Earnings call transcript Q4 2022

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Operator

Good day. And thank you for standing by. Welcome to the Dine Brands Global Fourth Quarter and Fiscal 2022 Conference Call. At this time all participants are in a listen-only mode. After the speakers presentation there will be a question-and-answer session. Instructions]. [Operator that being advised conference today’s be recorded. is Please

the now Investor to would and like Levy, over hand to ahead. of I Brett call Vice Please go Treasury. Relations President

Brett Levy

fourth Johns, CFO; morning, morning Peyton, quarter Jay I'm Good Applebee's; by of Levy, of Dine John Treasury President Tony CEO; of Relations Vice to and I’m Brands welcome Dine Global, Brett and XXXX and Moralejo, conference IHOP. and President fiscal President call. and for Chang, Investor Vance Brands' joined this

Safe remember Please forward-looking Harbor our regarding information.

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

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

operated year As results XX-K, our brand. and our full to the Taco our include of and Fuzzy’s filed one it quarter was Shop and the franchises this relates fourth sold which in October morning’s release Applebee’s company to existing restaurants, XXXX our December acquisition

quarter XXXX Wednesday, planning are release call, For our tentatively earnings we purposes, first X the calendar XXXX. scheduling May of

Before the market opens.

pleasure CEO Peyton. John that to the our to it turn With is call my over

John Peyton

Jay We'll our including initial and Vance Fuzzy’s will provide joining capital year will will on call, the and updates to wrap offer fourth and discuss initiatives quarter our us results. up, investment Applebee's And this share for Shop. morning. XXXX IHOP. on we XXXX Tony guidance Hello, and of our structure. everyone. And recent thoughts Taco full acquisition today's thank our you On

veteran new is international He expertise just and details, President of of started Chicken. through let Church's in to Tony, brings development me this lead our our of Applebee's. role the and Dine a get first early our and as January franchising Tony in to Tony pandemic. welcome operations in into Burger President Before those we International Applebee's. masterfully of business, franchisees in XXXX, King time joined decades

And as a thrilled stewardship, I'm international from for openings for Applebee's, that year. receiving is our result and support Tony and of the appreciate achieved business our his I welcome franchisees. last and Tony warm record

Tony new While the is our face brand. Applebee's of

new brand our a of Shop, long portfolio. adding fulfils goal brand, Taco We Fuzzy’s which also stated a have to our

dining moment I was inspired tacos the with and I sampled vibrant and into beverages. after the and enamoured Fuzzy’s the fresh colourful room walked Instagrammable from Baja I delicious convinced

and its nearly Specifically, the in IHOP, leader Applebee's And Fuzzy’s value chose because like category. franchised. we XXX% it's it's

a sales compelling in addition Mexican attracted next growing. units its additional restaurants, that off expected nurtured lunch the to because and to love the business pipeline alcohol and to it's includes XXX over dinner model And strong years. XX% Second, We XXX sales. of vibrant XX% several the we're a open business it's premise and category strong

host. has we Moe's Southwest and creates Brands, with and Focus bold Paul its that strong finally, of Fuzzy’s led And veteran emotional guests. attitude describes a what badass its love connections D'Amico, Fuzzy’s Grill, as HMS by

two strengthened operations, innovation. Paul's Fuzzy’s, menu effectiveness, management his and he team and with marketing During years

family. of the extremely While team Dine as future building an his We're growth. have impressive to pipeline part and Paul for entire pleased

accelerate robust services platforms Fuzzy’s ensure focus benefits is from and and supplier momentum. technology, Our economies our scale offer of the to now that already that from shared Fuzzy’s to we our our

and solid Yet consumer. fourth Dine for against delays, the industry, tough this the The quarter, for uncertainty high us, distract the from cause regarding operating and it delivered of challenges, environment but XXXX. hiring us the continued full note chain Fuzzy’s a inflation, results didn't across on retention year year of acquisition end impact of strength and the supply course for the the XXXX

are I comp strength of and a more of But and our our franchisees positive work our on hard its QX X.X%. the commitment sales. and operational positive With our increase provide results. eighth year to value attribute brands, consecutive will posted of performance teams. brand the agility, oriented of our detail seasoned and highlights and marketing comp sales key growth that of quarter X.X% Applebee's full Vance

economic our restaurants. year across meet the to our positive our Despite industry, quarter. seventh as welcoming comp the full providing and value gain where sales million dividends to of excel are oriented we debt because last franchisees of was apparent shareholders $XX able retired they experiences, quarterly X% returned In had we over and And X.X%. delicious we our and food, brands pressures via IHOP of great consecutive fun XXXX, at strength outstanding its guests million were at $XXX buybacks.

teams Meanwhile, excel operational menu innovative marketing our brand at and delivering programs.

XXXX agenda core needed marketing those includes enhance accelerate and Fuzzy’s to competencies, investment loyalty in growth training to our innovation and IHOP our programs. addition and technology, continued In and the

digital for artificial our by, that like engine review the improves waitlist A recommendation the robust and payment and that for POS joining to includes on that restaurant. fly advance dining and our that for seating, adding functionality options the drives technology agenda handhelds, new channels, ordered and IHOP in apps technology experience includes intelligence server ability guest Applebee's, the

chicken into national now and cereal dia. on leveraging of portfolio testing And we're branded with coffee grilled IHOPs super Heinz CPG Mills. Kraft partnerships, General brand a Third, building focused We're brands that includes cheesesteak virtual equity also currently IHOP our watching concept. with cheese and a we're and mega

of and well testing to concepts, dual compelling windows the new offering And finally, to kitchen construction we're incentives future brick the mortar new pickup of restaurants. like as accelerate branded as targeted restaurants, franchisees and

opportunities. expect result, a are we've to meet our needs of to prepared unexpected, new decisively the reminded learned And to us challenges as and quickly teams and years have more better our The past changing guests. react few equipped the and to

will still that continue deliver term, results and steady to environment. difficult diligently anticipate focus Dine In and XXXX, balance in that to structure and and invest long innovation We're returning confident serve sheet, the a debt our our us will against for technology on macro optimizing We'll that us strengthens cash managing our our XXXX team shareholders. will momentum and well strategy and beyond. our we

who Vance And offer we'll financial to our more that with turn performance. on details will

Vance Chang

despite you environment. drive We in growth. long you volatile as positioned ability well to Thank flow accomplished is the generation operating Dine John, term a mentioned, bit XXXX, cash leverage our to quite

and we target. levels, beyond capital first EBITDA and four-year our posted combination year, to the above the our During shareholders of IHOP completed Return since pre Applebee's. acquisition, pandemic

total of resulting operated quarter our a million, basis. in were fourth both decline Applebee's reflecting Our year-over-year comp by growth positive a at company sales brands, and units, revenues X% $XXX refranchising of the offset on

For generated was $XX X% the $XXX XX of to prior was higher of restaurants. revenues, the despite quarter $XX full year million the refranchising quarter G&A we the the total million, for than year. million year, of XXXX in last same compared for fourth which the

in last to costs normalize also including $XXX million These our costs franchisees, of and expenses one-time from such including Fuzzy’s year related to with return increased resulting as items higher year travel G&A software growth were to professional million the higher maintenance investments operations ended due $XXX services, up acquisition conference support to strategic occupancy We expenses, costs. costs. and

$XX adjusted one-time consolidated below for our of EBITDA various the generated in quarter quarterly G&A million the approximately million expectations Excluding $XXX items our year. have compared this We last would results. been year XXXX million with just $XX

XXXX ahead guidance Our $XXX of of adjusted consolidated below million $XXX year's EBITDA was last and million. our modestly

were per respectively, and fourth outpacing $X.XX share, and share for below Finally, XXXX fourth per year ones per share, adjusted last $X.XX share, $X.XX full earnings per diluted $X.XX but quarters the quarter per share.

remain supplies and costs elevated. food restaurants, on Inflation

pressure more and Applebee's have on pronounced, continued cost IHOPs and XX% inflation year wheat, XXXX and XX%. the IHOP wheat. of respectively. Although impact the experienced XX% eggs been eggs inflation IHOP Without for would and around given

IHOPs of first was at inflation with XX% half XX% of first QX XXXX. XXXX. consistent Applebee's XX% from XX% during a and the during remained improvement half the QX inflation about

an their in with year a pricing, menu adjustment QX focus menu average continue and pricing Our half positioning, franchisees percent year. on our to over Applebee's seven approximate value

taken pressures. approximately inflationary pricing more in IHOPs XX% franchisees year-over-year as have QX elevated with deal they to continue

cash our flow capital. and statement, to balance strategic Turning uses of sheet

to $XX capital the prior discussed year change full of in at due working Our XXXX variance this cash from quarters. three came million operations and in million in compare $XXX in primarily the was year, in prior year. QX saw we The flow with the

related to with to asset provide of the upsides variable ample structure and note, covenants. operational liquidity cushion including model capacity capital light and business the continued Our undrawn our our funding

the We $XXX end fund of ended retire of and $XXX total quarter, bonds year in Fuzzy’s value, QX. done $XX with impact to to million expense of at liquidity a million $X.X of of million third cash the at and of a below over discount we buybacks million as principal face versus annualized The the of acquisition unrestricted utilize our million net averaging to savings. $X.X were bomb par with XX% interest savings,

upcoming the June of prepare A-X-X in repayment we bonds our As XXXX. anticipated of date for class

refinance currently we'll the over markets, our window We're best to the encouraged and next months improvements the in for look the by securitization several notes.

On capital allocation.

debt our capital equity pre allocation to Through going investment and We and $XXX will pandemic of average. returned organic to both buybacks. dividends million shareholders outpacing addition capital growth, focus In buybacks, over include stock drive XXXX. in to our forward

$XXX buybacks have opportunistically. Board the capital also optimize million bond for We our authorization structure from to

wanted December our acquisition, I to XXXX XXXX. to Fuzzy’s which turn on I Before Taco in closed share colour recent guidance, Shop additional of our

efficient concept unit generated system that XXX average. units in square achieving with in units average fast the excess volumes, newer casual sales. Its This of million in $XXX cohorts over XXXX footage generated sales $X.X million well Taco

process and part our value the We're thesis. creation opportunities the encouraged integration by of optimistic as thus investment about far

guidance would development. I our Finally, XXXX, financial on to first limit like for share touch

Applebee's XX, opened in plans year, are IHOPs in with opening net to the plans call Are QX of XXXX. XXXX. net restaurants new to XX of targeting restaurants XX the Our for development restaurants fewer already XX development for XX

of an non-cash expense and we're to of million $XXX million. Second, expected range $XXX including $XX G&A approximately based stock forecasting depreciation million, compensation

guidance XXXX to the EBITDA to be of million. range our adjusted $XXX targeted between million Third, $XXX in is

be range $XX to in spending XXXX anticipate the CapEx to of we million. million $XX Lastly, gross

the lower which certain CapEx about flows cash will our Although related reimbursements million purposes. accounting through GAAP levels operating due for flow $XX TI to effective will to projects, be

structure Overall, this our navigate of cost tailwinds and XXXX. through in current the to scenarios. And required the different view guidance reflects headwinds the

the returns adjusted for long risk Our for shareholders. operating upside the we term focus how create while downside, investing protect is on to can philosophy to

Applebee's. Tony? me on Next, the to please as allow new for of Moralejo, perspective his introduce President business our Tony

Tony Moralejo

I'm Thanks, proud Yes, be brand and professionally I that Applebee's, excited to so Vance. a personally absolutely admire and much. leading

in Based team worked categories when successful few the Having to with multiple wins confirm talented succeed. I have years, experience produces and the strategy years. franchisor nearly stable on we and my that incredibly restaurant doesn't for a involvement franchising last results. winning that can leadership XX over waver Applebee's I team across an a know franchisees committed and

and be would in Applebee's this not intelligent we remain with team. leadership were of passionate base that not franchisees it’s driving to We position committed and business the collaboratively results. Applebee's for closely Together the

period a second XXXX on of top same closed sales X.X% year's the of of Applebee's last out a year X.X% sales versus And QX comp of increase in gains increase X.X%. XXXX year consecutive performance. the full strong comp XXXX. is with

comp Appleby's growth. mark consecutive positive quarter sales QX, of eighth

XX% solid generated qX premise XX% with per off and sales, $XX,XXX of in to from with delivery. from by coming sales on across restaurant. Our sales was channels resulted from premise weekly our and average sales split go XX% momentum XX% Volume

are in continues leader category as sector. the casual team engagement awareness. variety, positively serve, also Applebee's brand family convenience, friendly, communities neighbourhood doing local rankings. to who good impacting metrics At here the recognizing to franchisees attribute Applebee's we leaves affordability, and great place and the a the such remain in brand key the Applebee's brand as in leads dedicated perspective, recognized on and the be and a From time, dining same to work platform. heroes

on focus category Applebee's our guest and position overall is experience. relentless leadership success driven by the

aim and we of to exceed expectations While service quality.

evidenced guests, efforts which aided by all-time hit fun marketing and to for value innovation our our brand unaided highs. as continue Our awareness, and bring

brand Beyond partnered Tom on Gun. with Maverick and Paramount we our approach, traditional Cruise Top

remain focused guest Football value, top these our show. of strong Sports. number on Thanks leveraged Night with campaigns Live to guests football and which affordability on We importantly, times. America our also relationship partnership in Sunday and Most NBC. during launched with night mind one our we inflationary America's primetime for

emotional in by XXXX, plans emerging connections listening products, Our to the what with to marketing, want, they trends crave. guests build keeping in to they globally, services the minimize openings to open Touching brand we're a on restaurant while closures portfolio. domestically, interactions occurring our and operations with deliver briefly pulse four restaurants XX continue and of XXXX culinary the managing on while on impact development, those the effectively

with XXXX XX ended just We closures. restaurant

Over ROI, experienced new rising cost on thanks all-time unit new high growth. restaurant build factors the the franchisees construction These on experienced inflation, an low land our margins, AUV. ignite industry costs now, in last to our while to operating years ability pressure two franchisees footing, remain while acquisition downward solid financial hampering and resulted

My franchisees is to successful. our top priority ensure are

create financially and closely my system. development development leverage attractive with Applebee's to new, entire the franchisees to I'm So background going for opportunities work

up, strategies and ingredients brand, for because talented and wrap the see teams for I momentum brand represent our continued the future our franchisee To Applebee's necessary success.

let it that, to Jay. with me hand over And

Jay D. Johns

Thank Tony. you,

already consecutive you've heard, As comp sales, continued positive progress IHOP and illustrating despite resilience delivered quarter volatility. of our seventh

While from strong detracting purpose our isn't may people. be joy to to challenging, more and more it connection serve the operating environment consumer

quarter, posted Average gain. consecutive XX,XXX sales and years prior seven modestly X% sales positive quarterly weekly were growth represented the of XX,XXX. brand fourth the comparable IHOP store the in of ahead positive it

XX% generated be the continue mix X% to-go Our by led sales. for of remaining was business and sales and to traditional of delivery takeout the XX%

to two over restaurants with XXXX virtual is XXXX business in excited our Mega and cheese throughout The brands, our off Super offering We're thrilled supported XXth by year. celebrate also the anniversary Dilla. premise

has brands experience ever Our as been. food remain restaurant today, it and relevant as

Tooty the strength were leverage only but our of value Fruity our not off display to back bringing and value iconic year we at our leveraging which marketing also kicked as on 'N by continue price by Fresh brands Rooty proposition, We through our $X, relationships. a legacy of both

Quantumania, is our Ant-Man an Studios example ticket to Fandango. Marvel tie-in recent $XX get for and spend partnering Wasp: value the with One movie movie exclusive a with and

Bogo, focuses current our campaign Our value sweet quality savory and is through March. new which running on and crates

aspects across driving also of all We're business. innovation our

over has program app Not as in international Our received expectations. far well have our our IHOP bank downloads program of triple seen loyalty pancakes been the only exceeded year interest a we And months, in we lead nearly members category. more members added sales X% accounted our for million year and year this But X.X X million its first of expected. end. than nine by

progress, guests We're our excited look with to I with our forward engagement loyalty potential. its programs and initial greater

excellent We're data this which next and KPIs, early. still hope While we and developing share receiving more deeper, year. data time at becomes set richer as to the

part Heinz our our with our through of stores excited of evidence recently mini January. a IHOP we're with consumers And be with partnership retail new and in business. standing as We today an to which collaborations. multi-year restaurants seen pancake introduced Additional can General Kraft announce debuted cereal, Mills partnered in coffee

are and branded examples we're be store product taking on across unexpected how IHOP will These of April, shelves nationwide. categories. retail new great coffee approaches In

mind which to Turning into offerings top us launch in expand our to are IHOPs a more third Thrilled tender restaurants. TenderFix, serves brand relevance These allowing enable to virtual Dilla. concept strength reach, Cheese We're more to than complement two of which brand to and speak virtual to our brands, our XXXX Super existing us be Mega now chicken and customers. partnerships about

in of XX slipping Our our of activities We already of which originally opened have the as XX in call, highlighted macro into this our new last opened planned pipeline. below have QX in affected QX with development more expectations XXXX. year. were XXXX we restaurants XXXX as our issues timing on

openings. continue pipeline although The to factors impact the timing robust, remains macro of

year. We’re which could targeting XX activity. a unit to macro represents XXXX, our XX more net normalized development new in openings solid still factors and influence Understanding

we to to IHOP momentum for IHOP forward this XXXX. year. confident the we more speak all And look we'll together the system spread I'm into at where proudly joy do have I going collectively

now turn to me John. call over Let the back

John Peyton

taught Thank it's few expect and anything, If you, Jay the Vance. have to Tony years last us the and unexpected.

business is invest can philosophy aspects we our approach us remain our experiences will resources guests, our time agile to challenges. returns ensuring and and while XXXX, our Our This on that the deliver control, we in when confronting in business, decisive as guide of the that immediate focus and exceptional value drive we shareholders. and to for

we're for will be international and on going and Jay manage time to join change forward, modify with effectively our time addition to then for final remarks One possible our remarks Vance Fuzzy’s And we us Tony scripted much the approach note, We're that of to our going and leave next limited this call. of the will to our your focus Q&A. ensure Beginning as to this quarter, me. refreshed questions. making as

joining day. great for again us Thanks have a this morning. And

Operator

Eric [Operator line Instructions] the Key with Question Bank. comes from Gonzalez up

Your is now line open.

Eric Gonzalez

and question some the out the be and having think investments, you on G&A guidance called outlook, morning. I may release. My Thanks good first in the

these the into up would at and a analyst looking these little in start were idea the step ago, bit end higher you're to would So year. was you that year. to next 'XX roll they're of If G&A investments year go G&A know, to 'XX, the going maybe generate the day back so returns investments by a I

I we So delayed. where just in investments know that of I'm some been happened, have wondering have cycle. the are kind of some

So delay, impacted the the offset that to of those investments costs? of know, see delays are cycle? timing yet Or starting tangible you have we the sort

John Peyton

morning. John. to Vance that tackle We'll Eric, it's Hey, have Thanks. Good question.

Vance Chang

Eric.

'XX expected year. in 'XX, our given that G&A QX, So, investments are of about disruptions we we right, saw because the said, as target, the into we some earlier our talked as falling lowered we in

to that yet filled positions XXXX. open the analyzation new have increase that did we this, fill during reflects So of be positions

Of innovation increases course, are there's inflationary cost projects in XXXX. and some pushed

be XXXX we our to the expect we to going infrastructure level forward. that need growth overall, the So about G&A support

long operating returns, restaurants operating know and profitable I comps environment revenue of complication, so to the sources. as with environment. and continue for see sort and last like, we've answer As growth made starting support we first a complicated we're in think year context all, with more franchisee behaviour normalized it's despite we to progress we guest it'll new of a of the more new on to in progress see XXXX But specifically the initiatives that for are development

So continued in our will the guidance that effectively seeing And early implies that funded by we're G&A XXXX. term our growth growth and beyond. 'XX of upside with EBITDA to investment innings be course, in longer of with

John Peyton

technology By had to we et And it's like so we way out, beginning it. X% build give of 'XX the the for that something specific those loyalty designing mentioned million the just where its John app, Eric, accounted the And about IHOP XXXX, a members wanted Jay it's sales. enable end for to of 'XX program it the on X of was spent example enrolled. cetera. IHOP, and about members to flows

promotions, so and their of will help the how to the cycle we into analytics tech head so 'XX. with should our in market to to to predictive start them, as purchase capability and And you those now people impact know, one that's next initiative think a we And about intelligence to 'XX, marketing way recommend be? what we're made adding it's directly artificial about investment the to using

Eric Gonzalez

be where them sense. And not the to due delays, construction and comments I quite, about if can ask of that store makes your suggested development are the maybe margin. here, costs, to That ROIs Tony, level like borrowing inflation you'd maybe the sort

store where how this we much So and in declined are 'XX. question think terms EBITDA, of I at begs level that the

a function that closing just we I this growth would the so this if opening ago, think, had offset of the net would fewer basis? is a I to, more closures go five I'm of on a wondering, And, year, again, was be you Or back to a that I year or idea discussion to go are guess stores? unit that sort

even IHOP I you've ago, that think XX the you've end on updated missed you quarter for of did Jay side, the a bottom then the year. -- finished And the guidance,

thought presumably yet year gave that so would development perspective. And units 'XX. means you initially today with guidance But filter you the some into that would what below is maybe from normal that those a of

the accelerate that unit, So by reach you what laid XXXX long growth, ago? think target and ability unit out to just not wondering about that means XXXX that too I

John Peyton

Tony. Yes, it’s up for

Tony Moralejo

I’ll tackle that question first.

more down proposition. year, open rate than an future. experience we or we new be pace brands, in where So, it comes believing of significant the last across development, on not year look, franchisees we're improvement. want going Based is to multiple this the But did restaurant which to the global it's attractive there’s a my value restaurants to

really I leadership think, team, those is estate of are been offset costs, make AUVs. going and The use opening on our leadership inflationary on margins, construction costs, high are time real experience, to gains that those higher pressures within factors team by going operating cost delivered as in we're had my rising control. brand to capital? I'm focuses I the brand my How So but that remarks all in higher said sure my expertise,

we're help to help net franchisee drive to continue -- to prototype improve growth. We'll the reassess going going unit we're continue Applebee's our to with to to profitability, positive AUVs, to and return

Jay D. Johns

couldn't a different in kept open to without these items, help year. try we did on it. the that the factors Look, equipment, had and last Yes, new year, this to coming moving restaurant into of started we supply talked pieces we later is chain, But play, as side. new target took not macroeconomic to the positions had, to hit Jay. last things open wanted the of we IHOP call, restaurants From supply you about chain ourselves hit we get actually the we

the can term, it I the pushing started this years year, confident we into we pandemic. on as the have like we're proven completely responsible not our to compared where not five target, chain developed we're get we factors has openings pre same the was guidance the they also, long getting while rate over to. next gone timelines are still And to Supply trying think to year. at away. before of it So sounds here that But macroeconomic not move feel extended, be

the keeps cetera. to approve happening et longer local things taking of one that big that plans, And are and municipalities is just longer

the one retrofits is, done toward that have pandemic, to restaurants. we've our pivot other things to since the of So get we of previously doing started franchisees

got We’re years. very our of successful for this, system. and doing this XXX we've done years about in We've them

we And to of existing we're how is, that's yet, combating it's cost we're now more the with the we much right you the trying retrofit last It's have kind themselves. approved. actually so proof of factors that permitting inflation if responsible the this. we usually economic also on don't not year potentially just get to building faster space, the gotten mean doesn't resolved But to be have a upside much build issues an have But beneficial. much had

year. year, of XX last restaurants we first in couple months opened already this that the we've So of expected the

confident we're So to hit pipeline, differently out a anticipated. we work may goals very developing for, all the feeling the it that going were the term and than that still pipeline, get we the building stretched with but what long little we're looking we're originally doing

Eric Gonzalez

Taco’s impact in last EBITDA the contribution the just on you quarter Fuzzy’s one can maybe that expectations Okay, for comment for of P&L fourth next and year? me, maybe

John Peyton

Yes, Vance us will walk that. through

Vance Chang

QX. of late we Fuzzy, closed So, in

is replaces built way about EBITDA future not lot But years. forward growth with think the potential it's of guidance. in financials. our material the a Fuzzy’s QX more would I into for terms impact company But it, going for roughly restaurant, contribution. 'XX and G&A owned course, really of in there's modeling So obviously purposes

Eric Gonzalez

queue. Perfect, back Thank I'll the in you. get

Operator

line from Brooks, now Todd Benchmark is open. of Company, with Our comes next line question your the

Todd Brooks

morning, my everybody. good Hey, Thanks question. for taking

how Fuzzy’s to concepts I'll for sell could an with talk environment? ignite is, try look as the be? we about normalized about long you really Just you if One the here. or growth big construction you cross a there? at your can potential opportunity, that term are discussion get IHOP can you to having And unit Applebee's think two to that Especially franchisees opportunities limited more early vision

John Peyton

thought that fast Hey, Todd, a the And, love we Fuzzy’s, it's and a combination we category. we do growth a, you category, casual John. because Thanks, was Mexican it and as do the in high fast know, interested that great as we we're potential. brand,

how you a it. know, big number material terms that of behind in become I vision business. it put a we was to can't But on it. intend certainly the of part our So, And

are tacos the development achieve including, applicable team mentioned, footprint. a XXX there's our Fuzzy’s we a choice we're As country, companies across years. the lot that several can work the design the on team we and in additional of believe beginning to before just and pipeline Fuzzy’s, of with pretty on the and the restaurants for tests did confirmed we landed elaborate national that. restaurants see several this and literally And made now can expand next to We and national research to and we that cuisine the that the we do

IHOP a Fuzzy’s. any When interested our in it comes thinking Applebee's, to at franchisees existing or of be about with

development thought investing is, and I have a great, in commitments with we've And to, Fuzzy’s had a their us. above a their that IHOP agreements but view there few our mean that. of We Applebee's of them, is upon would current with conversation be based over about and point

Todd Brooks

picture at Fair again. quick higher, the their looking such what returns on cost basket to out thoughts and And a for see relief and your you could as the of And returns. in battenkill? I Eric franchisee level know what's help maybe 'XX, the touching a like drive Vance. then franchisees was you're for on from But kind that one just some inflation

Vance Chang

bit that range, Applebee's, on we're for the on digit little for trends, lower XXXX. sort experienced bit current top inflation of but brands IHOP, a XX% the in a two So, of for little sort roughly our we of expecting mid-single based higher that in XX% inflation

that, rate they're the to up cetera. the et disclaimer But China, us. hikes, opening macro pressures all from Now, Fed Ukraine, is playing

we're what definitive, of the is, seeing be to hard a for inflation it's XXXX. So softening is

Todd Brooks

a just that And I with far have to the as that been been pricing As you guys that, pricing? where inflation are up both behind do catch sense feel price to you increases Thanks. brands have both do the the taken? experienced? on seem as incremental franchisees And still have delivering value guess, follow any, maybe up brands

John Peyton

Tony John, to add Yes, want they they Todd, And but. and I'll take if want that. I'll to on if ask its comment to Jay

goods restaurants. of the the have being understand about you us guests effect franchisee strategically they're are the As average, they oriented their now, value a cost of said, our think And raised I about half prices, and They of economy with the them. we aligned because the like cost on where into are, on brand. of of where about inflation right

And know, guests. we sales, customers are also you we that of they've too you comp When can, as, away that both think look taken balancing is their as and prudent prices their that as but hit with our protecting much in they steep. spot sweet driving own our responsible at margin as not the margins pricing I quarter our well of performance remaining to the think attainable franchisees

you add want do Tony, to anything?

Tony Moralejo

franchisees ever, consumer part just is that lower value savings, approach way than way rising debt, brand inflation important cetera. the is John. it, is value the the thanks, of Yes, et our approaches equation. the more And of card and because credit Pricing

important value, for experience, guests. when how we have price. and attractive value from you good can it or triggers friends. them, to day, and they're To to what sharing more the offering a end spending feel price, of Our than what's money an to to our guests family come we comes determining most This with stakes That's your with call at believe you the are table on meal value prioritizing win need indulgence a guests. close a element deliver just which a deliver reasonable

And so to on those in offerings. the Applebee's elevating franchisees Applebee's for and experience were reasons the offering value total guest compelling addition focused

Jay D. Johns

John Jay. are strategy. I barbell this. refer this IHOP From an said, franchisees, about we But to think a Yes, being as the it standpoint, prudent people as some very

very smart and value needed places price. at to We continue some initiatives. guests where support get though to take have can even restaurant, been they've our They've value

can offer are Hoppy that to doing program even We a that time our did have on or value we Xd them a for we limited and exclusive the the in everyday program. our can sign do value offers first because for just send BOGO with them now Rudy crates $X directly offers, program, the for like people loyalty in now unique value for Hour we we're We our right reason program, the up to year, we're high

come experience moderate down. sure that think they're as I'm I their prices guests to a hurt going doing more their catch as guest of the to be reasonable and balancing job levels. their So they're go to to well And that anything going not at costs a are I'm come they're prices up down, but back sure to their good there because some not and it. off to point run opportunity of may going do guests and

Operator

line Wedbush, your line question Nick from of comes is Setyan Next open. with the

Nick Setyan

in for correlating day least general current a at you poured just QX your in maybe terms? performance exception outside about the talk time one to make given QX, just possible it you, just be and would an Thank

John Peyton

specific can try, see pace I'll not is see what see our, the you that Nice Nick, we see give we're and momentum going that we last I tell I to can the John, what our can But and for what QX. its year I not that guidance this we're I trend ending baked numbers into do, about certainly is the year.? can

Nick Setyan

Got it.

that? see there going that more advertising that set being is some incremental of worry the marketing price and guess, sort of big biggest to about to competitors feel you in your incremental your television response the one cadence, aggressive peer Applebee's are how in positioned an basis. on terms you of How I points we're of competition year particularly ongoing your this with One what's on as competition, progresses?

Jay D. Johns

ask about for I'll bit talk to A comment. Tony And that broadly. little Sure, more Applebee's. specifically then

that think former, fourth in, TV in of time, Applebee's in marketing of best year particularly is an television where a As Applebee's is, or a CMO is the the strength for in category. is position successful it It long Starwood does I like now. campaign, the actually its fifth and and right a extraordinarily position at Hotels consistent I

has rather television add a to Then money to lot of Tony, spending scratch. be view of again, to to awareness is the having that? brand winning a rather position, uncertain the 'XX, an charts consumer you on behaviour. than where consistent Applebee's into heading message much so, and on there I'd And has brand be a scores point terms year off from a new clear in has is, which its, create of about want a that from

Tony Moralejo

position. very John. we're said, Nick, with by the question. start I'll I'll And, start, Thanks, marketing calendar entire well confident very the value And our with very brand for Applebee's with We're we're Yes. year. confident saying, great the sits proposition. Look, confident

prepared the agile. necessary, changes any entire or competitor system to such and market if should Applebee's importantly, pivot force we're nimble want make we'll And More is action.

record. figure got we've But results. And We've winning five-year playbook. out are proven while the a trying new others to a campaigns, it's sustainable got track producing

remain to to So to And use results. great on with restaurant through and connect drive marketing our experience. guests we're to our going focused going strategy business we're to continue our going to playbook. We're continue

Nick Setyan

very you Thank much.

Operator

And Instructions] James. question Vaccaro from comes [Operator Brian Raymond with our next

is line open. now Your

Brian Vaccaro

Good Thanks and morning.

as various brand you Applebee's on I any peers? much Just the can little brand and, Applebee's strength hone on of what awareness. attributes. Or degree there could more metrics a piggybacking maybe hoping Nick's couple you that perhaps a specifically mentioned have you have Tony, provide from Is on benefited increased on think was awareness? question to Applebee's pandemic category over you how years in quantification awareness last the trends across versus

Tony Moralejo

specific year performance. don't together what you share starts had, when three sales eight run quarters I stringing And part Brian. we've three But results with nice say a to indicators, confidence to gives today. addition strong consecutive it have years, that us sales. of as let we've metrics with had me in this strong it first sales. comes And Thanks, with to

Joe such ad go specifically, also, important unaided in amazing metrics awareness, Officer, from really category you'll we dining resonate value under that winning with aided throughout award the and our leadership in continue our in of it delivery examples our that Marketing the to incredibly to the advertising awareness, perspective, attribute Chief will casual And campaigns year deliver added lead awareness. to environment, [indiscernible], my referenced a see of awareness add I'll But continue brand as guests, I unaided affordability, brand that which continues to partnerships and this opening is comments.

health robust. remains very of brand very, and are encouraging today these So all factors our

Brian Vaccaro

franchisee how just are expect I each provide about you food I any of ballpark level what Just brand? more initiatives through circle Okay, digit EBITDA be And just trend store are that on think savings kind to XXXX? you also and said Could average profitability. inflation, any what margins inflation then on back wanted XXXX? exiting that just color how where wage for are expectations the mid-single highlighting? specific Vance -- had worth but to you and might

John Peyton

of a here. couple So back questions to peel

So strong better to restaurant and time is overall let thanks X.X our average getting overall, average unit of franchisees portfolio with of continues better. me volumes the system million to unit specifics improve, the P&L, restaurant, as our part our first, get very high health without franchisee finishing the all in that of annual profitability volume per into XXXX say

here some more With year. we're margins, now costs, they moderation impacted, relief healthy. especially respect remain to the but the And the that cost anticipate food were they franchisee equation, side seeing is of this later good news

for XX%. of by specifically terms saw basket year, past our food of increased costs this In we

As Vance mentioned,

Vance Chang

food sales. It's of roughly for system. cost The XX% Applebee's

there saving So you sort the initiatives. P&L about is, the apply to you inflation causes our specific of the percent but impact, asked cost right, math food

come functional costs, up purchasing usage, labor, or lower the saving to cost ideas operations, one the improve impacting just each Op not production reduce Co restaurant we brands, or impact negatively obviously of experience. the So with our waste, have between while cross guests teams franchisees to

So, initiatives, are distribution, fixing help some sort product in server inflation tablets energy include all of the of things saying. like these to help ideas save indications, packaging, that specific offset to reviewing franchisees these equipment, conjunction shrink are reduction are, labor,

Brian Vaccaro

does if and many openings XXXX? And that. for unit Fuzzy’s? closures then how guidance one on you you many you. Thank the in open to expect and then I thank how one, net guidance, each Do development just then embed your Okay, And brand? at could last

John Peyton

not you yet enough -- businesses, us significant out. guided of We consolidated is Wheat gross just our number. to on it closure. I also it right haven't break think versus it's know, the for was think, guided is on And like, Fuzzy level net we now, like international a this

as So grows providing time. we accordingly, we're the but separate not will obviously, over report system guidance,

Brian Vaccaro

very Thanks All right, along. much. pass it I'll

Operator

Thank next you, one question. moment for our

line comes with Bernstein, next open. is question Our from of your Jeffrey Barclays, the line now

Jeffrey Bernstein

you much. thank Great, very

layer And there material to that, the As Just think try mentioned you incremental as any following out qualification know just build up sales any I already we on you into I can specifics Fuzzy’s. not by guess of you mentioned provide? or built is da that guidance. an it's and or this EBITDA terms enough. I But it's the guidance? in XXXX

John Peyton

sales. to our year, plus system restaurant, In to EBITDA, what company the terms for is the about G&A roughly in and about restaurants XXX terms contribute in roughly then million Fuzzy’s to system And sales used XX of sales, we dollars talked this of owned P&L. equates

there's XX lot said, So for the what going to growth restaurants sort do. forward, roughly as of would I but potential, a before, now, of equivalent

Jeffrey Bernstein

think And mentioned from Understood. cost things I 'XX versus in you standpoint, obviously, a 'XX. easing

basket. said with two, gone how have be much mid-single detail I Should pricing in franchisees? contracted think you digit one of may the or we conversations pricing the franchisees how terms suggesting those what's provide for food cooperated and

John Peyton

is of I think locked next we're, sort XX cost XX% now, XX% the fee in pricing of months. we're Right our for to at

high. still I for think we're and risk high fixed pretty we pretty still would level lower than this still normally the markets are are at spot pricing current because, premiums is

seeing we're what that's So

second And could your remind question me again, you

Jeffrey Bernstein

relative and Yes, but that decisions, thinking going going it's maybe about whether how own talking suggesting about? what you're just making pricing franchisees, or alright how into pricing to with conversation that they're 'XX, their is

John Peyton

on and traffic the term Yes, grab longer going themselves to focus franchisees for what's is enterprise it's conversation market determine to pricing, the having obviously the share and value focusing to drive completely us. that's for on up we're menu but

Jeffrey Bernstein

you positive traffic your think that And to trying traffic? brands, just through relative the 'XX, based on thinking industry compares how as for XXXX lastly, you're Understood. to we compare maybe for just and for the assumption move what on

John Peyton

We before. guided on traffic haven't

different think reason that industry have players being definitions I the traffic. different so, of And

specifically, experience you it's but investments as focus, before. could key So, guided us guest point all a and our aim drive traffic. But imagine, the the on we our haven't that all and campaign's improve to for

Jeffrey Bernstein

you. thank Okay,

Operator

At Dines's Instructions] Chief to Peyton I time, this closing conference over the [Operator would Mr. comments. to Executive Officer John turn for like back

John Peyton

some appreciate We time much. questions we'll day, know talk I be And speaking us and take morning. the and very of to take this with appreciate with always and you care. Thanks the a you everybody's have great day throughout

Operator

conference concludes This for participation. you Thank your call. today's

You may a have now everyone wonderful day. disconnect

Dine Brands Global (DIN) 1 Mar 232022 Q4 Earnings call transcript