DIN - Earnings call transcript Q4 2019 | Dine Brands Global, Inc.

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Operator

Welcome to the Q4 2019 Dine Brands Global, Inc. Earnings Conference Call. My name is Vanessa and I will be your operator for today’s call. [Operator Instructions] Please note that this conference is being recorded. I will now turn the call over to Ken Diptee, Executive Director of Investor Relations.

Ken Diptee

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

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

these known which expressed call, discuss may the actual than those involves cause implied. the risks, of release statements. context to the Please uncertainties which The are forward-looking statements is press in information supplement forward-looking information of obligation the During unknown today’s that in and or evaluate factors assumes we and may and and forward-looking these other detailed update or factors, results no filing. XX-K today are as and

non-GAAP our described which on certain financial also available You measures, press Brands’ and may in website. Dine refer are release also to

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

Steve Joyce

achievements substantial strong and better focus you, This existing year franchisees very terms. pricing. continues morning, facing our Thank completed Good defined past dining $X.X successfully Notably, Ken. significant create of in strategic the for and welcome. Brands, with alignment even with our Dine guests value At our despite of and with several experiences. everyone to by provide and we a competitive our refinancing billion a long-term increasing importance debt was our marketplace value favorable shareholders

ago XX% record year free to enabled track to us cash through a quarterly well our adjusted dividend flow generate repurchases. cash shareholders our robust by to returning Additionally, ability raise our as of cash stock solid as continue

deal IHOP’s fuel will agreements, initiatives, domestic international meaningful largest XX%. we history. We U.S. As the We our of dividend which strategic in our signed development in resulted morning, by the outside to announced this multi-unit which growth continue development further raised development accelerated

capabilities and see both across guests at for catering it footprint including next to ordering our expand business. We and of growth new our of will several with to initiatives enhanced digital at make and India dinner for easier We potential Eastern deals Applebee’s Canada, growth Latin breakfast. brands in lot brands the our as of recent catering most in a support both IHOP and the area for Pakistan. America, launched Our XXXX,

we a via IHOP delivery their Applebee’s Additionally, DoorDash. websites through with both mobile at apps partnership branded introduced a and and respective

We restaurants, achievements a also investments improved by delivery on and of the stock technologies committed supported, and the the and guest hard in that sales same work. for XX% possible innovations carry-out and franchisees our you in behalf our XXXX our restaurant profitability. experience a members have organization and Thank people were focused roughly delivery amongst new made for accomplishments, franchisees your provide our price partnerships their our These resulted day, products, for our year-to-date. who who their made throughout team These in-restaurant, made propelled other in increase XX% others, business so guests that around each forward. new data who decisions better dedication necessary

delivered we results, quarter release EPS morning, across metrics, adjusted fourth solid key as financial EBITDA. including our you adjusted in issued quarter another our press to saw this of Turning growth and

Importantly, XXXX. we of also meaningful compared in the fourth to a achieved G&A improvement quarter

Brands, closely is important G&A, manage asset-light to an lever our Dine continue will our attractive We which for given model. especially

opportunities as our opportunities as momentum the strength development unit we restaurants by addressing can believe in experience and to We sustained the of are leveraging are technology be position prepared our off-premise. marketplace. well a in through from growth to operating We and capture enhance significant

Additionally, relevancy. we pipeline new expanded marketing have elevated our and of our products

to with visit more IHOP. across reasons brands advertising guests even both Our ongoing menu innovation and and Applebee’s creative provides

despite in that IHOP fluctuations comp performed to would public asset-light continued our industry sales sales highlight and sales at our Switching volatility expectations I casual to generally both traffic of domestic quarter line fourth resilient like performance briefly and brands, data. our trends. in according gears to to model Applebee’s family business comp with dining the more us dining in makes

for and Looking outlook IHOP is ahead, promising. Applebee’s the

have Applebee’s We in are franchisees. value-oriented positioning extremely going confident forward with alignment strong and our

Regarding IHOP, unit and more Both opportunity represents consumers development a when little later. time brands incremental significant details growth bit will demands a and remained respective brand from high. provide their at for the on from Jay a franchisees John

core business In closing, fundamentals remain strong Dine’s is our and healthy.

solutions their delivery executing the and through strategy comprehensive that against value. enhanced on our our focused both in creating sustainable for a business terms Dine to brands continue on guest is We Brands the elevate successfully will experience or that growing it’s restaurants, an experience are dining franchisees. our profit whether and growth engaging guests innovative our shareholder By further drive focus on and

We brands have people, growth. of created value-based focused three culture and a high on principles core performance,

well Johns last very We of was ensure have seamless by of Jay talent promotion to to IHOP and transition. years been integral elevated Jay an and X franchisees. the which added experience the hit a part IHOP, organization, of running success the has for ground of valuable he across our received President the notably, and the

the all the We recognize encourage are have highest brands because and really team the our team made of take leadership pride inclusion their from foundation We development members, and and they our planning, our value, priorities. jobs of everyday. succession development one diversity in to recruitment of of truly

the Tom that, With results. over an to will of provide call now financial Tom? overview I to the turn

Tom Song

everyone. adjusted pleased that I you, EPS Steve. we report morning, Good continue to improvements year-over-year am to deliver and Thank adjusted very EBITDA. in

shareholders the full and be our franchise quarter despite able With to and market. to fourth competitive in ability invest are business and for model, to return and we the brands capital for year the agile Dine perform highlights our performance Our technology.

highlights performance. with able of level the EPS our briefly XXXX and that am our year recap I guidance on our and top the provide on some adjusted strong being half note a range. and to results will pleased high both adjusted Dine in quarter the fourth comments the I for was finish EBITDA

prioritize XXXX of in for our of Later, X.XXx XXXX, as to the return an debt capital EBITDA provide at result growth. to stability our continued shareholders, decreasing leverage of reflects which guidance We from I and fundamentals overview business. solid of our a time, X.Xx while the same will from continued

Turning to begin I will results, our financial statement. changes with notable income the the on

For the $X.XX quarter $X.XX same was EPS fourth adjusted quarter, the compared for of to XXXX.

an XX% positive growth of the to comp adjusted compared all fiscal due the grew XXXX. net sales approximately $X.XX IHOP’s to number $X.XX For XXXX, profit, IHOP in domestic gross effective Higher contributed to EPS restaurants and in development increase increase year-over-year. to

our remains us for G&A. G&A constitutes as revenues, and an important our given excluding revenues total further G&A, related revenues XX% to when business excluding model, gears and lever company-owned XX% it Switching of asset-light advertising

for in guidance the expenses to fourth primarily $XXX.X costs. XXXX for low and the Our million decrease lower improved This to quarter compares G&A $XX.X year. a to a end was $X.X due million, improvement from range. which compensation G&A professional of decline was XXXX. of The our XXXX last million services beat million, $XXX.X in

reminder, to both our fourth a year of for included the careful costs the clear our In to company restaurants. G&A management related As that million and contributed full quarter of financial it’s G&A favorable $X results. over

effective GAAP fourth for tax of our XX%. was rate, XXXX the quarter rate tax our Regarding

federal of income The year, effective primarily XXXX For rate was local to incremental pre-tax the the state book due statutory than full was tax GAAP tax rate rate unrecognized taxes. tax to higher our XX.X%. effective benefits applied XX%, and in tax income

us This I strong Turning allowed free dividends, later. to statement, continues to our through return to and discuss shareholders which cash will generate to the cash adjusted share flow highly flow. cash model significant franchised repurchases

adjusted in The million variance cash XXXX, from an operations. compared cash For for was million increase flow favorable due $XXX primarily was XX% to free $XXX to XXXX.

model primarily high-quality XX% investments driven IT improvements Despite Because in and requirements, consolidated million to adjusted very in compared EBITDA. profit in The previously still was CapEx $XXX.X was XXXX adjusted CapEx primarily adjusted the guest-facing by adjusted CapEx of $XX.X with increase year million have improvement due the in G&A for in million only EBITDA, both Regarding revenues and total prior we mentioned XXXX along for XX% our management. EBITDA X% gross to to asset-light XXXX for represented EBITDA. low XXXX. compared $XXX.X a increase initiatives, to of

shareholders $XXX in common share, we cost million in of dividends morning, Switching gears our the million of to a in X.X shares repurchased million. at of This shareholders, cash capital total priority. paid return our shareholders. XX% an stock increase for cash XXXX. a top total a In of combined $X.XX favorably creating This dividend to remains value announced million briefly our over we $XX quarterly million and per increase. $XXX quarterly to XXXX, to to returned a returned $XX compares we XXXX, the In

see I highlights we our for XXXX. Lastly, fiscal the will release the performance details. issued for review complete today financial press of guidance Please

and between profit, excludes expect We IHOP, to between $XXX Total million. be positive comp X% X%. the we expect segment positive and and between be million be comp restaurant sales $XXX at company X% to is which expected X%. sales Applebee’s segment, to At

to G&A closures of domestic with stock-based expense to to net and $XXX restaurants. and compensation XX upside including prior this company G&A to million that related XX inclusive range $XXX $XX between inclusive compared X XX We of IHOP, the years $XX and EBITDA, company development expected million, Applebee’s million. openings At Consolidated restaurants. between approximately expect EBITDA million, net restaurant projected $XXX we range new million some million. approximately of $XXX domestic range to expect million between is and range million adjusted to to non-cash and is restaurant between depreciation segment is and which $X of expected $X note segment. is be between expected Please of

$X.XX adjusted expected be earnings for XXXX, and to diluted $X.XX. is share between per Lastly,

by for market. facing wrap Dine several and despite successful a challenging To up, XXXX year a competitive was measures,

securitization financial achieved on While proud ahead foundation success. which made a the completion our that a accomplishments, there health. I progress particularly great several am solid work of for has us, significant we and is of the franchisee’s been of of laid lot

With to and of line franchisees very about to deliver several development four-wall support optimistic year top profit their expansion, strategies We continued closely I execution bottom our continue am compelling line and monitor offering while growth, opportunities. ahead. our the

I turn to over will call now John. the

John Cywinski

of Time. good Eastern on and Thanks, afternoon to those you Tom

comp the ‘XX Applebee’s ‘XX. hurdle X-year XXXX. since that of given be seen a success of our have of to X.X% expect in This highest plus We was QX challenge we QX and QX

a we down minus were XXXX plus As full XXXX QX sales Applebee’s the X.X% comp comp and comp a year. closed of from year of X.X%, prior rolling while sales result, with X%

will a this the was Applebee’s having With first XXXX has X momentum our year. reestablished positive reserve in important quarter, return leadership considerably detail report to was this of on as in the while shifted later call, Now, has marked until value sales I challenging we to context additional QX entirety thought its its April. position market, comp through the although in share today’s weeks QX I

I previously, consistent poised stated for believe forward reasons. for moving growth several As Applebee’s is

with of more well and plan. bad concluded predictable now years debt, stream and ensures is X.XX% than no funded we’ve material up no closures initiative closing brand Said XXX fully strategic the our very XX as far marketing and X past stable national XXXX damaging franchise a a Also, the healthy system restaurants X to First, a as per navigating pruned years royalty underperforming approximately over This of system delinquencies. U.S. we after important advertising a of milestone and XX differently, and assets. more we year. income will target begin

XXX% are remain in here essence the around our our tactical partners plans as throughout great execute relevant and need franchise we our Applebee’s This clarity Additionally, value to provides XXXX. seekers year. among develop aligned and brand

terms that are media Finally, we don’t have intend our and scale of model. business These smaller their our brands independent supply chain points restaurants disposal. large in at fully difference of and muscle, franchisee to leverage simply meaningful

to turn let’s Now restaurant P&Ls.

is on food reduction cost related, P&Ls point reduction followed results clear. timing food year implementation. restaurant beginning achieved by management. plus the of point year, a given and now third last in XXXX, a these We the focus Our reduction renegotiation savings basis an much XX of its initiative XXX and operational XXXX, basis commodity cost are with here benefit are Most staggered will which in of impressive

to packaging. as and disciplined And as to Some franchisees of the labor, around scheduling offset And off-premise portioning, respect savings soon be about restaurants, particularly we which week. partnered implement practices related to in deployed the are to with throughout eliminates XXX to with server prep continue just-in-time pressures, some geographies. well forecasting wage in best tablets we with hours labor also high

before sure Now smart additional restaurants. we’ll this here expanding to fully methodical initiative optimize and be and be to

an is objective flow with will XX basis these specific of target point we bottom be basis quality initial two-thirds that on to Directionally, PWC. savings in additional Our the reinvested cost to ultimately us points improvements. franchisees’ track about established XXXX reduction line, one-third which XXX puts our exceed menu very while will

the continue restaurants proud U.S. I’m have restaurants Carolina, under ownership. we total, positive XXXX, XX on now average, partners Now year plus base to our XX North and In to front, in company operate and their that and portfolio Applebee’s own X,XXX South the outperformed these consistently and in full sales franchise of system in comp has a first say restaurants posting

As plan portfolio to continue we for maximum the past few this with years, performance. refining

continue narrow I Applebee’s variability our and brand, also Based for upon to stronger our we operational franchisees health entity a anticipate acquisition. fundamental of affinity. a select of such this introduce best elevating well-qualified as to while in brand in as new transaction, the that handful I say satisfaction with part it’s each optimization, of these metrics, been growth while strategic years. here providing to we overall As is metrics transactions opportunities brand number continue via With confidence XXXX guest can franchisees than

off-premise the brief XX% our very XX% very After our our growth and XXXX. of represents grow comp anticipate Delivery shift marketing-driven although a to From to guest XX% stable I in car-side to of rate this and well, ‘XX my growth Of slow in business. this mix, XX% Let’s penetration about ‘XX, component off-premise which Applebee’s. I to delivery less a as means in adoption a the a off-premise continues of in dynamic or penetration the at category, and business. moderate XX% growth for and clip, overview off-premise mix X% bodes a healthy year to to-go sales matures dynamic of expect at is mix of more naturally total driven perspective, balance well of growth growth this off-premise stabilizes.

As X,XXX long we days battle haul. past our value with Day. variety, relevance, I the referenced the the off-premise and fact wins reinforce locations. Applebee’s Simply more sales menu in we orientation, improvements, that market, operational right convenience ever generally posted ago believe calls, corner XX over To highest we’re the around our on best stated just Valentine’s day than are digital this on demographic given youthful the positioned

cadence And innovation unit as excellence. summary, In you from Applebee’s restaurant the franchise big Jay. to our scale, our leverage turn highest to partners of and hold can XXXX. steady it expect value of With economics we brand in accountable will a standards that, improved and, most importantly, I

Jay Johns

share Good the over impressive to our sales our and that our XXXX. the we John. Steakburgers I comp comp meaningful quarter positive increase comp to is afternoon, delivered strongest particularly an that consecutive also every you, quarter Ultimate rolling limited eighth in IHOP marks sales recent for which posted growth. in XXXX. since Thank of lapped This proud offer, sales in everyone. positive quarter sales the X.X% award-winning third time brand’s most fourth quarter, quarter and of of the comp given years, over launches branch-inspired of am the we led highest including XXXX, our launch quarterly which successful increase of platform some of morning

animated branch not property feature up entertainment but During with beloved on one family two centric tie-in film followed XXXX the the we fourth our quarter, with partnerships.

Addams property. for have Both items for and leveraging our kids-eat-free MGM’s Elf on iconic its followed a all Addams kind off Family demonstrates for menu tie-ins our Addams restaurant these film, to on Shelf our quarter featured a holiday movie of fun limited which Elf Shelf a brand. underscoring IHOP create commitment promotion, further a Family, connection menu food the and we the opportunities affinity guests the ages. and The Then and with Elf partnership the the craveable The IHOP’s tie-in Family by success first value. growth resonated inspired popular offer, of of First, programs with strength, was the kicked guests time strategically with with animated unique,

is want pleased option to sales for a value are our grow both food great see to continue having great with sustain our achievements, the will and momentum aggressively positive and to great proposition as guests we IHOP that can IHOP’s We be done and to-go. While there more dine-in and a and business.

reinventing being which Our strategic business. plan is traffic, focus defend priorities, Driving are restaurants, helps back the and we ensure driving the To of the guest where often. traffic. restaurants our continue come great squarely focused the on key defending great great underpinned two is our foundational more and leadership areas, The achieve guest is growing four guests driving and experience. this, to most by position driving on ability restaurants running to

that To do efficiency on our restaurants. we in focus our and technology this, operations, training sharpened improves

a As our continued metrics guest result, improve. to

last provided of review X whose XX%. system thorough a years, Over and in franchisees bottom the extra ranked performance to the those we’ve also restaurants attention our conducted domestic and

we’ve long-term result, the As sales taken the actions IHOP’s address and momentum. to of ensure a underperformance sustainability

Switching our has competition leader We share a system-wide domestic from significant by now dining our than for relevant been restaurants. on consecutive their competitive the XX ever. grow taking gears, years and believe to advantages the more us is attracting opportunity IHOP provide driving in sales. based traffic for into guests family

We doing are of variety ways. in a this

younger advertising We are more increasing our consumers. to mix reach effectively of our digital

our family IHOP’s of to advantages aged compared for demographics. our and average of an our dining are peers. is younger many guest guests favorable XX% of One Over XX XX% only

value-centric are deals we price hours. points during leaning into non-peak attractive and Additionally,

with it any pancakes we instance, breakfast by year combo. bringing paired the popular started For our back all-you-can-eat and

pancakes $X.XX. for of two sausage links XxXxX offer two introduced includes We hickory-smoked or bacon eggs, have and a only choice two strips two that a also weekday

value traffic with our relevant one abundant competitive to We on to our committed balance offer IHOP. strength what point expect into weekdays a to want increase value understand traditional one and and are at a particularly enhance guests providing We frequency, leans as from on price to weekends. the guests

marketing a has layer expanded platforms. value, and is culinary partnerships innovation, to which focus produce new exciting primary XXXX calendar on in and us strategic Our continues that to of enabled food full

from entice are relevant in and come develop to guests to offers key successful more often. using that learnings We promotions

to insights to traffic, coupled competition. Our taking potential that To approach, our on allows for goal threats. driving testimony meet also pipeline deep of with consumer from respond competitive we are focusing feeds culinary share that a point, to flexibility the

We will do and minds in being guest’s by that path. our on their

We mix continue better strategic through differentiate that our reach IHOP are to to break clutter, and refine messages the guests leverage data with relevant. our compelling and brand to

XXXX, QX adding off-premise next IHOP. In more signed of phase restaurants announced guests strategy rollout we one the for also up almost our the have Today, with catering, to way XXX of experience for catering.

delivery offering We with XX% QX our more an also improvement reflecting To-go, In provide over of points levers. the off-premise total bringing continue restaurants participating service XXX of number the us up sales, number the total basis now additional to one or XXXX, approximately made last providers, growth through and X,XXX. same quarter catering expand of about compared of of year. to third-party delivery restaurants to

have be choosing number in where a convenience in the one factor areas. high-impact Since growing the guest footprint This restaurant is means to eat, guest’s path. to in we

unit a IHOP that net has history We’re development. of proud stable

developed net XX that the the decade upside XX family through restaurants franchisees the for we announced last category one record development the of development else years. over in have new has will like we XXXX, our and brand No in average similar coming Late deals track annually. in gross fact, the two believe restaurants XXXX, an dining IHOP. a In approximately

it planned over development Travel of a XXXX. next was XX with These deal first expected multiunit five making October, the approximately nearly Centers open America in The years deal the in history. restaurants are IHOP’s largest XXX-restaurant to with for

breakfast XXXX concept feature an plans in December, Flip’d fast will menu a we also inspired in on the and to-go, launch casual by in have IHOP growing densely by a populated fast centers. focus concept spring options Additionally, all called favorites of demand technology. city announced quality Flip’d heavy delivery new IHOP. fast consumer will address for casual This day will to directly and

development to all we traditional addition our quickly Centers line deal, restaurants. with to Travel expanding nontraditional In building continue of our plan

growth, a than of number part routine new to confident we we development addition are business. limited growth stronger of that a XXXX. also plan With a just course our in in In will to underperforming plan close units XXXX robust place, of as be

fourth sales wrap very am I full and our with up, To performance. comp year pleased quarter

which place will defend core brand, and delivered the We results our positive business and have ahead. has the our fuel to plans momentum well-defined in in year grow

signature my strategic pushing tomorrow upside taken steps also growth. potential our $XX Children’s remarks, while that franchisees campaign. charity our off-premise Day, XXXX, Since development IHOP’s in have have annual is further and close Hospitals. unit supports and to for into IHOP drive We PM million further our than giving To Network IHOP’s National Pancake out raised this Miracle campaign more during partners

by Now will its draw Pancake National at Day an a We sweepstakes to you that IHOP big tomorrow component excitement adding we’ll believe of we us fans. nationwide. join up year, XXth restaurants be the invite inter-restaurant for in

will closing I that, back over his to call turn for With Steve the comments.

Steve Joyce

year-over-year and notable The briefly future each adjusted ahead. which enthusiastic strong EBITDA highlighted year to recap, despite To success we EPS the results by improvement deliver road XXXX and continued several groundwork adjusted me about which the was Jay. challenging for of in very environment. achievements, Thanks, lays ended a makes

the during free core tangible to the in adjusted being seeing cash last as business, years lifting that’s are We such flow the the this significant done the results X of period. heavy over improve growth

million deliver shareholders that results. for focused am has in about XXXX. performed we on quarterly our in of and creating dividends another $XXX Our generate strong to these operating enabled value we well, beyond, repurchases to XXXX and cash as succeed able shareholders. ability remain and return cash our to our very are to pleased through share key Dine By solid all continued asset-light very free model of to and quarter were we flow, which priorities us enthusiastic substantial roughly I measures, business

open be to call we’d that, to up Operator? with the Now pleased any questions.

Operator

our Thank from first you. Nick question And have Instructions] Wedbush with Setyan we Securities. [Operator

Nick Setyan

you Thank quarterly that directional thanks on for was very commentary I think the helpful. that and Applebee’s

think than to bit the year, it more maybe sense comes a board the relative that increases? pricing are into Would Applebee’s was looking I perhaps maybe there XXXX category. you the little pretty a system with last bit on control when franchisees more little that a in kind of out that took much say to the price

John Cywinski

this love Nick, John. position on Yes, insight market. is good the our part. in your We

franchisees, smart, Our they’re savvy operators.

our in the everything in And for plans value-oriented loaded profile, guest geared that is bear of aware and market, We’re they’re terms positioning of is consumer. we a which price consumer. our toward tactical do that well

our yes, So your to like very we position. answer question directly,

Steve Joyce

what price win to abundant at year-to-date. aligned it and game to I Nick, demonstrating is providing this we plan marketplace. and year, we are our is franchisees we think on and convincingly add we to have that are value the I think going with demonstrated in aggressive And winning, that, learned Steve, last the are XXX% are us, We

plan, great think our we brands we plan and to we that the of abundant aggressive are brands, both when going successful. a known for price to And for we’ve be same point. value year are So both of stick very and for got them, the thing, both

Nick Setyan

growth in even how accelerate we least, to the thinking are at and yet, but unit pretty franchisees moving to, Is maybe on was front not maybe maybe the that doing helpful. attractive gains the there not for that’s actually more on XXXX forward? if Applebee’s And thought incentive if impressive. unit incentives front, now growth, unit Okay, we’re net about making anything I the growth XXXX

Steve Joyce

Yes.

have the not in of couple at So good all Applebee’s obviously, last development reasons. apparent the question, for years think, we I pushed

in unit do now Franchisees, are us of We them a that. talking development. new position to about number are to a

today several development more in existing want we in discussion we when with We but to years franchisees interest of are we It’s conferences, to some over speak. the franchisees, of yes, grow coming next strong only the importantly, who relative the franchisees, And number incenting system new bringing interesting in also go plan as us. the have restaurants these but development with both interest of significant that an folks under a couple new existing have with of a us. outside developing and not that on

Nick Setyan

Okay. to the of kind of for tend just And you trade would sharing what context, in question, franchisee Applebee valuations, hands of portfolios at just mind franchisees? the the terms last sort

Steve Joyce

Yes. the Well, years you’re we trading seeing based portfolio, the seen several But where have the and we’re you’d the varies. transactions it right what of middle is over think in on I transactions. find obviously, all

Nick Setyan

helpful. very That’s Thank you.

Operator

we Thank you. And question Raymond James. with have our next from Vaccaro Brian

Brian Vaccaro

Good Thanks. morning.

context with trends, light it each of to are date, brand, Just reasonable to range that at the questions on you brand? the assume each could is to you stronger if out guidance how that quarter industry in I few a more could. comps, some for above Starting put around the range arrived the we at flat up two

Tom Song

Brian, hey, this Yes, Tom. is

of I year we looking the of So through thinking lapse year, of do ahead, a for balance results. how the yes, And we to don’t developed have the of I the over obviously, we obviously, are in kind was have seasonality tend guidance from wouldn’t ending the XXXX different a up course little bit read, and quarterly – last range our year. of

are where that we read to date. quarter So as I wouldn’t necessarily into

Steve Joyce

exactly can we we as plan, reiterate is well. comfortable we we’re and think believe while we’re that very on game which going guidance where strongly that long I to are, as that that very with I do think we’re

business looks the the think could I also I our a it there’s of on cognizant don’t that have various Right our businesses. could environment have have things now, election. on change going world this in to industry on we’re an going much an a elections different of the good. impact in But impact that. the and Including number but of list factors like typically on don’t seems pretty with you that

don’t all the about being pessimistic year. I are we So think at

give so is to impact most like numbers. weather the those sort our it other run sense going out let’s Right going is be could guidance We’re numbers for now, on out. we’re we’re there a good, think thing. see, clear, confident that issues all I that considerations. are reflective the of things we’ll in our of but impactful settling positive good to number that’s of comp it. that winter, of like trying just been a a there And But could looks a I but have very the think through of, we’re potential lot looks Looks of

Brian Vaccaro

an could EBITDA Alright. benefit That’s helpful. is that and you week? Thank EPS XXXX there in week believe quantify from to extra you. And the extra I

Tom Song

Hey, have the a for We are right. Brian, XXrd you week year. do

the to $X it of mid-teens million be about sense. kind EBITDA is perhaps think from from So EPS and the way range perspective, could an net an it perspective, in the

Brian Vaccaro

Okay, you takes other the could great, profitability just quarter? the some Tom, in shed of one, Applebee’s then company the here And just one moving and there some on pieces, fourth and great. units, puts light the

Tom Song

Sure.

So if or thinking in so XXXX? back you you look up, prospectively are

Brian Vaccaro

details on just Well, fourth more quarter. the

in then it digits in and count we something low, the think on takes EBIT almost perspective, view or? any mid-single on that And puts low, call I margin. the

Tom Song

Yes.

it of have performance, did we in good, alluded the comps there So system did as light outperform. which John was positive to, overall

but bit G&A. year, on having – EBITDA it on well offset as did that, there little a on the For as said miss was of

level with I million EBITDA, $XX G&A. portfolio four-wall EBITDA, XXXX, restaurant implies which that, stabilizing entity $XX about finding of $X million you’re million $X above million, that For approximately we’re think finding

Brian Vaccaro

a and helpful that’s Alright, thanks lot.

Tom Song

comparable margins our the consideration on system we four-wall important are the we that and gauge franchisees the one think rest with end, other we like in running we that I is, of the how are number fact leading to a profit the of franchisees. top And franchise newer obviously,

Brian Vaccaro

Thank you.

Operator

you. Thank

Jeffrey Our with is Bernstein from next question Barclays.

Jeffrey Bernstein

A very you of Thank couple much. Great. questions.

brand. one, peers you Applebee’s your I dining just with and The kind aggressive that, first seemingly talking some know comps, on of the about the beverage mentioned on of eye casual an foundation is of been more that on the food and Applebee’s, discounting have

of offers, especially Just if traffic just with the desire but I wondering, their have aggressive follow-up. strong I more currently more and terms alignment like know willingness discounting? the desired to their continue mentioned conversations franchisees? what acceptance willingness not And value presumably aggressive Applebee’s with a driving growth, these then the in the and you of are

John Cywinski

this Jeffrey, Good question. is John. Hey,

with incrementality plans we consideration our our We relevant. tight our that content will be implement assumption partnership Council. particular, and take have is our We Business franchisees in our a when into and Franchise

We will broad-based always drive incrementality, a it’s not target.

It a Sometimes proposition. depending those incrementality. on assumption value in maximize we the defined reasons, moving number are beverage a a high is But of be food incrementality, varies as well successful and with degrees we proposition, forward it’s XXXX. proposition targets for incremental that or whether as believe a we well very of doing And revenue. in so will drive we profit narrow

Steve Joyce

certainly clearly I as strong as team, the is abundant we think year, year. when proving now about can last We’ve directly strong and what And bring Dine point, going and the build to well price talk it create we traffic. Applebee’s when we’re aggressively ourselves team this alignment, count in new proven see that franchisees the we that on we products can really ourselves innovate, value are to

we ending our which was incredibly enthusiastically by Bowls, our for with by And campaign an well that and are And just successful obviously, so guests supported were franchisees. priced and received just example, $X.XX.

notice we things And our where a are it, factors ‘XX, when on yes, and so think both well. as at of look not think doing you of competition that types it’s took And programs I in hang think did lot in brands, to clearly ‘XX, those that see success compete I started hanging we we people on.

year, competitive got a categories. what planned expect we both is we significantly but of So confident very to that going this environment also we are similar lead level

John Cywinski

we would number a a look, compete here to entities. franchise concept add, units. again hard John to large XXX And it’s with that our, scale, have I of happen XXX, of if Jeff, XXX, you have brand with And a our

share win battle so over well we welcome we to long And haul. and we the are believe that market positioned the

Jeffrey Bernstein

disparity expectation? EBITDA expense a if it guidance, And might was led while think line as there specific on was provide that the earnings disparity help between count, guidance, the growth consensus, XXXX like EPS seemed interest to to the EBITDA any have EPS color above share whether item any perhaps between EPS or a you well reconcile to EBITDA it. and I unusuals relative and us that’s below. then tax, between Got could wondering I about

Tom Song

don’t have it, figures table expense look a if to it question, I out, and That’s or the expenses, at our In and do some Jeff. what site with the amortization. example, interest think you two depreciation between good to split but of differences lot have been a debt-related I need really difference our does further are interest there might to other reconciliation for interest on expense.

there. few CapEx will flowing to up have two then not we depreciation company-operated has $X EPS notice company-operated more our million year, you and respect this to there do business. attributable the past So factors about being over restaurants, CapEx for and going which so that impact running our through, are if with to you’re cadence, One only years, of ramped have

based We accounting. also have some cost purchase on amortization our of

think depreciation, of on have that helps could $X that amortization Hopefully, I some on So significant answer factors those question. are assumptions EPS. million every your probably the impact variation

Steve Joyce

And But Yes. pay as years. to ramped programs drive front, the thing technology see four experience. around represents sales additional in Franchisees we are in significantly how keep to dividends to up in business. like as are technology us we going server customer overall to think and have mind tablets but last are the them, improve starting going us made. to allow as to as investing as well technology that alongside depreciation we the that that’s I in one on futures, but investments restaurants those depreciation based well our do now allowing to things are clearly it three investment both both of going spending well over productivity on investments And on to have us the technology, it’s

things where kitchen, technology. doing using in are we’re the We

a the we’ve of years which John invested also has spending last on there’s money over the those, stores, referenced, that addition of cost some things We’re couple obviously, are doing depreciation that in we program number some of in effect. so which to owning some company

to the be going ownership in long as of said, not term. we’ve end, is that our Now

yes, a future. depreciation to blip. the view it’s dampen as but I it’s investment that’s the going bit, should earnings a But think temporary So in little you also

Tom Song

out one company million point, and adjusted the EBITDA, have just if our of from of XX, net that depreciation million is Jeff, look here additional detail amortization, $XX of giving operated. XXXX at and $X final you so you reconciliation between income we table

Jeffrey Bernstein

Very you. helpful. Thank

Tom Song

Okay.

Operator

you. Thank

from next MKM question with Levy our Brett have Partners. We

Brett Levy

Good since you West Coast. the morning all its you. morning Great. Thank to in

aggressive, have, have If Jeff’s you about he where might could powder how more on just succeeded to value equation, on and obviously follow-up a asking successful start, given talked have you little marketing dry of very now about a think couple is you more do got growth you and off-premise you I’ve had then already really And to promos? the much others bit the be landscape you all question competitive a as follow-ups. that a value some was more of how opposed

Jay Johns

couch be is to reasons our address to for guests to and order off into to relevant Brett, come etc. restaurant IHOP standpoint them to-go, an me let from Jay. or give want This We first. the get their

that what be value are our would guest to XX% we guests consider in category. about of So

amount it’s of guests. our a So large

brand. kind of of America are of kind We a middle

We’re like Applebee’s brand a just value John is. said

be that. So to cognizant we have of

to of highest business. going restaurant play the the not We’re end at

get of the think more So the I have to frequently. guests got make that. them to we’ve to relevant we always value need for type have know sure guests that some to come And in that we

not So the discounting sake keep we going of discounting. just for to are

that’s Our do value franchisees profitable have traffic board us are to and on our need we with with to programs. what

filling where do the going we a on great there’ll our opportunities is on We parts, leaning do we’re this will into where really up we on at the and different be programs, things not other day innovations, have but there times, different up weekends. our heavily the be seats So will are to value lean job over weekends fill food we’ll that’s value be restaurants there discounts to or place.

John Cywinski

message And do Applebee’s be marrying that from of from right do direct, relevant Brett, within a with is the of culinary have the for data, really a and we’ve demographic, a standpoint, leverage right right important lot we ever We framework, beverage to from the if just past, wrong gone powder. and a dry we sight test us. occasion standpoint, very perspective, lost validate understanding when value propositions, we seeker. for have We those it’s the drivers guests we in an

market to a of there’s dry And a so and XX change. plans to XX should of dynamic in tend our powder lot answer be advance, directly, months the with your lot flexibility question to

Steve Joyce

Yes.

guests, drives things can that growth but going our should confident, what also expectation And all believe profitability to environment is brings I game traffic, together. be So drives we year. we’ve franchisees. what confident became we those store from sales like But that that drive that competitive it comp do think very at the us we’re in you time, seeking same hearing is the we remain the got plan we’re value is very for last a

Brett Levy

still little up also And in of following XXXX on you And to out thinking the terms you in the earlier for we IHOP? are you XXX done more international Great. the then start on can should when a you. bit on called terms IHOP also, an domestically, about side? share discussion development, landscape? what of you remodels, think what Applebee’s next-gen on needs thinking Thank about to about are And what

Steve Joyce

for So let’s the start renovation brands. aspect with both

Jay Johns

so we years. IHOP, when schedule. on for based those the restaurants So growing began Franchisees had exact about they doing many their restaurants years on we’ve an agreements XX remodel our on schedule at program year. and a We have now, XXX franchise will been a every about do

that schedule So goes on. regular there’s a

lot of the start of speak. next cranking to as we do The more fresh for be the we on every of We’ll program. out restaurants we’re this be ready be we’ve will couple working years, We and next as we’re remodel already remodel kind become a have done we has done auto actually have to and us them But we’ll to committee program. with only a with year, regular that and next a got left on starting at years because got that our next, pilot a keep what’s schedule. look that’s this program couple

John Cywinski

if portfolio is standpoint, the been there were And approximately remodeled from the last our we consumer shape, distressed front, considering the removed systems Applebee’s system and the assets And in within look then a pruning the part Brett, of system. that have very XX% those years. asset on six didn’t were from our good of good up

a have is prototype that developed, We value it we’ve new engineered.

and our stability the focused at of franchisees comp predictability growth. now we’ll engage the time, We’re and of the sales in evolution right begin right kind of And next remodeling.

Steve Joyce

Yes.

let’s So side. with start international on front development the the

half other areas units are hand the globally. the on the brands in year. globally. What is three that the very a and of were of franchising done two churn the last that got different is pipeline last on our In and on approach grow a couple bullish XXX to to rapidly restaurants expanding mentioned couple existing years, our has years, previously. the become some each in we’ve We where very to We ability seen you’ve

the in scale past. franchisees much about been have more may are we having So as much with a we within concerned business more doing obviously than interested who we’re and market in

the in we you’ll but the are additional going expand in additional that about We to growth bringing footprint the got we’ve resourcing factors, going a drive we to the great see and with past. done greater forward. combination those profitable franchisees have in those than investment of opportunity got density international talking think significant we’ve approach, and international us to may market-by-market so where existing markets think a And continue and And to side. new

of exciting on but similar introduced we’ve new the of have in formats also side. one format obviously front, On is to at like on. the a exciting. Flip’d the things some some we Applebee’s growth is for really looking both. flow idea for open Applebee’s and We’ve We returning there just at formats, cash going IHOP idea domestic The fast looked really

look us with So based you’re marketplace, makes what with the by expectations. sense continue on size individual going franchisees to guests and to to see unit approach work at what

overall that excited health both and Returning think the really, to pay franchisees signal the that. dividends. system Applebee’s I to will of was we’re so we about that So think, growth the big going of

are the incredible, I front On lies us. you at there that even been adding. last other are the category who’s the yes, years, that but it’s that of grown I mean number are mean, And of number, we’ve some it not we’re in the IHOP same adding the this growing folks in new though, is side, if look already, they’re IHOP. over XX opportunity just restaurants

So good. IHOP in our position is

going about guidance look the at going for talk to be forward that you If going to growth IHOP, we’re explosive. of it’s

big interest from expecting is strong. Flip’d. level The We’re things

first one it, the concept open a lot. in in, to going We’re that call April-ish like Atlanta. We

those options there’s one kitchen particularly of look be restaurants, when a out some looking at you other we’ve looking then We’re signed we ones we’re there. conversion to bring a big grow where And at we’re opportunities big at footprints they looking the to of lot this nontraditional And value whether ability well the that but at. these expansion point in existing to significant or as footprint to haven’t of Americans. well looking we’re to areas that run a is of strong native casinos for opportunity for going to begun think we’re the as expansion think even IHOP truck example, the There’s us we at, we get stops going as gaming just other give going Applebee’s. tap by we’re that we as significant

Operator

Thank you.

from is with question next SunTrust. Our Jake Bartlett

Jake Bartlett

or of was on kind guidance kind the kind of development, I side for kind net of Applebee’s, represent a just should But had development, fourth about with first of quarter, what a the I clarifications, call international there of how does quick play closures questions. large the the taking for a domestic up of Thanks us given number know Great. couple international you’ve it. but in that into maybe that? cleaning that of

Steve Joyce

with, cleaning to some that what want one we with. decided fourth I up, continue the think do saw in were franchisee that we did was you to quarter we was struggling not that business really it but

back replace lost. go that result, drove units market that that that so to of most and those we we into expect And and

and think continuing prune net two, or growth to but think of ought I next you’ll strong in to result efforts. about way then unit strong those a the I year think inventory it growth the the is, see we’re I as eventually,

Jake Bartlett

the deep that And forever? a margins then kind question, us is kind way of are from Can comment something essentially one tell value for during Also, value some Eat expect your value you actually forever, how kind value this then level engineered you you’re forever? that You like it. promotions, just All of Applebee’s heard that just that it you of we’ve Riblets, of maintaining Got that franchisees’ do in of in to level And of that margins keep what could can inflation can’t keep XXXX? competitors your those answer commodity

Steve Joyce

That’s running, programs driving are the increasing designed. when the not we it. When we the programs we decreasing are way are are traffic, margin,

So this I’ll little a to bit. let talk John

We that pointing are we forward, guest interest strong as well restaurants it’s the a coming into an to believe looking in and driving at combination where of in opportunity as value our price going and abundant both brands keep traffic. maintain

of increases, it’s to of in the positive traffic a well go because sales mild mix, and up we price comp menu. that because as different of to may not drive Our so are our pricing goal combination drive continue managing a fashion, with on but price highlighting it’s as our increasing is balanced items

a profitability. they very goal. not we’ve the and that that profitable, over built programs several we are when hallmark been franchisees that drive the is they they our work, drive our So And monitored traffic, only years, has last carefully,

that’s aspect go it so drive And other we us. our in, we same see any to sure that’s made not We all to drive for because offer shortage the people made. to expect that business it’s not John? we a margin do. come, the offer positive and with don’t the deteriorating franchisees. can make what structure for see our We limit value is don’t XXXX. programs buy value when to thing the any through drive of continue them ability in We We of these that’s

John Cywinski

Yes.

we we do which and and by have incremental we think a traffic for we franchisees. validate. We a vacuum both, around profitable. to can and we with believe I then believe framed test we Steve Look, can architecture partners. We we extraordinarily myriad drive it We these. our franchise don’t an designed well, ways our want programs in incremental Jake. do And this of profitability them be create these

It’s the come we that perceived order place. actually percentage In the again, we innovation, but order a important of and we guests our proposition the full understand do percentage continue discounted may be of communicate price We it. end the into what guests in important isn’t this between a margin as and little important value can we of always understanding and discretionary when us. Overt We our dynamic, alone. the seeker a also our is who restaurants And in we believe value from price to be partnership value that to abundance with also critically to dynamic have We menu. franchisees. as income believe deeply balance up profitable overt successful.

Tom Song

this Tom. Jay, is

question. basket me Let the just get commodity

over brands, favorable for of back both favorable Applebee’s. pretty some X.X%, was for year we’re give signs on seeing XXXX, IHOP X%. Applebee’s by was over was So now, year XXXX favorable that year year by some

by for by We’re points, unfavorable at XXXX unfavorable IHOP, XXX XX looking at basis basis points.

two give of still bit years, little by take, Applebee’s a between and the favorable X%. So

Steve Joyce

going will continue and in we’re any any keep increases in programs to Jay, cost running But of for both thoughts? we take commodity. we’re see that brands, mind, improvement advantage to those the offset

Jay Johns

deal, certain say somebody whether lower value, X% a people number and those down the may The or X% that only that. want else. can campaign of discount, depending from of is place to can The that an buy people though, Yes. difference what’s couch there’s offer be on these the instead difference it that is in standpoint get you value XX% being John, and the That than to percentage the to up what your and think, traffic, in difference come people would that actually to on thing be that made only the traffic if IHOP what’s move not. I they it’s a on actually of seekers off is, buy you significant the would on your between XX% only similar and

or to a that traffic be incremental difference got of traffic to lot be you’re going That time up competitive drive whether not So extra or we’ve is of in. down. the to

make but In in you the that’s sometimes helps act important, profitable I to good about, enough and we’ve you having the going a what have or two franchisees definitely for comes And to think too, that traffic, you’re in what a more relevant percentage it’s that’s can money. marketing is your outside we’re and you to building, have use concert have handing franchisees look program your to traffic in penny profit. mind an something drive people? POP So restaurant. that our What you to messages your less example, of keep we layout? profit, Well, what here that you what like a care traffic. is dollars everybody that everybody how’s you our with down in want guests. to that, of traffic the There’s And I restaurant, you have who balancing are on flow but think buys not want of the the we tenth The trade a to for bank menu is, drive in actually product. goal comes got

John Cywinski

one that must right? on to they without ability scale, Final look the this the incrementality, do in you proposition. think particular, a not media if the The it’s must it’s thing I compelling on you I’m right, sure smaller have to one, Jake. to consistent drive And have muscle that John have across point. basis. is players landscape, Hey, important this advertising be it’s The an compelling content, a and point,

to engineer drive there. You awareness repeat, to effective and but that are you and and have and attractive muscle trial to think proposition. can don’t IHOP We be in Applebee’s proposition a the if going well guest, are a communication positioned fail for the you

Jake Bartlett

the in was is, drag And we more quick from is expect was should is fourth last, actually, the than something the last kind that the one in a some XXXX might that something usually be in one, out that just flipped quarter, the that question the catch-up should it. year, a comes fourth Got prior that’s but then wash, so or advertising it period? real expense revenue other of quarter

Tom Song

No.

advertising our equate tend up. make do you expect to When those overall to thereafter, shortly have can slight following you expenditures advertising tend our receipts You That’s year expenses. in or roughly differences to expectation. to timing on the

Jake Bartlett

the X.XX% can of the contribution, share the continue of the XXXX? terms in of beyond likelihood thoughts kind then And of that. last we’re on that year Okay. Any would in the you that,

Tom Song

stated, going have we as reveal here. anything I’m proprietary to Jake, not

driving for We like relevance, tend subject. contribution And be have brand aligned franchisees. more are making on a terrific that to they on money rates, partnership come things when so and we to

Jake Bartlett

very Appreciate you Thank it. it. much. Got

Operator

Associates. our And from have next CL question & Todd we Brooks with King

Todd Brooks

afternoon, everybody. Good

on. are across thoughts quick focused question catering, that how I secondly, you forward about rolled really you two need that? a dollars then in brands restaurant you on value a of menu? marketing growth that Steve, for that highlighted big you to in we’re about And the could of kind scale behind One, talk really taking the would talk if and know catering be the And of pace can nameplates at of then as both to putting Just that both the driver out guys concept about of driving before on catering? both facets and the catering carrying talk Can rollout brands. we if

Steve Joyce

Yes.

So then about me we’ll start in general brand. and talk let each

IHOP the being in we which would because time to big for ways. as obviously have is us. a when don’t from they’re getting doing it another and want to options a a opportunity residential very two perfect don’t catering One that, see together setting for families think it is from or we in we catering brunch option. or see we they are Applebee’s So the for event, a options lots many ourselves do of lead see to varied from cooking, And

they because we brand. behind for or this rolling we And off-premise out think will will us opportunity can to is talk marketing that are and put We an muscle didn’t. all it and dominated the and of because the has only us one market two the are in franchisees significant them where going that profitability franchisees that drive value for has a players rest that about it each forward, rapidly it we went is by and dominating the they and been been traditionally reason after they’re that

big we muscle in will catering we put aspect. the yes, see it. behind So upside marketing And

Jay? So,

Jay Johns

like in restaurants down Yes. to this and kind the At signed have my said I are right get this, established are critical restaurants would We that of market. in getting XXX a do before we to got phases. money in with IHOP, catering lot have we’ve goes our we and make message, we chops of to things mass two up processes got got They want franchisees. operational sure for our spend to to We be able ready. the go as

So this just really goes in two phases.

having the of this out people The first at going and This really marketing is business. building restaurant the this level grassroots locally. phase is

it’s start catering to you is now more can, this, about channels to the kind offices, That assistants we along push do some all we’re together to it. etcetera. and book things into looking folding wave as build at the time you grassroots get doing for That’s skills catering much talk helps marketing first as these to that with actually And market think you how broadly. will administrative who going If and to business. this. to of what overall come execute off-premise and of

John Cywinski

incidental, to And And those XXXX our to-go, that that leveraging fully being of time of to time I of business think layer? against now and consider this brands for XX% catering a be database, being to-go on offer with And this will optimizing year other the was delivery. have XXXX working does Without both X% sales reintroduction side, time, Todd, of X% of it benchmark franchisees establish was very when significant it some XXXX take approximately some a who take long Applebee’s XXXX emergence which I arena, kind America. hard year we XXXX, to kind would been of is could and then while the credibility X% much and everywhere. in to a you question, establish in activation delivery. but does year. this a a engines be is both foundational it in a

Todd Brooks

And catering, price service with the Do is offering positioning? market back the to the how value That’s part both brands? this? you just are price Is on and you reinforce great. that pricing? the for this of you Or capture this convenience type looping would share a value go-to-market more of of and

Steve Joyce

talking I broad delivery? you Todd, are scale or understand, in

John Cywinski

Catering.

Steve Joyce

Catering?

Todd Brooks

catering. Broad-scale

John Cywinski

catering $XXX. is Applebee’s $XX check average probably is north of Look, in

you, And entrees. from You it’s attractive consumer standpoint. and do far a individual it more than have guest we ordering efficiencies make for financially easy

yes, is a component there So that clearly to embedded. value

Jay Johns

got this. I seen this on that expensive. I’ve to do a times you we’re people places have, the past rate think There’s guests what amount that this bulk side, thinking try where of too about be the on IHOP fail in number charge kind in is to the other that’s X of you

value, are value but that bulk you’re a the a in to talking deep not We consumer price. getting is deep there discounting, marketplace that

Todd Brooks

helpful. Okay, great. was Thanks. That

Steve Joyce

Thank you.

Operator

Thank you.

Joyce questions this to will the call now over time. Steve I We for closing no turn further remarks. have at

Steve Joyce

to call April on XX. your day. with Have first-quarter So thanks, time. again forward look again, for you We a for good scheduled our speaking

Operator

this for Ladies Thank you. participating. conference. concludes gentlemen, and Thank you our

You disconnect. may now

Dine Brands Global (DIN) 24 Feb 202019 Q4 Earnings call transcript