DIN - Earnings call transcript Q3 2019 | Dine Brands Global, Inc.

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Operator

Hello and welcome to the Q3 2019 Dine Brands Global Earnings Conference Call. My name is Sheryl, 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 [Operator Instructions]. Please note that this conference call is being recorded.

to may call begin. like Diptee, to now you sir would turn over the Ken I

Ken Diptee

CEO; Jay Good third John I’m Joyce, quarter and Cywinski, conference Song, morning, welcome call. joined to President of by IHOP; President of Johns, Dine Applebee’s. Brands’ Tom and CFO; Steve

our I Before remember the Forward-Looking regarding to call Harbor turn Information. please Steve, Safe

different factors, context During Release from information results unknown risk, and forward-looking, involves the known actual implied. or call, management expressed factors, today’s filing. in the and those may are which other Please discuss to forward-looking Press cause information in XX-Q detailed be of that is the which may uncertainties and evaluate these the

We are and also certain of today, to website. statements are to non-GAAP assume financial forward-looking measures, update Dine in on as and also these release may our press which refer obligation The IR statements. Brands described available no or supplement

I call will over With the Steve. to turn that,

Stephen Joyce

for you Good Ken. several strategic you Thank challenging we objectives have industry. during report quarter business joining morning I’m achieved and a and thank pleased to the that for for today’s everyone call.

IHOP’s expectations Both sales of we the Applebee's with performed last were revised the quarter, XXXX. in strong slightly in-line third comp the quarter. promotions over brand while quarter cycled communicated in that positive third

At decades. sales increase three back highest were comparative worldwide. our the the meal, over viral to brands platform IHOP single our IHUB Tender we last we this two steakburgers which brand's imply ultimate went that changing Notably and Chicken and tweak introduce popular name You course launched year brought with to the our and new Riblet All to Can Eat Applebee's, quarterly in contributed

and noted, a face trends their will coupled brands have of respective John industry challenging Jay provide little this quarter difficult others later. traffic comparisons year. on details performance to Both the the As during the with continue

history. in We multi largest unit deal development are pleased we have IHOP's announced the

with further will restaurants in XXX conducts to exciting XX Jay partnership. this We Ohio, which on have in nearly TravelCenters businesses provide Westlake headquartered details of Canada. plans IHOP develop new America, and States

financial our of same to XXXX. improved to the Turning compared adjusted quarter results EPS

We consolidate reflects asset in our improvement which to also adjusted of stability model. the light continue see EBITDA,

of cash model substantial to flow. an G&A, In nine-months generate of the attribute ability cash we is quarter compelling us last $XXX free X% is year. the our compared lever adjusted Another million business important third declined approximately flow. to XXXX, for generated approximately free in which the first

to We will our manage continue closely G&A.

growth of prong XXXX, we've focused Since joining on strategy CEO on focused multi returning we've some sales insights consumer sustainable investing strategies, competitive assessment which executed and a to in and to develop drive the that as better a Dine will end, data These in greater understand in those Brands maintained positive landscape. a Company. discipline To include analytics guests our traffic. and

in XXXX credible contributed pricing. broad which to excellence scores to overall Culinary our a achieving restaurants, higher food satisfaction our array innovation menu and Operations XXXX. provide with of attractive and at guests guest between

our restaurants. in changing development of consumers. preferences impact our our design footprint high to create Remodel domestic Strategic business in atmosphere ever programs, Growing the to warm a off-premise which accommodate initiatives inviting and expand locations.

our brands, to leveraging engage off-premise. We are also restaurants how improve technology guests or enhancements with in either

While, results. our progress produced has positive

not are complacent. We

categories the harder our while even working to committed to insurmountable strengthening in operate, which are brands. we build We leads in

top one based the sales to chains. system nation's on IHOP restaurant of the for casual XXth ranked like record XXXX. Applebee's long track news dining dining wide highlights of was one that would I also ranked family domestic in number year, for being has by the consecutive a

new focusing on top to franchisee tier health two and attracting financial brand's franchisees. over the years, the brand our the Now past to Applebee's let's operators improved system. while turn relevance briefly We've enhancing

In our the to the in of a domestic fact, system. testament franchise This evolving these rank of is performers franchisees. franchisees, highly currently experienced strategy top the portfolio among two by adding

sales in to between and XXXX contributed overall comp today. approach This the improvement

a third As of lower the by Dine bad record XXXX, a amount ago. end to of of quarter significantly years debt Brands result two compared the

provide to our cash the financial positioned franchisees to closely leading continues model on produce gain they brands monitor industry continue strong our environment. made. are we health in are Tom franchisee with that our have close, franchise the To adjusted performance. flow free We and of pleased and progress competitive color well a share to will more

Tom discuss turn the over Tom. results. now financial call to will I the that, to With

Thomas Song

Steve. you, everyone. Good Thank morning

have for we adjusted delivered pleased difficult year-over-year EPS and we that EBITDA. report to comparisons adjusted and very While last I’m year, improvements

repurchases. third on capital quarter later. the relative more the I compared adjusted was our the through allocation to same EPS increase XXXX. for to shareholders share EPS result of of color quarter $X.XX provide return capital $X.XX due XXXX, earnings to to and of a will For The in adjusted little stability commitment was

Turning fewer restaurants, XX due declined our franchise to franchise acquisition units, in replace resulting which due franchise gross with to to effective in revenues decrease the sales. X.X% include franchise our Applebee’s of Company primarily operated operations, royalty profit of being a impact

did and the which a decline cash contributed also upon restaurant revenue recur decrease decrease Additionally, collection offset in growth was year domestic in This the in sales revenue. decrease not IHOP franchise franchisees. partially the this by franchise to top recognized

Dine’s IHOP advertising fact, In now excluding Company the XX% looking sales, and mix of at revenues constitute operated generating when revenues. fees revenue profit QX

I emphasize represent is from franchisees, It not I this provide that does data doing and surveys data also franchisee submissions not data like independent citing, reputation. subjected have the I’m our financial for comprehensive At been based on into Dine. the will time, some primarily to which the to so, insight in financial would

tracking performance. Four-Wall financial and both For Applebee’s have entity franchisee we been level

X% driven in our Let’s improvement start to XXXX increase the Four-Wall. saw was margins, trends surprisingly by looking XXXX When which with we from not at comps. in significantly

including slightly for XX% cost system, operating goods flat both While expenses cost that range. decrease profit Four-Wall double-digit low a approximately starting remain in of total averaged labor for the margin

system stronger first compared top XXXX. six in period than the XXXX opened for over on Importantly, to same XXXX the up slightly wide AUVs performance, of months in are performance, remaining X% stores

Food last slightly in half year. XXXX the cost period of first same the versus of improved

during in Four-Wall this down but period EBITDA were However, paid, provider almost range. the low X% margin margins entirely by still double-digit service delivery in was fees increase EBITDA the

this that profitable with note, John designed providers contracts we with service fully As delivery addressed for will issue make are to delivery have new franchisee.

have since favorable XXXX. basket respect leverage, With for X.X% dramatic Applebee’s market cost goods by for to the seen is improvement approximately to entity XXXX. debt be we expected Importantly, of franchisee

XXXX approximately times the had but three had back returned a three to half more historically, leverage. range debt with and in averaged average Looking XXXX, EBITDA normal a then system significant in times and variability to

when years, respect past and costs With IHOP, to the have IHOP Applebee's lower full the lower half to to XXXX period over XXXX. of higher profits comparing or in we labor had franchisees of same XXXX few first with very When service other the food either seen stable compared margins Four-Wall restaurants. actually

by to The points of favorable is approximately expected goods basis market for cost XXXX. basket XX IHOP for be

sales. with franchisees and including our continue improving comp work We improving profitability, to Four-Wall

other at I when exceeds brands IHOP consistent data showed own other set competitive franchise want franchisee national our across all with publicly to similar and an franchisee as leading the of Four-Wall brands and level to their Family brands, Finally, margins, industry are profits franchisee highlight profits traded compared study that Applebee's Dining significantly brands.

Regarding G&A.

back to Dine Zone Now financials.

As us. for G&A is mentioned Steve an important lever

to for $XX.X was the third million quarter G&A decline million compensation lower lower The year. last to primarily and $XX.X Our due P&E the was compared costs period of for same expenses. year-over-year

continue rate inflation. to diligently long-term will G&A and growth expect the We over with manager consistent the of modest

rate, the of third GAAP flat XX.X% to year. for rate effective Regarding last tax quarter same XXXX the our our was period of compared tax

to cash Turning flow your statements.

the franchise ability cash of adjusted advantages and generate the to strong highly flow. of free our stable One is model

the XXXX, XXXX. $XX same nine-months adjusted For free for compared the period million flow $XXX cash of was to first million, of

EBITDA quarter for XXXX same adjusted of million quarter $XX.X to million third for was the last the $XX.X Consolidated year. compared

quarter EBITDA operated quarter Company advertising Excluding margins from improved third in same adjusted XXXX of to our the the results, last and XX.X% XX.X% for revenue of year.

priority. remains top to Returning a our capital shareholders

This total exceeds total cost $XX quarterly We XXX,XXX dividends comprised repurchase have and returned million. at of quarter of the entirety third million $XX.X a in of a of alone of cash approximately in we was million amount million stock $XX third quarter. the of in common XXXX. shares combined This repurchased the the our of the $XX

some our I would for overall evolved guidance. for quarter, performance to other highlight the release XXXX. details. complete These among see financial like performance Please has XXXX factors, updates our outlook of and our our press third during reflect, revisions. the quarter to fourth gears Switching

of the domestic wide We X%. restaurant comparable X%. sales X%. while Applebee's positive positive expectations between X% zero and between expect and X.X%. to and compares X% between of compares positive system and same to now This positive domestic performance expectations negative IHOP’s expect to This positive zero We sales range system between performance restaurant range previous previous comparable now

XX We between previous be of XX restaurants currently compares expect on to net the are of to to This between majority openings. and new our domestic developed expectations franchisees XX globally, XX. which expected

share of be to adjusted the expectation to expect to Applebee's, globally, that between This compares previous now and be per per of we expected share For to earnings diluted share. XX range per between and now $X domestic. which We $X.XX to share. This XX $X.XX expectations from for are previous closures expect to $X.XX range from units. per restaurants majority share XX XX the compares per

the competitive To comparisons. to restaurant close, discipline through that through very a of guidance own I'm unchanged EBITDA pleased course our let the costs our able same been we've and with margin remaining we period in maintain have business year. difficult sales

With over to turn call the now John. that, I'll

John Cywinski

year. QX lapped record and highest sales Applebee's QX with Tom everyone. our from is our QX. by we of identical good to dining X.X%. reported in category restaurant In-line expectations the decline, X.X% increase XXXX year, in through posted performance the comp as XXXX. settings Thanks, last year-to-date sales results comp casual comp morning The category brand last sales After a significantly on any outperforming average our

that These the now our is you. seen years With are Tom QX the positive XXXX highest X.X% XXXX. full-year very hurdle we we've plus in given context QX that guidance challenging our reflected said, of for just two outlined early QX a XXXX are expectations Applebee's since expecting comparisons for and

highlights there brand. forward, I would Applebee's three moving are the milestones like important Now to for

XXX we space towards marks our return the of with XXXX normalized to bring end a approximately restaurants, a that XXXX of less the closure rates strategic low volume initiative XXXX. of the than base of restaurants development of certainly into while XXXX three-years - us X% will XXXX First close completion selected underperforming current and

XXX existing about underperforming representing we've This has introducing opportunities Additionally, years, exit experienced restaurants. transactions well franchisee past completed new of over the creating the operators, system franchisees. several growth as the for in portfolio several franchisees eight to while as deeply evolution two resulted Applebee’s and

Perhaps first marketing a plan is as significant most one in importantly coming are for and years, up of stable here close well far as in material the have we royalty This no a XXXX. predictable as of or more stream, ensures the a advertising QX. fully delinquencies, development, X.XX% that three income time funded

some These for is milestones it in had it we've brand quite stronger means without the years. bode over challenges the time the few past tangible constraints navigate has very Applebee's future, our well been than

This around franchise guest value and innovation, evident our partners month's last reduction. restaurant included annual on-premise where was our plan optimism we excellence focus in plan. on P&L cost satisfaction, our aligned conference XXXX and and strategic This with

guest see likely progress as satisfaction such to and attributes, brand affinity the consistent and to continue On brand front, likely we to visit. recommend core

X.X% start percentage our metric little with fact experiencing all proud are high track We of to currently very end our across the the a that the we reduce the also and from this an XXXX of problem of variability time franchisees low have a X.X% guests very of important at system.

renewed commitment Applebee’s, tactical point steady our with and While of you our franchise value see central perceptions for to plans hold as was in moving discussion value I continue our a mentioned this money call to a last will the forward. for partners

have be up and positioned On we profile the given to than orientation engine anyone the the fact QX continues in Applebee's for brand we of demographic on-premise as or top the increase, XX.X% we value front, growth sales are important and locations category. last the believe in on our CDR variety, year's were best else useful menu XX.X% that on-premise more

when accuracy our To third-party promised. priorities, partners. and than Delivery being order go its off-premise now execution XX% off-premise and XXXX currently Applebee's to multiple about two top offering well improve website, balance continue our as restaurants our around delivery of our mix through order of with represents the ready delivery through our restaurant franchisees more mix the as

contracts for are also Applebee's placed XX% margins successfully ensure moving delivery approximately sustainable total, partners to We've our In refined now third-party our off-premise forward. digitally. of franchise orders

nationally As business, off-premise layer I been has represents have aggressively we believe to as its currently plan Applebee's infancy, incremental while mentioned begin opportunity we the and in sales third XXXX. activated in of previously, our catering significant component leveraging a this catering for

partnership to Shifting we beginning case overtime, refining and established enhance been meaningfully believe very We've as technology. in our in a introducing we well. deliberate by Tablets our with methodical experience implementation XXXX can We as this guest franchisees. in Server for initiative business

enhanced benefits attentiveness of perspective, there from ordering, to From are in and point due a and savings perspective, satisfaction are operator associated of server more guest there very are labor From terms well proper speed, benefits around with deployment, of perspective, flow. sale as as a a tips and efficiencies order meaningful kitchen ease an engagement. there clear balanced

also with a when very throughout as in receive to captured be Server high particularly all fashion with cue for XXXX to we've And labor benefits to more Tablets. and revenue markets this and likely first cost deploy And contemporary data Bottom-line, beverages the far are in-line sequenced is XXXX it. entered experienced brand. we plan orders,

of year, year, and publicly Dougherty I'd New Roche awarded deserved. of of Group Long out being Finally, as Applebee's as Jersey well being franchisee Applebee's the well Island the Philadelphia so like of recognize the Enterprises awarded for to the out neighbors for

turn that, And it to like I'd with Jay. to

Jay Johns

quarter very very are Good the this brand Steakburgers we Ultimate the as of platform consecutive positive you, XXXX successful Thank over third with XXXX. morning, slightly delivered John. I'm everyone. pleased of growth. the marking IHOP of seventh sales positive comp quarter in for rolling achievement launch sales

in third direct And quarter work strategy longest grow represents we've The three a our years. against our sales the done sustained performance of and defend brand. as positive to reflection our

calls, prior future. has growth As IHOP for will aggressive to on continue foreseeable upon stated an plan build the that

growing strategic each and Our role in serve continue a defending our the to critical playing four as roadmap brand. initiatives

restaurants, As driving reinventing the a great reminder, these are where traffic, and guest being guest the running experience. is

the the that are initiatives While IHOP's and critical trends priorities each category’s labor strategic the traffic of important most success, and of two challenges given franchisees. four facing

some growth. provide two foundational profitable me let drive on Now priorities the color to

attract is running defending first encompasses business. great focus frequency on our restaurants. keep our core current The sharpen guests, This guests. A and operations helps us new drive

best-in-class year. managers At year. the new more you training X,XXX Through end out the certified down we comes manager essential, our is program program restaurants. in is this to of certify Best-in-class a talent rolled of than why end day, operations will by having which the next this great leader

the improve the also execution for every enhancing experience Equally every important day. back is while recipes and the the front and simplifying of to the greatly guests, our guests in house, core menu both our

and/or restaurants, to viability. address sustain long-term taking we steps underperforming to Finally, markets franchisees are IHOP's corrective

Defending the guest second driving business half order to strategy only our be in the we minds our path. Everything and of in the on core is their In though. brand, grow we do to and is traffic. both priority foundational the long short-term about need

our to is strong, and proposition. IHOP change. having to One we there's to the This that a than steal a already to is off-premise. category. both was more proposition, not XX are this and an and competition, outside within the billion multifaceted value plan grow traffic restaurants share going grabs opportunity Abundant we for believe both meals which in way substantial value do up and There from is by sprinter

need more. we However,

continuing multiple to our approaches and what to for as and such that points guests during deals our are with non-peak hours price test We franchisees. see resonates profitable are

As part part we buttermilk, day of crispy menu. expansion a chicken continued new our introduced strategy,

which for this the $X.XX, amount over of doubled For we chicken - incidence offered abundant pancakes value to items gave sustained new combo and time, the our sales a menu at launch. and peak guest times crispy the chicken ideal chicken have three our combination pairing prior by and limited sold of a

with believe the new most also Ultimate these requested of innovations current for bun new both quality menu gluten-friendly items of and IHOP marks and addition made gluten-friendly items the looking we waffles for another items to without milestone of allows reach gluten. great new guests tasting Steakburgers. one for Gluten-friendly gluten-friendly The and menu brand our along items with introduction the like pancakes were

Switching to convenient our gears, to guest.

quarter We continue continued sales XX% key to-go in growth. a comp X% sales quarter and increased quarter, of sales an off-premise makes of up of is Today, business third for to traffic. in the to XXXX. third XXX improvement our in solid the over Off-premise basis the than primarily by areas more this compared see traffic growth approximately driven a third our little points total

Currently to of offering sales, restaurant is delivery goal ramp business the just continue restaurants of to an to immediate of off-premise delivery. four year. up we that least Our to also restaurant number the sales. participating roughly provider. one over a This accounts with last will of reflect X,XXX our one-third total Delivery grow XX% participating at service to-go increase number in times being of the of

the the to sales share our opportunities by XXX with expected another traffic, we restaurants grow refine to year. XXX the from platform continue Learning business. and in initial and we of additional this nearly IHOP channels catering Expanding XXXX. the in restaurants of very QX, end drive participated At rolled steal creates will grow to launch, end our our

due I top business, of into our made. to will potential as CapEx. about are early for we additional stages this imperative is mind provide still drive optimistic is IHOP in guests update progress Although the course for Keeping very

foods now offers our consistently new and exclusive experience. show My cases guests to includes Our HOP, an and

offered from partnership members lifetime A&E we experience restaurant only. a In in created with Network, IHOP IHOP tiny a a up and dining once

to E-club, continue fun deepening engagement find e-mail creative with our will We current subscribers. for our drive our ways club while sign-ups to also

places in is the IHOP and More drive final brand grow more to push traffic. the

As Steve XXX over across mentioned, almost years. centers announced the five U.S. IHOP we TravelCenters today restaurants next to America travel with of in a the deal open

mark with the go The be plan. full supports on major the of will and larger service deal and largest brand’s visiting of enjoy single TravelCenters TA America history menu IHOP’s IHOP Center full development deal in Guest XX able order our items the the to restaurant. the development

To wrap up, are IHOP’s we executing strategy, strategic delight that our and with performance, freshly pleased plan our key food I’m which has guests. our as overall of The growth. our against a roadmap initiatives fun our key is creating served cornerstone beverages made for

great Time Women Our with right is tie served in guest paired menu environment enjoy a strategic to offering. offers and more we defend can value Having by are way meant innovations outstanding more the brands. to the core IHOP the best operators food

on To grow and the brand our lunch, expanding building overnight dinner business we are business to-go new improving restaurants. significantly our and focus

with efficiency. and experience is guest maximizes this restaurant of All technology the that improves supported

approach this great stated, as confident we are We are already seeing results.

turn with for that, comments. closing I'm going And to back over to Steve it

Stephen Joyce

a adjusted deliver Thanks, Jay. improvement To EBITDA adjusted in to recap, year-over-year EPS challenging we and continue environment. in

the year-to-date. to generated million return through flow enabled and us significant to compared free share light the asset quarterly same of to XXXX during over cash period our shareholders $XXX business year. first model This last nine-months growth repurchases Our cash and dividend

gain value more deliver our in in have positioned by well are long-term as against to strong be plans to place confident remain we prong strategies, shareholders. value multi which the I share couldn't to execute we brands propositions. Both underpinned

the Now, Operator? for questions. up we call open will any be pleased to

Operator

question first you. Wedbush. from Thank Nick Setyan Our comes from [Operator Instructions]

line open. now Your is

Nick Setyan

I number and the comp is, the franchisee to comp trend for XXXX the year October can next ensure learnings you comp and stable at all question mind are around of the everyone's stabilize on apply the that thank in and I this you we year a how from color guess some Thank one guess probably profitability. what you to the Applebee's? from improve

John Cywinski

to met bit of the with John. value we Hey to and referenced past call. our zero recently those our aggressive profitable. sales. value value, is in perceptions drive few But this Nick last be traffic tactics, I value franchisees that a engineered on When this incremental very would and seeker in on that we specifically months,

aligned of we We kind moving system. pruned are I up that mentioned, on as the forward, also

are underperforming So restaurants our out.

this Our of you our example months And is market approach, debt a franchisees. in Ad aligned of upon wing be one we ago example a programs bad - kind short-term whole, it's the program non-existent. may our and fund the few essentially XX% current a see that, but our would of with tactical

Stephen Joyce

answer opportunistically stated, seats higher dinner, of I we areas that as really we the lunch, fill business think side question, to want on we our to overnight. the have we where

in We we to are that. continue very strong breakfast, want

And We help working great I family innovation on period. in items fun will and and bringing during work to us especially breakfast fill keep got we've pipeline. seats think new value our on to value off-peak

Nick Setyan

to a spend Was spend on spend seems the of relative kind is do IHOP ad what Applebee's in may I down. is been into XXXX year-over-year it what then back XXXX? in when X.X% up advertising I the then, it expectation QX? And year-over-year, Applebee's expectation at the at And because have and like advertising

John Cywinski

the half. favorable ago. it’s versus half is year our little more again. favorable Nick, a QX And than is of John kind back front

of I TRPs so of moving rate very XXXX. commitment by dollars to operating mentioned quarter-to-quarter in of debt, model get a forward, to more you'll predictable X.XX% here bad run absence the the and see a And flow and of balanced virtue

Thomas Song

well. this a of details Nick, as is Hey just Tom, couple

QX, as for boosted franchise at collections QX and XXXX, well mentioned for as in remind comparison, I ad both last prior up fund that a while everyone both and the rate fund is this you had you year Applebee's to did want some revenues what XXX that fund You QX have ad year ad quarter collections.

bit little fewer offset, restaurants open. you so, was yes, that a had And effective

takes and So there. couple of a puts

Nick Setyan

plan when with in the And company disclosed? stores margin back the D&A, what four-wall lastly, forward? the EBITDA what's add operating going guys the QX it. you the then that also, was margin versus Got And you just on

John Cywinski

the with ownership. start Let's expected longevity the of

our when we had. they view we didn't those rate to restaurants any was continue bought than allow it, As wait to want to said further and we

them performance system. stepped end of we top and the the now have up of and moved in So the quickly them bought towards

our we're view is of long-term obviously a not So owner restaurants.

And strategy as high looking with we those franchisees our in with that stabilize, feel strategy. restaurants to so would system. we interested would are right exit the in to we And an that begin the hopefully we've fit begun But franchise is position, performing will want the us. in for bring and exit ongoing new reformation growing of are that

Thomas Song

you our respect what Nick, above be guidance with approximately year. was of said if G&A so the at the the restaurants. $X that year, for was Then full approximately running the contribution entirety So would margins, million we EBITDA $XX to look million

very portfolio Dine. end the profitability And if consistent pretty with think profitability the system. about year we're -- talking was kind tail of kind four-wall of acquired so literally the implies And when of by you of was being a that so that's a December last year,

stabilizing surprised I think portfolio. job able to done quickly team by we we've the been great were how has all stabilize, pleasantly of

And so unchanged guidance on front. remains our that

Operator

comes Raymond Brian from James. Vaccaro next Our question from

Your line now open. is

Brian Vaccaro

your range from you it quarter be system wide on quarter? the might could quarter Applebee's willing content, comps. the the to the embedded guidance? fourth for if guidance as data the comp are floating quarter And you go. any start updated helpful straight relates I to that and Applebee's, seems points saw sticking to thought what to within a be a it it comp and Would ranges your third then around. out one with -- comp to relates record be want are And various as for And cadence through that pretty perspective assumptions few set I tighten it on with these sources that

John Cywinski

Brian is Hey, this John.

balanced quarter. start over I'm question year as within kind is, going Let's zero it's know QX. fairly in some prior movement remains It's providing performance of our rolling the your minus and you with to unprecedented sequential on guidance any one. a resist as

quarters that model and don't here forward. move guidance narrowing at that of upon I can You all wouldn't data based anticipate three as -- we

Brian Vaccaro

December. I will you as in last and monthly cadence through similar about the they move as tapping and the on are us easier, we they comparisons quarter can talked getting as Okay, Do guess I the move view your fourth the marketing year, you fourth think brakes remind to you if spend quarter?

John Cywinski

I with we And kind within a balanced versus in delivery Brian, whereas perspective. QX were a as question, is but year it year-over-year quarter, our sit quarters favourable from the of not. favourable mentioned TRP a It’s position media mix ago, perhaps prior

rolling that again, as reflected QX our as like in positive a we our position, And in guidance. 'XX planned. that's years 'XX, our activity like two and well tactical I So said, flow have that in of with over we QX of very favourable performance for

Brian Vaccaro

of towards the at promotion, about & expectation? on sense of also you Thinking shift Pasta you with markets a the $X.XX sense guests resonated how or really value. that you've to in wing give and been Okay. Grill tactical And can us test give that the any and past seeking Combos you us seeking that impacted Applebee's reengage? value versus performed in Can boneless your did certain how

John Cywinski

tested, two ago past, it I'll with brand, on Sure. which very segment months tested delivered in event seeker was than The Brian. proposition that much outcome. providing pleased of Other & and approximately Combos. abundant an to the value we're for and I that and the $X.XX tactical much was that wing say guest that start I’ve referenced on any delivered too resist Grill kind Pasta is front with center event. color value

a insights meaningful have apply So and we and in tests albeit we that data, here speak. we small as upon sample based size

Brian Vaccaro

there profitability to our the question in Was quarter. company that that Tom Applebee's out maybe math that, something the And that but one-time on back circling any seasonality was on that? flattened would suggest color the expected units, and this was

Thomas Song

great question. a that's Yes,

the QX to further I'll see our some profitability MD&A of non-recurring commentary in which the talking items that though will QX. improved leadership give You team. will have Q. color in in that There were some in is

Brian Vaccaro

MD&A Okay. In the does of it details end you... would section, the have or that

Thomas Song

the Brian, cites it profit just contribution. segment

Brian Vaccaro

franchisee And And I me. then do last one profitability the question. appreciate from

You four-wall about talked margins being down.

that Just want half But basis margins the I it the to points Did I year. the four-wall year-on-year sure make low-double-digits. in in EBITDA the of first XXX down Four-wall margins hear are correctly. still heard correctly?

Thomas Song

correct. is That

Brian Vaccaro

Okay. build. back associated half do And cost franchisees a XXX to the delivery any points of of than on talked you with With that, related delivery more that? half called get roughly XXX you -- the being agreement, bps basis that, this out the color about renegotiated

Thomas Song

a than more get They half back. lot

them puts a it almost back delivery. So of it's equivalent in profitability whether restaurant carryout or position in

Operator

Bernstein next Our question from from comes Jeffrey Barclays.

Jeffrey Bernstein

couple unit the down, quarter of in you accelerating One, both see growth whether ‘XX or there's in brands or think think on engagement of short-term But just unit that noted or both if net growth closures late that interest openings into underlying franchise perhaps on the might things, brands reduced side more long-term you going growth. forward? hesitation said with wondering ‘XX any whether at concern, remaining. just just were one fact any you side it’s terms growth? questions. seemingly A wondering I I'm of taken maybe Applebee's we the there's

Stephen Joyce

and then to start Let me contribute. I'll let

the and the hear believe are on future. based IHOP's the on very mentioned, on based in we've to as accelerate So some growth IHOP other things it's field that in we and going bullish this that future, side, you'll on

in going 'XX Applebee's we'll to the to growth past growth we into that units we're have that returning and moderate going start believe side, On 'XX. with

and development opportunity on are in to franchisees start territorials. the groups restarting to is, place. with in question have also -- with process new the side, with we're the the going real they we franchisees use But the currently discussions in so And new about bring development

John Cywinski

example anything are Good of we're international in interest not just to of at I that IHOP, of look -- with well. rate, we is, growth closure spoken see And here. that down, line some Applebee's as predominantly don't being nail so out some if we’ve franchisee opportunities international seeing the only there

details of our on and no consistent. here. is So financials. been again, look some if real the pretty There's at change QX QX, I This this has of QX,

Stephen Joyce

thing are to some those is decreases add Dine international. The only of

Jeffrey Bernstein

up then And on Okay. an question. earlier following just

at to You quarter, terms XXX basis of a tough brings perspective. again The terms least any whether I points would range you comp the would imply three-year see in basis you on question be full you earlier fourth wondering, fact lower and or the that just of the tracking the color you that got I'm from quarter range? feasibility to wide going how very a two what at year your points talked have higher or in swing about it’s a offer guidance in October comp rather relative potential you're Applebee's on which seems guess of if end fourth XXX basis. considering that wide

John Cywinski

But month keep on color we're in. in no October. Jeff, a mind,

And so the remaining. is reason range provided you see that the we have months we two

prudent. And being so, we’re

Jeffrey Bernstein

and And any guidance look I we any EPS EPS. was Okay. But being you I Steve long-term EBITDA to know EBITDA yet. thoughts on your or it’s high high formal you’re proud know and growth. EPS and ‘XX in as single-digit giving lastly teens for of for growth EBITDA ‘XX directional whether guidance mentioned then not the both

wondering on that’s some what’s color XXXX the sensitivity Just for …? maybe possibility of around comps some or the of whether

Thomas Song

but view I in don’t have our of about to talk off comp. this actual want long-term not performance XXXX we come

Jeffrey Bernstein

of that’s both inclusive of comp to X% X% sort at seems And viable longer-term, brands? still Okay.

Thomas Song

Yes.

Operator

Levy Our next Partners. question Brett from comes MKM from

Your open. line is now

Brett Levy

on little we into new I What’s general could been these the off people system? to seeing are looking are a that you get of the where bit franchisees start guess if makeup from? coming just

John Cywinski

And the caliber, speak Brad, transactions evolve experienced forward. expect highly looking entities. see capitalized. enter and will demand transactions transactions for that restaurant specific, allow very operators industry, deeply come multiple And to high we’ve franchisees brand And prospective from very the regarding very forward the We financially-oriented portfolio we’re few past first moving externally. we in categories, in seven Applebee’s. we for move that we as those could Applebee’s eight the we’re we’re meaningful necessarily us selective years. qualified not over stated be for you additional looking purely I’ll are can or as And well

Stephen Joyce

It’s interesting.

but had of interested, back some dining. we’ve some the franchisees are casual coming it’s casual in. business, -- We all from They’re backgrounds the of some combination the coming coming QSR a fast and coming obviously background, from new are restaurant in from that have they

Jay Johns

franchisees have talk the look et dining, and dining a not of On spoken themselves. do breakfast they’re rounding they against lot of a portfolio. family we’ve IHOP one They don’t cetera. lot of concept the a out is of to like potential the franchisees franchisees side, concept family think things about -- they those a to, the compete about potential especially lot a that ours A is

John Cywinski

depending that those point Final with of well. side the we on forward expect on the comes we as development I geographies, would make some as is opportunities transactions transact Applebee’s moving will have

Brett Levy

If to delivery turn for second. a could off-premise we and

you’ve large that slowing we’re had producing of are from double-digits on a with are that growth. a going obviously companies obviously of going of of more law thinking both it and But get rates get you. hearing and You more the Thank at see level, just the competitive to teen how outsized we’re and of the we’re from mix? you high but nine hearing numbers can a next lot been to -- how from you front or low returns. also mid that about How you to lot can with the competitive some success point the after rates

John Cywinski

Applebee’s as those the on one delivery one along to third-party at referenced Brett of both by did guests. brands accomplished objectives we’ve that of fees Steve -- passing the to accomplished our our we side

whether let And is be if go experience, delivery experience. will, decide. franchisees want we we you a so experience then a And to our guests the that margin-whole, or to dining

a very enhanced users. time. We heavy and food for well at getting our We operating be on delivering that packaging have tend enhanced demographic clear to our of They better as it They We've them. and make very We're off-premise profile dine-in accuracy use certainly experience. easy as off-premise. guests. Applebee's

this position. so And business. our is we not incremental. a And the It fully love highly of optimized is segment

Jay Johns

the I you in way And the standpoint, game. the it IHOP to got look of first that is be at we think from all

to the it. don't competitors off-premise all You to doing are concede want that

only We're really think We're growth are growing We're there's can at well. restaurants still very the that business. in high We more doing the a we We're doing game. more XX%. got restaurants opportunities. we're plus X,XXX add it. So rates, still about We on. still

delivery DoorDash instead guests they providers of service not have the have UberEats. service the expand we restaurants providers We some can use use that more because but one other, already you within

you if providers, So that you to our actually more We just to ability can guests. get catering expand more expand your capture rolled business.

we that So of time of we great few where those all think can growth in years. next run have get kind a

point some just point within there's We near there's execute we're right be lot share going a we're far a it but the maybe at a end. we're okay, that the some more right, where, from anywhere point to You're growth not have industry. And and to don't now. becomes end, then going everybody to at think war the

Stephen Joyce

underserved see operations. been next very take your think question can our going level, the that brands, both the because to and for to opportunity we response what's has catering us about to to brands well space both that relate catering in we But major as

the well after everything of as the in going just to residential able always of did, more So business we're get-togethers social to get and catering front. going we and go We're that product the and we need franchisees our as to both own other have for be than lot the would well, we that and catering packaging are family we families we But also target today. And out execute desired business be believe to ones on a because some prepared cases, catering else needed. occasions.

Brett Levy

sneak if one more. could in guess, I I And

what fourth for offerings competitive how misstepped think your on what high menu just lowered the quarter, internal, your you’ve And the back you're of then do of you you're externally it not across throw rate as much achieving queue. is As the the versus landscape? seeing whether to seeing outlook usage and or I'll

John Cywinski

John, this, know, I this it call. think acknowledged our on had Brett, past, I don’t is I the in I acknowledged QX

where as we this with again, Applebee’s, example a of Some well exceptionally our product guests. a good is by would that have self-inflicted use is I [indiscernible] received

to with learning seekers. me forward. incentive applied point launch We the from plans that led when I that the our we a tactical say value trial failure or a product Our to to secure at didn’t starting data, see Trust misstep. a we've moving price

behind bad our won't respect poised missteps debt, time is honestly closed of I three the So growth feel back. as years predictable And have value as kind we've we XXXX. hand for have my stable those the we in normalized don't I brand we and reduced here for to tied restaurants, look forward first like a in and we with and

Jay Johns

I side expect outperform that will IHOP we the on mean I the fully industry.

you where pressures. minimum margin for People the So take look business there traffic the franchisees challenges cetera, industry. on place across cycle And just Clearly pressure a that taking price margin and our by wage there's in et overcome price. headwinds and here there's are industry. not there's to there's takes across think entire I pressures industry, the

price, having the a right and run And better the experience right goes here. cycle products overcome that to much we perform that will on There's off the through than so we take that industry. you offerings and You and traffic. able think the be right

confident So the now. we're we're and in direction confident right going in our plan

Stephen Joyce

But expects in the just showed conferences, franchisees of we in excess, increase pricing both where the cost the of taking to price go. the consumer

And we hold traffic our and and definitely correlation and those between are to price better. perform moderate so show -- could a more in who ability

issues based are a though, the they're of Jay's I And in are brands, performance would the major it. internal in say, also general it's because environment. discussion, operating a at price. competitive to that of of going case, are, outrun was kind expectation case, on that some And in both on both that pretty taking part tough we're so competition our John's is cases, they the

our but we -- the industry. so to stated is lead want And goal

Operator

Brian from Vaccaro Raymond final Our James. question comes from

Your line is now open.

Brian Vaccaro

Yes, just had follow quick a up.

is comparisons. difficult in more understand you the just acceleration, you color side quarter. third suggest guidance product seem Could specific. a it help comps a the nice provide? what's you the Any driving lapping That's despite part what reported On that’d to IHOP day that upcoming successful in versus would pretty can whether us be launch, acceleration

Jay Johns

trends those down and quarter to want don't cetera. into get I how et exact Well, the breaks

just we X. to a we tightened at if the end our it you you really little, changed But X we -- the look I we year-to-date high number, all if mean guidance down. lowered So, X:X were our is at guidance, was we were

going still acceleration to I where in guidance that. comfortable we're any But up. implied our we're end So -- is huge we're and there's think of think where with don't just I

Stephen Joyce

but for that, to And get into programs But remainder that the for of -- the we've year. place mind just us Grinch year. successful how strong said to not we'll and very program see numbers, well in keeping having in perform, got believe we was the we but have last have a they

Operator

completes time, to this question-and-answer Steve our to the session. call back That for I At would like closing comments. turn Joyce

Stephen Joyce

again and you for on day. we've We'll speaking look Have time. forward call again the quarter fourth your you progress Okay, thank to good our with a made.

Operator

Thank for you, call for participation. you today. our concludes your Thank gentlemen, ladies this conference and

You may now disconnect.

Dine Brands Global (DIN) 30 Oct 192019 Q3 Earnings call transcript