DIN - Earnings call transcript Q3 2020 | Dine Brands Global, Inc.

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Operator

Hello, and welcome to the Third Quarter 2020 Dine Brands Global Earnings Conference Call. My name is Lee, and I will be your conference operator for today. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. [Operator Instructions] Please note that this conference call is being recorded. the to turn now will call Mr. over I Investor Diptee, Executive of Director Ken Relations. begin. you Sir, may

Ken Diptee

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

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

the these as supplement in the and factors, filing. call, that different expressed detailed forward-looking obligation was involves today cause the information known and forward-looking information these which statements. The be may other in no context forward-looking or of factors, and the which unknown XX-Q results update discuss release management uncertainties from During press of or and were the evaluate risks, are statements to implied. actual assumes may and today's to those Please

to You turn in and press release described may financial website. also that, are on Relations refer measures, to which Steve. our call Investor over With available certain also non-GAAP our the I'll

Stephen Joyce

Good you morning, hope for us you joining everyone, well. thank and I Ken. and all today. safe are you, doing Thank

best we As for the challenges and commitment new the a brought team faced I franchisees our normal have proud gradually out the future, industry of their and foreseeable settles the members. in extremely into am fortitude.

change by sales. the XXX% states demand respondents contributed Additionally, comp showed The to strong off-premise their of distancing, McKinsey comp In posted closely Company and XX% alignment room on across very using report restaurant reopened. to XXX% XX% are getting or behavior business The both our seeing related and will even delivery don't a shift dining dining respondents recent am upside continue third also brands in for returning restaurant they pickup. to business According will some growth at continued takeout consumer remain in our and are and restaurants the believe survey certain of believe to impressive robust sales. increased with already Consumer restaurant cases. that the quarter, of as activities a friends restrictions, stabilize With the getting we restrictions delivering improvements & at that obviously and and exceed have with ranked COVID, continue to to eager as growth using caused intend pandemic require following, business restore to brands guests compliment delivery additional that survey that our even are provide dine-in quarterly sales are I curbside Off-premise capacity strategy service still states we pleased and Applebee's intend both bar family, top a their guests capacity as an country. to sequential has XX% of guests restaurant which IHOP. to We one brands. access social in in gradually linked. appealing together with our our consumer resume three convenience our off-premise together to at how but said, to Pulse at eased indoors

second for quarter, restaurants the during our operations remains approximately or This like fully the the with navigate from the state domestic Dine’s of team the federal of and process. open XX% was business. end As the that highlight is engaged through XX% domestic to of system local, we pandemic, X,XXX quarter. would up authorities for I reopening third

utilizing are members CDC as a guidelines The while of products including sanitation by EPA-registered local guests greater in and number will of accordance be committed always provided safety with the We with practices, brands and state franchisees. two-in-one the reduce to cleaner well as used, our for guests best-in-class governments. our environment end, are a welcoming their friends both expect and team dine providing only sanitizer. the safe To this and to with family, and will high Not of we priority. an use efficiencies that our

reducing operate. In the of safe handling measures indoor to to guests just is help safely restaurants, return eager to that communities in taken addition food understand consumers in the the procedures points one the which and number this of to are touch several dining. protect we We

both categories improvement since for Black Jay brands respective in details on well fact, in trend show the data will quarter, John outperformed operate. their the sales brands, of as month In in respective as each categories we provide well third which April Box sales quarter. bodes and later. their our significant XXXX This which full additional

While which recover, well-positioned believe we both confident over quarters. the are the to Applebee's I continues and last restaurant in progress our plans, resulted to that sales and stabilize am to return two industry in IHOP significant growth. very

omni-channel guests model year. an coupled or meet to their in-restaurant to the third management quarter million level, over since to Tom this I'll an our dining At with enable This dine of preferences, $XXX.X that, G&A whether to Tom? will cash. in and the overview call quarter have approximately the business off-premise. turn results. our provide conditions disciplined an approach us end first With asset-light our offering business to of We quarter experience with improved continue the the

Thomas Song

Good Steve. morning, everyone. you, Thank

outstanding During during certain in $XXX which March that drew the credit of of great early the To we XXXX September augment of precautionary pandemic, of uncertainty. measures all the our revolving from time million of end, flexibility stages remains financial XX. as took a to facility, we

strong this other third position to the end on balance liquidity proactive result significant cash our of a a sheet at Dine steps, the have and and quarter. continues As of

we is of milestone. restricted had cash like total to was Steve XXXX. notable As our nearly you had strong, is same level total $XXX year-end $XXX the highlight at of exclude This million mentioned, total cash million. we $XX I'd that cash including the cash of if million, that a

comp to reopen weekly for service, continue sales quarter. brands As both trends improved dine-in for the during restaurants

Just comps for XX, during July of quarter for in the percentage comp third and was IHOP ended to September the In week-ended the final down quarter at comparison, the compare, IHOP, at XX.X% XX of These week improvements the points basis down Applebee's was the XX.X% decreased IHOP beginning quarter, and XX XX.X%. and figures sales increased for Applebee's points XX represent Applebee's X. respectively. and

improvement earlier. Steve weekly reopening the is off-premise in well brands performance significant September, the sales their March of as best the restaurants, since trajectory sales During both solid primarily comp as The due X. growth progressive posted to domestic week-ended our in mentioned business that comp

third results. to turn our quarter let's financial Now

$XX.X quarter, diluted $X.XX in share, of of the reported per per earnings we XXXX. third million $X.XX the adjusted of for $X For which, per was expenses, We reported share share period G&A non-cash. compared million same to

quarterly next in of like Our XX. the to debt first X.Xx anticipate and continue in initial leverage year. of we highlight have September ratio September XX. making or compared X.Xx X.Xx our cushion I that as would an as June as of service million of ample We payment to X DSCR, ratio, of quarter at on coverage to XX December $X.XX payment was subsequent a

light is notes. below In company first measurement Standard Class watch the Poor's rating. BBB pandemic, when the to respect the in S&P AX our & of company from watch-negative reaffirmed on with In XXXX X.XXx. the this DSCR year, September, key placed The tripped COVID-XX ratio our removed credit credit of March is and

with as We reflects pleased and strength business the this are very our our outcome it of strong brands.

pandemic. diligently business we to the recover from as continue will our manage We

benefit our effective rate, in due The primary tax the X.X% expense release tax the unrecognized our Regarding benefits for XXXX GAAP third of rate XX.X% variance tax to of third to reason tax the quarter the last third compared quarter a this was quarter for year. of of incurred the a for was year.

to Just rate months to expect single-digit significantly the rate than quarter tax full-year. effective tax expense we our statutory expected since three effective overall low higher for be a note, fourth tax is

quarter $XX.X period the Our $XX.X to million was XXXX. compared of million adjusted third the EBITDA for XXXX same of for

nine the to of lower profit. flow operations was for same was Turning to million XXXX, due from the difference million to XXXX $XX.X the compared first the months gross of period Cash cash while $XXX.X primarily our for statement.

the XXXX. April and schedule related also of million XXXX. the Applebee's deferrals of assistance XX A and total We up of months were of in payment fees These receivables of primarily franchisees an approximately repayments programs, rent March repayment $XX months. representing royalty, provided XX% the advertising franchisee with which to had quarter of deferred third for nine payments begin in in to restaurants increase our franchisees,

advertising, deferral. offered franchisees As with outstanding of have September XX, of and million $XX.X scheduled payments as We months for XXX the of defer IHOP their of to equipment, restaurants Applebee's franchisees, representing rent royalty, in balances rent the for XX been was in opportunity total approximately XXXX balance well. four repaid the and sublease March XX% primarily franchisees their deferred to of this the deferred third over full. IHOP Repayment in weeks, up beginning of quarter amounts A April. participated

of cash the the As the would of year. second quarter $XX.X was our XXXX during was million the million third like approximately repaid. months $XX.X a compared free million to adjusted balances for have original debt we outstanding with in having to $X.X XXXX. franchisees million of months the total as three flow XX the expect was this that Overall, of repaid deferred balance to generate September XX, remaining flow $XX full. bad nine I for cash $X.X free in quarter positive expense million the of deferrals note first been of and Adjusted

of guidance on currently materially Now performance for could the to uncertainty let's XXXX. our based tremendous information guidance turn of the fourth pandemic, believe due and that This results be to we have we quarter impacted. our the to financial continue is

expected to XX result our system-wide Applebee's for by Domestic the for expect gradually development sales We same-restaurant net closure IHOP restaurants. approximately franchisees is of improve and domestic in to Applebee's quarter. comparable

level We provide are more information approximately Jay a stock-based evaluating quarter and million. domestic depreciation approximately IHOP restaurants million, later compensation be And for the expenses, the G&A currently fourth expected $XX including to impact and significantly pandemics $X unit economics. call. to due the totaling non-cash is on bit will underperforming

open. the significant deferred IHOP staff To Applebee's of sales. are over months, While and past are support their made of resourced trajectories we restaurants sum to and expenses many by the fully furloughed significant in up, respective several improving the now that our franchisees XX% comp progress we

to drove even continue as the solid remained growth across robust dining business off-premise Our rooms reopen with restrictions and country.

the Lastly, our now over turn John. call remains liquidity and to I'll strong. With cash that, position

John Cywinski

leadership circle I've that adversity, of very times XX.X% minus evident I'm to in accelerated vibrant Applebee's in and Good August Thanks Tom, sales than Coast, And at and Applebee's more clear in from down QX in and moved afternoon, March positive position with XX.X% is XX.X% our week October. often good in full on comp come July in After trajectory overcoming QX. couldn't of here has remarkable its strong a best we morning, seven four that we've was through weeks closing dining this the in Sequential extraordinarily to dining. comp our is down X.X% early September. first XX.X% are minus if the to report been Applebee's any in the its this you challenging first to September. in comp as months, minus quarter today. After sales story everyone. to stated adversity achieving East X.X% rooms it at of has pleased very QX, were This be in from throughout returning casual sales minus of being improvement

This natural Box past put the the as Black strong dining several to system, at might to in a recall pandemic. Now to context. Applebee's in This also our variability of a geographies hiatus self-imposed expect. indicator the impacted return as Recognizing, if still this COVID you health proper marketing casual the is we lockdowns, throughout coincides the XX-day back category peak XX after intelligence, now current the According mid-June terrific creating have to the you brand. momentum by with of over outperformed consecutive national has weeks. performance

months remarkably have and March, paying as in franchisees April in deferrals, been consistent beginning royalty our are fees, referenced nine which being Tom, August. including Additionally, advertising over paid our the back

model, collection our as May XX% ongoing quickly our to economic us, our well to us beginning presence. important media Importantly, reestablish national rate has allowed as very in

a perhaps point the and trusts of environment every have week $XX,XXX averaging the open experience with franchise our our to-go While relentless Simply between what approximately the in guests certainly This this metrics. curbside evident Applebee's franchise and this present, proud Applebee's of partners restaurant have their delivery. most trust industry as visit, we is guest I'm execution, restaurant $XX,XXX brand of in trust. each performance, restaurant my of intent favorable we for important more and safety than to dining to-go And their or now most At and U.S. guest business, I'm whether of per XX% partners that's that's sanitation, and visit look with occasion. of the earned stated, reassurance a and affinity teams brand fixation perspective, From single a room their and XXXX. XX% right difference a throughout about XX% ever most dine-in, is very currency parkside can restaurants important America have trust now our proud in around and mix most pandemic. X,XXX the is

constraints, we demand this Northeast but this is is penetrated impact our worth post these Now where regarding most by Saturday fully limited with government varies in and dinner, feel restrictions prevalent. where course, abundant, of ability Midwest most satisfy are that disproportionately geography. restrictions Applebee's demand. and and This, noticeably also the noting capacity It's to have Friday

having and many the of rigorous have with sanitation as call, firmly restrictions Now safety gradually own remain states been these our restrictions while standards easing geographies is here all news in that this capacity place. XX good removed

the to However, and as we've change. landscape volatile seen, certainly remains subject

front, digital in innovate the off-premise of relevant we On to the occasion-based form marketing. continue

is November brand new and guest benefit coming launching also tamper-evident another yet up in form We packaging of the here a throughout system, are reassurance. delivery

front, the very surge now available states. become Applebee's XX the Mucho off-premise beverage in evolving digitally popular you in as signature, to-go On expect, rapidly Cocktail are about dining. And have given might

to in branded cups, example, an proprietary ounce As in home Mucho your our to-go bumbled properly are of and featured ready as XX garnished mixed our part take Spooky October Sips properly here and meal.

our Wings which about also extend in Our virtual brand, being Neighborhood is off-premise currently with partnership called piloted in restaurants innovation will currently by Applebee's, XXX Grubhub.

will repositioned entire this initiative As for year, expanded next visibility, be of system. and the then relevance QX meaningfully and throughout greater

mitigating I'm this Additionally, thank in which while a tremendous our simply asset I'd once of and Dine thankful our and supply agility suppliers team this organization, a solid been pipeline furloughing talented in expertise. impressive in innovation truly both early rock environment, QX, with has exceptionally to enabling like turbulent for Also of reunited. after chain Applebee's portion is again, a very brands team

significant our momentum, of I'm team's as with current challenge. franchisee our of this albeit course, business next into head flexibility alignment anniversary celebrating built pandemic, in we proud have also be we excited would And ongoing environment. meeting. precisely global because are today. a franchise session response about the week's our accelerating I'm as we'd annual be to XXth that's that As the our of meeting next well a where Applebee's given thought of but middle that'll week, strategic Who around virtual plan, early XXXX in

have anticipate of Applebee's ad note throughout council fund agreed marketing and moving franchise early Importantly, are November. is our I on contribution all summary, extraordinarily in X.XX% committee the our In franchise to brand. aligning well-positioned continuing This subject national unanimously forward. the business terrific also franchise for and news XXXX, should we I partners that

resilience, thrive to we innovation ourselves entire next tell in buzzworthy leverage courage, Applebee's belief course, get navigating And saddle after back COVID of off, it excellence, we past back And is to horse. turn Jay. franchisees it get be effects exhibited I'll good that feels believe America to and have expect sizable restaurant in our fully plus importantly brand our scale, partnership really the that, can of the as on I with that I truly year, of being uncertain, down, behalf on genuinely most with dust who team, Applebee's back the And remain again. symbolic up, months. knocked of sure I in you While as seven remarkable and

Jay Johns

been diminished local XX.X%, due of highlight The a safe spike. brand's in dining of performance of represents I Good doing all which be transit. IHOP’s home third to by you, national points quarter across well to you're on improvement quarter, breakfast as to category by first our oftentimes everyone. the overall remains Thank the sequential room sales John. out compared that consumers replaced coronavirus comp and declined mandated utilize July. the and morning, like morning meal second the three performance third of the as percentage hope governments has XX.X there. did continued governmental media room mainly resurgence the the to home. quarter July place daypart in to restrictions and the I'd not impacted we of start traffic the operations and cases XXXX. of the work general work due soft effects continue At at from in challenged put dining state restrictions to through Also, reflected weeks the staying

opted except we brief the marketing As marketing quarter, a some late campaign. and our off-premise discontinue a local to first reminder, in basic for

our from very restaurants, we're category according IHOP in to reopening The sales, opportunities safely capacity restore on second category We're continue units, include comp performing and progress improved XX. XX in the period the March. September focused decline higher remaining trajectory after for IHOP’s while business of pusher part included Black depending sales on dayparts, traffic since focus and available broaden build to the PM driving brand's our the consumers for line XX launched known XX:XX I'm sales. evening on meals pleased quarter market. IHOP’s comp with the both To dining made. good continuing overall variety platform that Hour plus the experience XX-week our to afternoon a early to-go that PM outperformed IHOP’s channels. to dining offers or PM attractive and recouping when the every and September choose oriented across with breakfast depending longer, expanding to than delighted The respectively, to out price ending the weekly on and strategy the Box. the third $X, reaching Our location. can of be breakfast, addressing to of family Guests $X is or we we've value This dayparts we're first ever during best I'm other week report value our and XX. family quarter. on The an business. This in at comp innovation weeks, appeal is X:XX to menu. sales traffic trailing day between IHOPPY non-PPM strengthening daypart the XX% at

still strategic focuses early states are we eased gradually restrictions We issues. and don't which into periods Hour launch value IHOPPY when the we have to its play stages, guests While for encouraging dining and options great typically IHOPPY on reopened. think longer guests non-peak our is are during is us, very in restaurant traffic will Hour believe as results. increase attract governmental capacity rooms on influencing IHOP a for term about seeing

One research IHOPPY goals We've and a done of work a is for on and over platform Hour for the of deal to loyalty. drive frequency year. our great

have as of XX, the open with domestic capacity gradually most XX% approximately that of September June have to system business it for many compares for ease to some rooms Now business, open launch domestic it. This XX% I'm domestic of our limits. system that pleased restrictions states sense as of as we open XX. is say of approximately to dining made our

to shown dining. to have surveys earlier, return consumers eager some that are mentioned Steve indoor As

breakfast the total outpacing In is during capacity especially on that demand We impact certain X% the the fact, capacity restaurant for over seeing weekend sales weekend week. we're estimate daypart. restrictions, consumer of paces

and Now food curbside pickup they curbside percentage XX% find respondents said coronavirus appealing through their getting needs. delivery to pickup to respondents a essential it meet use of comfortable dining to restaurant fair feel of data also delivery. or restaurant safe According or study,

potential back consumer guests our our can While with to accordance procedures, for own welcoming IHOP. off-premise as this sentiment as into tailwind we rooms on guidelines, look governmental well dining forward a be in

to-go quarter, in off-premise primarily continued IHOP’s Turning sales comp to growth driven solid business. our experienced increasing XXX.X% by third traffic.

XX% mix comfortable reopened, dining of sales. Our remained online XX.X% even up sales Delivery sales retain of mix. can Due more believe for eased third making quarter as to total room and time. takeout we even strong IHOP’s we rooms dining accounted the and with channels, gradually of as off-premise these consumers accounted of for becoming XX.X% sales, much over restrictions familiar are sales

press IHOP Turning guidance our for today's briefly to closures in release. unit disclosed

Given of These of economics the on evaluating and viable that level sales in pandemic we on some or restaurants the are individual system only based out lowest the not underperforming generally performing greatly restaurants of currently are pandemic. impact restaurant franchisee profitability. coming believe units the the

Tom based restaurants we current of six next on result could less the evaluation information, As the over closure XXX in mentioned, the than expect our a months.

To However, better we're confident of strong performing will a relations these eventually million. approximately pre-COVID the IHOP and have for of a our the strength close, that into support that remainder restaurants to in $X.X year, with windows. to severely seasonal position AUV promotional replace underperforming remains plan marketing with volumes XXXX we of our closer

pre-COVID with than on a environment are replacing providing understand Looking and more by focused restaurant and ahead, and restaurants. in greater sales guests traffic comfortable that restoring safe safety. we ever levels, our to guest cleanliness first on emphasis We

off-premise return Secondly, we'll we will by in-restaurant grow which business, to on continue dining. believe our the be complimented

to to and the into propositions With call innovation Steve now guests value comments. turn attract for compelling closing provide that, restaurants. back our over I'll Third, back

Stephen Joyce

improvements IHOP more To we've Applebee's to in be achieved meaningful Jay. Thanks comp both more know and we wrap sales, but needs and done. that up,

which obligations again we cash which withstand services. to-go as the of conditions. and can We to advantage strong ended and industry and a take the growth, still continue with solid our liquidity, drive majority of debt consumers to meet we retain believe what quarter continued current business position off-premise Our us positions our to

growth trajectory. that goals. continued confidence I Dine, restore for our the will a the of successfully management plan franchisees, achieve have team optimistic for Lastly, ahead our have I members. in Dine’s and our very place team the support our Board about am to with road great we for

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

Operator

from question of your from And first Instructions] Bartlett line [Operator the comes Truist. Jake

Your now line is open.

Jake Bartlett

Thanks what's addition since trajectory the for improvement trajectory, what the Applebee's just of you really weekly driving trajectory? to? And what's strong and whether that driving on attribute is Great. some the the same-store of taking outdoor of What first My But plexiglass examples if questions. do sales. dining, give you wondering of Maybe the could us the dividers, addition I'm since the the helped then? marketing obviously, mid-June. trajectory has is that

John Cywinski

is Sure, This Good John. Jake. question.

you referenced there. a I points of couple think the

our say a I'd environment. foremost, subset been competition. in track research. visibly We referenced, demonstrating internal versus – those we we essential very restaurant affinity in those level of improvement. versus trust we're and on significant I and in through of and ago intent. and practices teams that's track clearly It our safety I seeing remarks, metrics overt sanitation and my building year have And a is First franchisees revisit believe cases, see this brand them both

guess welcoming to has with a America We in resonated. of very certainly point, I marketing out appropriate activity final So the kind our tone started back Applebee's.

menu. makes It our the Kotter We to propositions easier and value broadly for theme it narrowed we featured Welcome our music, then song with coupled appealing. you Cheers. that execute. Back recall, that We from restaurants If were

trajectory all face, these the that to and franchisee we brands that a add we You very year. very face optimistic up of and headwinds next all look have and hopeful as solid community in

Jake Bartlett

at on has just do how That's how in performance same-store us you could helpful. restrictions imposing – what new the that stores dining performance of the position Obviously, tell have of imposed been restaurants. indoor today Great. at – the a but See in restrictions for Can stores market, sales dining? risk has focus been impact results. investors being not have that – indoor that and assessing

John Cywinski

point. at are an fundamentally we perspective, Jake, from think this Applebee's dining indoor I

We there. directly to there have tied that the variability restrictions is And is restrictions.

delta. you'll tighter. those see next one a between so are northerly state a is the with delta and with restrictions The direction restrictions And getting that tighter news to heavy delta from metrics all good almost is no in and moving that and those –

beyond I So won't quantify that.

Jay Johns

is same This Jake. question. IHOP. answer Jay Hey at Johns I'll the

of got as that I probably say Board, are It's we've if restrictions. very would less by about different state or kind just pertinent. right think state XX% XX now, states you we know, you look it's across the in

So that’s typically XX%. or XX%

You've got nine are over states XX%. that about

in of time. they states basically So are social still you But about restrictions. got most XX XX% there no locations. distance with of is at the Then restriction some these

X when California. very different. So even the And table, regional though capacity your in a the but distance, is had about factor, of and think you open state very of may to very foot be social a of XX% We've the it six it's fully footprint big depending kind on still limited like that. then California

are still places a down some completely only. some closed tabular in of large XX%, dining So XX%, is part have California

predominantly we've as states them. XX%, got XX% far about restaurants our on already footprint, the prototypes that in As patios warm our weather had of

Then issue them are in The to restrictions our And advantage completely. Again, have have time. and for East. the There weather double places, that the you've again its patio the it's we some capacity to team already on some of weather that which are all the some that be time. XX% there another climates, don't of patios of bigger in are that governmental grand down in organization so So most on is states off-premise. you'll We of cold warmer probably amount type added just the we continue and impact, material. and were able that closing size but they have up going Northeast the of of think a are supplemental or those really will down got patio. to that be

Jake Bartlett

it. Got

John Cywinski

I of restrictions. fairly are look in think both us that both heavily the one of at distributed brands confidence gives is markets some dispersion brands, that geographic things if have heavy you the

the sure of at see. markets. government in markets with the So But us we're the and a make we're safe. capacity follow of to we're that as dealing as we're we to do the team keep and in our lot numbers lot markets achieving we'll that already and tells have we customers to open going already whatever a as those in members Obviously, strong are wait – the aren't and restraints aren't

Jake Bartlett

question kind closing where a effort Applebee's last the Got system on franchisees maximum similar those Is some ago for at you months? I'm wondering it. of the to concerted stores. operating few for you’re the And of then this my number next stores? that kind the that is that, are that the provide IHOP. at just is closures clean a waving years kind relief there to how of over And of and up the closures here underperforming And confident if six are penalty related to is XXX any effort the

Jay Johns

Well, think first is I the Jay, again. this –

I into a other first are locations. significantly in restaurants much say the state I than pandemic were weaker think would probably that we thing going underperforming is that looking the at

So this franchisee isn't issue. a broad

have issues. is this restaurant as or pandemic very almost IHOP XX maybe single and of them of XXX [indiscernible] only different franchisees, and And systems. unit that's different have kind their they one causing ability XXX for very had kinds This livelihood one job restaurants. locations. franchisees. to The a Applebee's Our to weather two I've them got their opposed of

we in now. working future the make all and think of to we we that. know. we're that what on that And really point And XXX you is that right there'll this come informed sure that more the up to doing So number on we wanted that Street right the just we're be assessment to for at this

Jake Bartlett

Thank it. very I you much. appreciate Great.

Operator

from line question next comes Your Securities. Nick of Setyan from Wedbush the

now Your is open. line

Nerses Setyan

questions. two Yes, you. Thank

store constraints, First, that are tents things do? these there in or the still to or implementation – to sales rollout continue lot, the can it's sort Are are et things continued parking the of assuming capacity we there to continue dividers cetera. continued things whether potentially don't of specific increase maybe that still are implementable

John Cywinski

John. is Nick, this

distancing social entrepreneurial parameters. I proven for in frankly, think brands but footage maximizing square our franchisees, only with resilient, both extraordinarily not have

there's space that And stone on referencing. outside constraints that no innovate, unturned the continue we front. of so physical you're So to

our innovate to relevant messages continue and We for provide guests.

even spirit, outdoor restrictions that with example those of a hampered you that that easing all, seating. cold many, offset and that bit geographies, some outdoor in losing tends where So which seating, situations great not many the of entrepreneurial weather, of impact kind the but a of adverse maybe in couple is to by

Jay Johns

think Nick, on very I think IHOP the I similar story. side,

It's of career. – franchisees the In are for of are lot just there's I And there's know franchisees. thought entrepreneurs. as remember life got think and think my XXX long very this macro about you you the job. our can't winter, These on as dining, is many truly a easily, People it's the how they system. and losing get remember, their said on Well, cases, I outside problems They working Arizona, how that there. I people savings. can. capacities their to about level, seaters, their makeup increase. These five creative but even up. been – their improve Think outdoor don't of to things things really on to question with it's solve local weather their actually a in put they areas, patios much outdoor they've when also use as already you governments open these one stay do when the those want in you've as and I into be right? cold counterbalance about get you how come They've what do out

takes have and system. around you So to the for our start puts country

tents individual share that figures when leaving you And system. new on a out we'll on improvements improvements And patio, Carside though and a someone your stone those. how in help share have to way be or things, make We we're on that to to do sure we'll to franchisees help best got be no heat it franchisees the the on unturned them we've practices. able

Stephen Joyce

Yes.

help think obviously Nick, it one restrictions. So us think about I that biggest would would of terms be if decrease levers in you the of the levers,

expanded But most have a hours of to got We've we'll So got lots play operating pull. at hour still to because other lesser rate we're out. restaurants. that we've levers for

drive return school people will As level some that some of to business.

us things sorts and let And get as surviving are will to of offices all tax takeover parking lots revenue. will finding with drive return municipalities do there business. and work and lot what is us some some because is that to sidewalks they're are their a we're As doing they tent to interested business people, and

with help if help even we to And addition So delivery some and we think digital, is heavily don't other off-premise things us. of in push lot get of delivery pushing companies, we're different into there restrictions And the a we're more. doing of which can all which levers we that, will will pull.

John Cywinski

fringe that this have X to outside found here. behavior we have the and concentrated of dinners, other tight, guests fully has they everything very point window found here, kind to dinner final capacity to savvy lunch us while X:XX those business I what a interesting guests And note will, Nick, earlier and dayparts. a – John. very window, later been it's for to do, mid-afternoon. control, modify behavior and They're And historically here. dayparts, to XX:XX guess leverage The tight so allows does modify we are the we o'clock a we and dinners, us, is in choosing of it if that X:XX you

not we're to helps. the as dinner many quite out at peak filter that guests So honestly hours, trying

Nerses Setyan

expense continue any levels going couple is from last the those debt all quarters saw for to helpful. of the bad decline over detail. And think, head that is decline? there. you Do the we on of there Thanks sequential It's debt side, around, visibility some recoverable? Is and the obviously expense, the very also margin the if here bad where to

Stephen Joyce

leading program of questions, are franchisees, on deferral you scripted Those some levels, we is our them. good indicated I'll performance bad from, the our And Yes. balance think kind indicators during did other the a balances because had obviously deferrals. start those we we lot of deferral lockdown, doesn't indicators, full. about a We're portion, debt. the how payments fact also But that of of of represent increased was franchisee represent program. strong. that the all thought repayments is which repay leading sales One Nick. health. in franchisee that But provide in We number of very been sensitive has it to was industry-leading country the the very, that that on And when very, very on tough the period,

that's good remains feel brands a both we collection so strong. tree leading very on very very, And indicator as is our

trajectory the all never continue and the you We continue that's uncertainties continue So hope improvement think sequential that Nick. It's good you to improve. the in know did we well going market. given that will note that to

Nerses Setyan

very you Thank Great. much.

Operator

Your Brian next from Vaccaro question comes James. from Raymond

now is open. line Your

Brian Vaccaro

have the topic IHOP I Thank and morning. if many I units did within installed six and missed it how the say line you do you by you want might the next you good mind? capacity end have it. on in months many sorry into and have follow-up the how to But sight partitions just have that or some of currently of year timeline

Stephen Joyce

requirements partitions to on and/or restaurants there's them outdoor money But people the are this to that based a about of for making changes. expand I now. capacity. have keep numbers to think right are that XX% our of added all do the some where think what on or the dining local that – change restrictions help of invest as whatever and we is estimate or These we time the rough type

Brian Vaccaro

Okay.

would just initiatives capacity. broader to expand of think XX% be that mentioned – I you So kind partitions, outdoor or

Stephen Joyce

and across those It just are. in Yes. the on same dining, kind of tend both municipalities there, Those the those lot restrictions And right. those those. some of in over of restrictions to allow A the cases, government indoor states are way locations. are lot of same similar of same at be that’s

Brian Vaccaro

each start down on and front? Where's to maybe weekly I range? four-wall touch IHOP? profitability. XX%, profitability XX% maybe you Can you Can average range Okay, the the XX%, guess update XX% for an with XX% great. provide And to shifting in franchisee or gears brand on sales that that

Jay Johns

actually Jay. It's is hard through I'll financial they've start lie. been to Overall, will with This say given Yes. averages health is what franchisee going IHOP. – good. I our pretty

closer looking one And state results, giving just over look many I you money, different at an are we're plus okay, recent average, XX. example, closer you think, making so at down getting that that and a franchisees well, state places. another state different If in was in but was XX% had week,

issue and bills, obviously, can can XX%, the of their not are were, some they're hit up their as If maybe good you Arizona, to they that issue. in they working. balance all they – between making as the kind now. they the as franchisee disparity shape the a down maybe little a they profitability. we're out can level, a different California speaking, California and based XX% paying even right set do you're of they've they sustain have Generically pretty how those do footprint, If XX%, That's closed, is once range So And only far where a restaurant that's is off-premise? more kind in that's restaurants if to with one et portfolio They with bit franchisees as are get But different the except environment money have different five on they then longer get their five their this sales, far XX%, what's flowing cetera. lot a still of their can are how restaurants business individual for restaurants got this and issue. restaurants in very but as dealing that a in cash.

but over So it's were of level, of all XX% to about being they kind they a before. that place up their previous the get better they little sales start Board, when than

Thomas Song

represents is answer of terms own size. respects average our we Hey, Brian, I'll a behalf which in lot of because Applebee's Tom. is system really portfolio of have company the portfolio, operating of that on in kind this

and has despite restaurants into very, have XX those North Carolina. flourishing back been conditions. units – open that have brought team how We tough in and pleased with status South Really these an very

EBITDA profits to look going a point the four-wall the four-wall positive this fairly Brian, cash So we're there, we be profitability anticipate flow at in solid for when positive a perspective, year at and in we time.

a sales clearly in is more favorable position, than Applebee's again, IHOP. wise So

that, on on some of insights that hopefully you but again are, Applebee’s gives the side. that, aware We

Stephen Joyce

Yes.

noting I franchisees our a think took program. it's the of that PPP lot of also worth advantage Brian,

think in So that cash receivables experiencing we significantly helped cash part of is the kind that I has wide. And We're and flow positions. are.

very which are with hopefully – working obviously to our Lending another push So SBA working will Street help and Program of also them through involved and program loan again we're program, for and we associations closely that then with Main programs. most franchisees on and them

It of going. pushing Obviously, we've the ends background. associations franchisees is approach advocate we're them business other various through line. be going scrambling that various programs make financial like But it. for sure is to the So work most election because happen support it'll to want front but got we to we're following be everybody's that look And fast bringing we – trying the and obviously the furious the both at our federal the to important pre-election, the and it's for of in doesn't for as going dollars.

John Cywinski

returning is sales. positive Brian, this is Yes to mission The John.

we're at in great to recognizing back in particular and across first the we On you month of particular Applebee's in QX geographies, in sales positive when shape. as front, get variability look trajectory franchisee, there's some a QX the and

to franchisees portfolio now back right mission get all to that is in position. Our the

Brian Vaccaro

that just out And an you to a we're to the That's quick on pushing page? $XX items number $XX to non-recurring Tom, the new then G&A, think last same give on just any Or on a be And is I or rate? you quarterly rate million? number just lumpiness too, gave rate? on I sure willing number. Thank for is that two more is a had I one, tax timing there there tease the of And quarterly normalized quarterly clarifications run maybe Would you kind annual you. great. a make the guidance guidance then if or can Yes. way could. million, of clarify the kind to run

Thomas Song

Yes.

question. that's good a So

$XX was guiding We're G&A roughly to million. up QX and it's So million. $XX bumping

provide bridge. bit me of a Let a

I think an pay do help. of bit extra fourth in quarter. that We it'll period have a

million that's dollars. couple a So

motivator QX some for mode, decision to beginning we G&A. that on, but were deferred and back our then QX primary some We frankly cash hold during the a items have as there as we austerity, our austerity made come – We in online. in deferrals, of preservation, we do have

XX% That's So And norm. so another bridges $XX $XX really restaurants we we remember, just this all open. We million, outstanding point, had franchisees. our the have And that expenses million few another so. elevate that some $X our our we that's G&A and furloughed of need related brought million. At then typical support COVID kind above back between our employees. or the million do of to

your are resourced Hopefully, And so we fully answers that point. question. this at

Brian Vaccaro

That’s Thank Yes. you. helpful.

Operator

from the Jeffrey comes question from line next Your of Bernstein Barclays.

Your line is now open.

Jeffrey Bernstein

just much. pursuing Great. talk color. think I'm although using you of specific My it Grubhub. largest the I very of mentioned can like guys one, first give you something brand. a morning are just peer, your seems questions. Thank with Couple theme any similar, this to the virtual if John, Applebee's you wondering perhaps like you a brand, that's

helpful? thus or in very a think system follow-up. entire I the sales incrementality, share whatever on have quarter said you units whatever early would terms And or I feedback and learnings of early you year, XXX next the have margins, far but in could first be you of

John Cywinski

Sure, Jeff.

here we differences dipped referencing think We've some between know in this I brands. I in initial specifically. water see probably of the kind you're pilot. brand our another toe restaurant competitive XXX

time, partners marketing. just with haven't incremental to of lever information everything naming significant We from I'll and in menu pulled any that activity, it's learning a robust. in believe share take of learning tell menu will half branding. I good terms And some learning, and of probably relevance We to reposition have That'll us the towards leading in very results. is place share terms delivery point to yet that is at QX won't you that and in the the fundamentally QX. meaningful but we back that more

Jeffrey Bernstein

for be allowing then obviously I closures this just There's last lots quarter the presumably And of lining your independent independent chains significant Okay. some and share would gains. larger talk came in market broader for silver up call, the on about closures, know industry. a terms of

thus industry-wide states. I'm months far points got wondering independent three by mentioned much quarter, now, closures. last touch you've seeing in Obviously, you're a I you've of in think gone very having XX pretty large terms what just forecast.

in color would thus you outlook of could any terms So the provide closure far great. be

Stephen Joyce

So this people not clearly, are we're suffering that crisis. through hoping other

believed look and out. associations, this based and mostly if various study, bunch it industry you a there's But from a independent will issue. struggling. seen on forecast closures to the also restaurant numbers however, number of changes of significant So range And at the as is that you’ve be an have those broadly are to continue occurred that the occur extends

when sure not people's empty fallout is for it is. not what other opportunity be gain total restaurants, us. we're losses. So the We're hoping there could Clearly, to on

numbers will range numbers are of that. they XX opportunity and as it in those an us terms However, the percentage in And independence, in than for of terms be points, restaurants, range the higher substantial.

are than here. So the seeing. other general numbers those studies. what seeing what We any we're from insight don't that's we're have the we're industry And

John Cywinski

Yes. I independence there seeing the category. currently the around in Association the XXX,XXX Jeff, has think about whether that And by a Restaurant closures change. the and categorized industry. haven’t published breakout are – National national defined that haven’t They they They

these or IHOP be thing the independence. impacting have formidable infrastructure brands think It’s and that to or the struggle Steve Don't that a that have. be brings of more good because the brands will very Applebee's at there'll talent change the just list up is others the our winners. vulnerable scale impacting don't clear I this be assumption, make point. they top some of Certainly like and

Jeffrey Bernstein

know the And to talked over of guys just with a in been number XXXX. years. it's about new some at past transition early Steve great you Understood. lastly, working a then I point CEO

topic, a there's search years. few the whether decides Just if update going Steve delicate in he's with wondering, just goes for or us that to terms perhaps stick next well, how of any

Stephen Joyce

Actually, it's all. not that delicate at

So come we've hopefully surprisingly build working make to same. in that'll the and report decided new to process the the Obviously, an The point, somebody they and They on announcement diligently here when some until full-time along brands it. got will process. you, is we'll of Board this positioning the I'm here. is working from process the at do continue as we final that

Jeffrey Bernstein

Great. Thank you.

Operator

would like to the back our closing remarks. to I now call turn for over their presenters

Stephen Joyce

it time. going We a what questions. cautious appreciate is Obviously, about we the forward. feel are, optimism where you. your but good based we on pretty thank might face we So Appreciate

great with However, a year. look we with great a again to new we're you model, forward think brands, profitable We'll a in more business position franchisees. great hopefully in and speaking healthier great

Operator

concludes and today's conference this call. Ladies gentlemen,

You may now disconnect. participation. Thank you for your

Dine Brands Global (DIN) 28 Oct 202020 Q3 Earnings call transcript