash held related to IHOP advertising funds and the Company's gift card programs is not considered to be restricted cash as there are no restrictions on the use of these funds.

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Dine Brands Global, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

16. Cash, Cash Equivalents and Restricted Cash (Continued)

The components of cash and cash equivalents were as follows:

September 30, 2022 December 31, 2021
(In millions)
Money market funds $ 60.0 $ 30.0
IHOP advertising funds and gift card programs 74.0 101.5
Other depository accounts 221.3 229.9
Total cash and cash equivalents $ 355.3 $ 361.4


	June 30, 2023		December 31, 2022
	(In millions)
Money market funds	$	3.0	$	75.0
IHOP advertising funds and gift card programs	73.5		96.7
Other depository accounts	21.5		98.0
Total cash and cash equivalents	$	98.0	$	269.7

Current Restricted Cash

Current restricted cash primarily consisted of funds required to be held in trust in connection with the Company's securitized debt and funds from Applebee's franchisees pursuant to franchise agreements, usage of which was restricted to advertising activities.

The components of current restricted cash were as follows:

September 30, 2022 December 31, 2021
(In millions)
Securitized debt reserves $ 31.0 $ 29.9
Applebee's advertising funds 21.4 17.5
Other 0.1 0.1
Total current restricted cash $ 52.5 $ 47.5

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~~Dine Brands Global, Inc. and Subsidiaries~~

~~Notes to Consolidated Financial Statements (Continued)~~

~~16. Cash, Cash Equivalents and Restricted Cash (Continued)~~



	June 30, 2023		December 31, 2022
	(In millions)
Securitized debt reserves	$	33.8	$	32.4
Applebee's advertising funds	4.1		5.4
Other	1.4		1.1
Total current restricted cash	$	39.4	$	38.9

Non-current Restricted Cash

Non-current restricted cash was ~~$16.4~~$19.5 million and $16.4 million at ~~September~~June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively, and represents interest reserves required to be set aside for the duration of the Company's securitized debt.

~~17. Assets and Liabilities Held for Sale~~

The Company classifies long-lived assets or disposal groups to be sold as held for sale when all of the following criteria for a plan of sale have been met: (1) management, having the authority to approve the action, commits to a plan to sell the assets; (2) the assets are available for immediate sale, in their present condition, subject only to terms that are usual and customary for sales of such assets; (3) an active program to locate a buyer and other actions required to complete the plan to sell the assets have been initiated; (4) the sale of the assets is probable and is expected to be completed within one year; (5) the assets are being actively marketed for a price that is reasonable in relation to their current fair value; and (6) actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or the plan will be withdrawn. When all of these criteria have been met, the assets and liabilities are classified as held for sale in the balance sheet. Assets classified as held for sale are reported at the lower of their carrying value or fair value less costs to sell. Depreciation and amortization of assets ceases upon designation as held for sale. The assets and liabilities held for sale are recorded on the Company’s Consolidated Balance Sheets as assets held for sale and liabilities held for sale, respectively.

On July 26, 2022, the Company entered into an agreement for the refranchising and sale of related restaurant assets of 69 Applebee’s company-operated restaurants located in North Carolina and South Carolina. Assets held for sale include $55.5 million of operating lease right-of-use assets, $43.9 million of property and equipment, $9.3 million in goodwill and other intangible assets, net and $1.7 million in other assets for Company-operated restaurants that the Company plans to sell within the next year to an existing franchisee. Liabilities held for sale include $95.4 million in lease obligations and $0.6 million in other liabilities. A loss of $1.1 million was recorded in closure and impairment charges on the Company's Consolidated Statements of Comprehensive Income during the three months ended September 30, 2022 and does not factor in any future royalty stream from the refranchising.

~~18. Subsequent Event~~

~~In October 2022, the Company completed the refranchising and sale of related restaurant assets of 69 Applebee’s company-operated restaurants located in North Carolina and South Carolina.~~

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

You should read the following Management's Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) in conjunction with the consolidated financial statements and the related notes that appear elsewhere in this ~~report.~~report and the MD&A contained in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022. Statements contained in this report may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Please refer to the section of this report under the heading “Cautionary Statement Regarding Forward-Looking Statements” for more information.

~~Overview~~

The following discussion and analysis provides information which we believe is relevant to an assessment and understanding of our consolidated results of operations and financial condition. The discussion should be read in conjunction with the consolidated financial statements and the notes thereto included in Item 1 of Part I of this Quarterly Report and the audited consolidated financial statements and notes thereto and the MD&A contained in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021. Except where the context indicates otherwise, the words “we,” “us,” “our,” “Dine Brands Global” and the “Company” refer to Dine Brands Global, Inc., together with its subsidiaries that are consolidated in accordance with United States generally accepted accounting principles (“U.S. GAAP”).

Overview

Through various subsidiaries, we own ~~franchise~~ and ~~operate~~franchise the Applebee's Neighborhood Grill & Bar® (“Applebee's”) concept in the ~~bar and grill~~American full-service segment within the casual dining category of the restaurant industry, ~~and we own and franchise~~ the International House of Pancakes® (“IHOP”) concept in the mid-scale full-service restaurant segment within the family dining category of the restaurant industry, and the Fuzzy's Taco Shop® (“Fuzzy's”) concept in the Mexican limited-service restaurant segment within the fast-casual dining category of the restaurant industry. References herein to Applebee's®, IHOP®and ~~IHOP~~Fuzzy's Taco Shop® restaurants are to these ~~two~~three restaurant concepts, whether operated by franchisees, area licensees and their sub-licensees (collectively, “area licensees”) or by us. With ~~3,436~~almost 3,600 franchised and company-operated restaurants combined, ~~98% of which are franchised,~~ we believe we are one of the largest full-service restaurant companies in the world.

We identify our business segments based on the organizational units used by management to monitor performance and make operating decisions. We currently have ~~five~~six operating segments: Applebee's franchise operations, ~~Applebee's company-operated restaurant~~IHOP franchise operations, ~~IHOP~~Fuzzy's franchise operations, rental operations, financing operations, and ~~financing~~company-operated restaurant operations. We have four reportable segments: franchise operations (an aggregation of each restaurant concept's franchise operations), rental operations, financing operations, and company-operated restaurant operations.

We acquired Fuzzy's in December 2022 and the results of its operations are included herein. However, comparative key performance indicators in the following sections only include the results of operations of Applebee's and IHOP, franchise operations), company-operated restaurant operations, rental operations and financing operations. We consider these to be our reportable segments, regardless of whether any segment exceeds 10% of consolidated revenues, income before income tax provision or total assets.

~~Events Impacting the Comparability of Financial Information~~

~~Comparisons of financial results~~unless otherwise noted, as prior period data is not available for the nine months ended September 30, 2022 and 2021 were impacted by the extent of restrictions in place on restaurant operations in 2021. In March 2020, the World Health Organization declared a global pandemic related to the outbreak of a novel strain of coronavirus, designated “COVID-19.” Initially, federal, state, local and international governments reacted to the COVID-19 pandemic by implementing restrictions that resulted in, to varying degrees, reduced operating hours, restaurant dine-in and/or indoor dining limitations, capacity limitations or other restrictions.

The operating status of our restaurants was fluid during the nine months ended September 30, 2021 and subject to change. Restrictions on restaurant operations were relaxed, removed or increased in response to changes in the number of COVID-19 infections, the availability and acceptance of vaccines and an increase in vaccination rates within the respective governmental jurisdictions. Generally speaking, during the second quarter of 2021, many federal, state and local governments began to relax or remove the restrictive protocols noted above, while most international governments maintained the restrictions, the degree of which varied by country.

As of September 30, 2022 and 2021, almost all domestic Applebee's and IHOP restaurants were open and operating without government-mandated restrictions. Internationally, government-mandated restrictions vary by country, with some international restaurants still under restrictions. As of September 30, 2022, approximately 82% of international restaurants were operating without restrictions, a significant improvement from September 30, 2021, at which time most international restaurants were operating with some restrictions.

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Government-mandated restrictions notwithstanding, some IHOP restaurants that operated 24 hours a day for all or parts of a week prior to the pandemic are currently closed during overnight hours. As of September 30, 2022, approximately 532 IHOP restaurants were operating 24 hours a day, seven days a week, with approximately 141 restaurants operating 24 hours a day for some portion of the week. As of December 31, 2019, the last reporting period prior to the pandemic, approximately 845 IHOP restaurants were operating 24 hours a day, seven days a week, with approximately 245 restaurants operating 24 hours a day for some portion of the week.

We have experienced a number of temporary and permanent closures of our restaurants during the COVID-19 pandemic. These closures occurred for a variety of reasons, and all closures were not necessarily related to the impact of the COVID-19 pandemic or related restrictions. We cannot predict the duration of the pandemic, recurrences of the virus (including the emergence of new variants of the virus), the acceptance of vaccines and booster vaccines worldwide and the availability of vaccines internationally, restrictions on in-restaurant dining that may be re-imposed, and, in general, what the ultimate impact on consumer discretionary spending the COVID-19 pandemic might have on our operations and the restaurant industry as a whole.

Fuzzy’s.

Key Financial Results

The financial tables appearing in this MD&A present amounts in millions of dollars that are rounded from our consolidated financial statements presented in thousands of dollars. As a result, the tables may not foot or crossfoot due to rounding.

Three Months Ended September 30, Favorable
(Unfavorable) Variance Nine Months Ended September 30, Favorable
(Unfavorable) Variance
2022 2021 2022 2021
(In millions, except per share data)
Income before income taxes $ 28.7 $ 30.8 $ (2.1) $ 95.4 $ 93.4 $ 2.0
Income tax provision (7.8) (7.7) (0.1) (25.7) (15.4) $ (10.3)
Net income $ 20.9 $ 23.1 $ (2.2) $ 69.8 $ 78.1 $ (8.3)
Effective tax rate 27.1 % 24.9 % (2.2) % 26.9 % 16.4 % (10.5) %
Net income per diluted share $ 1.32 $ 1.33 $ (0.01) $ 4.22 $ 4.52 $ (0.30)
% decrease % decrease
Weighted average diluted shares 15.4 17.0 (9.2) % 16.1 16.9 (4.6) %


	Three Months Ended June 30,						Favorable (Unfavorable) Variance			Six Months Ended June 30,						Favorable (Unfavorable) Variance
	2023			2022						2023			2022
	(In millions, except per share data)
Income before income taxes	$	24.4		$	32.5		$	(8.1)		$	60.6		$	66.7		$	(6.1)
Income tax provision	(6.2)			(8.6)			2.4			(14.9)			(17.9)			3.0
Net income	$	18.2		$	24.0		$	(5.7)		$	45.7		$	48.8		$	(3.2)

Effective tax rate	25.3		%	26.3		%	1.0		%	24.7		%	26.8		%	2.1		%

Net income per diluted share	$	1.16		$	1.45		$	(0.29)		$	2.91		$	2.90		$	0.01
							% increase									% increase
Weighted average diluted shares	15.3			16.1			(5.0)		%	15.3			16.4			(6.7)		%

The effective tax rate for the ~~nine~~three and six months ended ~~September~~June 30, ~~2022~~2023 was different than the rate of the prior comparable ~~period~~periods primarily due to the recognition of higher excess tax benefits onfrom stock-based compensation ~~related to the departure~~and lower non-deductible executive compensation.

Table of ~~our previous chief executive officer in the first quarter of 2021.~~Contents

The following table highlights the primary components of the ~~increase (decrease)~~decrease in our income before income taxes for the three and ~~nine~~six months ended ~~September~~June 30, ~~2022,~~2023, compared to our income before income taxes for the comparable prior period (in millions):


	Favorable (Unfavorable) Variance
	Three Months Ended June 30, 2023		Six Months Ended June 30, 2023
Increase in gross profit:
Applebee's franchise operations	$	—	$	0.9
IHOP franchise operations	0.2		5.4
Fuzzy's franchise operations	3.4		6.8
Company restaurant operations	(1.6)		(3.6)
Rental and financing operations	(0.4)		3.1
Total increase in gross profit	1.6		12.6
Increase in general and administrative ("G&A") expenses	(3.8)		(13.3)
Interest expense, net	(2.4)		(1.6)
Loss on disposition of assets	(2.3)		(3.6)
Other	(1.3)		(0.0)
Decrease in income before income taxes	$	(8.1)	$	(6.1)

Income before income taxes for the three and ~~nine~~six months ended ~~September~~June 30, ~~2021:~~

Favorable
(Unfavorable) Variance
Three Months Ended September 30, 2022 Nine Months Ended September 30, 2022
(In millions)
(Decrease) increase in gross profit:
Applebee's franchise operations $ (0.9) $ 4.7
IHOP franchise operations 0.1 —
Company restaurant operations 0.3 (2.5)
Rental and financing operations 0.2 1.8
Total (decrease) increase in gross profit (0.3) 4.0
Increase in general and administrative expenses (2.6) (9.1)
Increase in gain on disposition of assets 2.8 4.5
Other (1.9) 2.6
(Decrease) increase in income before income taxes $ (2.0) $ 2.0

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~~The increase in Applebee’s franchise operations gross profit for~~2023 decreased compared to the ~~nine months ended September 30, 2022 compared with the same period of the~~comparable prior ~~year, was~~periods primarily due to ~~higher royalty revenues from a 6.3%~~the increase in ~~domestic~~G&A expenses and loss on disposition of assets primarily related to the stopping of our IHOP Flip'd initiative, partially offset by the increase in revenue from franchise ~~same-restaurant sales and increased international royalty revenues.~~

operations including our recently acquired Fuzzy's Taco Shop
® brand.

Increases in commodity, labor and other restaurant operating costs experienced at restaurants owned and operated by our franchisees could impact us to the extent our franchisees are adversely impacted by a sustained decline in their operating ~~margins; and at~~margins. At company operated restaurants, impact us directly. The changes in company restaurant operations gross profit for the nine months ended September 30, 2022 compared with the same respective periods of the prior year were primarily impacted by increases in commodity, labor and other restaurant operating costs ~~offset by higher retail sales. As of September 30, 2022, we operated 69 Applebee’s restaurants, representing 2% of the 3,436 restaurants comprising our system.~~

Rental and financing operations gross profit for the nine months ended September 30, 2022 increased as compared to the same period of 2021, primarily due to a $1.6 million increase in rental income based on a percentage of franchisees' retail sales.

With almost all domestic Applebee’s and IHOP restaurants open and operating without government-mandated restrictions, the Company has returned to normal operations supporting franchisees, as well as making strategic growth investments, resulting in the increase in general and administrative (“G&A”) expenses for the three and nine months ended September 30, 2022, compared with the same respective periods of the prior year.

~~The increase in gain on disposition of assets for the three and nine months ended September 30, 2022 primarily related to the sale of land and buildings for restaurants located on sites owned by~~impact us ~~compared with the same respective periods in 2021, a loss on disposition of assets for capitalized software no longer in use was incurred.~~

directly.

See “Consolidated Results of Operations - Comparison of the ~~Three and~~ ~~Nine~~Three and Six Months Ended ~~September~~June 30, ~~2022~~2023 and ~~2021”~~2022” for additional discussion of the changes shown above.

Key Performance Indicators

In evaluating the performance of each restaurant concept, we consider the key performance indicators to be the system-wide sales percentage change, the percentage change in domestic system-wide same-restaurant sales (“domestic same-restaurant sales”), net franchise restaurant development and the change in effective restaurants. Changes in both domestic same-restaurant sales and in the number of Applebee's and IHOP restaurants will impact our system-wide retail sales that drive franchise royalty revenues. Restaurant development also impacts franchise revenues in the form of initial franchise fees and, in the case of IHOP restaurants, sales of proprietary pancake and waffle dry mix.

As noted above, the comparative key performance indicators in the following sections only include the results of operations of Applebee's and IHOP, unless otherwise noted, as prior period data is not available for Fuzzy’s.

Our key performance indicators for the three and ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 were as follows:


		Three Months Ended September 30, 2022				Nine Months Ended September 30, 2022					Three Months Ended				Six Months Ended
		Applebee's		IHOP		Applebee's		IHOP			June 30, 2023				June 30, 2023
Sales percentage increase in reported retail sales - 2022 vs. 2021		3.2	%	3.7	%	5.9	%	9.1	%
% increase in domestic system-wide same-restaurant sales - 2022 vs. 2021		3.8	%	1.9	%	6.3	%	7.2	%
											Applebee's		IHOP		Applebee's		IHOP
Sales percentage (decrease) increase in reported retail sales - 2023 vs. 2022										Sales percentage (decrease) increase in reported retail sales - 2023 vs. 2022	(1.5)	%	4.6	%	2.0	%	7.8	%
% (decrease) increase in domestic system-wide same-restaurant sales - 2023 vs. 2022										% (decrease) increase in domestic system-wide same-restaurant sales - 2023 vs. 2022	(1.0)	%	2.1	%	2.5	%	5.3	%
Net franchise restaurant (reduction) increase (1)	Net franchise restaurant (reduction) increase (1)	(3)		2		(10)		15		Net franchise restaurant (reduction) increase (1)	(12)		—		(17)		9
Net (decrease) increase in total effective restaurants (2)	Net (decrease) increase in total effective restaurants (2)	(18)		30		(19)		26		Net (decrease) increase in total effective restaurants (2)	(11)		34		(7)		32

(1) Franchise and area license restaurant closings, net of openings, during the three and ~~nine~~six months ended ~~September~~June 30, 2023 and 2022.

(2) Change in the weighted average number of franchise, area license and company-operated restaurants open during the three and ~~nine~~six months ended ~~September~~June 30, ~~2022,~~2023, compared to the weighted average number of those open during the same ~~respective~~ periods of ~~2021.~~2022.

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The changes in sales percentage and domestic same-restaurant sales of both brands were impacted by increases in average check, partially offset by decreases in customer traffic. There were varying degrees of restrictions on in-restaurant dining in effect during the first quarter of 2021 that substantially had been relaxed during the first quarter of 2022, as discussed ~~under~~ ~~“Events Impacting the Comparability of Financial Information.”~~

The change in total effective restaurants for each brand reflects both permanent closures, net of openings, over the past 12 months as well as the weighted effect of restaurants temporarily closed during each period.

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Domestic Same-Restaurant Sales

Applebee’s system-wide domestic same-restaurant sales ~~increased 3.8%~~decreased 1.0% for the three months ended ~~September~~June 30, ~~2022~~2023 and ~~6.3%~~increased 2.5% for the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 as compared to the same ~~respective~~ periods of ~~2021.~~2022. The ~~increase of 3.8%~~slight decrease for the three months ended ~~September~~June 30, ~~2022~~2023 was primarily due to a decrease in traffic, offset by an increase in average check. The increase for the six months ended June 30, 2023 was primarily due to an increase in average check ~~partially~~resulting from the successful promotional food offerings and menu price increases by franchisees, offset by a decrease in ~~customer~~ traffic. The increase of 6.3% for the nine months ended September 30, 2022 was due to an increase in customer traffic and average check. The increase in customer traffic primarily was due to the positive changes in restaurant operating status as discussed under ~~“Events Impacting the Comparability of Financial Information,”~~ ~~as well as increased consumer desire to patronize restaurants after the relaxation of pandemic restrictions.~~The increase in average check was primarily due to favorable mix shifts related to a reduction in core menu items, successful promotional food and beverage offerings as well as menu price increases by franchisees.


Applebee's Off-Premise Sales Data	Three Months Ended June 30,						Six Months Ended June 30,
	2023			2022			2023			2022
Off-premise sales (in millions) (1)	$	244.6		$	281.6		$	508.2		$	578.7
% sales mix	22.6		%	25.6		%	22.9		%	26.6		%

(1) Primarily to-go, delivery and catering sales for comparable 2023 and 2022 restaurants.

Based on data from Black Box Intelligence, a restaurant sales reporting firm (“Black Box”), Applebee's ~~increase in same- restaurant~~same-restaurant sales for the three and six months ended ~~September~~June 30, ~~2022 outperformed, and for the nine months ended September 30, 2022~~2023 underperformed the casual dining segment of the restaurant industry (excluding Applebee's) ~~as compared to~~during the same ~~respective~~ periods of ~~2022.~~2023.

Applebee's Off-premise Sales Data Three Months Ended September 30, Nine Months Ended September 30,
2022 2021 2022 2021
Off-premise sales (in millions) (1)
$ 259.0 $ 282.9 $ 837.7 $ 945.5
% sales mix 24.2 % 27.5 % 25.8 % 31.3 %

~~(1)~~ ~~Primarily to-go, delivery and catering sales for comparable 2022 and 2021 restaurants.~~

3028

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IHOP's system-wide domestic same-restaurant sales increased ~~1.9%~~2.1% for the three months ended ~~September~~June 30, ~~2022~~2023 and ~~7.2%~~5.3% for the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 as compared to the same ~~respective~~ periods of ~~2021.~~2022. The improvement was due to an increase in average check, ~~partially~~ offset by a decrease in ~~customer~~ traffic. The increase in average check was primarily due to an increase in menu prices as well as a general increase in consumer spending due to larger party sizes and greater spending per person.


IHOP Off-Premise Sales Data	Three Months Ended June 30,						Six Months Ended June 30,
	2023			2022			2023			2022
Off-premise sales (in millions) (1)	$	156.2		$	154.6		$	317.4		$	317.3
% sales mix	20.7		%	21.3		%	21.2		%	22.9		%

(1) Primarily to-go, delivery and catering sales for comparable 2023 and 2022 restaurants.

Based on data from Black Box, IHOP's increase in same-restaurant sales for the three and ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 underperformed the family dining segment of the restaurant industry (excluding IHOP) ~~as compared with~~during the same ~~respective~~ periods of ~~2022.~~

IHOP Off-premise Sales Data Three Months Ended September 30, Nine Months Ended September 30,
2022 2021 2022 2021
Off-premise sales (in millions) (1)
$ 143.6 $ 157.3 $ 464.4 $ 507.6
% sales mix 20.4 % 23.3 % 22.0 % 27.2 %

~~(1)~~ ~~Primarily to-go, delivery and catering sales for comparable 2022 and 2021 restaurants~~

2023.

Restaurant Data

The following table sets forth the number of “Effective Restaurants” in the Applebee’s and IHOP systems and information regarding the percentage change in sales at those restaurants compared to the same period of the prior year. Sales at restaurants that are owned by franchisees and area licensees are not attributable to the Company and, as such, the percentage change in sales at Effective Restaurants is based on non-GAAP sales data. However, we believe that presentation of this information is useful in analyzing our revenues because franchisees and area licensees pay us royalties and advertising fees that are based on a percentage of their sales, and, where applicable, rental payments under leases that partially may be based on a percentage of their sales. Management also uses this information to make decisions about plans for future development of additional restaurants as well as evaluation of current operations.

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	Three Months Ended June 30,						Six Months Ended June 30,
	2023			2022			2023			2022
Applebee's Restaurant Data	(Unaudited)
Global Effective Restaurants(a)
Franchise	1,662			1,604			1,667			1,605
Company	—			69			—			69
Total	1,662			1,673			1,667			1,674
System-wide(b)
Domestic sales percentage change(c)	(1.5)		%	1.4		%	2.0		%	7.2		%
Domestic same-restaurant sales percentage change(d)	(1.0)		%	1.8		%	2.5		%	7.6		%
Franchise(b)
Domestic sales percentage change(c)	2.1		%	1.3		%	5.8		%	7.3		%
Domestic same-restaurant sales percentage change(d)	(1.0)		%	1.7		%	2.5		%	7.6		%
Average weekly domestic unit sales (in thousands)	$	54.3		$	55.1		$	55.6		$	54.5

IHOP Restaurant Data
Global Effective Restaurants(a)
Franchise	1,628			1,593			1,622			1,590
Area license	155			156			156			156
Total	1,783			1,749			1,778			1,746
System-wide(b)
Sales percentage change(c)	4.6		%	5.7		%	7.8		%	12.1		%
Domestic same-restaurant sales percentage change, including area license restaurants(d)	2.1		%	3.6		%	5.3		%	10.1		%
Franchise(b)
Sales percentage change(c)	5.0		%	5.6		%	8.1		%	12.3		%
Domestic same-restaurant sales percentage change(d)	2.2		%	3.6		%	5.4		%	10.4		%
Average weekly unit sales (in thousands)	$	38.9		$	37.9		$	38.5		$	36.4
Area License(b)
Sales percentage change(c)	0.9		%	6.2		%	5.5		%	10.0		%

Three Months Ended September 30, Nine Months Ended September 30,
2022 2021 2022 2021
Applebee's Restaurant Data (Unaudited)
Effective Restaurants(a)

Franchise 1,601 1,619 1,604 1,623
Company 69 69 69 69
Total 1,670 1,688 1,673 1,692
System-wide(b)

Domestic sales percentage change(c)
3.2 % 30.2 % 5.9 % 38.6 %
Domestic same-restaurant sales percentage change(d)
3.8 % 27.7 % 6.3 % 39.5 %
Franchise(b)

Domestic sales percentage change(c)
3.1 % 30.2 % 5.8 % 38.4 %
Domestic same-restaurant sales percentage change(d)
3.6 % 27.8 % 6.3 % 39.3 %
Average weekly domestic unit sales (in thousands) $ 53.5 $ 51.4 $ 54.2 $ 50.6
IHOP Restaurant Data
Effective Restaurants(a)

Franchise 1,602 1,573 1,594 1,568
Area license 157 156 156 156
Total 1,759 1,729 1,750 1,724
System-wide(b)

Sales percentage change(c)
3.7 % 46.1 % 9.1 % 41.6 %
Domestic same-restaurant sales percentage change, including area license restaurants(d)
1.9 % 40.1 % 7.2 % 40.5 %
Franchise(b)

Sales percentage change(c)
3.6 % 45.7 % 9.2 % 40.9 %
Domestic same-restaurant sales percentage change(d)
1.6 % 39.4 % 7.3 % 39.4 %
Average weekly unit sales (in thousands) $ 36.8 $ 36.2 $ 36.5 $ 34.0
Area License(b)

Sales percentage change(c)
5.2 % 50.9 % 8.4 % 48.1 %

(a) “Effective Restaurants” are the weighted average number of restaurants open in each fiscal period, adjusted to account for restaurants open for only a portion of the period. Information is presented for all Effective Restaurants in the Applebee’s and IHOP systems, which consist of restaurants owned by

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franchisees and area licensees as well as those owned by the Company. Effective Restaurants do not include units operated as ghost kitchens (small kitchens with no store-front presence, used to fill off-premise orders).

(b) “System-wide sales” are retail sales at Applebee’s restaurants operated by franchisees and IHOP restaurants operated by franchisees and area licensees, as reported to the Company, in addition to retail sales at company-operated Applebee's restaurants. System-wide sales do not include retail sales of ghost kitchens. Sales at restaurants that are owned by franchisees and area licensees are not attributable to the Company. An increase in franchisees' reported sales will result in a corresponding increase in our royalty revenue, while a decrease in franchisees' reported sales will result in a corresponding decrease in our royalty revenue. Unaudited reported sales for Applebee's domestic franchise restaurants, Applebee's company-operated restaurants, IHOP franchise restaurants and IHOP area license restaurants were as follows:


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended June 30,				Six Months Ended June 30,
		2022		2021		2022		2021			2023		2022		2023		2022
Reported sales (in millions)	Reported sales (in millions)	(Unaudited)								Reported sales (in millions)	(Unaudited)

Applebee's domestic franchise restaurant sales	Applebee's domestic franchise restaurant sales	$	1,044.5	$	1,013.3	$	3,176.2	$	3,000.8	Applebee's domestic franchise restaurant sales	$	1,099.3	$	1,076.7	$	2,255.4	$	2,131.7
Applebee's company-operated restaurants	Applebee's company-operated restaurants	38.2		35.2		117.2		109.4		Applebee's company-operated restaurants	—		39.5		—		78.9
IHOP franchise restaurant sales	IHOP franchise restaurant sales	766.8		740.4		2,270.3		2,079.2		IHOP franchise restaurant sales	822.7		783.8		1,624.9		1,503.5
IHOP area license restaurant sales	IHOP area license restaurant sales	73.5		69.8		219.3		202.4		IHOP area license restaurant sales	76.0		75.3		153.8		145.8
Total	Total	$	1,923.0	$	1,858.7	$	5,783.0	$	5,391.8	Total	$	1,998.0	$	1,975.3	$	4,034.1	$	3,859.9

(c) “Sales percentage change” reflects, for each category of restaurants, the percentage change in sales in any given fiscal period compared to the prior fiscal period for all restaurants in that category.

(d) “Domestic same-restaurant sales percentage change” reflects the percentage change in sales in any given fiscal period, compared to the same weeks in the prior fiscal period, for domestic restaurants that have been operated during both fiscal periods that are being compared and have been open for at least 18 months. Because of new restaurant openings and restaurant closures, the domestic restaurants open throughout both fiscal periods being compared may be different from period to period.


Restaurant Development Activity	Three Months Ended June 30,		Six Months Ended June 30,
	2023	2022	2023	2022
Applebee's	(Unaudited)
Summary - beginning of period:
Franchise	1,673	1,606	1,678	1,611
Company	—	69	—	69
Beginning of period	1,673	1,675	1,678	1,680

Franchise restaurants opened:
Domestic	1	1	1	2
International	1	—	3	—
Total franchise restaurants opened	2	1	4	2
Franchise restaurants permanently closed:
Domestic	(10)	(2)	(16)	(6)
International	(4)	(1)	(5)	(3)
Total franchise restaurants permanently closed	(14)	(3)	(21)	(9)
Net franchise restaurant reduction	(12)	(2)	(17)	(7)



Summary - end of period:
Franchise	1,661	1,604	1,661	1,604
Company	—	69	—	69
Total Applebee's restaurants, end of period	1,661	1,673	1,661	1,673
Domestic	1,554	1,574	1,554	1,574
International	107	99	107	99

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Restaurant Development Activity		Three Months Ended September 30,		Nine Months Ended September 30,
Restaurant Development Activity (continued)						Restaurant Development Activity (continued)	Three Months Ended June 30,		Six Months Ended June 30,
		2022	2021	2022	2021		2023	2022	2023	2022
Applebee's		(Unaudited)
IHOP						IHOP
Summary - beginning of period:	Summary - beginning of period:					Summary - beginning of period:
Franchise	Franchise	1,604	1,627	1,611	1,640	Franchise	1,633	1,600	1,625	1,595
Company		69	69	69	69
Beginning of period		1,673	1,696	1,680	1,709
Area license						Area license	157	156	156	156

Franchise restaurants opened:
Domestic		—	2	2	4
International		1	—	1	1
Total franchise restaurants opened		1	2	3	5
Franchise restaurants permanently closed:
Domestic		(3)	(5)	(9)	(15)
International		(1)	(4)	(4)	(10)
Total franchise restaurants permanently closed		(4)	(9)	(13)	(25)
Net franchise restaurant reduction		(3)	(7)	(10)	(20)
Total IHOP restaurants, beginning of period						Total IHOP restaurants, beginning of period	1,790	1,756	1,781	1,751

Franchise/area license restaurants opened:						Franchise/area license restaurants opened:
Domestic franchise						Domestic franchise	9	8	22	15
Domestic area license						Domestic area license	—	—	2	1
International franchise						International franchise	2	5	6	7

Total franchise/area license restaurants opened						Total franchise/area license restaurants opened	11	13	30	23
Franchise/area license restaurants permanently closed:						Franchise/area license restaurants permanently closed:
Domestic franchise						Domestic franchise	(10)	(4)	(18)	(7)
Domestic area license						Domestic area license	(1)	—	(2)	(1)
International franchise						International franchise	—	(1)	(1)	(2)

Total franchise/area license restaurants permanently closed						Total franchise/area license restaurants permanently closed	(11)	(5)	(21)	(10)
Net franchise/area license restaurant additions						Net franchise/area license restaurant additions	—	8	9	13
Refranchised by the Company						Refranchised by the Company	—	—	—	—
Franchise restaurants reacquired by the Company						Franchise restaurants reacquired by the Company	—	—	—	—
Net increase in franchise/area license restaurants						Net increase in franchise/area license restaurants	—	8	9	13

Summary - end of period:	Summary - end of period:					Summary - end of period:
Franchise	Franchise	1,601	1,620	1,601	1,620	Franchise	1,634	1,608	1,634	1,608
Area license						Area license	156	156	156	156
Company	Company	69	69	69	69	Company	—	—	—	—
Total Applebee's restaurants, end of period		1,670	1,689	1,670	1,689
Total IHOP restaurants, end of period						Total IHOP restaurants, end of period	1,790	1,764	1,790	1,764
Domestic	Domestic	1,571	1,587	1,571	1,587	Domestic	1,681	1,665	1,681	1,665
International	International	99	102	99	102	International	109	99	109	99

IHOP
Summary - beginning of period:
Franchise 1,608 1,588 1,595 1,611
Area license 156 156 156 158
Company — 3 — 3
Total IHOP restaurants, beginning of period 1,764 1,747 1,751 1,772
Franchise/area license restaurants opened:
Domestic franchise 5 7 20 22
Domestic area license 1 1 2 2
International franchise 3 1 10 2
Total franchise/area license restaurants opened 9 9 32 26
Franchise/area license restaurants permanently closed:
Domestic franchise (5) (5) (12) (35)
Domestic area license (1) (1) (2) (3)
International franchise (1) — (3) (9)
International area license — — — (1)
Total franchise/area license restaurants permanently closed (7) (6) (17) (48)
Net franchise/area license restaurant additions (reductions) 2 3 15 (22)
Refranchised by the Company — — — 1
Franchise restaurants reacquired by the Company — — — (1)
Net increase (decrease) in franchise/area license restaurants 2 3 15 (22)
Summary - end of period:
Franchise 1,610 1,591 1,610 1,591
Area license 156 156 156 156
Company — 3 — 3
Total IHOP restaurants, end of period 1,766 1,750 1,766 1,750
Domestic 1,665 1,656 1,665 1,656
International 101 94 101 94

~~Table~~As of ~~Contents~~

June 30, 2023, 47 franchise groups operated 137 Fuzzy's restaurants in 18 states within the United States and we had one company-owned restaurant in Texas, totaling 138 restaurants. Fuzzy's average weekly sales for the three and six months ended June 30, 2023 were $33,685 and $32,136, respectively.

The restaurant counts and activity presented above do not include ~~three~~one domestic Applebee's ghost ~~kitchens~~kitchen (small kitchens with no store-front presence, used to fill off-premise orders), 1312 international Applebee's ghost kitchens and 3941 international IHOP ghost kitchens.

The closures presented in the tables above represent permanent closures of restaurants. Temporary closures, which can occur for a variety of reasons, are not reflected as reductions in this table and are included in the summary counts at the beginning and end of each period shown. Temporary closures are reflected in the weighted calculation of Effective Restaurants presented in the preceding Restaurant Data table.

Closures of ~~Applebee's and IHOP~~ restaurants adversely impact our system-wide retail sales that drive our franchise royalty revenues as well as, in the case of IHOP restaurants, sales of proprietary pancake and waffle dry mix. Further, with certain restaurants, we own or lease the underlying property and sublease it to the applicable franchisee. Thus, our rental income also could be adversely affected due to the loss of such income, as well as our obligation to make rental or other payments for such properties.

Table of Contents

CONSOLIDATED RESULTS OF OPERATIONS

Comparison of the Three and ~~Nine~~Six Months Ended ~~September~~June 30, ~~2022~~2023 and ~~2021~~

2022

Financial Results


Revenue	Revenue	Three Months Ended September 30,					Favorable (Unfavorable) Variance		Nine Months Ended September 30,					Favorable (Unfavorable) Variance		Revenue	Three Months Ended June 30,					Favorable (Unfavorable) Variance		Six Months Ended June 30,					Favorable (Unfavorable) Variance
		2022			2021				2022			2021
																	2023			2022				Favorable (Unfavorable) Variance			2023		2022		Favorable (Unfavorable) Variance
		(In millions)															(In millions)
Franchise operations	Franchise operations	$	164.9		$	161.2	$	3.8	$	494.4		$	469.1	$	25.3	Franchise operations	$	177.9		$	168.3	$	9.6				$	357.9	$	329.5	$	28.4
Rental operations	Rental operations	29.2			31.3		(2.1)		87.1			84.8		2.3		Rental operations	29.4			29.1		0.3		61.4			57.9		3.5
Company restaurant operations	Company restaurant operations	38.2			35.2		3.0		117.2			109.4		7.8		Company restaurant operations	0.5			39.5		(39.0)		1.5			78.9		(77.4)
Financing operations	Financing operations	0.9			1.0		(0.2)		2.8			3.2		(0.5)		Financing operations	0.6			0.9		(0.3)		1.4			1.9		(0.5)
Total revenue	Total revenue	$	233.2		$	228.7	$	4.5	$	701.4		$	666.5	$	34.9	Total revenue	$	208.4		$	237.8	$	(29.4)	$	422.2		$	468.2	$	(46.0)
Change vs. prior period	Change vs. prior period	2.0		%					5.2		%					Change vs. prior period	(12.4)		%					(9.8)		%

Total revenue for the ~~nine~~three and six months ended ~~September~~June 30, ~~2022 increased~~2023 decreased compared with the same ~~period~~periods of the prior year, ~~partially~~primarily due to ~~increases~~the decrease in ~~average check. As discussed under “Events Impacting the Comparability of Financial Information~~,” during the 2022 period, many governmental authorities relaxed or eliminated restrictions on restaurant operations that had been in place during the 2021 period in response to declines in the number of COVID-19 infections, the availability of vaccines and an increase of the number of vaccinated individuals within their respective jurisdictions. This had a favorable impact on same-restaurant sales and customer traffic in our franchise and company restaurant operations as ~~well as~~ a ~~favorable impact on~~result of refranchising of Applebee's company-operated restaurants, partially offset by increases in Applebee's and IHOP franchise operations revenue and the inclusion of Fuzzy's franchise operations revenue. Smaller changes in rental ~~revenue based on a percentage of franchisees' retail sales.~~and financing revenues are discussed in the sections that follow.

Gross Profit Three Months Ended September 30, Favorable
(Unfavorable) Variance Nine Months Ended September 30, Favorable
(Unfavorable) Variance
2022 2021 2022 2021
(In millions)
Franchise operations $ 84.6 $ 85.5 $ (0.9) $ 253.8 $ 249.2 $ 4.6
Rental operations 7.2 6.8 0.4 21.1 18.8 2.3
Company restaurant operations 1.7 1.4 0.3 5.4 7.9 (2.5)
Financing operations 0.8 0.9 (0.1) 2.5 2.9 (0.4)
Total gross profit $ 94.3 $ 94.6 $ (0.3) $ 282.8 $ 278.8 $ 4.0
Change vs. prior period (0.3) % 1.4 %

~~Table of Contents~~


Gross Profit	Three Months Ended June 30,					Favorable (Unfavorable) Variance		Six Months Ended June 30,					Favorable (Unfavorable) Variance
	2023			2022				2023			2022
	(In millions)
Franchise operations	$	89.6		$	86.0	$	3.6	$	182.2		$	169.2	$	13.0
Rental operations	7.2			7.2		0.0		17.5			13.9		3.6
Company restaurant operations	0.0			1.6		(1.6)		0.0			3.6		(3.6)
Financing operations	0.5			0.9		(0.4)		1.2			1.7		(0.5)
Total gross profit	$	97.3		$	95.7	$	1.6	$	201.0		$	188.4	$	12.5
Change vs. prior period	1.7		%					6.6		%

Total gross profit for the three and six months ended ~~September~~June 30, 2022 decreased slightly compared with the same period of the prior year, primarily due to lower bad debt recovery, offset by increased franchise revenue from higher sales, partially offset by increased gross profit from rental operations and company restaurant operations..

~~Total gross profit for the nine months ended September 30, 2022~~2023 increased compared with the same ~~period~~periods of the prior year, primarily due to the increased revenue from franchise ~~and rental~~ operations, ~~primarily from higher sales,~~ partially offset by ~~higher costs~~the refranchising of ~~food, beverage and labor in company restaurant operations.~~Applebee's company-operated restaurants.

Table of Contents


		Three Months Ended September 30,						Favorable (Unfavorable) Variance			Nine Months Ended September 30,								Favorable (Unfavorable) Variance				Three Months Ended June 30,									Favorable (Unfavorable) Variance			Six Months Ended June 30,								Favorable (Unfavorable) Variance
Franchise Operations	Franchise Operations	2022			2021					2022				2021				Franchise Operations			2023			2022						2023					2022
		(In millions, except number of restaurants)																					(In millions, except number of restaurants)
Effective Franchise Restaurants:(1)	Effective Franchise Restaurants:(1)																				Effective Franchise Restaurants:(1)
Applebee’s	Applebee’s	1,601			1,619					(18)				1,604				1,623				(19)	Applebee’s			1,662					1,604			58				1,667				1,605			62
IHOP	IHOP	1,759			1,729			30			1,750				1,724				26		IHOP		1,783				1,749						34			1,778				1,746				32

Franchise Revenues:	Franchise Revenues:																				Franchise Revenues:
Applebee’s franchise fees	Applebee’s franchise fees	$	43.1		$	43.6		$	(0.4)		$	131.1			$	126.1			$	5.0	Applebee’s franchise fees		$	44.4			$	43.9				$	0.5		$	90.0			$	88.0			$	2.0
IHOP franchise fees	IHOP franchise fees	50.1			46.9			3.2			146.6				139.1				7.5		IHOP franchise fees		54.0				50.3					3.7			107.7				96.5				11.2
Advertising fees	Advertising fees	71.7			70.7			1.0			216.7				203.9				12.8		Advertising fees		76.0				74.1					1.9			153.0				145.0				8.0
Fuzzy's franchise fees																					Fuzzy's franchise fees		3.6				—					3.6			7.2				—				7.2
Total franchise revenues	Total franchise revenues	164.9			161.2			3.8			494.4				469.1				25.3		Total franchise revenues		178.0				168.3					9.7			357.9				329.5				28.4
Franchise Expenses:	Franchise Expenses:																				Franchise Expenses:
Applebee’s	Applebee’s	0.9			0.5			(0.5)			2.5				2.2				(0.4)		Applebee’s		1.2				0.7					(0.5)			2.7				1.6				(1.1)
IHOP	IHOP	7.6			4.5			(3.1)			21.4				13.8				(7.6)		IHOP		10.9				7.4					(3.5)			19.5				13.7				(5.8)
Advertising expenses	Advertising expenses	71.7			70.7			(1.0)			216.7				203.9				(12.8)		Advertising expenses		76.0				74.1					(1.9)			153.0				145.0				(8.0)
Fuzzy's																					Fuzzy's		0.2				—					(0.2)			0.4				—				(0.4)
Total franchise expenses	Total franchise expenses	80.3			75.7			(4.6)			240.6				219.9				(20.7)		Total franchise expenses		88.3				82.3					(6.0)			175.6				160.3				(15.3)
Franchise Gross Profit:	Franchise Gross Profit:																				Franchise Gross Profit:
Applebee’s	Applebee’s	42.2			43.1			(0.9)			128.6				123.9				4.7		Applebee’s		43.2				43.2					0.0			87.3				86.4				0.9
IHOP	IHOP	42.5			42.4			0.1			125.3				125.3				—		IHOP		43.0				42.8					0.2			88.2				82.8				5.4
Fuzzy's																					Fuzzy's		3.4				—					3.4			6.8				—				6.8
Total franchise gross profit	Total franchise gross profit	$	84.6		$	85.5		$	(0.8)		$	253.8			$	249.2			$	4.6	Total franchise gross profit		$	89.6			$	86.0				$	3.6		$	182.3			$	169.2			$	13.1
Gross profit as % of franchise revenue (2)	Gross profit as % of franchise revenue (2)	51.3		%	53.0		%				51.3		%		53.1		%				Gross profit as % of franchise revenue (2)		50.4		%		51.1		%						50.9		%		51.3		%
Gross profit as % of franchise fees (2)(3)	Gross profit as % of franchise fees (2)(3)	90.8		%	94.5		%				91.4		%		94.0		%				Gross profit as % of franchise fees (2)(3)		87.9		%		91.3		%						89.0		%		91.7		%

_____________________________________________________

(1) Effective Franchise Restaurants are the weighted average number of franchise and area license restaurants open in each fiscal period, adjusted to account for restaurants open for only a portion of the period.

(2) Percentages calculated on actual amounts, not rounded amounts presented above.

(3) From time to time, advertising fee revenue may be different from advertising expenses in a given accounting period. Over the ~~long-term,~~long term, advertising activity should not generate gross profit or loss.

~~Applebee’s~~Applebee's franchise fee revenue for the three months ended ~~September~~June 30, ~~2022 decreased slightly~~2023 increased 1.2% as compared with the same period of the prior year, primarily due to a ~~decrease~~$0.5 million increase in ~~the effective restaurant count~~Applebee's international revenue, $0.3 million in termination fees offset by the ~~favorable~~unfavorable impact on royalties ~~from an 3.6% increase~~of a 1.0% decrease in domestic same-restaurant sales.

Applebee's franchise fee revenue for the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 increased ~~4.0%~~2.3% as compared with the same period of the prior year primarily due to the favorable impact on royalties ~~from~~of a ~~6.3%~~2.5% increase in domestic same-restaurant ~~sales. Applebee's international revenues increased $1.0 million due to~~sales and an ~~improvement~~increase in ~~sales.~~

termination fees.

Applebee's franchise expenses for the three and ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 increased as$0.5 million and $1.1 million, respectively, compared with the same ~~respective~~ periods of the prior year primarily due to ~~a lower recovery of~~an increase in bad ~~debt.~~debt and other operating expenses.

~~IHOP~~IHOP's franchise fee revenue for the three and six months ended ~~September~~June 30, ~~2022~~2023 increased ~~6.8%~~7.4% and 11.6%, respectively, as compared with the same ~~period of the prior year, primarily due to the favorable impact on royalties and pancake and waffle dry mix revenue from a 1.6% increase in domestic franchise same-restaurant sales.~~

~~Table of Contents~~

IHOP franchise fee revenue for the nine months ended September 30, 2022 increased 5.4% as compared with the same period of the prior year, primarily due to the favorable impact on royalties and pancake and waffle dry mix revenue from a 7.2% increase in domestic same-restaurant sales, partially offset by a $2.8 million decrease in domestic termination and other franchise fees and a $1.6 million decrease in international termination fees.

~~IHOP franchise expenses for the three and nine months ended September 30, 2022 increased as compared with the same respective~~ periods of the prior year, primarily due to ~~a lower recovery~~favorable domestic same-restaurant sales which resulted in higher sales of ~~bad debt expense,~~proprietary products (primarily pancake and waffle dry mix) and increased royalties.

IHOP's franchise expenses for the three and six months ended June 30, 2023 increased $3.5 million and $5.8 million, respectively, as compared with same periods of the prior year, primarily due to an increase in ~~the~~ cost of proprietary products (primarily pancake and waffle dry mix) and an increase in ~~franchisor contributions to the advertising fund.~~bad debt expense.

Table of Contents

Advertising revenue and expense by brand for the three and ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021~~2022 were as follows:

Three Months Ended September 30, Favorable
(Unfavorable) Variance Nine Months Ended September 30, Favorable
(Unfavorable) Variance
2022 2021 2022 2021
(In millions)
Advertising Revenues and Expenses:
Applebee’s $ 44.0 $ 43.5 $ 0.5 $ 133.8 $ 127.0 $ 6.8
IHOP 27.7 27.2 0.5 82.9 76.9 6.0
Total advertising revenues and expenses $ 71.7 $ 70.7 $ 1.0 $ 216.7 $ 203.9 $ 12.8


	Three Months Ended June 30,				Increase		Six Months Ended June 30,				Increase
	2023		2022				2023		2022
	(In millions)
Advertising Revenues and Expenses:
Applebee’s	$	45.6	$	45.3	$	0.3	$	92.7	$	89.8	$	2.9
IHOP	29.4		28.8		0.6		58.3		55.2		3.1
Fuzzy's	1.0		—		1.0		2.0		—		2.0
Total advertising revenues and expenses	$	76.0	$	74.1	$	1.9	$	153.0	$	145.0	$	8.0

Applebee’s advertising revenue and expense for the three months ended ~~September~~June 30, ~~2022~~2023 increased slightly compared to the same period of the prior year, primarily due to an increase in effective restaurants from the ~~3.6% increase~~refranchising of 69 Company owned restaurants in October 2022. This was partially offset by the 1.0% decrease in domestic franchise same-restaurant ~~sales, partially offset by a decrease in effective units, and~~sales. IHOP advertising revenue and expense for the three months ended ~~September~~June 30, ~~2022~~2023 increased ~~slightly~~ compared to the same period of the prior year, primarily due to the ~~1.9%~~2.1% increase in domestic franchise same-restaurant sales.

~~Applebee’s~~Applebee's and IHOP's advertising revenue and expense for the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 increased ~~5.4%~~3.2% and 5.7%, respectively, compared to the same period of the prior year primarily due to the ~~6.3%~~ increase in their respective domestic franchise same-restaurant sales. IHOP advertising revenue and expense for the nine months ended September 30, 2022 increased 7.8% compared to the same period of the prior year, primarily due to the 7.3% increase in domestic franchise same-restaurant sales and the reopening of restaurants temporarily closed during the prior year period.

It is our accounting policy to recognize any deficiency in advertising fee revenue compared to advertising expenditure or any recovery of a previously recognized deficiency in advertising fee revenue compared to advertising expenditure in the fourth quarter of our fiscal year.


Rental Operations	Rental Operations	Three Months Ended September 30,						Favorable (Unfavorable) Variance				Nine Months Ended September 30,											Favorable (Unfavorable) Variance		Rental Operations	Three Months Ended June 30,										Favorable (Unfavorable) Variance		Six Months Ended June 30,						Favorable (Unfavorable) Variance
		2022			2021					2022					2021							2023					2022							2023				2022
		(In millions)																								(In millions)
Rental revenues	Rental revenues	$	29.2		$	31.3				$	(2.1)				$	87.1				$	84.8					$	2.3		Rental revenues	$	29.4				$		29.1	$	0.3		$	61.4		$	57.9	$	3.5

Rental expenses	Rental expenses	22.0			24.5			2.5				66.0					66.0						0.0		Rental expenses	22.2					21.8					(0.4)		43.9			44.0			0.1
Rental operations gross profit	Rental operations gross profit	$	7.2		$	6.8		$	0.4			$	21.1				$	18.8					$	2.3	Rental operations gross profit	$	7.2				$	7.2				$	(0.1)	$	17.5		$	13.9		$	3.6
Gross profit as % of revenue (1)	Gross profit as % of revenue (1)	24.6		%	21.8		%					24.2		%			22.1		%						Gross profit as % of revenue (1)	24.4		%			24.9		%					28.5		%	24.0		%

(1) Percentages calculated on actual amounts, not rounded amounts presented above.

Rental operations relate primarily to IHOP franchise restaurants. Rental income includes sublease revenue from operating leases and interest income from real estate leases. Rental expenses are costs of prime operating leases and interest expense on prime finance leases.

Rental segment revenue for the three months ended ~~September~~June 30, ~~2022 decreased as compared to~~2023 increased from the same period of ~~2021, as rental revenue decreased due to~~ the prior year, ~~$2.7 million accounting entry related~~primarily due to ~~the gross presentation of certain elements of~~operating lease renewals and extensions and an increase in variable sublease income, such as common area maintenance payments received from franchisees and remitted to ~~landlords, which previously were reported on a net basis, partially offset by an increase in base rent.~~landlords. Rental segment expenses for the three months ended ~~September~~June 30, ~~2022 decreased~~2023 increased as compared to the same period of the prior year, primarily due to an increase in lease-related expenses consistent with the increase in variable sublease income as well as due to operating lease and renewals.

Rental operations gross profit for the six months ended June 30, 2023 increased as compared to the same period of the prior year, ~~$2.7 million gross-up of lease-related expenses in the third quarter.~~primarily due to lease buyouts and operating lease renewals and extensions.

3634

Table of Contents

Rental segment revenue for the nine months ended September 30, 2022 increased as compared to the same period of 2021, primarily due to a $1.7 million increase in rental income based on a percentage of franchisees' retail sales. Rental segment expenses for the nine months ended September 30, 2022 were flat as compared to the same period of 2021.

Company Restaurant Operations


		Three Months Ended September 30,						Favorable (Unfavorable) Variance			Nine Months Ended September 30,									Favorable (Unfavorable) Variance			Three Months Ended June 30,										Favorable (Unfavorable) Variance				Six Months Ended June 30,								Favorable (Unfavorable) Variance
		2022			2021					2022				2021					2023					2022							2023						2022

Effective Restaurants	Effective Restaurants	69			69					—				69				69					—			Effective Restaurants	1					69				(68)				2				69				(67)
		(In millions)																					(In millions)
Applebee's Company restaurant sales (1)		$	38.2		$	35.2		$	3.0		$	117.2			$	109.4				$	7.8
Applebee's Company restaurant expenses (1)		36.5			33.7			(2.8)			111.8				101.0					(10.8)
IHOP restaurant expenses (2)		—			0.1			0.1			—				0.5					0.5
Applebee's company restaurant sales (1)																						Applebee's company restaurant sales (1)	$	—				$	39.5					$	(39.5)			$	—			$	78.9			$	(78.9)
Applebee's company restaurant expenses (1)																						Applebee's company restaurant expenses (1)	—					37.9					37.9				—				75.3				75.3
Fuzzy's company restaurant sales (2)																						Fuzzy's company restaurant sales (2)	0.5					—					0.5				1.5				—				1.5
Fuzzy's company restaurant expenses (2)																						Fuzzy's company restaurant expenses (2)	0.5					—					(0.5)				1.5				—				(1.5)
Company restaurant gross profit	Company restaurant gross profit	$	1.7		$	1.4		$	0.3		$	5.4			$	7.9				$	(2.5)	Company restaurant gross profit	$	—				$	1.6				$	(76.4)			$	—			$	3.6			$	(151.2)

Gross profit as % of revenue (3)	Gross profit as % of revenue (3)	4.5		%	4.4		%				4.6		%		7.7		%					Gross profit as % of revenue (3)	9.3		%			4.1		%							1.4		%		4.6		%

(1) Related to 69 Applebee's company-operated ~~restaurants.~~restaurants that were still operating through October 2022.

(2) ~~Costs associated with IHOP~~Related to three Fuzzy's company-operated restaurants that were acquired in ~~the process~~December 2022 of ~~being refranchised.~~which two restaurants were refranchised in April 2023.

(3) ~~Calculated for Applebee's company-operated restaurants only.~~ Percentages calculated on actual amounts, not rounded amounts presented above.

Applebee's company ~~same-restaurant sales~~restaurant gross profit for the three and six months ended ~~September~~June 30, ~~2022 increased 8.5%~~2023 decreased 100% compared to the same period of ~~2021, primarily due to an increase in average check. Applebee's company same-restaurant sales for the nine months ended September 30,~~ 2022, ~~increased 7.1% compared to the same period of 2021 due to an increase in customer traffic and average check.~~

~~The increase in customer traffic primarily was~~ due to the ~~favorable change in operating capacity~~refranchising of the company-operated restaurants ~~during~~in October 2022.

For the ~~nine~~three and six months ended ~~September~~June 30, 2023, company restaurant operations included Fuzzy's restaurants, following the acquisition of Fuzzy's in December 2022 ~~compared to the same period~~ of ~~2021. All 69 of the Applebee's company-operated~~which two restaurants ~~are located~~were refranchised in South Carolina or North Carolina. Since the second week of January 2021, the 27 restaurants in South Carolina have operated without capacity limitations, while the 42 restaurants in North Carolina operated at 50% capacity until June 1, 2021, from which point those 42 restaurants also were able to operate without capacity limitations.

Gross profit and gross profit as a percentage of revenue for the three months ended September 30, 2022 were favorable compared to the same period of 2021, due to increased sales, partially offset by higher food, labor and delivery costs. Gross profit and gross profit as a percentage of revenue for the nine months ended September 30, 2022 were unfavorable compared to the same period of 2021, due to higher food, labor and delivery costs, partially offset by increased sales.

April 2023.

Company segment restaurant expenses may include costs associated with reacquired ~~IHOP~~ restaurants in the process of being refranchised. There were no reacquired ~~IHOP~~ restaurants expenses during the ~~three and nine~~six months ended ~~September~~June 30, ~~2022 and expenses were incurred during the nine months ended September 30, 2021.~~

On July 26, 2022, the Company entered into an asset purchase agreement for the refranchising and sale of related restaurant assets of 69 Applebee’s company-operated restaurants located in North Carolina and South Carolina. This sale closed on October 25, 2022.

2023.

Financing Operations

Financing revenues primarily consist of interest income from the financing of IHOP equipment leases and franchise fees as well as interest income on Applebee's notes receivable from franchisees. Financing expenses are the cost of taxes related to IHOP equipment leases.

Financing revenue and gross profit for the three and ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 declined compared to the same period of the prior year, primarily ~~because of~~due to progressive ~~declines~~decline in interest income as note balances are repaid.

~~Table of Contents~~

G&A Expenses Three Months Ended September 30, Favorable
(Unfavorable) Variance Nine Months Ended September 30, Favorable
(Unfavorable) Variance
2022 2021 2022 2021
(In millions)
Total G&A expenses $ 46.3 $ 43.7 $ (2.6) $ 131.9 $ 122.9 $ (9.1)


G&A Expenses	Three Months Ended June 30,				Favorable (Unfavorable) Variance		Six Months Ended June 30,				Favorable (Unfavorable) Variance
	2023		2022				2023		2022
	(In millions)
Total G&A expenses	$	47.8	$	44.1	$	(3.8)	$	98.9	$	85.6	$	(13.3)

G&A expenses for the three months ended ~~September~~June 30, ~~2022~~2023 increased ~~6.0%~~8.6% compared to the same period of the prior year, primarily due to the stopping of our IHOP Flip'd initiative as well as increases in professional services and software maintenance expenses partially offset by a decrease in personnel-related costs. Included in total G&A expenses for the three months ended June 30, 2023 was $1.2 million of expense related to Fuzzy's, which was acquired in December 2022.

G&A expenses for the six months ended June 30, 2023 increased 15.6% compared to the same period of the prior year, primarily due to increases in professional services, ~~occupancy costs,~~ software maintenance and ~~travel and conference expenses, partially offset by a decrease in personnel-related~~occupancy costs ~~primarily related to employee bonuses.~~as well as the stopping of our IHOP Flip'd initiative. Included in total G&A expenses for the ~~three~~six months ended ~~September~~June 30, ~~2022~~2023 was ~~$1.8~~$3.1 million of expense related to ~~company-operated restaurants, a slight increase from the same period of 2021.~~Fuzzy's, which was acquired in December 2022.


Other Income and Expense Items	Three Months Ended June 30,				Favorable (Unfavorable) Variance		Six Months Ended June 30,				Favorable (Unfavorable) Variance
	2023		2022				2023		2022
	(In millions)
Interest expense, net	$	17.8	$	15.4	$	(2.4)	$	32.5	$	30.9	$	(1.6)
Loss on extinguishment of debt	1.7		—		(1.7)		—		—		(2.1)
Closure and impairment charges	0.8		1.3		0.5		1.3		1.5		0.2
Amortization of intangible assets	2.7		2.7		—		5.5		5.3		(0.2)
Loss (gain) on disposition of assets	2.0		(0.2)		(2.2)		2.1		(1.5)		(3.6)
Total	$	25.1	$	19.1	$	(5.8)	$	41.4	$	36.1	$	(7.3)

G&A expenses for the nine months ended September 30, 2022 increased 7.4% compared to the same period of the prior year, primarily due to increases in professional services, travel and conference expenses and occupancy costs, partially offset by a decrease in personnel-related costs primarily related to employee bonuses. Included in total G&A expenses for the nine months ended September 30, 2022 was $5.4 million of expense related to company-operated restaurants, an increase of $0.2 million from the same period of 2021.

Closure and Impairment Charges Three Months Ended September 30, Favorable
(Unfavorable) Variance Nine Months Ended September 30, Favorable
(Unfavorable) Variance
2022 2021 2022 2021
(In millions)
Closure charges $ 0.5 $ 0.4 $ (0.1) $ 1.7 $ 3.3 $ 1.6
Long-lived tangible asset impairment 1.1 (0.0) (1.1) 1.4 1.7 0.3
Total closure and impairment charges $ 1.6 $ 0.4 $ (1.2) $ 3.1 $ 5.0 $ 1.9

The closure charges for the three and nine months ended September 30, 2022 were approximately 30 and 35 IHOP restaurants, respectively, and were primarily related to the revisions to existing closure reserves, including accretion. The closure charges for the three and nine months ended September 30, 2021 were approximately 50 and 55 IHOP restaurants, respectively, and were primarily related to the establishment of, or revisions to existing closure reserves, including accretion.

Long-lived tangible asset impairment charges for the three and nine months ended September 30, 2022 related to the Applebee's company-operated restaurants and the impairment of land and buildings for two IHOP restaurants located on sites owned by us.~~Long-lived tangible asset impairment charges for the nine months ended September 30, 2021 related to four IHOP franchisee-operated restaurants.~~

Other Income and Expense Items
Three Months Ended September 30, Favorable
(Unfavorable) Variance Nine Months Ended September 30, Favorable
(Unfavorable) Variance
2022 2021 2022 2021
(In millions)
Interest expense, net $ 15.3 $ 15.7 $ 0.4 $ 46.2 $ 47.9 $ 1.7
Amortization of intangible assets 2.7 2.7 0.0 8.0 8.0 0.0
Loss on extinguishment of debt 1.2 0.0 (1.2) 1.2 0.0 (1.2)
(Gain) loss on disposition of assets (1.5) 1.3 2.8 (3.0) 1.4 4.4
Total $ 20.8 $ 18.8 $ (2.0) $ 52.4 $ 57.3 $ 4.9

~~Interest expense, net~~

Interest expense, net for the three months ended September 30, 2022 increased compared to the same period of 2021, due to an increase in interest expense on the Credit Facility (as defined below), as we borrowed $100 million during the three months ended September 30, 2022, as compared to no outstanding balance during the same period of 2021. Interest expense, net for the nine months ended September 30, 2022 declined compared to the same period of 2021, due to a decrease in interest

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expense on our Credit Facility. We had $100 million outstanding under our Credit Facility during the nine months ended September 30, 2022 for approximately seven weeks, whereas we had $220 million outstanding for approximately nine weeks during the nine months ended September 30, 2021. See ~~“Liquidity and Capital Resources”~~ ~~for additional discussion related to our Credit Facility.~~

Loss on extinguishment of debt and interest expense, net

The Company repaid the entire outstanding balance of approximately $585.1 million of its 2019 Class A-2 Notes during the three months ended June 30, 2023 and recognized a $1.7 million loss on extinguishment of debt from the write-off of the related remaining issuance costs. This loss was offset by a $1.7 million gain on extinguishment of debt from the purchase of $67.9 million of its 2019 Class A-2 Notes under par during the six months ended June 30, 2023.

~~On August 12, 2022, the Company established a new revolving financing facility and the debt financing costs related to the previous credit facility were expensed~~Interest expense, net for the three and ~~nine~~six months ended ~~September~~June 30, ~~2022. For additional details, please refer~~2023 increased compared to ~~Note 7, Long-Term Debt,~~the same periods of the prior comparative periods primarily due to the increase in outstanding debt balance and interest rate on our Credit Facility partially offset by the ~~Notes to Consolidated Financial Statements.~~increase in interest income from improved yields.

Loss (gain) on disposition of assets

~~(Gain)~~The loss on disposition of assets

for the three and six months ended June 30, 2023 primarily related to the disposition of certain IHOP Flip'd assets. The gain on disposition of assets for the three and six months ended September 30, 2022 related to the sale of land and building for one IHOP restaurant located on site owned by us and the release of a financing obligation property. The gain on disposition of assets for the nine months ended SeptemberJune 30, 2022 primarily related to the sale of land and buildings for three IHOP restaurants located on sites owned by us ~~the release of a financing obligation property~~ and ~~the~~ termination of an IHOP restaurant lease. ~~The loss on disposition of assets during the three and nine months ended September 30, 2021 primarily related to disposition of capitalized software no longer in use.~~


Income Taxes	Income Taxes	Three Months Ended September 30,						Favorable (Unfavorable) Variance					Nine Months Ended September 30,											Favorable (Unfavorable) Variance			Income Taxes	Three Months Ended June 30,										Favorable (Unfavorable) Variance			Six Months Ended June 30,						Favorable (Unfavorable) Variance
		2022			2021						2022					2021							2023						2022							2023					2022
		(In millions)																										(In millions)
Income before income taxes	Income before income taxes	$	28.7		$	30.8					$	(2.1)				$	95.4				$	93.4						$	2.0		Income before income taxes	$	24.4				$		32.5		$	(8.1)		$	60.6		$	66.7		$	(6.1)
Income tax provision	Income tax provision	$	7.8		$	7.7		$	(0.1)				$	25.7				$	15.4					$	(10.3)		Income tax provision	$	6.2				$	8.6				$	2.4		$	14.9		$	17.9		$	3.0
Effective tax rate	Effective tax rate	27.1		%	24.9		%	(2.2)		%			26.9		%			16.4		%				(10.5)		%	Effective tax rate	25.3		%			26.3		%			1.0		%	24.7		%	26.8		%	2.1		%

Our income tax provision or benefit will vary from period to period in our normal course of business for two reasons: a change in income before income taxes and a change in the effective tax rate. Changes in our income before income taxes were addressed in the preceding sections of “Consolidated Results of Operations - Comparison of the Three and ~~Nine~~Six Months Ended ~~September~~June 30, ~~2022~~2023 and ~~2021.”~~2022."

Our effective tax rate for the three and six months ended ~~September~~June 30, ~~2022~~2023 was higher than the rate of the prior comparable period, primarily due to the decrease of income before income taxes in the third quarter of 2022. Our effective tax rate for the nine months ended September 30, 2022 was also higherdifferent than the rate of the prior comparable period primarily due to the recognition of higher excess tax benefits onfrom stock-based compensation ~~related to the departure of our previous chief~~and lower non-deductible executive ~~officer in the first quarter of 2021.~~compensation.

Liquidity and Capital Resources

~~On June 5, 2019, Applebee’s Funding LLC and IHOP Funding LLC (the “Co-Issuers”), each a special purpose, wholly-owned indirect subsidiary~~Key provisions of our long-term debt potentially impacting liquidity are summarized below. See Note 7 - Long-Term Debt, of the ~~Company, issued~~Notes to the Consolidated Financial Statements, for additional detail on long-term debt, including the balances outstanding at June 30, 2023 and 2022.

Instruments

Our long-term debt includes two ~~tranches~~series of fixed rate senior secured notes, the Series 2019-1 4.723% Fixed Rate Senior Secured Notes in an initial aggregate principal amount of $600 million (the “2019 Class A-2-II Notes”) and the Series 2023-1 7.824% Fixed Rate Senior Secured Notes, Class A-2 in an initial aggregate principal amount of $500 million (the “2023 Class A-2 Notes” and, together with the 2019 Class A-2-II Notes, the “Class A-2 Notes”). The Series 2019-1 4.194% Fixed Rate Senior Secured Notes, Class A-2-I ~~(“Class~~(the “Class A-2-I Notes”) were voluntarily repaid in ~~an initial aggregate principal amount~~full on April 17, 2023. For a description of ~~$700 million and~~ the Series 2019-1 4.723% Fixed Rate Senior Secured Notes, Class A-2-II (“Class A-2-II Notes”) in an initial aggregate principal amount of $600 million (the “Class A-2-II Notes” and, together with the2019 Class A-2-I Notes, refer to Note 8 of the ~~“2019 Class A-2 Notes”). The 2019 Class A-2~~ Notes ~~were issued pursuant~~ to ~~an offering exempt from registration under~~Consolidated Financial Statements included in the ~~Securities Act of 1933, as amended.~~Company’s Annual Report on Form 10-K for the year ended December 31, 2022.

~~On August 12, 2022, the Co-Issuers established~~Our long-term debt also includes a ~~new~~ revolving financing facility, the 2022-1 Variable Funding Senior Notes, Class A-1 (the “Credit Facility”) that allows for drawings up to $325 million of variable funding notes on a revolving basis and the issuance of letters of credit.

Maturity

The ~~Credit Facility and~~final maturity of the 2019 Class A-2-II Notes is in June 2049, but it is anticipated that, unless repaid earlier, the 2019 Class A-2-II Notes will be repaid in June 2026.

The final maturity of the 2023 Class A-2 Notes ~~are referred~~is in March 2053, but it is anticipated that, unless repaid earlier, to ~~collectively herein as~~ the ~~“Notes.”~~ extent permitted under the Indenture, the 2023 Class A-2 Notes will be repaid in June 2029.

The ~~Notes were issued in securitization transactions pursuant~~renewal date of the Credit Facility is June 2027, subject to ~~which substantially all~~two additional one-year extensions at the ~~domestic revenue-generating assets and domestic intellectual property held by the Co-Issuers and certain other special-purpose, wholly-owned indirect subsidiaries~~option of the Company ~~(the “Guarantors”) were pledged as collateral to secure~~upon the ~~Notes.~~

satisfaction of certain conditions.

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Payment of Principal and Interest

While the ~~2019~~ Class A-2 Notes are outstanding, payment of principal and interest is required to be made on the ~~2019~~ Class A-2 Notes on a quarterly basis. The ~~quarterly~~payment of principal ~~payment totaling $3.25 million~~ on the ~~2019~~ Class A-2 Notes may be suspended when the leverage ratio for the Company and its subsidiaries is less than or equal to 5.25x. ~~The leverage ratio is not a maintenance covenant and exceeding~~Exceeding the leverage ratio of 5.25x does not violate any covenant related to the Class A-2 Notes.The complete definitions of all calculation elements of the leverage ratio are contained in the Base Indenture, dated as of September 30, 2014, and amended and restated as of June 5, 2019 (the “Base Indenture”), as supplemented by the related Series 2019-1 Supplement to the Base Indenture, dated June 5, 2019 (the “Series 2019-1 Supplement”), among the Co-Issuers and Citibank, N.A., as the trustee (in such capacity, the “Trustee”) and securities intermediary and the related Series 2022-1 Supplement to the Base Indenture, dated August 12, 2022 (“Series 2022-1 Supplement”), among the Co-Issuers and Citibank, N.A., as Trustee and securities intermediary (the Base Indenture, Series 2019-1 Supplement and Series 2022-1 Supplement, collectively, the “Indenture”). In general, the leverage ratio is our indebtedness (as defined in the Indenture) divided by adjusted EBITDA (as defined in the Indenture) for the four preceding quarterly periods.

As of ~~September~~June 30, ~~2022,~~2023, our leverage ratio was ~~3.90x. As a result,~~approximately 4.5x. Therefore, quarterly principal payments ~~on the 2019 Class A-2 Notes~~ are not required.

Make-whole Premiums

We may voluntarily repay the ~~2019~~ Class A-2 Notes at any time; however, if ~~we repay the 2019 Class A-2 Notes~~repaid prior to certain dates we would be required to pay make-whole premiums. As of ~~September~~June 30, ~~2022,~~2023, there was no make-whole premium associated with voluntary prepayment of the 2019 Class A-2-II Notes. As of June 30, 2023, the make-whole premium associated with voluntary prepayment of the 2023 Class ~~A-2-I Notes was zero and will remain as such. As of September 30, 2022, the make-whole premium associated with voluntary prepayment of the Class A-2-II~~A-2 Notes was approximately ~~$0.5 million; this amount declines progressively each quarter to zero in June 2024.~~$45.1 million. We also would ~~also~~ be subject to a make-whole premium in the event of a mandatory prepayment required following ~~a Rapid Amortization Event~~certain rapid amortization events or certain asset dispositions. The mandatory make-whole premium requirements are considered derivatives embedded ~~in the Notes~~ that must be bifurcated for separate valuation. We estimated the fair value of these derivatives to be immaterial as of ~~September~~June 30, ~~2022,~~2023, based on the probability-weighted discounted cash flows associated with either event.

Covenants and Restrictions

~~The Notes are~~Our long-term debt is subject to a series of covenants and restrictions customary for transactions of this type, ~~including: (i) that the Co-Issuers maintain specified reserve accounts to be used to make required payments in respect~~including maintenance of the Notes; (ii) provisions relating to optional and mandatory prepayments, and the related payment of specified amounts, including specified call redemption premiums in the case of Class A-2 Notes under certain circumstances; (iii) certain indemnification payments in the event, among other things, the transfers of the assets pledged as collateral for the Notes are in stated ways defective or ineffective; and (iv) covenants relating to recordkeeping, access to information and similar matters. The Notes are subject to customary rapid amortization events provided for in the Indenture, including events tied to failure of the Securitization Entities (as defined in the Indenture) to maintain the stated debt service coverage ratio (“DSCR”), the sum of domestic retail sales for all restaurants being below certain levels on certain measurement dates, certain manager termination events, certain events of default and the failure to repay or refinance the Class A-2 Notes on the anticipated repayment dates. The Notes are also subject to certain customary events of default, including events relating to non-payment of required interest, principal or other amounts due on or with respect to the Notes, failure of the Securitization Entities to maintain the stated DSCR, failure to comply with covenants within certain time frames, certain bankruptcy events, breaches of specified representations and warranties and certain judgments.

a DSCR. In general, the DSCR ratio is ~~Net Cash Flow (as defined in the Indenture)~~net cash flow for the four quarters preceding the calculation date divided by the total debt service payments ~~(as defined in the Indenture)~~ of the preceding four quarters. The complete definitions of the DSCR and all calculation elements are contained in the ~~Indenture.~~ indenture, and subsequent amendments thereto, under which the Class A-2 Notes were issued.

Failure to maintain a prescribed DSCR can trigger ~~a Cash Flow Sweeping Event, A Rapid Amortization Event, a Manager Termination Event or a Default Event as described below. In a Cash Flow Sweeping Event,~~ the Trustee is required to retain 50% of excess Cash Flow (as defined in the Indenture) in a restricted account. In a Rapid Amortization Event, all excess Cash Flow is retained and used to retire principal amounts of debt. In a Manager Termination Event, we may be replaced as manager of the assets securitized under the Indenture. In a Default Event, the outstanding principal amount and any accrued but unpaid interest can be called to become immediately due and payable. Key DSCRs are as follows:

following events:

•DSCR less than 1.75x - Cash Flow Sweeping Event

•DSCR less than 1.20x - Rapid Amortization Event

•Interest-only DSCR less than 1.20x - Manager Termination Event

•Interest-only DSCR less than 1.10x - Default Event

Our DSCR for the reporting period ended ~~September~~June 30, ~~2022~~2023 was approximately ~~4.15x.~~3.7x.

~~Table of Contents~~

~~Use of~~ Credit ~~Facilities~~

Facility

In August 2022, the Co-Issuers ~~drew down a total of $100.0 million from~~entered into the Credit Facility ~~all~~that allows for drawings up to $325 million of ~~which~~variable funding notes on a revolving basis and the issuance of letters of credit. The applicable interest rate under the Credit Facility depends on the type of borrowing by the Co-Issuers. The applicable interest rate for advances is generally calculated at a per annum rate equal to the commercial paper funding rate or one-, two-, three- or six-month Secured Overnight Financing Rate (“SOFR”), in either case, plus 2.50%. The applicable interest rate for swingline advances and unreimbursed draws on outstanding letters of credit is a per annum base rate equal to the sum of (a) the greatest of (i) the prime rate in effect from time to time; (ii) the federal funds rate in effect from time to time plus 0.50%; and (iii) SOFR for a one-month tenor in effect at such time plus 0.50% plus (b) 2.00%.

As of June 30, 2023, the outstanding balance of the Credit Facility was ~~outstanding at September 30, 2022.~~$100 million. The amount of $3.4 million was pledged against the Credit Facility ~~at September 30, 2022~~ for outstanding letters of credit, leaving $221.6 million of the Credit Facility available for ~~borrowing.~~borrowing at June 30, 2023. It is anticipated that any principal and interest on the Credit Facility outstanding will be repaid in full on or prior to the quarterly payment date in June 2027, subject to two additional one-year extensions at the option of the Company upon the satisfaction of certain conditions. The letters of credit are used primarily to satisfy insurance-related collateral requirements. The weighted average interest rate on Credit Facility borrowings for the period outstanding during the six months ended June 30, 2023 was 7.46%.

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Capital Allocation

Dividends

~~To maintain financial flexibility in light~~Dividends declared and paid per share for the six months ended June 30, 2023 and 2022 were as follows:


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Dividends declared per common share	$	0.51	$	0.51	$	1.02	$	0.97
Dividends paid per common share	$	—	$	—	$	1.02	$	0.86

During the six months ended June 30, 2023 and 2022, the Company paid dividends of ~~the COVID-19 pandemic, we suspended our repurchasing of common stock~~$16.0 million and the declaration of dividends on our common stock after the first quarter of 2020. After evaluating repurchases of common stock and dividend payments on common stock within the context of our overall capital allocation strategy, giving consideration to our current and forecast earnings, financial condition, cash requirements and other factors, we resumed repurchasing our common stock and the declaration of dividends on our common stock in the fourth quarter of 2021.$14.6 million, respectively.

In February 2019, our Board of Directors approved a stock repurchase program authorizing the repurchase up to $200 million of our common stock (the “2019 Repurchase Program”) on an opportunistic basis from time to time in the open market or in privately negotiated transactions based on business, market, applicable legal requirements and other considerations. The 2019 Repurchase Program, as approved byOn May 11, 2023, the Board of Directors ~~does not require~~declared a second quarter 2023 cash dividend of $0.51 per share of common stock, paid on July 7, 2023 to the ~~repurchase~~stockholders of ~~a specific number~~record as of ~~shares and can be terminated at any time.~~ the close of business on June 20, 2023.

Stock Repurchases

~~Additionally, on~~On February 17, 2022, ~~our~~the Company's Board of Directors authorized a new share repurchase program, effective April 1, 2022, of up to $250 million (the “2022 Repurchase Program”).

~~Stock Repurchases~~

In connection with the approval of the 2022 Repurchase Program, the 2019 Share Repurchase Program terminated effective April 1, 2022.

During the ~~three and nine~~six months ended ~~September~~June 30, ~~2022, we~~2023, the Company repurchased ~~140,997 and 1,642,097~~212,492 shares of common stock at a cost of ~~$9.5~~$14.0 million. Cumulatively, the Company repurchased 1,362,081 shares at a cost of $92.7 million ~~and $113.6 million, respectively. The amounts for the three months ended September 30, 2022 relate to~~under the 2022 Repurchase Program. For the nine months ended September 30, 2022, 588,108 shares of common stock at a cost of $41.4 million relate to the 2019 Repurchase Program and 1,053,989 shares of common stock at a cost of $72.1 million relate to the 2022 Repurchase Program. We did not repurchase any shares of common stock during the three and nine months ended September 30, 2021.

From time to time, we ~~may~~ also repurchase shares owned and tendered by employees to satisfy tax withholding obligations on the vesting of restricted stock awards. Shares are deemed purchased at the closing price of our common stock on the vesting date. See Part II, Item 2 ~~of this Quarterly Report~~ for detail on this stock repurchase activity during the ~~nine~~six months ended ~~September~~June 30, ~~2022.~~

~~Dividends~~

~~Dividends declared and paid per share for the three and nine months ended September 30, 2022 and 2021 were as follows:~~

~~On October 28, 2021, our Board of Directors declared a fourth quarter 2021 cash dividend of $0.40 per share of common~~

~~stock, paid on January 7, 2022 to the stockholders of record as of the close of business on December 17, 2021.~~

~~On February 17, 2022, our Board of Directors declared a first quarter 2022 cash dividend of $0.46 per share of~~

~~common stock, paid on April 1, 2022 to the stockholders of record as of the close of business on March 21, 2022.~~

~~On May 12, 2022, our Board of Directors declared a second quarter 2022 cash dividend of $0.51 per share of~~

~~common stock, paid on July 8, 2022 to the stockholders of record as of the close of business on June 20, 2022.~~

~~On September 9, 2022, our Board of Directors declared a third quarter 2022 cash dividend of $0.51 per share of~~

~~common stock, paid on September 30, 2022 to the stockholders of record as of the close of business on September 20, 2022.~~

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2023.

Cash Flows

In summary, our cash flows for the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~September~~June 30, ~~2021~~2022 were as follows:


		Nine Months Ended September 30,							Six Months Ended June 30,
		2022		2021		Variance			2023		2022		Variance
		(In millions)							(In millions)
Net cash provided by operating activities	Net cash provided by operating activities	$	63.5	$	145.6	$	(82.1)	Net cash provided by operating activities	$	42.7	$	29.9	$	12.8
Net cash (used in) provided by investing activities		(3.4)		7.5		(10.9)
Net cash used in investing activities								Net cash used in investing activities	(16.6)		(0.8)		(15.8)
Net cash used in financing activities	Net cash used in financing activities	(61.2)		(223.8)		162.6		Net cash used in financing activities	(194.3)		(124.7)		(69.6)
Net decrease in cash, cash equivalents and restricted cash	Net decrease in cash, cash equivalents and restricted cash	$	(1.1)	$	(70.8)	$	69.7	Net decrease in cash, cash equivalents and restricted cash	$	(168.2)	$	(95.6)	$	(72.6)

Operating Activities

Cash provided by operating activities ~~decreased $82.1~~increased $12.8 million during the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 compared to the same period of ~~2021.~~the prior year. Our net income plus the non-cash reconciling items shown in our statements of cash flows (primarily depreciation, ~~closure~~impairment and ~~impairment~~closure charges, stock-based compensation and deferred taxes) decreased ~~$6.1~~$3.2 million from ~~2021.~~2022. This was primarily due to an increase in G&A ~~expenses~~expense and ~~the recognition of excess tax benefits on stock-based compensation in 2021 that did not recur in 2022, each of which was discussed in preceding sections of the MD&A,~~other income and expenses, partially offset by an increase in gross profit. Net changes in working capital used $26.7 million of cash during the six months ended June 30, 2023 compared to using cash of ~~$41.6 million during the nine months ended September 30, 2022 compared to providing cash of $34.4~~$42.7 million during the same period of the prior year, ~~an unfavorable~~a favorable change of ~~$76.0~~$16.0 million. The ~~unfavorable~~favorable change in working capital was primarily due to ~~an increase~~a decrease in payments for corporate bonuses and other employee compensation and the timing of ~~marketing and other~~ disbursements.

Investing Activities

Investing activities used net cash of ~~$3.4~~$16.6 million for the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 compared to investing activities provided net cash of ~~$7.5~~$0.8 million for the ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022, an unfavorable change of ~~$10.9~~$15.8 million. ~~The variance of $10.9 million in investing activities was primarily related to an increase in capital~~Capital expenditures of ~~$11.6~~$23 million was partially offset by ~~an increase in proceeds~~principal receipts from ~~the sale~~notes, equipment contracts and other long-term receivables of ~~property and equipment~~$4.2 million.

Table of ~~$3.0 million.~~Contents

Financing Activities

Financing activities used net cash of ~~$61.2~~$194.3 million for the ~~nine~~six months ended ~~September~~June 30, 2022. We repurchased common stock in the amount of $113.9 million, paid dividends of $30.8 million, made payments on finance lease obligations of $7.0 million and payment on debt issuance costs of $6.3 million, which was partially offset by proceeds from our Credit Facility of $100.0 million.2023. The ~~decrease~~net increase in cash used by financing activities was primarily due to ~~a $220~~the repayment and issuance of long-term debt of $159.7 million ~~repayment on our Previous Credit Facility in 2021 that did not recur in 2022,~~during the second quarter of 2023. This was partially offset by ~~proceeds from our Credit Facility in 2022, the resumption~~a decrease of ~~dividend repurchases and dividend payments in 2022 that had been suspended in 2021.~~

repurchase of common stock of $88.4 million.

Cash and Cash Equivalents

Our total cash balances, net of revolving credit facility borrowings, as of ~~September~~June 30, ~~2022~~2023 and December 31, ~~2021~~2022 were as follows:

September 30, 2022 December 31, 2021
(In millions)
Cash and cash equivalents $ 355.3 $ 361.4
Restricted cash, current 52.5 47.5
Restricted cash, non-current 16.4 16.4
Total $ 424.2 $ 425.3


	June 30, 2023		December 31, 2022
	(In millions)
Cash and cash equivalents	$	98.0	$	269.7
Restricted cash, current	39.4		38.9
Restricted cash, non-current	19.5		16.4
Total	$	156.9	$	325.0
Less: Revolving credit facility borrowing	(100.0)		(100.0)
Total cash, restricted cash and cash equivalents, net	$	56.9	$	225.0

Cash and cash equivalents include ~~$74.0~~$73.5 million and ~~$101.5~~$96.6 million of cash held for gift card programs and advertising funds as of ~~September~~June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively. The decrease in cash and cash equivalents between ~~September~~June 30, ~~2022~~2023 and December 31, ~~2021~~2022 was primarily due to repayment of long-term debt, additions to property and equipment, payments to repurchase common stock, dividend payments ~~additions to property and equipment~~ and other payments including employee bonuses and advertising.

~~Table of Contents~~

We believe that our unrestricted cash and cash equivalents on hand, cash flow from operations and the ~~$221.6 million of~~ borrowing capacity available under our Credit Facility will provide us with adequate liquidity for at least the next twelve months.

Adjusted Free Cash Flow

We define “adjusted free cash flow” for a given period as cash provided by operating activities, plus receipts from notes and equipment contract receivables, less additions to property and equipment. Management uses this liquidity measure in its periodic assessment of, among other things, payment of cash dividends on common stock and repurchases of common stock and we believe it is important for investors to have the same measure used by management for that purpose. Adjusted free cash flow does not represent residual cash flow available for discretionary purposes.

Adjusted free cash flow is a non-U.S. GAAP measure. This non-U.S. GAAP measure is not defined in the same manner by all companies and may not be comparable to other similarly titled measures of other companies. Non-U.S. GAAP measures should be considered in addition to, and not as a substitute for, the U.S. GAAP information contained within our financial statements. Reconciliation of the cash provided by operating activities to adjusted ~~(negative)~~ free cash flow is as follows:

Nine Months Ended September 30,
2022 2021 Variance
(In millions)
Cash flows provided by operating activities $ 63.5 $ 145.6 $ (82.1)
Receipts from notes and equipment contracts receivable 8.4 8.4 —
Additions to property and equipment (19.5) (7.9) (11.6)
Adjusted free cash flow $ 52.4 $ 146.1 $ (93.7)


	Six Months Ended June 30,
	2023		2022		Variance
	(In millions)
Cash flows provided by operating activities	$	42.7	$	29.9	$	12.8
Principal receipts from notes and equipment contracts	4.2		5.9		(1.7)
Net additions to property and equipment	(22.8)		(12.7)		(10.1)
Adjusted free cash flow	$	24.1	$	23.1	$	1.0

Adjusted free cash flow for the ~~nine~~six months ended ~~September~~June 30, ~~2022 declined~~2023 improved compared to the same period of the prior year due to the ~~decrease~~increase in cash flows provided by operating activities, ~~and~~partially offset by the increase in capital expenditures ~~each of which was discussed~~and a decrease in ~~preceding sections of this MD&A.~~

receipts from notes and equipment contracts receivable.

Contractual Obligations and Commitments

There were no material changes to the contractual obligations as disclosed in our Annual Report on Form 10-K for the year ended December 31, ~~2021.~~

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2022.

Critical Accounting Policies and Estimates

The preparation of financial statements in accordance with U.S. GAAP requires us to make estimates and assumptions affecting the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of net revenues and expenses in the reporting period. We base our estimates and assumptions on current facts, historical experience

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and various other factors that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. We continually review the estimates and underlying assumptions to ensure they are appropriate for the circumstances. Accounting assumptions and estimates are inherently uncertain and actual results may differ materially from our estimates.

A summary of our critical accounting estimates is included in Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in our Annual Report on Form 10-K for the year ended December 31, ~~2021.~~2022. During the ~~nine~~six months ended ~~September~~June 30, ~~2022,~~2023, there were no significant changes in our critical accounting policies or in our critical accounting estimates.

Item 3. Quantitative and Qualitative Disclosures about Market Risk.

There were no material changes from the information contained in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2021.~~

2022.

Item 4. Controls and Procedures.

Disclosure Controls and Procedures.

The Company’s management, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Company’s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this report. Based on such evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of such period, the Company’s disclosure controls and procedures are effective at the reasonable assurance level.

Changes in Internal Control Over Financial Reporting.

There have been no changes in the Company’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter to which this report relates that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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Part II. OTHER INFORMATION

Item 1. Legal Proceedings.

We are subject to various lawsuits, administrative proceedings, audits and claims arising in the ordinary course of business. Some of these lawsuits purport to be class actions and/or seek substantial damages. We are required to record an accrual for litigation loss contingencies that are both probable and reasonably estimable. Legal fees and expenses associated with the defense of all of our litigation are expensed as such fees and expenses are incurred. Management regularly assesses our insurance deductibles, analyzes litigation information with our attorneys and evaluates our loss experience in connection with pending legal proceedings. While we do not presently believe that any of the legal proceedings to which we are currently a party will ultimately have a material adverse impact on us, there can be no assurance that we will prevail in all the proceedings we are party to, or that we will not incur material losses from them.

Item 1A. Risk Factors.

There are no material changes from the risk factors set forth under Item 1A of Part I of the Company’s Annual Report on

Form 10-K for the fiscal year ended December 31, ~~2021.~~2022.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

Purchases of Equity Securities by the Company
Period Total number of
shares
purchased (a) Average price
paid per
share Total number of
shares purchased as
part of publicly
announced plans or
programs (b) Approximate dollar value of
shares that may yet be
purchased under the
plans or programs (b)
July 4, 2022 - July 31, 2022 143,031 $ 67.51 140,997 $ 177,872,000
August 1, 2022 - August 28, 2022 679 76.36 — $ 177,872,000
August 29, 2022 - October 2, 2022 839 73.07 — $ 177,872,000
144,549 $ 67.58 140,997 $ 177,872,000


Purchases of Equity Securities by the Company
Period	Total number of shares purchased (a)	Average price paid per share		Total number of shares purchased as part of publicly announced plans or programs (b)	Approximate dollar value of shares that may yet be purchased under the plans or programs (b)
April 3, 2023 - April 30, 2023	75,062	$	67.21	74,382	$	161,282,000
May 1, 2023 - May 28, 2023	30,763	64.35		30,305	$	159,333,000
May 29, 2023 - July 2, 2023	38,535	62.43		32,945	$	157,266,000
	144,360	$	65.33	137,632	$	157,266,000

(a) ~~Total number of shares purchased~~These amounts include ~~2,034~~ shares owned and tendered by employees at an average price of $66.52 per share during the fiscal month ended July 31, 2022, and 679 shares owned and tendered by employees at an average price of $76.36 per share during the fiscal month ended August 28, 2022, and 839 shares owned and tendered by employees at an average price of $73.07 per share during the fiscal month ended October 2, 2022 to satisfy tax withholding obligations arising upon vesting of restricted stock awards. Shares so surrendered by the participants are repurchased by ~~the Company~~us pursuant to the terms of the plan and the applicable individual award agreements under which the shares were issued and not pursuant to publicly announced repurchase authorizations.

(b) ~~In February 2019, the Company’s Board of Directors approved the 2019 Repurchase Program authorizing the Company to repurchase up to $200 million of the Company's common stock.~~ On February 17, 2022, the Company's Board of Directors authorized a ~~new~~ share repurchase program, effective April 1, 2022, of up to $250 ~~million.~~million (the “2022 Repurchase Program”). In connection with the approval of the 2022 Repurchase Program, the 2019 Share Repurchase Program terminated effective April 1, 2022. The 2022 Repurchase Program, as approved by the Board of Directors, does not require the repurchase of a specific number of shares and can be terminated at any time.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not Applicable.

Item 5. Other Information.

Securities Trading Plans of Directors and Executive Officers

~~None.~~

During the fiscal quarter ended June 30, 2023, none of our directors or officers (as defined in Rule 16a-1(f) under the Exchange Act) adopted, modified, or terminated a Rule 10b5-1 trading plan or a non-Rule 10b5-1 trading arrangement for our securities (as defined in Item 408(c) of Regulation S-K).

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Item 6. Exhibits.


~~3.1~~						~~Amended and Restated Bylaws of Dine Brands Global, Inc, effective as of August 26, 2022 (incorporated by reference to Exhibit 3.1 to the Registrant’s Form 8-K filed with the SEC on August 26, 2022).~~
~~4.1~~						Base Indenture, dated September 30, 2014, as amended and restated as of June 5, 2019, among the Co-Issuers and Citibank, N.A., as Trustee and Securities Intermediary (incorporated by reference from Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on August 12, 2022).
~~4.2~~						Series 2022-1 Supplemental Indenture, dated August 12, 2022, among Applebee’s Funding LLC and IHOP Funding LLC, each a Co-Issuer, and Citibank N.A., as Trustee and Series 2022-1 Securities Intermediary (incorporated by reference from Exhibit 4.2 to the Company’s Current Report on Form 8-K filed on August 12, 2022).
~~10.1~~						Class A-1 Note Purchase Agreement, dated August 12, 2022, among Applebee’s Funding LLC and IHOP Funding LLC, each a Co-Issuer, certain special-purpose, wholly-owned indirect subsidiaries of the Company, each as a Guarantor, the Company, as manager, certain conduit investors, financial institutions and funding agents, Coöperatieve Rabobank U.A., New York Branch, as provider of letters of credit, swingline lender and administrative agent (incorporated by reference to Exhibit 10.1 to the Registrant’s Form 8-K filed with the SEC on August 12, 2022).
*31.1						~~Certification of Chief Executive Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended.~~
*31.2						~~Certification of Chief Financial Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended.~~
*32.1						Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.**
*32.2						Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.**
~~101.INS~~						~~XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.~~
~~101.SCH~~						Inline XBRL Schema Document.***
~~101.CAL~~						Inline XBRL Calculation Linkbase Document.***
~~101.DEF~~						Inline XBRL Definition Linkbase Document.***
~~101.LAB~~						Inline XBRL Label Linkbase Document.***
~~101.PRE~~						Inline XBRL Presentation Linkbase Document.***
~~104~~						~~Cover page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)~~


3.1		Amended and Restated Certificate of Incorporation of Dine Brands Global, Inc. (Exhibit 3.1 to Registrant’s Form 8-K filed May 15, 2023 is incorporated herein by reference).
3.2		Amended and Restated Bylaws of Dine Brands Global, Inc. (Exhibit 3.2 to Registrant’s Form 8-K filed May 15, 2023 is incorporated herein by reference).
4.1		Second Amended and Restated Base Indenture, dated as of April 17, 2023, among Applebee’s Funding LLC and IHOP Funding LLC, each as a Co-Issuer, and Citibank, N.A., as Trustee and Securities Intermediary (Exhibit 4.1 to Registrant's Form 8-K filed April 17, 2023 is incorporated herein by reference).
4.2		Series 2023-1 Supplemental Indenture, dated April 17, 2023, among Applebee’s Funding LLC and IHOP Funding LLC, each as a Co-Issuer, and Citibank, N.A., as Trustee and Securities Intermediary (Exhibit 4.2 to Registrant's Form 8-K filed April 17, 2023 is incorporated herein by reference).
10.1	10.1	Third Amended and Restated Management Agreement, dated as of April 17, 2023, among Applebee’s Funding LLC and IHOP Funding LLC, each as a Co-Issuer, other securitization entities party thereto from time to time, the Corporation as the Manager, Applebee’s Services, Inc. and International House of Pancakes, LLC as Sub-managers, and Citibank, N.A., as Trustee (Exhibit 10.1 to Registrant's Form 8-K filed April 17, 2023 is incorporated herein by reference).
*† 10.2		Amendment to Employment Agreement dated as of May 15, 2023 by and between the Corporation and John W. Peyton.
*31.1		Certification of Chief Executive Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended.
*31.2		Certification of Chief Financial Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended.
*32.1		Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.**
*32.2		Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.**
101.INS		XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH		Inline XBRL Schema Document.***
101.CAL		Inline XBRL Calculation Linkbase Document.***
101.DEF		Inline XBRL Definition Linkbase Document.***
101.LAB		Inline XBRL Label Linkbase Document.***
101.PRE		Inline XBRL Presentation Linkbase Document.***
104		Cover page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

* Filed herewith.

** The certifications attached as Exhibits 32.1 and 32.2 accompany this Quarterly Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.

*** Pursuant to Rule 406T of Regulation S-T, the interactive data files on Exhibit 101 and 104 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Section 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.

† A contract, compensatory plan or arrangement in which directors or executive officers are eligible to participate.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


		Dine Brands Global, Inc. (Registrant)


Dated:	~~2nd~~3rd day of ~~November, 2022~~August, 2023	By:	/s/ John W. Peyton
			John W. Peyton Chief Executive Officer (Principal Executive Officer)

Dated:	~~2nd~~3rd day of ~~November, 2022~~August, 2023	By:	/s/ Vance Y. Chang
			Vance Y. Chang Chief Financial Officer (Principal Financial Officer)

Dated:	~~2nd~~3rd day of ~~November, 2022~~August, 2023	By:	/s/ Allison Hall
			Allison Hall Chief Accounting Officer (Principal Accounting Officer)

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	September 30, 2022		December 31, 2021
Assets	(Unaudited)
Current assets:
Cash and cash equivalents	$	355,288	$	361,412


Receivables, net of allowance of $4,205 (2022) and $4,959 (2021)	89,529		119,968
Restricted cash	52,517		47,541
Prepaid gift card costs	24,595		28,175
Prepaid income taxes	3,502		10,529
Other current assets	11,075		6,728
Assets held for sale	109,280		—
Total current assets	645,786		574,353
Other intangible assets, net	526,989		539,390
Operating lease right-of-use assets	298,102		335,428
Goodwill	247,002		251,628
Property and equipment, net	135,368		179,411


Deferred rent receivable	44,306		50,257
Long-term receivables, net of allowance of $5,498 (2022) and $6,897 (2021)	43,245		42,493
Non-current restricted cash	16,400		16,400
Other non-current assets, net	14,823		10,006
Total assets	$	1,972,021	$	1,999,366
Liabilities and Stockholders’ Deficit
Current liabilities:
Current maturities of long-term debt	$	100,000	$	—
Accounts payable	40,781		55,956
Gift card liability	126,161		165,530
Current maturities of operating lease obligations	65,174		72,079
Current maturities of finance lease and financing obligations	8,402		10,693
Accrued employee compensation and benefits	20,786		40,785
Accrued advertising	38,804		33,752
Dividends payable	—		6,919



Other accrued expenses	22,975		25,016
Liabilities held for sale	96,023		—
Total current liabilities	519,106		410,730
Long-term debt	1,281,318		1,279,623
Operating lease obligations, less current maturities	279,620		320,848
Finance lease obligations, less current maturities	31,439		59,625
Financing obligations, less current maturities	28,572		31,967
Deferred income taxes, net	74,681		76,228
Deferred franchise revenue, long-term	42,616		46,100

Other non-current liabilities	16,263		17,052
Total liabilities	2,273,615		2,242,173
Commitments and contingencies
Stockholders’ deficit:
Preferred stock, $1 par value, 10,000,000 shares authorized; no shares issued or outstanding	—		—
Common stock, $0.01 par value; shares: 40,000,000 authorized; September 30, 2022 - 24,966,452 issued, 15,682,061 outstanding; December 31, 2021 - 24,992,275 issued, 17,163,946 outstanding	250		250
Additional paid-in-capital	256,508		256,189
Retained earnings	81,179		35,415
Accumulated other comprehensive loss	(68)		(59)
Treasury stock, at cost; shares: September 30, 2022 - 9,284,391; December 31, 2021 - 7,828,329	(639,463)		(534,602)
Total stockholders’ deficit	(301,594)		(242,807)
Total liabilities and stockholders’ deficit	$	1,972,021	$	1,999,366


	Three Months Ended September 30, 2021
	Common Stock								Accumulated Other Comprehensive Loss		Treasury Stock
	Shares Outstanding	Amount		Additional Paid-in Capital		(Accumulated Deficit) Retained Earnings					Shares	Cost		Total
Balance at June 30, 2021	17,178	$	250	$	250,509	$	(588)	-588000	$	(57)	7,833	$	(532,865)	$	(282,751)
Net income	—	—		—		23,111			—		—	—		23,111
Other comprehensive loss	—	—		—		—			(2)		—	—		(2)

Reissuance of treasury stock	50	—		422		—			—		(50)	2,083		2,505
Net issuance of shares for stock plans	(6)	—		—		—			—		—	—		—
Repurchase of restricted shares for taxes	(2)	—		(140)		—			—		—	—		(140)
Stock-based compensation	—	—		2,960		—			—		—	—		2,960



Balance at September 30, 2021	17,220	$	250	$	253,751	$	22,523		$	(59)	7,783	$	(530,782)	$	(254,317)



	(In millions)
2022 (remaining three months)	$	26.0
2023	101.7
2024	93.2
2025	80.6
2026	66.1
Thereafter	157.3
Total minimum rents receivable	$	524.9


	Shares	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in Years)	Aggregate Intrinsic Value (in Millions)
Outstanding at December 31, 2021	475,904	$	76.65
Granted	75,795	70.08
Exercised	(3,505)	68.80
Expired	(2,448)	94.43
Forfeited	(6,171)	81.13
Outstanding at September 30, 2022	539,575	75.65		6.2	$	1.3
Vested at September 30, 2022 and Expected to Vest	524,475	75.73		6.1	$	1.3
Exercisable at September 30, 2022	378,811	$	75.95	5.1	$	1.2


	Restricted Stock	Weighted Average Grant Date Fair Value		Stock-Settled Restricted Stock Units	Weighted Average Grant Date Fair Value
Outstanding at December 31, 2021	276,611	$	80.85	105,592	$	71.00
Granted	182,530	70.24		60,914	49.36
Released	(87,779)	88.35		(42,180)	66.46
Forfeited	(20,592)	77.24		—	—
Outstanding at September 30, 2022	350,770	$	73.67	124,326	$	62.18