DIN - Earnings call transcript Q1 2020 | Dine Brands Global, Inc.

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Operator

Good morning and welcome to Dine Brands First Quarter Conference Call. I'm joined by Richard Dhal, Chairman of the Board; Steve Joyce, CEO; Tom Song, CFO; Jay Johns, President of IHOP; and John Cywinski, President of Applebee's.

Before I turn the call over to Richard for opening remarks, please remember our Safe Harbor regarding forward-looking information.

During the call, management may discuss information that is forward-looking and involves known and unknown risks, uncertainties and other factors which may cause the actual results to differ than those expressed or implied. Please evaluate the forward-looking information and the context of these factors which are detailed in today's press release and 10-Q filing.

as or and supplement are obligations seems statements update to these forward-looking of it today no The statements.

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

to With that, Richard. call I’ll the turn over

Richard Dhal

is focus brought the coronavirus Ken. and and franchisees, to I my utmost hope crisis concern. pandemic. ever everyone's thoughts. The wish our the to doing board guests, I your are is you give the to wish are Good morning. management you, wellbeing call take importance to a this and and employees, by of Clearly, of closely war. assure to I the that well. so on management moment of investors that Thank company board primary working for families the you brought in is ensure and this expertise

ever all know and read board of situation is is I making. changing decision in the participating you earnings major announcement. addressed constantly our The have the

made that have our supportive be and and and the them appreciate company together succeed. vendors We proud of will you to all and we knowing our this team. tough very support. some a I'm franchisees this of the thank decisions completely strength, actions. these our part members, we and do respect attitude of I team for can board your of is very We

to call Steve. the turn I'll Now, over

Steve Joyce

morning Good Richard. you joining you, Thank thank today. for us and

our The are only government say doing and times. as country measures a and on call on physical The and the significant like close restaurants drastically. had whole. unprecedented Before to go delivery changed has well premise as our we all industry to distancing participating impact begin, These families. is I that mandates a and we industry allowing requiring and has I it know everyone diners to hope would your safe truly

in proud team across of been the past teams, the we the and stepped during our restaurant commitment which During have of of our who times. truly seen company country month, our franchisees, to communities resiliency, faced tirelessly our Each behalf and members challenges I people. work we of and and I've the brands this of best the focus these on serve. tremendously trying have unceasing thousands up the

Our Board of that engaged confident me and leadership, team we resources with is hand steady with path. Directors and scenarios have the is manage to the and a actively agility these clear and various a through management

to at related has Dine’s, response with coronavirus to been to enabled team operated as company continuity the organization, informed and to us business as Our across information, operations crucial obtain which well decisions engaged the cross ongoing. of impact has the our functional is restaurants. maintain fully make crisis authorities the all and levels timely

members our health The remains guests and priority. our safety of and number one team

limited We our the decisions I'm up-to-the critical in also have to our been monitoring franchisees, in business while our quarter. mainly off-premise open end of at say of remained domestic that our to and the restaurants services first running. clock, To restaurants operations and pleased go that and to minute safe keeping other approximately making to restrictions despite best only on work the dine-in delivery restrictions the stay virus mandatory around XX% for how

particularly meaningful delivery. in In channels, fact, across sales experienced both brands have these growth

years. XX% IHOP seen Applebee's been After XX. domestic business Growing and week our ended last grow transitioning off-premise the the week only ended both March to off-premise over have our between at of our the has X growth by part system-wide the sales long-term April off-premise and plans model, we three

and pivot franchisees with delivery to to a our to model result, a disruptions. only As minimal go were able operational

important have innovation strategy. our off-premise played in roles and Technology

ordering across it capabilities both the order our launched before easier we guests and business. and to for digital initiatives of the enhanced to support catering pandemic, including expansion make new several While brands, to building

performance increased before brand. completely platform mind. We'll in already offer has guest we’ll leverage device off-premise variable their say and get but rapidly technology our this pleased order off-premise with is our continue to dine-in strong the to COVID-XX use that When takeout, the business IHOP move and to option curbside restaurants, cover already franchisees was that many resumed enabled with reduced for demand capacity. we introduced to we've to for at new safety personal developed IHOP’s to I'm pay. our costs pickup the of in service which

of economics franchisee Tom shortly. will overview an provide

lease obligations by and fees, so case with to basis. remember franchisees operational case very that remodel more impact work of Please situations other on provide restrictions, and will these we a advertising by help support continue also significantly the affected and brands little respective closely on support and financial we payments later. a John offered measures To Both challenges. royalty, fluid will have franchisees details are on by their the Jay deferring minimize mandated our

able operating same. efforts hard some Additionally, new last we our establish as to brands and other several manage franchisees the provided costs the weeks. this the just for their uncertainties Act substantial other must came some under and who believe team some costs had cut we to Cares access those we several funding. as incredibly non-employee resort this support reduce have To to to to over were of only to and reduce support crisis We The programs liquidity members. help the included that past and businesses do after furloughing period, operations, this expenses our decision get through has decisions the make a work created

savings de-prioritize We reductions substantial hires and contractors. a cost discretionary freeze and in including we implemented on spending have new

to and us to able safely get be back improve. help tough optimistic team our from forward into a members back our emerge as believe bring our these our road the difficult Dine welcoming We guests restaurants. crisis to navigate and remain ahead conditions brands decisions to these and position positive will times through strong We in that this two will furlough look

now results. With to that, of the Tom call I'm over overview first to Tom? turn an to going provide quarter

Tom Song

and I morning doing thank for you well. you're hope Good everyone, Thank you, today. participating that all Steve.

Our the industry how to pandemic begin I'll to we've financial steps flexibility. taken uncharted territory. in for and the by discussing is we certainly reinforce respond

a $XXX drew completed we part as our was million we financing down note, issued month, total revolving a from variable of securitization Last or facility which funding in XXXX. of

measure need by cash, While didn't uncertainty have taken action an caused this additional we precautionary COVID-XX. the a immediate as was given for

like XXXX, this related includes we programs. cash unrestricted. company's At card to gift advertising the our funds had highlight cash $XXX sheet. end quarter and the In up with to of IHOP doing that so, held first shored million being of I'd we million balance of the $XXX

we we model, brands Given our minimal solid CapEx manage requirements our have and asset-light to operations liquidity strong cash position, through the and business believe, crises.

and be monitored. our VFN million Regarding and has approximately gross quarter. per exposure closed $XX expenses currently securitization These projections quarterly general lease drawdown just on The million of $XX.X to quarter mentioned. $X.X that of quarterly cash, are that million The interest franchise cash its restaurants administrative company and I being exclude estimates needs. company per under payments approximately

the of Our remainder assigned cash year. reduction the cost G&A one-third controllable represents of forecast a for

interest-only million [X.XX] that In the approximately the addition, with if These $X.X million above and the be quarterly of mandatory we goes would $X our the expenditures to only payments remainder payments reduced we have the for capital by ratio currently leverage $X.XX securitization, Covering year. exceeded principle the million, times. paying we're leverage. quarterly

times was the of X.XX to service ratio want was XX, highlight the As debt ratio, March leverage XX. March X.XX as which I times. of

several implemented franchisees Now, case-by-case Steve which advertising our some level, IHOP reviewed let's franchisees, the to and at franchisees. of landlords behalf ensure rent We're turn assistance And the the near-term we've stability of includes programs brands. franchisees evaluating for regarding with as basis Dine we've help and both on a concessions. request At deferrals financing mentioned and royalty payments. rent specifically on payment of engage assistance, requests deferrals for for for our

briefly gears franchisee economics. Switching to

economics to-go is with to of have of variable and rent consistent testament severe franchisees a brands. Our and sometimes pleased off-premise conditions. costs which only generally the their across off-premise is reduce This we been only operators and were costs cover under conditions analysis levels unit tackle that under with why which ability sales has and impressive franchise very substantially restaurants, number quality our able aggregate model both restricted been current Many have service. comprised we've the delivery the these to open of is to shown

we're vast quarter, across on due open room for local state service As to of Steve service. the which offered end majority mentioned, brands both of off-premise the dining at government restrictions business, domestic the our first XX% and only of the system

takeout both the in increase domestic to to John As growth was due more on of IHOP first of in provide our sequential XXXX. details Applebee's This April delivery XX% April in operations. system and the XX, quarter of will is sales off-premise at meaningful our openings open. and and Jay compared

I'll first were and financial as a XXXX The government in restrictions year. service profit $X.XX, mandated the was stay-at-home recap for to compared result first Now, quarter the significant of EPS lower for briefly of traffic of results. and last on our first to implemented gross Adjusted decline local the quarter guest state $X.XX quarter decrease due as dine-in orders.

continue in year-over-year G&A, our improvement we Regarding G&A. to drive

and was same of to For million the $XX.X for G&A was The compensation XXXX. XXXX of expenses mainly quarter to professional and in decline costs research services. decrease compared the lower due million first $XX.X of period

Turning to our tax rate.

of that, relatively with Our fact for to of cash for March XXXX. first $XX.X quarter from XXXX. same for the which of $XX.X And first adjusted XX.X% for flat last of was the to at million million was for quarter very of pleased flow our free $XX.X cash the periods XXXX Adjusted same year. with stable EBITDA crisis challenging $XX.X increased respect in compared our XXXX, first quarter first to cash first GAAP flows, million essentially XXXX, was We're last the quarter tax of was to year. operations compared rate to the the the XXXX, quarter period effective for the from the XX.X% of to start $XX.X the million despite this million

Regarding capital allocation.

repurchases month, in for to due measures, disclosed the the need COVID-XX open stock future. orders As to common market for caused take has precautionary the uncertainty its of foreseeable by and company all the terminated outstanding last the

also has our dividend. Directors of Board Our cash suspended

industry to as At resume. we and our while conditions we our re-evaluate time, our updating lift. strategy will will previous allocation restrictions comments normal expected capital as not beyond this my operations restaurant we anticipate guidance this that approve are expenses, are revisit We related

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

John Cywinski

Thanks, state of to share as possible My objective everyone. the detail hello to the Tom, as today much business. as and here current is Applebee's

crisis performance let's the start QX emerged. before with For context

through results the had As government were ending various ago. time outlined tremendous X.X% release, restrictions the positive March the the placed X week on in sales rolling to from year prior restaurants. upon X.X% a Applebee's momentum positive same frame Comp

model year, sales XX. total, posted of XX with to week a business the in the before franchisees restaurants positive local mid-March. XXX category and at In off-premise ending Applebee's dine-in shift to dine-in comp X,XXX closed we and casual our the restrictions outperformed meaningfully the consecutive let March downturn weeks have along began the downturn temporarily today This domestic quickly time, franchisees to the given of start uncertainty

the is approximately the over here each expect closed remain to At of temporarily restaurants that reopened present, number the become operations. locations passing good their getting days. we franchisees off-premise domestic day, next Now, as number smaller news and with even is, smaller XX XXX closed

about and municipalities as well once have dining of all for local Applebee's these to provide a temporarily-closed we our restaurants of total, restaurants rooms most the restaurants In light. green their anticipate as business X,XXX off-premise we reopen open

April important with XX.X% X closed XX.X% XX, to the XX, week XX up began. March very Easter XXX progressed ending this share sales From ending the to ending ending XX.X% detail. March but emerged, of the that the XX, to March Sunday, XX.X% point the tough After the here minus XX.X% comp April were comp minus this representing crisis X.X% April a restaurants sales through our year-to-date week crisis minus March it's like were week. demand from since X, the and time minus making minus week week to I'd being this our on lowest point from in to the Now in past know week we week read. ending

yet. April Our comp ending XX.X% sales representing week week XX the XX, XX.X% performance improved the April best minus and then ending minus to our

the As I believe we all checks timeframe. over benefited across arriving same stimulus country from the

two Midwest minus in weeks. For the from the XX% minus context, sales additional and and geographic minus XX% system Texas, California ranged XX% minus to XX% over to Northeast past to in

in total, of geography. Applebee's perspective, currently per have sales million mix. XX% from $XX,XXX an approximately of to of at mind, absolute restaurant of moved XX% restaurant in from off-premise the Applebee's Interestingly, approximately average XXXX. the of $X.X start almost this with past of at now So week. average tripled to mix volume, is depending has the From currently QX capturing year's end last Keeping weekly dollar of average delivery mid-March representing again Carside XX% in our volume $X,XXX XX% balance approximately restaurant about upon To-Go

reopening dining restaurant limited While off-premise are which our also operational teams, very of menu the reporting reduced team, management help to franchise in will mode, and that a partners all they've ensure restaurants are core us with excellence. this obviously rooms. a with operating, pleased small retained I'm hours successfully significantly that

currently through restaurant as taking our March we Applebee's media marketing open a and we make guests and for signage spending throughout on well highest a to postings on place our to Twitter, remained own chose is actions Facebook only our I'd frame from our modest activity The XX, takeout discontinue are course to of Now, all indeed local activation shift Instagram, Affective the crisis. and and who delivery. like perspective. database gears national as

decided In addition, commitments; we access once had to QX inventory successfully although canceled to certainly XXX% we our of media marketing. national reintroduce media we

a handling. party getting cabin our bit indulgent Applebee's really guests to and escape me delivery the they Plus I up have over several themselves don't across trust to for third little prolonging homes a review fever, I their To-Go they additional it neighborhood enjoyed it’s As favoring after guests that and past hopping pick of of a their part can party clear Carside about the because weeks, We're they country. to the our believe the seeing out in in third worry are Applebee's. this brand, cars

Georgia report accordance as Monday safety, and to week, in new and also that service Tuesday our adherence I'm room and reopening parameters social dining pleased distancing first regulations with and local to protocols. as strict in our this occurred is Tennessee sanitation, in well

Iowa, smart, to well call, Missouri, before begin Texas, this applying Montana, As as with up it other practice we learning in we'll appears of of North and Oklahoma, Utah, Nebraska, expansion determined. best morning be in and we're sequenced measured this as be geographies Alaska, a Dakota, opening

additional week, service state we including full It's with the have contingent to certainly follow XXX conceivable more governments. restaurants than course dining rooms restaurants guidance open of of cascade next upon from and local

well It's we to good mid-March engagement important this poised rolling note my robust of hall continue throughout off-premise of environment, as The cascade is business satisfy franchisee town the openings. on demand quick leadership beginning in this team. moving that in all franchisee know calls in supply our remain guests expectation chain entire initiated as Applebee's also to interactive the in critical for our shape should I a that role and remains very forward. play lives will our and

means in of real-time of has and engagement, over cascade XX held calls weeks. communication six total we've proven past primary and strategy alignment, the our of connection as invaluable This these

our Finally, very to spirit Dine and moment I'd like for the a well here teams as franchise partners talented crisis. Applebee's our to entrepreneurial take and remarkable as this throughout resilience, certainly perseverance, thank

more unified and in stronger leaders than come are and sooner even times. become folks a this We result my It's I'm these as than that often expect. best we'll at adversity, tough experience most ever of the personal and out determined confident

that, turn Jay. I'll to With it

Jay Johns

sales restrictions you're IHOP’s in guests have home in service, doing restaurant the significantly performance COVID-XX Good times. John. also our disclosed. by impacted during quarter everyone. tough as doing effects was safe companies staying statewide of all on first morning closures. and dine-in traffic and is on operations declined restrictions fell restaurant other sharply first IHOP’s XX.X% hope Thank the to comp March, separate well you, restaurant mandated and parts stay for quarter these I mandates

the Since beginning consistent in see weekly April's improvement sales. of started we second to the quarter,

XX.X% For XXX April of sales points. X, were ending, were By improvement down XX, at basis the XX.X%. week sales week April down ending the

restrictions franchisees changing quickly. and able continue on to As mandates implemented, I want thank to we countless were to team statewide to work adapt the restaurant and tirelessly recognize landscape. service the pivot dine-in this who teams members, to and the were ever

shifted an nimble a remain brand The protocols. state implementations and to of over only off-premise on just model weeks, based by few state stay-at-home

safe performing And Additionally, help This new the guests our to the ultimately XXXX due distancing well. meet practices to option very our domestic part in is convenience with needs the in support we're results. curbside we curve, rapidly for flatten restaurants. guests of pickup developed over pleased and

X.X% In for progressive to April X week week of as a Most remain our of XX, growth percentage off-premise the and to X.X% ending off-premise to and see the to increasing the prior compared of week XX. the the week this domestic only sales fact doubled sales off-premise open April continue model. under pickup X% of curbside total operate to restaurants ending for April

door. to we're right respite we with of serve so, that indoors from being able the by delivery in that communities convenience guests doing or a meal having providing great their In which to to brief come help the pickup

sales increase compared the even XXX mix quarter accounted fourth business which traffic of our points is XX% approximately off-premises The an growth Off-premise In by the account quarter of restrictions of dine-in sales quarter XXXX, XXXX now to were fact, on XX% of for compared in occasions the for XXXX. total basis first check. continued and first partially by the in delivery in increased an XX% of of to quarter, of off-premise first in healthy and sales. driven offset QX,

becoming off-premise XX% consumer with and only as food capabilities, at increasingly not are may our the familiar portable for delivery our primarily platform. Approximately the is, also a of exceptions. but open few end how have our to-go We service domestic of remain with restaurants fundamentally our just guests quarter the off-premise of awareness reset

this our As week, remained approximately of XX% open. domestic restaurants

a have road ahead. We

is to first do return it when and a goal to sense operations so. resume normalcy Our service and foremost to is safe full of

across At engaged Dine of the fully the with and IHOP onset IHOP the around team we the teams. clock team, management -- remain Brands working our with pandemic, swiftly, internal acted functional

and council, implemented plans. we've crisis franchise our Our our our supplier franchisees partners leadership as

our more two with parallel efforts, operations under Our on This immediate actions and stabilizing immediate conditions. run brands making to effective planning cost is when focused easier safe on these keeping unique business. stabilization relaunching restaurants the remain and focus subside. goals, main guests XX% operational current conditions the team the we’re In also

restaurants significantly will From impacted of we than experience usual not restaurant will the our and understand this the with and standpoint, guests an standard going safety believe this that up mandates to when And into our value and and with different. and mind more will cleanliness. forward we be as there top business coming we're include We We over will personal operation reopen. pre-COVID-XX going industry procedures value more know beyond out be taking guests of craveability. be be is consideration just clues now operating IHOP

guests guidelines. have with into standards coronavirus coverings, We include confirmed view, traffic our of our soon want CDC COVID-XX. as for a protocol to say team lineup distancing pleased business scrutiny suspected follows proactive of safely we open drive and members reopen. to CDC for to recommended restaurants being on In than IHOP’s a ensure of measures level that ever an training actions most Providing that strategy Restaurants if Operational facial to is. will or win we've when offer higher reassurance what and that they reactive the implemented guidelines have as exposed on with a franchisees members back social that will team recommended before. I'm implementation can. we

the restaurants developed -- for franchisees the the as delivery. means nearly than a to our XXXX dine-in were state back state home our comprehensive primarily XXXX to the -- prepare to shift, use to locations opened favorite With more guests, restaurants start as to IHOP a we're guide go to and to welcome restaurants mandates. we've open serve guests at for And

this as until relaunch changes the curbside We're in of not team for are pickups mind. key our tactics provide on members. items also and These having made guests table of rollout the safety committing of in room Some significantly guest less means in exposure guests a dining include or changes to to guests and development members the our with team such being arrive. the have

we wrap place have the ramps-up will we're as IHOP guest currently in To demand for a again. of believe path strength remain the while once up, intact faced and industry challenges, strategy appeal We forward. with

call With the that, I'll now back Steve Steve? turn closing for comments.

Steve Joyce

though To unprecedented. Jay. times that I strongly are Thanks fundamentals remain strong. believe Dine's difficult close these

doing to I this execute with view. a and We through will full will get confidence, the continue against manage together. so, strategy we our have business In long-term

we'd pleased call open for the questions to Now may have. any you be Operator?

Operator

Our question Bartlett Instructions] from Jake Thank is you. ahead, Jake. [Operator first with go Please SunTrust.

Jake Bartlett

My the first to two franchisees and the health one of that. parts on is

is I to that are think of facing the it's investors more concerned. one biggest be in really the unknown

So question give the kind to of could insight would us any is, level the system? within of indication as helpful. franchise be you broad leverage Any one

that costs sales you franchisees at including level give, these and is the from their And levels, cover could at costs? variable decrease but the question what at including what normal of the second sales then unit able is, fixed variable or restaurant level are generally you costs breakeven mentioned part that level, to fixed

Steve Joyce

leverage levels Yes, are so shifting. obviously

Tom at give and kind at various levels. asked is how insight having that wall do to profitability that, I've However, some into what said look you four of revenue we

walk So want through you to there. you do Tom,

Tom Song

variability of between those average day. be that across our there's the sales a kind restaurants Yes X,XXX to normally of the two X,XXX about per to in brands. tends but Again, to lot brands

a keep said now But seeing $XXX sales of that $X,XXX for neighborhood having to that, day, – what in we level the we're make of work per is day. it more stress a noticed notice restaurants per crew. we $X,XXX them will doors extreme of to what the for lot with So an it off-premise is skeleton is around open that worthwhile

And the that it rent and of to cover costs. is what more that cover variable of that the end costs spectrum, of starts variable the higher fixed at starts spectrum costs on lower and to end do to starts

for $X,XXX day year. And supports per listen to you X.X level is or of end so And health level the AUV kind our to about of on if substance equates that open franchisee million the restaurant. an that a financial view that lower

Jake Bartlett

Got of had much as helpful. it. kind going of a or really of been going should question and exposure of if the about particularly, of? the then it's Maybe off-premise the increase, just you and that could on Applebee's? That's discuss And breakfast and whether aware hasn't the some then IHOP an to for difference anything trust. just else reasons performance the businesses that's as there since I but we that really fallen sales IHOP well, be between fairly been into the of has robust performance a had more had this kind

Steve Joyce

up this to IHOP’s Obviously little on through Jay Yes, Jay, rapidly pre-crisis, Applebee's, in back a talk Carside has where seen to bringing To-Go has so ask IHOP I'm really lift this great to and been going had detail? earlier fill though started was. business crisis. the growth over growing want bit in. we a

Jay John

way but down gaining on very after results immediately John growth from started we've then consistently that, initially think great went for weeks. a seen similar what saw this initially to week patterns standpoint. trajectory I of week We Yes,

local we more in like rolled to out and happen obviously experience, learning are curbside restaurants it's without implemented that it. all get clubs And about starting really things it. protocols and people the they email about that know and to as to people amount much marketing we As just marketing,

we're and started rapidly we've longer when things years how last two runway been to of And of the two for growing real in pleased with just I doing ramping the practically. when and the three side. brands is off-premise couple much you really carsides on has a long decade or up Applebee��s a compare think we're they've IHOP So trajectory, the remember

in to the I for So I a using they're offices, from that think bit a do home. breakfast, at meals are And of your an about difference there's working little think there advantage is feel staying we guests not the point at probably They're their. that. what

way very stopping to busy to kids or So meal now is toaster pastries, the watching cetera. easy the sometimes at cetera, that cereal are on to that home that meal give working work, gone. for breakfast, a get them et et It's parents

So it's if your easy now. cooking an meal you're yourself to replace own doing

So the places little a replacement day, doing has other. going a you're impact, time that dinner like probably home half, one to if a are meal bit the some look only order they're than of more of that replacements, winning

difference think I of the there's that's So, the causing between a right all two of now, little bit that probably brands.

.Operator

[Operator Thank you. Instructions].

Our next question is from Nick Setyan with Wedbush.

Nick Setyan

Can back. include thinking up the stores sales as that and IHOP turn are both today. little given percentage about just cash as Applebee's, about a flows labor thank calculation much rates talking of see, the background? incremental open and up, on? we of you, and provided things then some in you the And room margins? in-dining question or been wage those One that of only maybe hiring do appreciated. these Thank everyone guys Do difference What come would the the sales, or capacity again the of staff off-premise of about be that breakeven constraints sort up the early closures? you negative comp for room the we Can dining Are you very dining within sort versus model? to issues kind of then seeing have that address between think of oppose as sort the the is sort you benefits before all you you will detail the come you. how clarification any we more Thank bit is,

Steve Joyce

Yes.

profitability talk little So, off think we a about, and goes. let bit why me lead don't you then where

So, brands of our uniform pretty and our franchisees but operate, both all, only approach across first not is operate. across restaurants once we the

open way and reopening for two in got is forward And the which that, restaurants the seeing we're restaurants literally path one so, we're days. we've

in And thing and so is pancakes. the had ate in ate came the restaurant but people and drinks interesting – and

so, members going were point. be happy tell I because that, at anything team work back share obviously think. were of we're mean this there numbers And glad not people to lot you But, to I There they to a at was back. can wouldn't be

a think and so, do it we're they to is going I time going sure the same are add going is way And over to the we're staff. thing, to this franchise

open certain you to a there's need Now, restaurant. a number that

because a around. But fix. So that a we remember, lot lot of kept limited of on there's we're with the managers a managers

they'll what hourly would normally be doing considered some So, be work.

to so, of there And revenues staff be support goal the a is back have it. to the will as you add combination that. And

our it's true is we were that profitability and to we -- from at. us of so franchisees, going And sales overall most are don't is, hope and that, we levels people restaurant were sorry number in costs Clearly, it's where, off-premise at elevated to covering started the our be know where with some the like? were look that for costs is allowed we municipality variable and many and those our that think covering I true so, we we we're is components, that, point added fixed what restaurant coming for that begins and this remain to what's in costs look, at were point and are covering this incrementally adding in sales into and are a I'm we've by interested covering restaurants just at -- how because fixed levels of

sort And at to back more cover costs, probably As we can sales, covering think we out Tom you your lease. restaurant the start the of we but we'll variable begin then add also continue fixed of levels covering which costs. believe laid

And and we what going to at lot of we try have we're because to so is think this say don't to speculation visibility point very a what into, know, valuable. I not

in to so beyond are And point over restaurants. the restaurant learn we how we'll next safety crisis, the the visibly in and month many this in what above demonstrate comfortable going is to are and the reality, coming at people

earlier. areas kitchen, the expect things space, wiped So all made gloves that between table, you down were of facing us Nothing that to from everything comes and make a have mentioning people we the in everywhere. changes the number masks on the restaurants, so

So next populations point and a in a learn to population the in crisis, out part certain of continue I up. want we'll number this the think that it to there's certain pick to eat what month okay wants is, of at restaurants, the over come

our how so it, restaurant. how preparing quickly over into how to a that and get shifts changes the whether And then all relatively we're the and of shifts to -- expectation, measure level generated back back We soon it we whether someone normalized have in do for of and reopening bring obviously it insight back not back is a slower. We're the any And a of costs same being our costs comes are with or the going comes to manage the revenues to measurably restaurants. these little bulk try quickly result of doing franchises it and time. as

And let's bit sales little Tom, and those profitability. talk a so of reviewing sort incremental about how

Tom Song

some the obviously, for week, sales it closed the it's either that in if included enclosures, those period, on question was as in you've type period, not in environment, more this the it's the you conservative exclude this another include ask restaurant then during think changing of or the I the restaurants. closures did But little this didn't had the duration We week, way we reporting we're restaurant these it. if does think a is, way comps, of console, happen had about bit to cost. me Let as the in prior

on closures. your And question so, hopefully that answers

margins. the on question second The incremental

it went staffed pointing about the a are the think currently managers. that on think it way way at is thoroughly, is, another restaurants bit heavier I through as pretty these Steve to but

a of your that costs. so fixed lot is And

and staff bring again, staff, of you phases still we're for early when costs. the most part bringing that staff, variable that in food as is back this So the highly

John Cywinski

those John, two versus in here, And our Nick, days very days keep sizes, all Georgia I of Tennessee, during just sample Steve two the restaurants, but prior dine-in incremental. week said, in mind, and XX-ish color data business is what this specifically, is best

dining whatsoever So surprising very members, up about not it any had team businesses back rooms. off-premise having opened And take our on perhaps issues front. differently when that a our our we and coming hit, enthusiastic

Steve Joyce

about employees -- other your one question bringing back. So thoughts

They laid were were not furloughed. Our employees off.

think of franchisees where industry. in the in case our tenured turnover a they so have we than employees. lot have the of these And lower lot a folks, general, in longtime And

back. so change we these as people not not programs have there the levels time. prolonged will picture. whether lot challenges whether And a of to been build bringing Clearly, have a business out And or the folks see to employment for organizations help long are some of will or we have

top and going to think we Our our significant expectation add as obviously need to conversation, be is to come we work. of think those there's revenues people we And we're -- expectation it's but that on able that, to back of want folks back to our amount levels. based is, a

higher a that time out. to is will think something clearly were revenue higher how on gradually need But them see I but But folks as is is build we sense -- all that back based I levels. monitoring. obviously will that our reinforcement a plays sense be actually, over of we'll the that And so folks. add our level think And those general to able we we

Operator

you. Thank

Our next with question Raymond Brian is from James. Vaccaro

Brian Vaccaro

I my volumes, was fixed wanted covered daily sales costs. of on the phone comments to just necessarily and to glitching. your And earlier variable back circle sort

of I but sort apologize, brands? guess, I XXXX to volumes. asked you sales two of I day in the And materially current a it question I said the And So upper of context between differ end my XXXX that does think the range. is, the

would just the sales And twos. level envelope what sort from I low to quick current trying is in volumes level. of current you franchise to low see suggest Applebee's math of sales back think some EBITDA type need levels store stabilize one understand that at in I of the improvement to the the offer

Tom Song

to brands, it when to both mind, was results. comes speaking I to variability So keep sales in Brian. just you And huge got

system. particular get the you're folks I'm And side. There start side, on the to We're is IHOP good volumes in noted lower are as able to some out to so range sales trying the seeing to in that that Applebee's with with average speak on you evidence anyway. what higher starting of end

indicator help restaurants our open franchisees encourage the is but we to and pretty an trying obviously as restaurant sustainability that, and best of So, open keep as good feel possible. many we're

Brian Vaccaro

side. little Okay. what provided. to bit ad I And franchisee on but of relief little I royalty the guess a be fund or you the sure the could just company that review understand on part dynamics, what switching in normalize. you in percentage booked received it versus may you IHOP as everyone's conditions say it relief, fluid whether months business have gears maybe relief, drill that, collections Tom, franchisees the down a further coming occurred the on And make page. rent cash expect the might same to that any QX? differences of relief until Or could the in revenue

Steve Joyce

the me let So take of first part that.

period of, fair Tom I through said deferral, then and would a of I have then say when be cases from well, a are obviously day a to mentioned when grace but most subsequent lot all level the come that fund, fees it's it all as in deferral to going in XX working us said we other think it's ad bit of still done and of relief some and get so, and with little think, at it's to this as looked done, a payback to of through but and royalties with there. franchisees we're franchisees, the

it as working pulling program. that through and all documenting so, still a And we're together with it

going core if done the done of, to hearing general, And you're and interesting doing are and when assist gloom in most going then lot them franchisees this when through, amount help they're needs, of to They're their we've be goes with of looking actually that not reopening we've back I It's the normalized part of we positioning from program it's folks. we're are. that's There's work point. Both talk with daily. look we'll provided are at our They're levels And they forward assistance of of the it what themselves we'll to are companies be them what think anything in said get to franchisees. for to though fair we that franchisees and to the not, through a And franchisees all things past, to where preparing to today. doom see back. the But as at, reopening. as and get so restaurants. individual needs to kind employment and group a revenues coming some done,

to start dining uncertainty long still how about of and I know I sense of I think experienced our being part, seeing And as consumer over that things what and think But what, month is, tired be we emerge. know next and of the remaining, two so, as or the obviously patterns last people a restaurants think you I most what's need lot there's sentiment that the for at are a lot home.

about for right? the from out? are And, I view we want everything example, many So that more. protecting And their good can out to people so to gone We're people are going feel doing as all our so think syrup safety. people tables, start brands coming venturing containers how the

for that's the foreseeable containers individual future. in So coming out

know they're people touching. one's that touched that no So anything

so to device other pick comes Fewer everything to own people kitchen. buttons. on from you so, you're the pay can And rapidly hoping straight pushing the move even handling, your we're not

that of possibly experience. that a to a and there's to we're so make lot we do doing And to great to going reinforce everything try we're can safe fact things the this

want open, then as but franchisees, spend, we'll and business And, we back. restaurants to to the collected the go starting of we some And back with marketing. advance jumpstart by some advertising through get how will into to restaurant work doing

we're work the to that so and those can a begin story one to to But to? Tom, to here's so, come all want continue along obviously a expecting we're everything our we opens to restaurant be And safety. protect going lines. we're into tell that doing to new you three of able to sort great do

Tom Song

offered? on more we've franchise you details program wanted Brian, relief Hey, the

Brian Vaccaro

I'm sorry, Tom? what was that

Tom Song

more wanted program we relief details on You franchise the offered?

Brian Vaccaro

if was meaningful through some there of any about us more of collections just royalties thinking the mean, could quarter? versus at Yes. And I the deferral cash looking and the financials, in you walk first books

Tom Song

Yes.

really impact our the when that's because hit March in started franchisees. it really So,

think so one subject by the weeks. March of between and is so, fees is again, bit the between little just deferral. subject has differences subject royalties And offset in deferral brands there's payment portion a to it and is of some two couple brands to are to way the about and two that timings April

the and so, time. of the And be Brian offered. franchise April. against part, programs in and one March payments owners deferral it of best When we industry, the extended for most period benchmarked the the spread fairly And being it substantial an that out restaurant found is with to other is over period we this

greater that, to realized franchisees our dining was due to restrictions. we so, the impact the And

a we so, out with to with. start program get wanted there And good to

Operator

Thank you.

is question Our Bernstein from come next Jeffrey with Barclays.

Jeffrey Bernstein

two questions. I have

brands peers or perhaps I'm you initiatives there's was comp think while differences differences any if I I peers about quickly. Just I'm think that appreciate the recovery has I you're Applebee's seeing so. have seems down little peers. wondering comps like there one, it and more the in XX%, as being as guys about down versus color. looks more it Applebee’s know between perhaps terms like of just conservative or that progressed. or It XX% week-to-week might it is the we're or and comping most specifically system you're be you recently some and than what therefore a pushed progressed XX% the between wondering offering. slower It

the feel trying I of significant benefit to or get then or the think whether stimulus was and you to followup. recovery one the modest. refund for pace Just your more tax have And accomplish

Steve Joyce

Sure.

start comment individually. So ask Jay me and then let Johns

performance looking on we're would say we ours some marketing spend. groups. that, So, of between at highlight the based would and I general, of in peer our their think I difference

longer airwaves they the stayed we than on So, did.

strong incremental felt as the waiting coming people campaigns not back are that better we As we sense justify at we're and having revenue, whether spending restaurants our would the the or looked and off then open. was

and growth we our restaurant with hope pleased quite we're to individual thinking our that that's forward and we're go add incremental so that business kind back. we think, that, that to folks. brands we of begin restaurant but doing might a off-premise to to be So have eradicated highly the some than I on level is, sense of hold going that in And basis, what as of somewhat is as business and business, market better it yes, the again competitor we've gotten us, are

So John Jay, or thoughts?

John Cywinski

Sure. Steve.

I this in highest, discontinued marketing. just the air Steve think hit point, strategy on XX, the the administration during difference the off and primary went

off-premise primary couple I start company company, Number with think a that's predominantly public owned brands mix two, the point. of percentage those a higher begin you're referencing to with.

you'll when of and there of start with ago will. a So kind off-premise heavily run couple a then this those crisis. very throughout you're offering looking a sales, full at marketing see delta then delivery year versus you And brands delivery larger on sales are base, if free aggressively and

you're would three those think specifically be variables asking. I will question the address that probably So

Jay Johns

did We it, people have I the very of weeks, sides, to some other of campaign, similar nearly doing our the off-premise competing off-premise immediately we that game both went settings. weeks were newer to were two to or knowing in campaign we against. something regular we were we I we two pulled think,

we wanted that message. to see So

and then of of weeks just a we basic marketing So all money shutdown for save our for rest of outside to we relaunch. for couple the did the some that marketing later local

similar So tactic. very

Steve Joyce

we're Applebee's is Applebee's we're amazing other we felt that's we going we're the just what we formula, blowing now was the it on that The IHOP great, and think we was to disappointing thing here go doing an do. just things XX. I like back, And And Yes. guess the is as like another on crisis. entered fine into quarter. and to really were said, actually having going

really And Day out about to our then the tire. air work come ring of the St. and Patty kind of that

restaurants and this when quickly into get So that we're that than obviously get more that actually we hoping we're hoping back into they're that. comfortable consumers -- coming

anything. Now prognostications, which seen match of none a dozen I've

But it me into quarter. So you having let we're a all speculating, we point. this hell of is, tell were to because a that's something, at not going get

that the We when just fine. supposed very in be have hour weekend. a on geographies think next open It's very calls the do Friday we and the doing to going of we're keep aligned group what doing, I now yesterday I the restaurant and franchise Tennessee. two opened benefits us a just Applebee's confidence just call it on forward reopen, Georgia that it's So shame be look we a those aligned. up when on we gives one that were did just that a And that if going we'll is these call is will this into and happened right

best the practices nuanced one sharing pulls around out expect to detail at guest We're time lot. and what

across collaboration XX said same these franchise so is or be group, tremendous. for IHOP so the And can and

Jeffrey Bernstein

obviously I a just And number was right? were to that factoring stores a asked stores presumably, base, but in if comment constantly comment if for distorted about it's are Tom, And you is to the from of excluded closed. store comp know clarify, that the you're down clarify, put earlier the closed XXX% that large your is week,

Tom Song

No.

is week, for So is if it included the if record for did entire excluded. But the it week it's for days. those close sales

Steve Joyce

restaurants example that week, XXX comp an that on in day closed the As number. that's Applebee’s Easter

ago. And that's number was And in a year tought. that's why a far the number so comp larger that

Tom Song

good of treating you comparison to good a they're It's how their All the apples comps. to a question were ask. folks get apples that

Jeffrey Bernstein

terms wondering sensitivity. other of the question just And in I'm Tom, Yep. just, was

we margin or or do XXXX. and earnings as whether from how Can quarters? reference a comp sensitivity we give are recover at and As it, Thanks. of contribution trying XXXX, are a modeling about frame over framework a or look comps early it's terms Just months of annual think XXXX perspective? your from benefits, a a in out calendar as point you still coming you of earnings in

Tom Song

in a use. think little early say too I general still to it's

can But guidance we're sticking to mentioned with cost comps, guidance use I For guidelines. prior still our for respect to as you for before, -- now.

Steve Joyce

even exercise. our don't of And it's so sense there's it Our think that that speculative becomes to we're the could frustrating. impact recovery. to value. I many provides make a is, going But sense, I know, that sort That have so many assumptions variables

to what and previous, as think, I on is versus the a recovery if our should the would happen. variables you think I occurs, to think guidance competition would have going is you our be how versus based assume view that you we run

going very and our customer would numbers the full back, which to the restaurants have different. by we're be think rushing you If fall, the is going come Then would great in to way. be

think you to of kind to in relatively build gradual a If it's get 'XX back slow before normalized you the levels.

And all I'm I've have those sure just you as seen. forecasts. I've seen of as

of all thread So, We different needle the early just insight the value. -- have to. which we of idea think don't are lot adds XX a really trying with of to get to assumptions, too

Operator

Thank you.

is Our Levy MKM Partners. from question next with Brett

Brett Levy

there ask Great, level spend at call. the I appreciate corporate doing you. appropriate I all question costs Jake’s throughout in how perspective, different the out color If about just I guess release thinking also a just to the little the hope thank and is of the could just taking risk. from a franchisees well. of everyone And I bit when it's are and you're seeing. that the incremental

There's point algorithm. on sales pressure also going of way, then thinking front But a could obviously stress see talked easing your reduce P&L marry corporate. a their additional incremental off-premise there's margins. the the through to lot impacting of try costs you've for potential about and to sales labor more going period How for they or after challenges? and start costs aid you you or incremental this where going some right question slowing. these they restaurants for the to If they the think about you're And the are deferrals as There's incremental there to relief to now costs. a be are franchisees it as get be more ask I'll face a where as hitting

Steve Joyce

will think we've do situations specific from anything the picture, So that else. we there's if that's as a at do point. have the this Then we've we provided with do Tom in no that variable. about can work you assistance past, done them franchisees make wants we're plans help picture Obviously, required the that. to on bit And the gross franchisees continue sense. tell a to cost obviously picture we little to we individual a

Tom Song

second Brett, corporate on of side. the part question, The your was

example, reductions. to up We see sign now franchisees quite our as, we've supporting actually so, technology focused we the initiatives with of related we're And quarterly out cash what bring we're back, a some that and now not the only demand, going cash the furloughed plan right investments. we'll the laid better run for And we reopenings rate on. like trajectory to that would continue G&A represented but for our back I to be on But of off-premise. also corporate as find cited staff we are of the are ramping numbers the

Steve Joyce

measure ramp let's members back costs collect. and we're for But clear, and the the that team up of with be it those generating will revenues bringing be

got do, spend is expectation not an big that a to that got the So we've we've that we’ll there revenues. upfront create

it They're what a what good with more is the reopen way our but be still board. back, of got We've done sense to bring management with staff think lot working able going revenue teammates balance of we costs. got. needs We'll restaurants. obviously a we've strong we're we'll framework we that cost matches between to on do to more, to to reopen So as in and a help

without not costs spike so that. expecting we're collections offsetting a and in big to revenues And see

Brett Levy

you. community, just system are could gotten be either fold of would within for back movement looking a system from bringing And did the structure franchisees And sense other system with I franchise being able about outside a get them this? there Well, could into after not or how ask the thank to out the to you above you system? more Applebee’s what one head have franchisees the think are you there the consolidation stay about within some if or that, like that question

Steve Joyce

goal retain create our many to we some has clearly possibly can. is of as obviously This so potential Well, restaurants as to change. our the

and we our to at We that have continue all of will disposal do that.

restaurants ability have We in to bring house. the those

those We in ability restaurants. the to have ownership for bring new

working where franchisees. We're And a matching all so are with in carefully cost from and monitoring with they debt. structures carefully standpoint we're at their the in their this liquidity point,

doing been actually for good and we're so so back data time, forth this is working place can And that some franchisees so, about and the in help. good our with a news we've quite sharing we

we're seen on things the we ownership. over, are may the some to that's next basis I've cases us talked cases, the positive side categories and over that is about in that inventory And in serve our could going some haven't new of taking we'll In of that's some “Oh point, it cases, to clear mean and that the for months. we going say, create have guesses, lots see. some going us this much, may at restaurants, decline. an to mean but on to more. assistance How franchisees. some Obviously add one there is The to to to some thing it the some it'll Yeah”, be also expect this pickup ability retain XX% be several facilitating in don't the We really we're going restaurants individual opportunity, able because

awareness of what competition. a get of pick So, middle we conversions up, we to may get that's some good are there that to inventory for see kind what But, ads of we does next more what and if available too the and what what's That's going to think where that, terms be knowledge ability and and pick all how look picture us clearer end more six I play the so in can to fall. to got, overall we'll up thing. up think and The would on out we less we year. next months, see with we'll we've net-net tried a it's better, early do of give you for and able I restaurant much year, be over won't our net probably the we'll save into as and towards to

John Cywinski

John. is just couple This add on Brett. there, points And to of

very Our March quickly, cash. franchisees, preserve XX talking right I'm on is this they good, acted to

committed close, closed temporarily So, almost those they and decided furloughs actions immediately. to took

are We're mentioned, and our intend that about closures. I number temp we to closed declining they're today. reopen anxious XXX and the at temporarily every I at XXX rapidly were As so. they talk to ones That is time do franchisees, to

Brett Levy

all to the family. for Thanks best Great. All Dine help the your of the in rest you and the and the families call.

Steve Joyce

again just we're for you thank its unprecedented So, your time. facing. Obviously, set of events that

not overwhelming also I sometimes, of hear you franchisees their tell in Their the when the you However, that, they're and for I've their community what will they're way team are and proud to doing, businesses this. preserve their team our operating, jobs been that sheet. doing stories they're but what members, the and only

had of one business things and it. been and these XX it's years. But our characteristics through of some like So number never I've these things, of in expectation. always came I've that's end that other we almost this anything seen been out a the I've

you a So, I things into we've everybody going. future, hope insight got where stays safe to are when lot forward the look Thanks. more talking in to and we'll

Operator

ladies we program. Thank And participating. today's gentlemen, that you conclude with for and

now may disconnect. You

Dine Brands Global (DIN) 29 Apr 202020 Q1 Earnings call transcript