DIN - Earnings call transcript Q3 2017 | Dine Brands Global, Inc.

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Operator

Welcome to the Third Quarter 2017 DineEquity Inc. Earnings Conference Call. My name is Sylvia and I will be your operator for today's call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session. that is note recorded. Please Instructions] this being conference [Operator call to Ken I like the over would now turn to Diptee. Ken, you may begin.

Ken Diptee

Good quarter XXXX President of Steve of President of DineEquity's I'm Darren John Corporate welcome Sullivan, by Cywinski, and and Gregg Joyce, morning. joined CEO; Rebelez, CFO Controller; Applebee. IHOP; conference And call. Interim third

I the call our forward-looking regarding Harbor turn over remember Before information. Safe to Steve, please

forward-looking made release on also also may other risks factors are that information measures, may During evaluate the that, over caution and the I'll and forward-looking, these filing. to which in described known are results uncertainties turn and may you context press information obligation no the and in than or call XX-Q financial factors, of and actual call, the Relations assume are to or is unknown as supplement different Steve. available those which statements. to and update our press involved cause discuss which our With to certain be in Investor implied. non-GAAP detailed we forward-looking of management The website. these today refer We to such expressed statements release We today's

Steve Joyce

your Thanks in Ken. interest I Good morning today's everyone. appreciate participation and call.

five CEO member say So, great ago, for of such months has also and very the first, potential. to a I've -- past truly two I'm tremendous also of I to I'd which of DineEquity's company, excited Directors role lead like been honored that and the about this but the assumed Board I've years. opportunity

talented that working strengthen team Board further importantly, we come realizing I two with would am members to require the understanding to what I our that this extremely international a full and will also I working insight and many I've and developed industries, years the franchise XX one to what development. future I lifting. by incredibly before that strengths, judge as the generated business, next Applebee's long-term in deep successful well potential into success. with have of franchisees. years. about strong I not. and underway a the time, a combined the I I'm over are partnership to this relationship. return also management hospitality With years a with became know worked franchisees I've franchisee up efforts XX And long-term on for of During challenge. already have that deep several is that beverage I forward company, us. makes and understanding and opportunities CEO, has total success and shareholder and has optimistic with of knew looking to my food member, heavy a and as over what I senior When weaknesses, almost the realize dedicated brands. communicated this build IHOP our positioning had measure or some franchisees, our company's of experience and have most developed growth of

the most capital priority will efficient be Our of first shareholders. always to return

full certainly change of is happen a it in Now, realizing with DineEquity our will our potential achievable what overnight, philosophy is. not

a here we One, want at to focused company succeed. the a sales sustainable, as and committed brand a two a with growth in evolve but of will members brands, I strong success supporting three, positive culture Dine attention IHOP. longer at a about performance-driven team brands, strategic From franchisees. experience, we no you are and our on bit holding whose our Two, need future. particular, and establish Applebee's to We we And culture And well, talk priorities that, our Dine. be little drive to company that achieve company. oversees goal to will a will the our my return great will

that we'll and Regarding respective the internally to believe our Dine approach iconic developing our In in to culture, I'm that being a our fostering and important categories. then performance-based this maximum remain relevant and innovation turn, that emphasis and create greater and drive will this culture place very bringing robust collaboration, franchisees. value our will A franchise an on bolder, benefits I both taking from focus brands and risks, externally, for moving is shareholders. strong, forward. opportunities shift for lead certain brands their Dine system making agility

of success the by driven is success our franchisees. Our

is Our to equally conditions continue be our remained competitive. to able sales Industry In to and and highly challenging positive to at needs environment, consumers. sustainable drive must nimble brands priority, respond important second, ever-changing of the and both brands. this

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diligently to that to Cywinski are John the and his days put has best resources of it. and working team Applebee's tools ensuring succeed. are ahead We the brand needed

we dedicated the that In ensure our the to restructured thoughtfully has have strategy. fact, over brand's months, support organization franchisees the the few Applebee last resources to and growth

year. and great in have our target building tracking performance committed achieve improving our creating on IHOP, To to and needs expand steps Applebee's franchisees executing are Go different -- to platform. great XXX remodeling this meet our business The their including abundant in taking we're restaurants for to to use this both IHOP IHOP. on enthusiastically we our deliver of positive To we're the our and Turning restaurants customers. IHOP to convenience off-premise experience remodeled value strides made equally also the and at of on our I'm of franchisees a the ways, end, are and guests, strategy our sales to we're confident technology. growth drive traffic the

morning respective their detail Our additional and provide brand strategies with Presidents us on they'll this are shortly.

to DineEquity Regarding our third company. growth priority, returning a

both and our brands. people prudently investing growth, in for are our We

rigorous going and customer and our by be in business This analysis remain a reignite to are must having tools competitive, To analytics vision best-in-class by consumer and expectations. business, with obstacles. This of investing understanding franchisees driven will We insight understanding better provide key behavior. provide succeed opportunities, consumer make us we and More optimal sustainable trends a trends will developing quantitative support, information decisions forward. better of and will help growth. clear a of

G&A. improving closely on managing profitability our focus will operational efficiencies through and We

as will through be. to continue where bet evolve our expand we will development. us We opportunities we If sure no hell will relevant to change, mistake; want consumers must our format our so you small to be. can traditional to assess on to not nontraditional guests unpenetrated competition competitive markets and landscape be Make growing, are and thoroughly the

We the expansion International increasing potential our will attractive brand an also provide for opportunity. continues explore portfolio. growth to

still it for going our is last consolidated forward. total comprised a very business less our strategy of revenues than international fiscal our and Although operations year, X% relevant part of our

across franchisees approximately growth restaurants, of same brands international our both the first the last year. period XX new nine XX% combined in fact, In XXXX, developed months representing over

going you financial through to quarter. the walk So, Greg with to the results that, ask for Greg? I'm

Gregg Kalvin

you, live quarter, remainder our I'll Steve. Good Thank XXXX. third performance the for the to for briefly before of performance everyone. guidance our turning morning financial cover

the to and G&A X.X% debt advertising decrease primarily franchise Applebee's third increase impact lower to to higher quarter, comp the due for adjusted expenses to of to until the compared point result a same and the of not to the national due For gross modest royalties in franchise Applebee's period XXXX, expense bad quarter due cash, $X an bad a increase XXXX paid would a personnel-related operation or as from was like revenue out and I of that franchise increase period $X.XX due in costs. Applebee's to in Applebee's expense, EPS profit in the was in in $X.XX primarily closures, contribution in decline an compared were fund. The recognized our of a XXXX. decline and million the third to operations sales, same debt

the in second XXXX. or fourth our $X expect on to million we discussed additional last during As half an million contribute call, $X earnings of the quarter

$XX previously the Finally, in as first regarding the discussed Applebee's million nine incurred in approximately million $X the with was costs stabilization XXXX. months an of associated initiatives, update we've

the expect balance fourth in be the to We quarter. incurred

future, The with third related in million to the intangible benefit, million and impairment benefit note in see recognize approximate federal for of taxes, there goodwill deferred the current cash income a the be goodwill deductible of is $XXX intangible The the approximately non-cash impairment both million other related deducted the statement tax for federal and it. Applebee's nine other $XX the for even tax did $XX of goodwill tax deferred related taxes $XX months benefit of quarter purposes, million the impairment. assets. We year. intangible to other September that million other of our related not $XXX in tax our ending it's XXth. the The with though not totaling for run assets. tax the deferred In associated to can impairment impairment quarter, Regarding deductible to coupled charges that no Please item third million flows asset Applebee's so purposes $XXX $XX to we assets a rate impairment of you'll charges. reduction is charge Applebee's million incurred resulted annual write-downs intangible of consist in for

comments charge. additional some provide me Let this regarding

Accepted under assessed required, impairment other Principles, are indicators to for and exist. Generally certain goodwill periodically intangible assets when We Accounting

of to of assets of factors nine months note business the of this covenants, charge this the no year cash valuation on impact non-cash first said, charge. impairment that the debt not ability in results that ability and capitalization goodwill it of dividends repurchase we of Applebee's our not shares. finally, over market The overall determined quarter resulted other third and impact various does an XXXX, the it During does With please was to pay the valuation based the impact related our this intangible earnings performance and warranted. or company's on and DineEquity, the generate future has flows, to

GAAP effective earlier. benefit expense third quarter impairment reasons non-deductibility our rate, an the and compared third a was tax to XXXX tax rate XX% loss the goodwill discussed Turning our tax is The last primary the for quarter our of to of the the variance book due the to of XX% for quarter year. for in

For effective our for be per we tax approximately that XXXX adjusted year expect will currently rate XX%. earnings share, full

compensation cash gross first G&A. charges year, nine to of million, resulting separation expenditures compared Test profit the of Adjusted in at was in nine G&A was the nine mainly the our to IT period approximately the headquarters from our CEO. due net higher turning nine for the stabilization million for XXXX. million was XXXX Kitchen construction million mainly discussed, franchise statement. free from a of first XXXX. capital decrease Cash income, variance increase and decline due same activities XXXX non-recurring equity for the for $X operations to Applebee's first increase to the million, and XXXX incurred first to nine our $X the months primarily to in period compared the $XX Now, lower XXXX, first to of of was previous due from as flow And flow related for was in related to severance cash The the of The a incurred approximately compared quarter, to $XX operations, The overall in last costs The for the from first corporate and approximately months last expenditures $XX months same of and compared year. decline $XX flows period to additional operating consumer due facing to months for the investments of in months the initiatives. million capital of initiatives. previously cash cash in comparable higher were

financial This franchisees we Turning themselves to on restaurant Trinity financial with closures franchisee reviewed necessary. both an program. financial Trinity. includes number to financial to franchisees avail to our in and any the of limited Capital. financial direct Franchisee support continue programs, by only including availed partner adviser, Applebee's direct assistance financial the various and ability Applebee's update financial and franchisees health our brand to health, matters themselves a assistance are as our Direct Currently, support. continue will of have this

However, closure to all, process franchisees out a improved have like the point restaurants. but participated in I'd that for underperforming few,

sales discuss see guidance our fiscal the our now today details performance our X.X% Please between range X.X%. revisions to I'll we for negative negative to expect Lastly, press for release guidance. complete XXXX. Applebee's comparable issued on to We

initiatives. the our Our the guidance quarter in and implementation reflects fourth early the traction for traffic seen of driving sales

million, range million franchise fourth spend a We've the number mainly to to and primarily of our of have for our the $XX revised expectations our range for and due and franchisees. Applebee's Applebee's mentioned. cash collectability lowered million, the operating $XX in related the flows to to from loyalty impact segment timing expectations franchisee activities collectability quarter $XXX between between to $XXX of previously royalty of continuing marketing limited due profit We million

a cash generate our our to to guidance we side With call XXXX ample million million business conclude, to activities, on and expect cash of our and is XXXX. success. John. while the monitor financial for $XX now priority our making adjusted for Turning people. free closely and cost franchisees challenges, in I'll The revised operating To brands turn despite high we're flow. to cash to of model business, Based $XX health flow. approximately our free the continues now adjusted that, committed investments for our our of We a us appropriate their range over

John Cywinski

Thanks everyone. Gregg morning and good

the spending was a As quarter media quarter last in a in same challenging very our Applebee's, QX, unfavorable for represented national anticipated, with QX year. particular, comparison

are we ago. year Additionally, more weeks compared to the in [Indiscernible] quarter when

on as that with remain our beginning plan, to see our said, focused we Now take to we turnaround hold expect QX. XXXX initiatives in

in one contribution, neighborhood, here some the with eating the our a best about in at initiatives. time we categorize combination with and lead supplemented the change of $X new the on high very our and of franchisees ad have we simply at fact, our with outlined of we in we new new years bullish plan. to saw importantly, terrific reasons as year. through franchisee future. reintroduced, proper focused fund In trajectory have all the look good a October, required advertising. alignment And We And million company, of of consistently optimistic are restaurants. both concluded as execute first X level, of well On sales confident our we primary we to and next as $XX growth our saw on months, particularly a note, partnerships our the been And Most proposition, the for franchisees positive strategy, the this value as our I'm XXXX we positive since support turnaround about comprehensive with middle Applebee's and components October. core a and We another for in beverage just again our Conference once XXXX, plan, underway. traffic we in that's

proud consistently of Speaking Year. Franchisee day announced and and I'd Greg kind moment the walked to well, our out. Group, because day talk XXXX who brand operating of and to of largest our his really franchisee, I'm in they all franchisees, a represent just team Apple in of as exceptionally like we've the American recognize Flynn metrics, key they take to

LLC, in newly welcome acquired restaurants our In Utah. franchisee, Apple addition, XX to newest operating Mountain I'd like

our as far of we'll As optimization. portfolio long-overdue forward, likely we additional have transactions look

turning across building our perspective, guest operational focused role removing guest connections our and excellence Operations well-positioned operate. marketing adherence complexity Kevin with a experience We narrowing season operating new is of communities the throughout remain in Kevin look brand Carroll and our with We're an accountability. Kevin welcome value deep brand, while vibrant for embrace system, and to on to operations. to Now, I'm while in hold delivering the pleased From as we'll we experience variability restaurants. for leader Applebee's. Officer satisfaction, which very Chief a accountable tremendous as a partnership, will his practices, in brand of all-American essence. an franchisees Applebee's sharing elevated fundamentally standards. oriented culture through best family-friendly to

very see target routine in value neighborhood restaurants You'll and and as leverage Applebee's, us touch those points. all well across fully who as eat our casual particular. the prefer We'll good in secrets, positioning important traditionalists dining

our will have development substantially guests through to and has our And XXXX. brand clear as content Our been refined. personality to crystal been move voice strategies Media enhanced. advertising and we become approach

On from trendy well flavor embracing niche away the mainstream menu culinary as front, items, we'll as appealing and broadly profiles value. abundant shy while

and Our build the relentless with in new we now process disciplined is pipeline validation guest testing place as orientation. our innovation

have clear from months. new prior essential chain our culinary all This activate XX-plus enhanced next Importantly, investments that of filter and with restaurant be supply to will operations part profitability to over of both food and PricewaterhouseCoopers And labor consideration. an a is animations the process. can our pursuit partnership standpoint, we'll complexity redeployed a

the operational greater slated Now, These middle of technology a for investments implementation and we well as priority, are in packaging ideal off-premise once XXXX, remains service enhancements. have consistency validated model. as requiring

consumer this with test currently XXX continue being engine and to the of we've ensures very Go growth over resources restaurant for near-term and the resources. total we're optimistic a training. just and actively structure, the about see equally in a to our Applebee's To-date, of X% grow implemented with while services, brand To Go accountabilities. fully part optimization evolution sales, culture of very present business shift analytics, expand we off-premise have for the delivery This We overt DineEquity focus, a opportunity is shared and structural footprint, distinct important operation change dedicated Applebee's with accounts currently autonomous insights, the An the platform. To business brand, clear we brand to as restaurants. our about

for we makes once and XXXX line you, what unique begin crowded and up aligned how Again and certainly know we Applebee's, guest so turn again we and on While you, we a improvement stand franchisees, our what transitional it I'll space. plan We throughout in And is year our this Thank what with clarity sequential we execute value most our for. who have turnaround are us XXXX. over forward. this that, QX to everyone. And with moving to Darren. in see we initiatives to expect are

Darren Rebelez

All dining right. quarterly Thank globally gross John partially more industry Despite steepest successful X.X%, by conditions, of first last declined quarter morning a the provide part; kid declines later. same sales a driven were Franchisees in IHOP third by eat free reflecting year, year. our both period this comp franchisees and pace. years. cycling continuation represents XX everyone. the one categories traffic solid increase development restaurants opened traffic results you, XXXX. a traffic very promotion IHOP's total in of two in by the details development nine over in of continues declines on and results months that good XXX% of the This the comp over day soft at I'll underperformance the specifically in due sales decline as family well IHOP's primarily of the comp dinner to in as last XXXX.

guest and atmosphere starting and enhancing frequency broad rebuild executing 'N each great is great a expect our the is who and care guests traffic our brand and is ever lives. building strong Make momentum value our and before, integral bringing and restaurant their pleased as in-depth mind dining experience. to game-changing dedicated that brand? across the these, the of the by is experience to is. remodeled no consumer running being to of guest guests has age we report where matters We great that that welcoming itself. significantly program IHOP To guests. in our which we I'll guests our driving in very the attuned elevating to better is that top analysis added are, sales restaurants mistake, Through part enhancements against XXX Providing insights our the us is everyone includes with with what know guest to based XX conduct the Our strategy, believe experience, experience, helped among for this food dining to warm franchisees demographics. existing Rise an experience. plays guests they We've service broad what And consumers, our briefly restaurants, we are know team competitors. than to top Shine the is four-pronged focus traffic, a on of just IHOP to why this the from a our work, end, the discuss more priority role relevant of differentiate remodel that quarter, further them, our at total about environment with a IHOP drive a we I'm and restaurants in equity third build the year. higher understand

track the initiatives better a technology of brand include for XXX the expect remodel will second quarter. are launching technology the we roll savvy facing out enhancing accessibility. this IHOPs of We to consumer year. the mobile To we leverage increase These to both on to complete which up, go, on consecutive and also today's meet website consumer needs restaurants

was pleased growth both quarter, quarter Lastly, and that growth X.X% announce compares the comp revamp progress fully has online ordering our this same growing sales of IHOP I'm we're These in platform combined deployed in To This the to To solid delivery. in year. generating will have Go and comp year. launched on online and includes check. program growth we've to initiatives earlier traffic the making ordering positive business, and yielded results last overall off-premise which Go our X.X% that our Go almost sales of support third

met confirmed with Once quickly that operating the these within online vendors to we standards, integration has Amazon other initial areas. the with we'll expand start our are be limited quarter able tests ordering delivery, offering platform Dash coverage and/or the to restaurants [ph]. we'll that Regarding this respective

testing Additionally, higher than of last with compared in quarter for sales to approximately X% which third our XX account year. of to quarter To Go IHOP's next we start year. first of is slightly mix, the Grubhub points more Today, plan the basis sales

the While platform still revenue stages, potential optimistic in is we're early incremental represents. this channel the that the about

Let's shift gears the in restaurants. running rate

leader on sharp restaurant XX by for July. all We're rankings Our focus hospitality family be basics. the new to building of success helped in and aspects IHOP -- has in by issued dining Restaurant operations consecutive News addressing years according to Nation's on by operational

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also frequency better implementation. to operations training teams to tools with high the well We as train to XXXX, our touch their people-centered and events, as they of the our meetings provide need increase franchisees in foster plan

unlock we'll business to and major continue and a further focus our have Additionally, to execution off-premise operational efficiency. practices on effective best

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clutter, existing value guests momentum. our new visits innovation, advertising a rebuilding restaurants attracting sharper traffic, focus to and driving going to enticing on more the IHOP's into are to traffic. imperative culinary ones we're continued effective through drive Turning proposition, To break from and repeat to

with introduced we culinary, Regarding marketing donuts, the campaign new a bold quarter. during toasted French all-new our

IHOP one multiple that by out creativity as guest lack of of $X.XX, a product caused just equities, compelling [Indiscernible] with popular the a of change combined Agency been Pancakes, our Starting indications named agencies guest will since the is flavors the delicious their Adweek, the introduction some has in core DrogaX in this this the was will to and positive inception. This messaging what with as country, we of and Age, To level. found beverages. this most underperform DrogaX leading part regarded consumers of stand in our assist we record. value, of which believe Year followed times by equities intent, While expectations. ad price cases, help garnered with Festival, each to and sentiment next a versus both brand, is selected better and us proposition combination the confident promotion our purchase effective drive communicate Advertising the to coffee breakthrough by offers Latte allow traffic resonating that and in new brand and point and as agency This available compelling Advertising restaurants. inspired Lover's are for resonate our new it our that Early clutter. the break this We're takes day IHOP's widely are across core the stand generating recently guests. value the creating firm value with we and into through creative the

the a of the guest millennial survey Regarding being strategy, where is. said the and most and adults element restaurant of factors friendliness. important Approximately XX% convenience our of final are when XX% availability, choosing

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XX globally, domestic First, which of I'd and openings. the like restaurants to new XX reiterate majority are our between previous of guidance

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as We celebration a on as November be XXth well expect great veterans. fulfilling way our to success to this year's thank a

that, for IHOP comments. in this are a closing the combo worthy turn donate momentum. the shared to Red, business wrap-up, sold we're providing taking with wrapped In every in IHOP traffic I'm and month our the approach $X XXth what's line heavy align the addition, our back confident future. direction an sales of & to To drive inviting year Global duty. the to to favorite Conference, Patriots recently where pancakes scholarships we're who've we're lifting Franchisees of around will atmosphere that our IHOP Franchisee the to college as cause. forward, Children doing system provide up necessary I'll our in to Its to Blue The moving we excited White warm very mission for Steve and We about rebuild enjoy With come Steve? the of of steps and guests his children announcing Fallen for we their Foundation. November meals. parent military call plans our the partnership forward. with is lost to

Steve Joyce

excited great with And about be talented going Thanks Darren. management we're enterprise, and Well, is we're a this seasoned company working into very creating team. to which things. obviously, a dynamic

business, have their to the best plans. commitment our and growth confidence who the franchises We in in have long-term demonstrated success

a work company. to return have driving to growth establish ahead strategies as both culture, of at a and our sales on lot a performance-driven DineEquity we execute of us, brands, sustainable We

I think As a I of second the add going to call, said lot that things we're quarter do will different value. on

assets adjustments company's feel the realize the open you to have. and that, tremendous up enthusiastic very I'm We you full taking opportunity to let's the about I we're that. it Operator? With potential steps that any some on give updates to vision confident to that looking have might in company achieve a questions We're for needs year. next to going and early the comprehensive we're our progress. going forward providing forward

Operator

you. Thank

And begin first the [Operator from now from question Anderson Instructions] Group. comes will Stephen question-and-answer We Maxim session. our

Stephen Anderson

good Yes, morning.

Steve Joyce

morning. Good

Stephen Anderson

we've so that I from pin taking of improvements, quarter. as comp the the effect third ask, in in quarter improvement had? down you as hurricanes at Certainly, the far the can seen well two the just you want much saw we've how look a to

Gregg Kalvin

our amount Hi, stores relatively a restaurants were in the pretty minimal versus to Gregg. The quick back there's reopened. and was the people coming closed of is time this they reopened usually after bounce down businesses. were when The out effects

line on for minimal sales very the the So, quarter.

Stephen Anderson

up Okay. late looking and dining. gains night saw casual saw But big some that, quarter, And Texas. to on in we last Florida at out that track fourth we X.X% going come

gains of quarter, the just hurricane traffic the some attribute want and from sales you of that recoveries? see to in So, can the I

Gregg Kalvin

No. also Actually make October. the XX%. value, restaurants better of and now really I only the positive we think restaurants. our in advertising, are But that represent brands providing we're what think, both approaches to look, about we're running where year, doing capturing we're the doing serving And our we to marketing, the interesting the we're attributing feel some with customers' better better but but we I food interest our what happened not pretty does that we working. in October brands, it -- were think in is is

going positive benefit making So, we doing these we that's a think anything it to from. obviously to were that things difference. in attribute are we're categories positive But mostly

Stephen Anderson

you. All right. Thank

Operator

Gallo Our next from question C.L. comes from Michael King.

Michael Gallo

echo Hi, to to in see early it want good here. positive I just stabilization, good of morning. signs the game

Steve Joyce

you. morning. Thank Good

Michael Gallo

for morning. but on time. unveiled been the your companies, be you've just for Board vision these I still Stephen, about of Good know you this be to may think some this each when is

just the ultimately any positives seen call on you thoughts brands might thoughts being negatives Whether thoughts together? to goes having too and brands some of point opportunity being Thanks. you'll to maybe an sense together. with level early the be them Don't think have answer, securitization in from on away spring, helpful. but it And benefit these there whether split high at some high-level Obviously, You've these the it's from on together? apart? make some would benefit

Steve Joyce

at It's all. not early too

number something. balance let over to Franchise it. us scale, This to not is So, unit is costs profitable. expect larger that a can you business tell grow The allows you me incremental shrink a is us a entirely of you Scale scale. to of scale value business, units. almost business your about

Michael Gallo

delve bit. bit in just Great. year the said on of little you IHOP And to Obviously, challenging then some little to more want a years. a of relative prior a

the Applebee? effective last campaign. at it the since how success You've regarding from advertising you campaign it's gone to look changed I category just same a might Go, time evaluation long the ad seems To September, underperforming. Thanks. as the had that for promotion wondering seems some And is was whether at outperforming you're but it's undertaking it that just you the

Darren Rebelez

to a that. We're really focusing of on positively number drive things

As mentioned and I brought with creative ad arguably then, years replace ago, made in a the on, to agency Officer Chief a went quarter, change just Marketing last country. top XX to role. our further who's we that mentioned, minutes we nearly got our as And few of experience I've someone in agency the in

really and changes in a we in of food. got to agency top-notch we great restaurants. more we've So, we've all like restaurants highlight our We've our what done. of atmosphere needed a contemporary those restaurants service new great remodeling lot a creating and felt and and We're that's got

in results that So, we -- absolutely quarters as expect result the see coming of a those to changes. better

Steve Joyce

And on, from the going consumers provide all drive things value ever. focusing than going is loves. what we've to we is, we we're are one of think to which that heard those think and things is already our greater everybody brand important But that we're

concept we're that see in of communicated should a that to think well way reignite just this that's fitting value so and to levels to starting it already. going is we brand, And this brand at results be

Michael Gallo

Great. Thank you.

Operator

next question James. with from Vaccaro Raymond Our Brian comes

Brian Vaccaro

you, and Thank good morning.

sales to but mentioned reader hear October, encouraging it's And at pretty I traffic promotion. few Could color promotion profitability that perspective sales dollar you and any past May months? on the the So, versus performed? you October some Applebee's. six John and especially be three both to the on some month to provide how see in didn't the attribution rebound initiatives, a during of

John Cywinski

Hey morning. Brian. Good

from lined is expect early delve which we've advertising, combination basically on October, food a side, fronts and the the for previously for little As much our really here. and Suffice this going in the with new is and of initiatives competitive all good by to and frankly, all formula quantitative detail into but early up beverage traction on it we in neighborhood work, is the as hit say, look these eat resonating all not to both I'd of -- reasons, resonating, qualitative beginning success great to, used our that to any in this XXXX. -- just QX. surprised QX around love a we're we're I'm value proposition

resist reasons, understand disclose you but know I that. I'm Brian, detail to temptation for the any to So, going competitive

Steve Joyce

But there look, that say, contributing to we also that are factors three change. or four can are

first advertising, what so, the and more in more into is $XX is doing all, than we're we've offer of brand. restaurants. sold as I John as And of in, well. And these the driving X then resonating much we've program sold clearly promotions successful history people had than for That consumers think, the previously. mentioned, with We

can formula for of all positive, us us expect continue to that putting think forward. can you that, expect a and going you that we is sales growth on So the sustainable all

Brian Vaccaro

the Okay. be disclose Would your willing you mix sales quarter? alcohol to in

Steve Joyce

have look, both are, we disposal. at food that wouldn't it I XX% pleased And is Brian, my where range, alcohol any XX% the detail that. even on I to honestly generally on beyond mix alcohol disclose But Frankly, and in an with our front. speaking basis. annual we're wouldn't

Gregg Kalvin

think for the think needle. Yes. we And bar move that opportunity we by we an because way, is the us, can

Brian Vaccaro

Fair Another of look weights How third significantly is be at quarter right. then be also going down advertising Applebee's. perspective up comparison October? quarter, would the also, All pretty And to in year-on-year? there mentioned enough. sort the down Was And year-on-year? did quarter, were any the fourth you helpful. weight in of weights it part that normalizing that advertising

Steve Joyce

Brian. Hey

to the don't way Again but kind I is into an increase those stable. it of probably best you anomaly. it. nailed back call was bit we It's XXXX. forward Year-over-year, to comparison. QX issues think categorize have year-over-year, an a of it. wouldn't QX normalized I year-over-year moving

look So, very forward. bullish as we

Brian Vaccaro

pretty guidance. lowered to even that cash help an greater the shifting basis the as versus profit. down year-on-year guidance you debt Applebee's drill The in seem, the franchise sort and implies on And decline; franchise segment And the would royalties cash it flow Can parse a maybe of between collectability right. the the bad quarter, out reduction All there on segment fourth expense? in down the profitability. free you it gears adjusted meaningfully and parse

Gregg Kalvin

it's our on because either a first not whether you This collecting if all will, or the bad is Gregg. way, it to it in They're effect it's place, debt cash, collectability. in relates

is quarter. to the we're year, revision rest we to mentioned comfortable the that going cash weighted -- adjusted free the on we're the So for that of items rest marketing additional in of basis of some plus where cash flow those what have are projected the a fourth year. two is the our what's with the for Those guidance, it in items driving spend

Steve Joyce

in weights. roughly they're equal And

Gregg Kalvin

money, the time, to long a that's and and this business receivables tell your in to Yes you have franchisees can doing. make improve been is your I Having essentially. we're collectibles what way more this,

Brian Vaccaro

Okay.

clear be that. of to Just

I ad spend? that $X fourth NAF the that Or be going the than third million think expense the in to So, million of will spend was in the Applebee's $X that you expense, be the franchise more on just said on that [ph] quarter? you're contribution it accruing what cash is in line, quarter, also because

Gregg Kalvin

contributions Our the in also. $X be will million quarter fourth

second of the million $X whole for year. for the year -- half So, the

Steve Joyce

expense But not that fourth quarter advance. part is an and part in There's advance, expense.

it money spend like our franchise the expense. hit you to million also we're the be some from spending will incremental the will. fourth through for there advance said quarter, go cash normal in on rates, will I statement And earlier, $X income marketing run So, fourth in marketing the if quarter,

Brian Vaccaro

I a follow-up Thank that. look the this guess, units, offline on cannibalization? been trending, the then maybe Okay. of on question your has part IHOP ultimate best And X,XXX you it; you unit you. the guess the domestic? on of related comp is at see nearly system the few most at total in the I'll while unit think those thoughts latest right. piece if weakness know net next last given And last growth opportunity? on intensifying of I you're growth. I IHOP All at years, domestic do the unit to you growth year And where the outlook.

Gregg Kalvin

of Brian. numbers. say, correct just well, one I'd Yes, to your

We have around X,XXX domestic restaurants.

But So, And from franchisees ones absolutely not that were that have a you citing. are to challenges grow. than development. less come we're more the bit Because -- believe driving seeing the are the comp little our cannibalization. that we X,XXX we really room

cannibalize themselves. to inclined less they're So,

growth good seeing we're there. So, incremental

our it's IHOP that they not lot want And channel of is other a areas really gives telling upside think that But the penetrate guests access really some traditionally nontraditional channel. us we that us allowing we are to to gone the after. brands. The have

So, bullish growth without and we do existing restaurants. we're we cannibalizing can on our -- our forward have think moving pretty we that

Steve Joyce

that IHOP think is it got also more is, importantly, long globally. I runway think incredibly the about and we a -- for guess we've So, brand domestically, demand way we but in

almost just is interest there every continent. a in So, -- strong on

about in many deals. we're several joining And I've in is to you surprises the demand got so it's IHOP at since for this this company, nice don't have to going on talking brands, our point, of the future particularly seeing but see you're us discussions anything internationally. the tell We one -- multiunit

Brian Vaccaro

All right. That's helpful. Thank you.

Operator

Morgan. from Our from Ivankoe comes following question JP John

John Ivankoe

obvious, thank success total shareholder you. made There's return. be the driving comments capital business initial dividend that it's Hi, some of this going the To to state and combination around was a of appreciation.

extremely balance year's very, income net to some dividend the on is what sheet. is, close very Your given -- but have high, cash you do

you by can imagine to in itself. the value also a imagine driven equity, more top of this, business So, be the ways in dividend you you drive short-term there's your -- reinvestment and can the can meaningfully I situation would long-term where different be to that to basically mean order dividend the you TSR where lower allows

capital and So, that's up, obviously could that I and measured, dividend return, by there want be that. between different brought was you ways elaborate hoping very to on total that you you to since appreciation. shareholder's get

Gregg Kalvin

is John, Gregg. this

evaluates we deploy the management an to and Board every But payment -- it's the careful thoughtful our early the next year. a evaluation next, how paid of And capital. being consistently, done rate always quarter. we've dividend to As have dividend existing that as

to sheet that half or probably is think I balance -- more advertising is we our on goes, related of about money. cards cash the as far gift and As we've -- our cash said

$XX million is So will, purposes. million that it's way there's a here while. are specific the $XX free if will, or you up of about it of the tied those probably funds, probably in quarter, cash, for really of -- that end there's rest for been And third if you at the

half have And we will and amount is dividend a what -- said, is for not it in at is. as any quarterly. that. is, of time huge half there's be about point at So evaluated that the cash I've our disposal But

Gregg Kalvin

reevaluate by to company's performance what we have shareholders. now obviously right and going this We team's we're to I it. position. our with and give -- to continue performance performance don't this So, happy measure we management my

our that to are what efficient we can going our we is But how of most reevaluate to deliver to do in either shareholders. how so you going resources. going model, we're And do are we're value -- terms continually to long-term, the company we on, allocate we count

change bunch are things now, could things tax lots environments that with of the where we change in but you satisfied now, of whole to what's update right a and bill, who our where going. there's happen knows on we'll right where we as to we're are outlook, think different continue going So, and on the mix

John Ivankoe

and of where will just sense franchisee of profitability your XXXX, franchise And be how to? over hoping see on influences like then franchise of secondly, a you comments looking making your talking at that whether they're the costs Thank that. industry And so like the you're plans, pricing down going to, for certain structure in the a they of ability a just P&L up on years, the on XXXX or them to you be for depending they aren't XXXX Commodities overall problem. actual the reinvest their path may at are taking the community commodity. doesn't in It's your used would to that labor as markets lot willingness did couple they're to to levels middle of they're community where kind get cost hard have power, their that. and even up the

Gregg Kalvin

Yes.

XXXX -- voting the during questions our our some pretty Applebee's we've the on We working at that on asking. convention, actually So, optimistic of general number just a folks of franchisees. things -- and several session, we had we're had got front. about We were think we're

And you do well. them that do One do to XXXX? how their was, was in response to of which going we're uniformly positive we're going think

some is that to around around are efficiencies the cost Pricewaterhouse costs achieve labor aggressive efficiencies don't are drive that the We're down. doing. study we We we're trying the there drive benefit mentioned to positive not side our was things because you're target final. and We're of trying very on So, yielding it's that going think we're to the labor earlier. think right, We've point, to for results, got have that but -- at already going we going And study. well, a that's this yield buy it. know we

people big that but get any those make -- restaurants, into we're And more traffic. -- to we we're And is, so drive going drive that. than to thing other it money. And if doesn't the going simpler

John Ivankoe

belief casual two is in your traffic belief define conditional however Applebee's just you grow points. the XXXX, traffic that So, and related bar One, dining, want the industry that on drive XXXX? in drive that to it,

Gregg Kalvin

is we Look, in we're generally not then industry. but drive the I is we're going think going to -- if we're going environment, to our industry. not the the the plan a cannot outpace to outperform to But reasonable follow industry, industry --

wherever put us industry; going it. So, you're above to put the

John Ivankoe

Okay.

you competition, have opportunities and And feel when do you and or versus for ticket Sorry. on do about you final down No, to average at XXXX? up your you question, thank then franchisees XXXX the average in clarification. menu, that your And a look relative traditional the ticket? average non-traditional how ticket

Gregg Kalvin

We think we're drive greatest doing. the brands our that's value more consumer, in what opportunity for on is to both and planning

John Cywinski

we when are quite look this frankly. Look, we're check than much John, is XXXX more John. traffic we at on growth, fixated and Yes,

Darren Rebelez

thing. now. alignment what This more more is I'll Darren. proposition, we're value working got reiterate the our same sustainable franchisees on We've right focusing on with that's around

John Ivankoe

Thanks.

Operator

from comes Anderson Maxim question Group. And final from Stephen our

Stephen Anderson

Yes.

ad want can whether -- you to -- you for about contribution your about about any And additional contribution as follow-up see you XXXX, on fund. comment just do to think So, you comments had you'll the XXXX?

Gregg Kalvin

right We to our we now that We carefully need overall. franchisees the business assist give guidance and This is XXXX. don't for Gregg. evaluate everything

wouldn't we we go out with that guidance, -- on right we so you But now. will that know. And when comment will

Stephen Anderson

you. Thank right. All

Steve Joyce

Okay.

interest. you participating on So, for Thanks thank the for call.

sharing very obviously, more where headed. over we're the where next Have several excited quarters. day. And with are, you forward that we a We about also, but look great we are to now, importantly,

Operator

and participating. you Thank this Thank you. Ladies conference. for gentlemen, today's concludes

may disconnect. You now

Dine Brands Global (DIN) 9 Nov 172017 Q3 Earnings call transcript