Earnings call transcript Q1 2023

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Operator

Good day, and thank you for standing by. Welcome to the Dine Brands Global First Quarter 2023 Conference Call. At this time, all participants are in listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded.

to conference like speakers to now today. would hand over the the I go Please ahead.

Brett Levy

welcome Brands Chang, President to XXXX and Peyton, call morning, Good Dine from remarks I'm and This John Levy, will Relations include conference and Global's Brett Dine's Investor Vice Vance of CEO; Treasury. in morning's call. quarter those Jay of IHOP community will CFO. And Tony Q&A call, the President last the address Moralejo, President from available the Johns, following remarks of as discussed of to questions Applebee's; call. and portion be investment first

safe our remember harbor Please regarding forward-looking information.

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

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

we quarter planning XXXX, market are the calendar our call scheduling the second a with purposes, For on Wednesday, of the before XXXX opens. market release the after X, earnings tentatively close August following day

to my pleasure CEO, call over Peyton. the is turn it that, With Dine's John to

John Peyton

for Thank morning, you good for and Brett, Thanks, call. us quarter our everyone. joining first earnings

execution outstanding members terrific the is challenging dynamic delivered restaurant QX, our economic solid the our franchisees environment. a This team and to focus teams. we thanks and Dine, and financial despite performance at the In of

results. by expectations. environment Vance perspective analysis color our on of macro and discussion followed and strategy international a the financial our our performance I'll our Fuzzy's IHOP, more will Applebee's focuses business morning's results, financial highlights for and our provide operations, detailed This some and provide and on on and

And QX. now

Our $XX.X model. quarter the ninth stability was same of EBITDA in QX opened and X.X% demonstrated asset-light our eighth development. performance consecutive positive adjusted during of restaurants our sales, respectively. our for million globally, Applebee's increasing marked consolidated franchisees' IHOP's compared X.X%, QX comp the their quarter $XX.X and XXXX, million in belief demonstrating and new gross appetite brands to quarter XX for we the and

investor $XXX a Following our million significant reduced due million. a and senior a great refinancing is notes our $XXX bond outlook was approximately the debt of secured we our quarter, which that June positive our endorsement of completed There XXXX, demand, and by in business. strategy were of level we for the

more Vance. hear about this You'll from

signs are are Within the beginning that there sector, to dining some patterns return. pre-COVID

unpredictable. accordingly, And commodities guest However, bit me a we're labor. the little key situation share And remains and close keeping three of behavior, areas: on on more each eye somewhat a let these.

our convenience. loyalty the outstanding that on-premise First, terms what monitoring others the late resilient closely of economic teams experiences, helps focused that have just consumers are price therefore, QX, American patterns. becoming sensitivity we is like are experience. ever franchisees concerns been in and be us has earn and to on trend industry, guest, keep in noticed speed terms trust. guest to expect that their than but discerning The more the of service they of also we're and and delivering now a we about factors in and very cleanliness, see to impacting not success and traffic guest price, may the guest. One signs value And which in Like key more started is

commodities. is Next

beef eggs to of QX easing improvement remain wheat cost progresses. was driven of elevated. cost We goods coffee, and to prices and as by poultry, year see moderate continue expect the although and

our these cost We cost proprietary address scale in find to data help our best pressures easing relationships and prominent to analysis. tool and upon franchisees the possible with to as based the continue Since be prices. and our second half of expect suppliers the year serve more a

is QX upon Based information And from remains labor. hours late while staffing third feeling improve, continue challenged. levels franchisees, our night to

since For the that first labor seeing franchisees revenue are increases time a XXXX, on however, at in offset rate average, rise costs.

providing three same our addressing menu expanding technology experiences through time are third, by to marketing footprint and initiatives and in growth. new that continue future loyalty These and we through invest drive returning and key brands. global At attracting of our and in investing near-term relevant innovation, strategies; include we challenges, superior long-term to guests engaging the guest the

effort that by So and our overall with consumer offering driven the that, in sustain programs understanding brand's and guest $XXX,XXX-plus more pre-pandemic more for abundant are seeing guests. specifically helping with to guests now were This innovative results Applebee's. QX the more learned category. income and extensive appeal. in XX- income is sales versus as Applebee's an profile, coveted research success children. XXXX about promotions guests we the recently our Applebee's higher XX-year-old brand household our of completed I'll update We well value We're speak to our we guest to guests of a as serving than

of to motivating XXXX brand traffic. our including platforms influences two entrees and the our last shrimp, for to data all-you-can-eat guest The kicked that wings, drives appetizer, two favorites, abundant a and full-size offers $XX ability XXXX, drives diverse increasingly great and showcase dining marketing. that and in and strategy value of target acquisition is riblets boneless value off with both a example Applebee's compared our And retention. guests and and are guests highly point, Our deal-based to particular,

guest and menu finally, drives Applebee's our impact variety all-time affordable tuned This at marked is and such number innovations according leadership our convenience as affordability in by of in key industry our categories Stay relevant such later beverages, to proprietary awareness menu against popular remains XXXX. Mucho's [indiscernible] new Brand come across and favorite as promotions, like menu tracker. our one all-you-can-eat. high. an to ranking still the and also advertiser dining peers And third-party innovation variety. menu for continued The options metrics, also consumer

an openings team Shifting to reflects new franchisees regard, for guests drive prototype brings Applebee's intended our converted franchisees initiative financial a the next-gen work to to time, that knows it way ROI-driven that's Tony in leadership he to tremendous the In to what invest in At the hard beyond. us Applebee's expertise brand. And XXXX same entice in creating now. is at under which with interact this and launched the restaurants. takes or QX, development, Applebee's in Tony's development

celebrating one IHOP. be year. And million every through Shifting to on rewards earn our X Pancake IHOP proud serve the nearly celebrated brand's addition day program. pancakes International Bank with providing On to loyalty that of the opportunity National also a XXth XX, pancakes February in year. restaurants day, embrace We're Day, guests we we to IHOP's to

more core program about menu QX. In items its March, that Crapes several innovation launch its savory flavors of breakfast menu leverage it entirety, in share for previewed quarter. IHOP freshly were details brand the menu IHOP's during menu innovation crapes out lunch breakfast new the made decade. new crapes. the rolled as an sweet favorite, and dinner. largest and We'll in continue first as This Once be menu the complete well new is next a will in to

also higher progressing. XX is And the IHOP incentive some first last introduced why openings the globally which XXXX IHOP's as a than is development for IHOP Applebee's, first over from are development noted plans beyond. quarter. XXXX new of number added was development to are in and accelerate the restaurants also quarter, financial during We those QX, rolling quarter. into usual Like

growth. to an provide are on I'll innovations update that key Now IHOP four intended drive

first is X% also with First, in us, of downloads its We've program. million of opportunity engagement more seeing our app and so the members key the X.X a a We're and program, evolution Sign-ups the launch pleased which continue members is this represent roughly increase day, year, than app and sales. per following for enrolled and Xx loyalty X,XXX of to loyalty those the far. the grow. we're

Loyalty Ultimately, to average program frequency, and -- share unlock understand guests. promotions check. and value wallet to of more better highlight engage opportunities the allows through targeted drives and experiences. in-restaurant us to with our elevated

revenues reported outside for entered percentage They National as deepen exposure restaurant. to help of designated nationwide. thousands via agreements increased branded branded IHOP importantly, licensing of four be these stores coffee. walls and for quarter, a will cereal the create drive the into national in These and of products Fund. all breakfast IHOP. Advertising literally retail IHOP traffic the organic And Second, last now loyalty available IHOP And advertising are products brand

brands. quarter, two IHOP introduced virtual Third, during the more

options. by TenderFix chicken Schnapp, tender with concept meat plant-based is first a actor The and Noah

suggests, partnership as My in name These Pardon and top among IHOP the and cheesesteak our My over Take quickly already is restaurants second The are remain podcast Cheesesteak, virtual a brands a sports brand the present. We bullish new on became two with concept. XXX is, opportunity Pardon performers. virtual virtual brands its

to guests. and for that in our seamless technology for continue invest we a new more efficiency finally, And franchisees drives our experience

XXX For locations. over example, in restaurants, IHOP's new point-of-sale now XX% of its system is representing

the procedures. rollout completed our is franchisees server largely expect for and and enhanced of introduction be by next We the operating end phase to tablets QX, of the the

operations. on our like some international provide I'd Now color to Fuzzy's and

addition finance, to and support tech, Applebee's of up activities QA a is franchisees XXX We're new leveraging the brand that to integration inherited, interest from IHOP set unit Fuzzy's in the expansion. number existing marketing and we Our progressing brand's we're already smoothly And scale Dine's HR, pipeline exploratory have seeing meetings. now operations. and through across

activate serves point from and It into leaning design, all branded touch taco will its initiative, as a and of Baha is branding brands Fuzzy's points. elements experience, casual fast such which store menu kicked of other differentiation just other his roots. guest off the as

than visit We're often over from metrics Fuzzy's members, a have check encouraged loyalty the and program loyalty the active Fuzzy's seeing guests XXX,XXX we're non-loyalty also guests. higher more by with

and we coming look we its As progress to quarters. integrate continue on more forward in plans sharing to Fuzzy's,

Middle to four grow Applebee's strengthen kitchen the be At Caribbean, regions: XXX XX locations Canada. Rico key the as ghost IHOP restaurants for XX Mexico, quarter, the East we and in and the and a brands countries and territories. franchisees engine of growth Applebee's continues U.S. the with end International finally, had two work first in Dine Puerto in And IHOP to and we and

opening recent sales $XXX,XXX in in week. IHOP Bahamas of example most first highest its recent the IHOP sales opening a and resulting fantastic brand our dual record, reaching in in include in East Dubai on our successes the Middle An April, first opening of grand the in NASA, Applebee's early in location internationally

over to do commitment the our touch before call Vance, Now turn to good. on want to I I

The nutrition. governance. report report upcoming highlight we're Our serve, areas the in economic of four especially ESG ahead, the XXXX communities the reiterates and commitment progress business: will lies to climate what neighborhoods and to change affect critical and planet, people, and opportunity, we our we our making ways including which food

Additional be progress be and ESG in updates released which can to is week. later this scheduled found report, our

in us performance now, to so about Vance more And financial detail. talk our will join

Vance Chang

Thank you, John.

our heard, a year-over-year. little to successfully just our on color you on the comp refinancing an continue with want before begin update sales performing As I our well, completed provide brands our A-X-X grow debt. fundamentals to of are and I

XXXX The comp to inclusion reflected the prior the to line, of quarter XX%. Shop for a million of increased segment revenues, brands On Total XX% XX% Fuzzy's for excluding Applebee's first refranchised nearly versus $XXX first revenues, grew the was by compared and which revenues XX% XXXX. the revenues million. quarter same franchise excluding full same $XX quarter Taco $XX the $XXX to the consolidated the XXXX. $XXX growth strong Rental improved at of year for of million revenues in million of due restaurants, to total compared to top revenues, franchise sales the quarter to QX both improvement advertising million increased solid

to The rental renewals primarily prior buyouts increased extensions. lease the from segment and year and margin lease due operating

last decreased our company-operated for year. the This of restaurants Fuzzy's October, quarter restaurant the Applebee's due to approximately offset was company $X for operations, mainly period $XX to the three refranchising million million of to first last same sales by operated restaurants. compared our For our XX% company

XX% or from General in million XXXX. of QX of million QX $XX in XXXX and administrative $XX million expenses increased nearly $XX.X to

this investments $XX maintenance costs, onetime active our The and increase Excluding primarily G&A in was due professional million items, occupancy to in services, system personnel was costs. quarter.

compared first XXXX of was from expenses. XXXX, an increase quarter million QX increased the $XX.X the EBITDA $X.XX QX to profit, XXXX for adjusted Adjusted of offset XXXX. $XX.X period diluted in million of increase from for Adjusted resulting by for to gross in of $X.XX in EPS of an G&A same EPS

in same quarter adjusted the for We compared offset XXXX. in Turning the operations, operations an the cash partially flows. million of million $XX cash same operations for was of to $X for to CapEx. the of flow by from $XX last Cash XXXX $X.X had from XXXX of compared outflow first by increase statement first primarily driven cash million of nearly of quarter of provided period million used free cash quarter to of for year, the

$XXX The $XXX of $XX million. operating cash XXXX of payments million capital the XXXX. a the working roughly compares We due of quarter for quarter. primarily disbursements. to favorable in end was total variance finished unrestricted from the in and of quarter timing of unrestricted was a of at the to the to flow with for bonus CapEx decrease compared same cash cash This first resulting in fourth $X million first the change million quarter

to in in Our repurchases dividends of facility in our disciplined testament capital capital utilize Fuzzy's balance reflect This quarter, generate XX ability returned usage. while sheet the invest approach our current share acquisition and for to our shareholders balance. our and Dine's of future to the allocation under cash debt concurrently busy the generation We capacity capital last lowering million shareholders. and $XX balances credit available the value months to through is for cash our complete borrowing We QX. a and

to were interest very model $XX quarter We million from speaks utilized million environment. on today's flow our of back. pleased of strong we debt at our based investors. QX nearly and strong strength repurchased from $XX with the and our refinancing transaction bought in also on discount, liquidity generation top a cash of the opportunistically was which demand This steady in the our We that bond franchisor

weekly performance. of which quarter $XX,XXX results in from with approximately improvement a QX delivery. Applebee's per of restaurant positive QX and by ninth sales represented to sales, Turning comp XX% XX% sales consecutive average Applebee's continued The off-premise of growth. split volume XX% from of to-go

average consecutive IHOP, of eighth per For the comp this growth, sales restaurant. sales approximately $XX,XXX positive weekly of quarter marked with

and of sales X% XX% to-go. XX% was business off-premise Our delivery from with mix for

were continue prices, prevalent QX experienced franchisees with and pricing down Our Pricing significantly. and as John deal increases in XX% more pressures. mentioned. with QX. Applebee's from essential commodities, items XX% certain inflationary XX% year-over-year, compared These cost X% tensions beef such roughly to QX, in while grain in coffee, commodity costs on higher IHOP as eggs in dropped unfavorable remain poultry like have

inflationary price Our continue flexibility our to last levels benefit needs, brands current if of are with year, meet currently the helping contracted at pressures recede. to but to similar

positioned prudent to to confident year. in first strong our uncertainty, believe more deliver returning with the deliver across in performance, on our current outlook our pricing XXXX mid-single investing the commodity to results business, the We with balance in costs of holding taking remain our are on and we well of our low by with We're most encouraged flow to are But guidance. digits, leverage our change our to leaving and all year growth. drive we're outlook strategies in QX the the the our in to for are approach generation inflationary easing to occur macro cash and along We the rest quarter sheet shareholders. we're metrics financial performance executing cash second managing the our focused our equally half the ability on and ability despite long-term and

John? before for now some remarks it up quick for to open the back John will we hand So I Q&A. call

John Peyton

Vance. Thanks,

we mitigate look franchisees uncertain will support to for we relevant the assurances of to investments ahead, We'll environment. visible impact continue they make ongoing actively guests remain and quality value. ensure, of increasingly and our in seeking an brands and As our

the and benefit guidance. focused, work steadfast and is system our profitability to we Our shareholders of the as deliver for on execution accelerate and growth to plans nimble our of franchisees XXXX our in

back so now to the And hand I'll call operator. the

along and and reminder, here and on me both to questions. a we're As Vance, line Tony your answer the with are Jay all

we'll please So begin queue and operator, the Q&A. open

Operator

comes Instructions] KeyBanc. question you. Our Thank from [Operator first of Gonzalez Eric

line is open. Your

Eric Gonzalez

morning. good thanks, Hi,

You how you're us I'm the remarks comment. economic And first brands more signs the the comment on said and quarter, on in you specifics concerns you wondering as are in prepared that - to you saw some how what can that impacting of seeing in if how you're trends trended you seeing give April? guests. exited that what perhaps comps the performed warrant first the quarter

John Peyton

seeing John, Eric, describe resilient, same good year. the overall. time, they couple we last increased we're steady We the would the our fact over past the that we as our the from hi sorry we over consumer been to as happening At that it's quarters, state guest the were as What in and two well increased morning. and sentiment. of comments last during Yes allude quarters guests reporting economy what's reporting see see recession, see the has the

And being in upon we in for industry business that context, and by based reiterated general. our what seeing the at reported the our our But we full year in franchisees. look we're what's have guidance

Eric Gonzalez

details question drag the speak for Okay. range a what EPS you're securitization on basis? financial maybe just I'm able on - perhaps is you wondering and on the will My if mean expense guidance Fair provide I to give an transaction. enough. congrats interest impact be to second if more the to annual can

John Peyton

Vance. question Sure that's a great for

Vance Chang

as so X.X%. the - of refi on the and million $XXX we Yes, debt announced so is it's Eric, Sure. the group

income what a terms is tax it's net before a in year. roughly roughly now, sort impact math $X-ish of it the to it So after is like what if you're of million doing was

Eric Gonzalez

last income, real on then one one a in been bit little past. maybe it. just the quick, it Got And the than was higher rental it's

think there. about you to going be that going can $XX what income talk you some I if the in Maybe X% or million rental stuff closer the forward? said going where lease there's rate sort forward? Should it we might been past to is of on - run X% it's expect

Vance Chang

Yes.

cetera, we think that line sales specific the is And income separately. rent rental rental that I is as obviously, also, impact guidance provide improve there bumped on - percent rent But while, the a things in the a don't up. have et that that income it's some our of line in buyouts, once But a lease part, not that most income we would for numbers. rental that in variability volatility lot introduce drives P&L.

Eric Gonzalez

Okay, thanks.

Operator

thank standby Jake our for Bartlett of The comes you And next Truist next question. Securities. question from

open. Your line is

Jake Bartlett

trade taking first kind strong industry of what trade questions. for seeing terms on suggest down. thanks from results downs from your Great, the two in is within of casual My there's limited fast you're some and seen at the food, dynamics We've dining? service maybe very and brands

One that from of your space. dining said they family they into family competitors were large casual dining getting thought yesterday in downs dining trade the

can seeing brand? in to - what out terms of the each it, measure you or extent trading you in of So are

John Peyton

I'll including keep is John. couple the then as that about to a take one. well. got, ask comp that consecutive it we've sales it's in sort talk are of mind. Tony Jake, context last several One important Hi as Jay of of we've of growth, mentioned, things to and the quarters thematically and we'll There's,

financial to appeal so multiple demographics. we including And demographics,

times. well over-performed our XXXX have tough value as IHOP during three them Applebee's XXXX, do. brands and been to they and All the of then back positioned recession performed well. And back always and We look brands to

continue over now, know from It this is our sit our and that in to value where experiences results. so explain that. We right in favor people, goods benefiting from we And we're particularly that guests helps category. our

Applebee's that a versus And has in we the of was $XXX,XXX we for in we more some while. recently new share completed And household XXXX. where with research just increased learned, that some of were income our expensive research guests over done we've example,

may during - our times guests for while elsewhere some look So options. this expensive certainly, tough of less like

we're overall, And to then we're Jay, follow as talk We guests about well. with we specifically? you And want that know the also IHOP Tony pleased on. are performance. - gaining do will

Jay Johns

Jake Hi be. may John. you or morning Yes, afternoon good wherever

I that, think that seen haven't on can much of people we to just that the IHOP attribute moving we around. that side,

program. in things standpoint give part our One opportunities for abundant not obviously, we price of can to loyalty from program, people And we try with but value strategy point, is our do value. as a have very to unique to the that always values guests, only of

we things, coming that need And give reasons swath new innovation, see all products, you come experience. to we loves back. But think broad have what when to that balance and keeps a really us Americas great is IHOP those great new to of the

in We have that lot of level. people are a lower income

A I everybody, that people at lot IHOP, tremendous little of people of maintain not just we to helps all we've little more because got level, income we're and of people. think high for try times. something a one on and of the a set And that a stable, thing amount to one stay us

Jake Bartlett

be you if get Great, on the mentioned, this And could could changes? this really detail What what Jay, understand a that helpful. maybe think significant give you excited to launch trying how us you us be? And impactful? are driver of that much could menu a the little you that's more really

Jay Johns

we we've things and to the is our et sure we of actually one menu out maintain that of things QX, some working rolled the modern earlier. Well, guests, did modern is, but And been preview can relevant, the be one cetera. times to I the of and we those do think what relevance beginning on you biggest eating make things is at menu of with

example, crepes, both crepes and For out rolled crepes. new we which are breakfast our dinner

offer. buy-one-get-one a with out those rolled We

could big get with to way make a it it it to value we do to launch, this buy-one-get-one typically. by once the a at people a try people two get So oh, try way, that actually is we and

signature new you well These So even get are products. more crepes very the are received. that trial of

been in the promotion since out rolled have of that Soon April. new beginning right eggs Benedicts brand after now that, we

our the should should the we So for about We've crepes. in Benedicts, all own we're those absolute been We last own waffles. great everything breakfast best really categories, to got known We many own really the products should be own breakfast, pancakes. we've two should pancakes, and cycles. over trying but upgrading we

Jake Bartlett

then I looks balance And question, guess is the that the the what like I sheet has that refinancing dig revolver to Great. last a post here. to couple biggest into a cash. had me up balance your of and Vance, I wanted approach quarters I what from - And done think went for unknown would speak to

And so what down is pay you revolver? the the - did

use you as you of forward. Did or question part to is cash? then conserving your of some buybacks And it going also are that approach

going back to think lot cash to well? a could as have share I So Maybe buybacks if focus of just of you. on about you available Thank level talk shares. your you're buy

Vance Chang

Jake. Sure,

revolver of drawn the still is XXX So back million availability we've year. $XXX-ish north late of it last

our in use We didn't down, that cash saw on filings. to buybacks, we And draw reduce you it with and anymore. didn't so, but our our we debt as pay bond

And so, environment. we to have to sheet prudent plenty approach this in of liquidity. management it's balance a important keep And

to approach buybacks, second the about the Now stock returning shareholders capital strategy, still priorities sheet. about and right? your in then balance question capital to is managing investing allocation So our the always that think our same, if think company, talked we've on I you the three is

spent we the right? million Fuzzy’s, over of $XX if - XXXX, the you beginning on So since course, count of

shareholders reduce we buybacks, spent back balance of used sheet. - then dividends And $XXX our - and million $XXX to and we've it through returned to we've million

And of and down price versus is that So value continue won't just stock that we of much approach. trading in have it intrinsic depends approach will on terms stock, where and margin stock the the change. the of we how safety

Jake Bartlett

thank you Great, much. very

Operator

One next the moment question, comes question next Setyan of for Wedbush. our from Nick

Your line is open.

Nick Setyan

you just about tell in I on Fuzzy's us was? wanted And was? royalty the the sales also QX. to Fuzzy the ask from Would to country what be willing contribution margin what company you. Thank contribution

John Peyton

for and sure up their and of publicly we and constructs their John. still past, that have the particularly - terms process and Fuzzy's it's definitions making mean are ours didn't same Nick, the integration buttoned do the data they and that when to in I XXX% we We're their financial because comps. quarter-over-quarter as are year-over-year Hi in report systems in reporting

or sticking about measures, with quarter Fuzzy's more starting the more two away a some moment, specific to say we're I So probably in but to qualitative would to financial we're way on reveal certainly quantitative at And we're getting there. beginning from and talk way. a our

Nick Setyan

enough. I want for are? to what then brands And year Fair the a little pricing as progresses pricing thoughts both bit just and on visit

John Peyton

peaked bit I'll overview to The then Jay start Sure. that Tony franchisees. we know to can a from an for off they and good with of news applies three that all their pressure brands, year well at go bit, and to as is what the cost rate of restaurants. the in the increase of late last raise in mid of prices that a right our goods to easing franchisees across the brands inflation is felt last our because terms year

average mentioned the system, since not but the for I restaurants, true same on time continue it become pandemic been first And in the all we in And on sales for the that the to in across increases labor before a couple is by it's quarters, our first year-end. average the was at this rate Vance his the think remarks rose and to expect if easing of offsetting that time, time. last portfolio, ease, favorable for at

franchisees? want And encouraging do intense specific for on Applebee's price somewhat as you was to anything pressure as that not away, year. we versus not taking add the that's the certainly you're last what it's it year. but their from line bottom moderate going is Tony, hearing to So saw last

Tony Moralejo

John. thanks, Yes,

franchisees think I our not demonstrates experiences, we we're spend well margins. think bodes performance zone, lower are just price to If under I you X%, peers. increase look to at And Applebee's our franchisees their direct QX that that 'XX in an versus and for pricing guest our our It's comfort out X.X% protect about 'XX, us. on saw And of take about QX in continue than QX guests right? that's seeing

a And what great driver an our think, in than think stands of the along the is franchisees that what for. important comfort me ultimately, that with incredibly anyone, gives know Applebee's better affordability is brand I restaurant. experience I lot And the

John Peyton

Thanks your I mean thoughts?

Jay Johns

I side, Yes, IHOP the similar. very think on

so the year. the inflation about think Just cooked the first part menu our we're the printed And that like We've the I taking was the for at is in rates price X% first menu. quarter, an of into we price were decelerating already that seeing.

that's in So now. baked

an print menu We will opportunity. another franchises later will the have in year have that

have help we a this even very what price so comparing in they're IHOP down much taking the about more own as the what street On as not people to trade side, doing cetera. franchisees to doing, far traffic cheaper we more down that restaurants decline does take much our have and strategically. how They're either cause to third-party they're going and what's a vendor think do of increase less too they're scientific randomly use et competitor the within just or moved or actually how people an that that's the items,

and to make a they're So business, about careful to that because the pretty that's most sophisticated thing sure And to maintaining doing we maintaining in got try try way. what to long-term. the do very the that traffic we've they're this important franchisees the do are

Nick Setyan

it. be And you cash operating would question, Got flow just for the maybe bracket to year? final willing

John Peyton

to address that? Vance, do you want

Vance Chang

Sure.

- sort we working of a years. I right? normalize of sort capital first the to trends. flow we're past like think few This where year for past, is the weird the do should back had working this So, capital I in mentioned So

model you assume your level, if that's cash and the flow. just sort EBITDA so, should operating your can assumption, how working you And with have model pre-COVID of you capital

Now expecting about also I quarter through as that last a talked million mention, are cash TI our this reminder, reimbursements we about operating this will we $XX of year. flow

you sort So, And like this $XX CapEx, million CapEx our CapEx effective the reimbursement. in is section. then see flow of cash the of operating traditional net CapEx really

cash for that you build piece should incremental the an that's So operating the into flow year.

Nick Setyan

you much. Thank very

Operator

for Bernstein our our go Barclays. Jeffrey from question question, ahead. moment next One of comes next Please

Jeffrey Bernstein

Just brands any a referred seen portfolio to the in just factors you headlines And prepared your recent following quarter or to not are to respond? just the up weeks all whether industry? would I the late are macro months? industry reference clarify, that Thank you then And trying remarks consumers questions any clarify that you there's slowdown. seeing, you John were your one first than slowdown, saying that that's first, follow-up? in terms just I how a had in much. very just of rather change wanted have broader on see comment and you to behavior if to when Two

John Peyton

Sure.

- about comment we is on this call. know comment QX you my - don't so on So

obviously, we would significant see right marketing franchisees got and we if our focus slowdown, time. promotions need industry the a work really in sure it in do at marketing we we've And that So is we when and - general it, my in comment we'll if of with that and teams the and would we and to. and react to about we're watching and what are and our place terms make

be the would which they're we're the communicating right in each based Tony I I then the share brand to their what has now way you point helpful, and at about seeing guests in with upon just Jay, economy. philosophy with think this ask time it in if

Applebee's So now? the Tony, promotional talk at to you about looking is philosophy want that right

Tony Moralejo

so, Yes, happy to do John.

it's value core one it's So DNA. built on abundant right? It's for tenants. With our the our essentially Applebee's, of of a guests, part that's our brand

that and uncertainty, sure our guests relationship So we center. when doubled on struggles is need what the down economy make front or our there's to

If all-you-can-eat we at and you such campaigns we that and delivered promotion January through our February results. targeted value had tremendous ran $XX.XX look at QX, we in as

are think, It's compelling, at price. a IHOP? to I a It's our that you reasonable provides direct want example value competitors and abundant in many the do of we food portions that value environment. with, It's terrific combining attribute on it generous an perspective. continue excellent guests seeking why of one reasons comment of from outpace this to Jay,

Jay Johns

Yes.

before, bit we different we do IHOP but that this all the little On ways mentioned I there's value, do and the time. side, a

always sometimes value. for price, value strategy offerings about working sometimes If our that's guests, you on think overall its having abundant

one it be I offer a buy get crepes before. Sometimes one, disruptive mentioned a that like may value

what from in drive innovation and happens times, a you getting value, think loyalty also the traffic with unique I ongoing. have tougher members you unique And little ever but it's that's Sometimes economic and innovation to are and messages back do little that In messages do to innovative times are times, to messages try a the forth. more good In price. you more may full value you tougher, messaging. value morph

kind your of how time. having strategy make all having going it's times, kind adjustments of our instead respond in to bad morph to those to and to you're change and a toolbox basic scramble with in by And at of easy abilities

you on your you on when do and the pretty shelf, can things You've pull quickly and work time with got comes. down the that franchisees

John Peyton

John. Hi Jeff, it's

comment Jay our more all Tony are the much of learned were become responsive to they pandemic that And today the engines than brands much three Just is One - changes marketing more thank for how before. agile. in one you. marketplace to during and more thing and their

like left. us So this. during a that It year benefits uncertainty certainly has some

the Tony summary And we're Fuzzy’s that what true we but and now bit up this focus, little and as focused value, our perhaps those downtime, its value innovation a combination remains well always experience. a year, and on-premise for so, on also said uptime an experience, it's And always of a dial that Jay three. the off-premise menu or it's will the of whether and is

we And question. the next can go with to so that

Jeffrey Bernstein

Understood, just the -- follow-up

John Peyton

Jeff. Yes,

Jeffrey Bernstein

support your that prepared I support mentioned, remarks actively would franchisees. of end the or you it maybe at no actively think, No, you

terms recently? you're form most discussions color from Just having you what ask perhaps maybe franchisees the of one in can wondering if number you're when referring provide some what's to,

reference active typically you. few an rather any potential more support Thank background all in they're has what assume Applebee's of and well very large I meant of than corporate, mean considering kind terms that's franchisees, has capitalized, but IHOP of or Applebee's could already?

John Peyton

we think and encourage a Jeff, short-term, may many be In those restaurants incentive to in place I continue in that should supported that to in to open over we mentioned ways. all by referring you the openings to financial are three have remarks, our incentives these XXXX. my franchisees I and prepared so brands see support Yes, and support franchisees

I was as to what - support. referring that was that So

franchisees, different data in our helping opening broadly ways remarks. our assistance there in can with core specific unusual terms we upon analytics. a with from As provide you of at XXX support with and always a their have handful We're our it's comment them But portfolio not to training, as my that business. any that financial us given ours the some large relief, mentioned, time need as based more was and we operations,

Jeffrey Bernstein

Understood.

Operator

moment next next of Vaccaro you. our Thank question One for from James. question, this Brian comes Raymond

is open. line Your

Brian Vaccaro

Hi and morning. thanks good

Just what on up sort you curious, comment value under following what versus changed And at percent fall you some brand consider each quarters? the consumer, could on of of was your the construct? has that would health sales of last I few

John Peyton

time. to And XX,XXX-ish household to been brands both But for income. for guests half has or brands, I'll their below brands, Vance, for me. that generally over at $XXX,XXX it So of attempt household the income. both stable and their are about majority the answer invite Jay Tony guests correct both And in are

Would $XXX,XXX-plus on mentioned, XXXX. our now in anybody line Although, Applebee's on as fact me seeing I check to we to seems segment have that grown since that? care for the are

Jay Johns

just IHOP Jay, radical say any the I Brian, that. an thing would change from any seen Hi is it's of haven't only in we standpoint

at the a been appreciate years we has have, and and IHOP for I been like three sales of that consistent need our that's that now. two platforms true. or said There's, our John And that guests value percentage platform, the stable. and think what is use you pretty pretty that just that of look

year, on anything, lot the promoting we're at in spiked time. it six that morphs economic it months like because just based or of turmoil. what of More not last a It's than a and moves

taking a then people If you're deal. more you offer, the buy-one-get-one get doing

a ex price at price. you're ex Benedict full If in Benedict sell offer, full then you doing more

usually about shifting than it's and their just on promoting is it So what we're more they're own. marketing that

Tony Moralejo

This is Tony.

of On quarter. bit Yes more lower see the insight than share of important last income, Applebee's now which with with just cohorts. guest household more our to the profile. that I'll which visit increasingly means XX our affordability change a pretty into more the was but add among part over ever. are directionally I'll didn't the a of consistent is - income most John We little $XX,XXX, accurate. guests side, is see softening XX in that's income industry to guest old trends. more year little Any did becoming intent now cohort, We and some

John Peyton

ahead. go sorry, Vance, ahead, go Brian, Hi

Vance Chang

Vance. this so is Right,

our ways then that's tacos, the changed eat that way would different, and And brands, consistent example, has XX is perspective. value concept Applebee's, So the Fuzzy's they've that they thing to of guests. that our So different to right? IHOP communicate the has than offer is the traffic, mix all slightly changed value can ways for a hasn't from with value strategy campaigns two yes, hasn't So for for run. value is approach example, we I to the $X different other right? drive way add three the which to different and

Brian Vaccaro

I just second sales you for the the at dipped row. we below of are collections? any deferrals noticed a that as percentage could in quarter the sort that sometimes that it system-wide had that then about bit royalty And there franchise thank what's you. And least of little noting And driving that that Okay, a on revenue you question relates domestic worth you that income. we disclosed monitor other Applebee's within any franchise What as a it to a Are or X% dynamics line? in comment increases disclosed.

John Peyton

Vance, can you address that?

Vance Chang

working mentioned, haven’t had to always - through. - there's with some think it have I always as that Tony mentioned, or we we franchisees Yes, going John - noise be we're as

some out there's, that we noticing flowing franchising think that you're what worked is, through. with So I the restaurant company-owned we details that's

the we're collecting. that's not that change. of rate a terms effective of in So permanent It's temporary change more a

Brian Vaccaro

just you from you me, completed Okay, million, refi just square to debt $XXX that thank is clarifying you just new one the trying I Vance. I so last you And refi was notes - and the believe? cash then the the are $XXX new refied million and April. in

of card some - then million you is cash, have unrestricted that know a $XX gift gap there. cash. unrestricted but of Can And cash IHOP so, you there's I like just

cash So or that? me kind balance is sort set level sheet could maybe where where just your pro help through again. or you is unrestricted Thanks of forma

Vance Chang

no Yes, yes problem. so

exactly you're right. so, And

two between I the the really think we the cash is bridge on numbers just - gap balance sheet. the

even we still and and is transaction, for intact. gift IHOP that all pro after cards have So if the forma stuff you math

enough had to we liquidity So absolute reduce debt level. the

helpful, And of Brian? - just that's we did interest to minimize so we - net trying was was impact expense, math sort that the the income and did of what

Brian Vaccaro

it pass I'll great. along. Thanks that's Yes, again.

Operator

next Thank Todd of next from you. One moment the comes question. for Benchmark question Brooks Our Company. Instructions] our [Operator

open. is line Your

Todd Brooks

Two set and about more bit, thanks taking aggressive said everyone. Hi a question. Jay, good talked forward think half a for modeling first the as inflation my on morning a the menu of IHOP? one just We - for having waning I questions, quick price. questions is not to be the you for environment

we we for I if talked at QX, menu both was talk QX. question, anticipated we about brands was for just wondering, know I side? answering would in Nick's Can the be system what pricing the what pricing look about on in the

Jay Johns

trends, IHOP X% is off. franchisees they but their had previous that the Jay. Hi took price menu increase, on a about rolled years most Todd, also this Yes, they recent

So I be we'll X% until get we mark still that into the around right think fall.

Tony Moralejo

about in a Yes just we Applebee's side, from X%, mind quarter. as chain well procurement keep and under earlier, in standpoint, supply took the leverage thing our One incredibly system. is they the to on said the X.X% I from Applebee's

increases think to that of And modest to when seen so, price the I to you And our see peers. you'll year. the inflation, continue I think see you'll balance us for we've especially relative compare

to - for inflation the to balance year. expect it's expect do and moderate of to continue we the easing, it We

to pricing likely are our decisions I the impact franchisees their balance be year. traffic for to So in any strategic minimize the of on think very

Todd Brooks

you relatively what decline X.X% we over, look rolling Tony, QX year, system expect that we're just would QX the in if Applebee's stay last steady? for or at of

Tony Moralejo

not When comes it the franchisees in to of mind decisions to the it's franchisor. are the these and decisions important that keep pricing,

that need on So strategic. with value in levers understand remain They to are and that competitive. environment, are highly affordability to that pull especially they we this said, to continue

in our so And pricing can so again, to expect the leadership their incredibly position strategic we maintain I'd be that in category. reasonable them and

Todd Brooks

on Okay. a from focused can scale for share picture of pandemic, Early the the advantages question do investing Great from And John. you on, coming John, then you always business of a bigger standpoint, maybe thanks. what in out market standpoint.

able on and scale choppier competitors allows your, what some to it environment? for do advantages Dine environment smaller to maybe thoughts a to and what in be Just maybe relative not may a you attack tightening

John Peyton

both those just to two pandemic future, our think is right? Sure the The more they about I as, in that as around matters, the talked brands, number And terms that scale of platforms well which the brands less the uncertain I or as strategy. of are accommodate more ago scale about build has yes. important it's and company if years the advantages not of today. times And

And were acquisition, so looking years we we considering right? two said or at an ago,

them. in do we quarter, couple already one, our are our that more desk, desk There national are for are of services ways, and with help benefit contracts goods to are providers They or either customer service our ways right? beginning plugging into example about and technology stack, example, efficient a on Todd them. scale, from in and benefit us is that an did Fuzzy's following that's to able point and of last able it through our we're to scale And for

franchisees brand platforms the accommodate all XXX us. better than – platforms flexible, And open, that prove potentially we build future without off us so, are to scalable Fuzzy's in we're common brands, continue three fourth all with a that once and that to benefit going could

Todd Brooks

there And follow-up quick a just John.

investing the know And ever peers the in important I and to G&A you more with investment than in other - if thinking the of do kind of I'm is business? space. place look So scale a comes and ever, scale tightening from cement playing than large positioning that a relative stronger investment offense just in at the environment,

flexibility are don't just what Dine compelling pulling the the spend we about you do slow And how pull see reason do that all? peers? see well are we if there in our that investing you. out back on - some have would to that or so a think back But we others you returns as Thank future are at

John Peyton

Our peers, Todd. deciding not to is or benchmark going invest we're if for about not invest

an peer we if we're it's then are don't So We're ROI our pulling ROI moment, there's responsible pulling that's that think on that, that back, our the peers and across us way. economic the any we know the to back at environment ecosystem. that's I would benchmark. of or make in our investments compelling the a And same motivating is be focused in if

initiative bad. an not going it. is we then good working, not also money to throw after if unwind And We're will

are is more necessarily our ROI much So what lens others and our doing. about less internal about

Todd Brooks

I you ahead. go Right off. cut didn't

Vance Chang

this is Vance. Todd, Hi

we right, long-term But a So add seeing pleased drive the of the example, that. example we that another with the support right? designed to growth. things is very are right, happy. share investing we're an can specific past, I'll as loyalty would in for thing in. type I We're and progress then give program order work, far. are with said And I is, for we're so you you example, in really to And investments our

and critical get they storage, it's one payment platform, new entire the platform. tech includes loyalty single the didn't and that just stack. data not website, cloud overhaul apps It's function. We entire CRM, stack POS, new And

lot which our and are will so i.e., software going And forward. off of some right, costs are rolled over maintenance time. one-time, implementation related, one-time costs licensing that A be

pullback. million great the course, pullback clear right? other mentioned X% related and answer both far levers But during the your and levers on XXXX, worst but the to thus with have We've G&A still of short to been it's Look, progress sales, as CapEx. we through of Look, terms right? - with to complete the members John have loyalty. the of picture in we is, to question X.X So

fundamentals our long the We proven liquidity game. that playing business know we've we can of or protect the

But play is there. as everyone So key John are the defense. the strategic our we also, models asset-light certainly with offense playing else when advantage that we - mentioned, could levers the have

Todd Brooks

Thank both. you

Operator

closing our Peyton it back Thank over for now remarks. That segment. you. to Q&A turn John I'll concludes

John Peyton

Chris, Hi thank you.

of You’re year. the operator the

You don't where happen for started, for and Applebee's you by and were your which quarters fantastic, thank reiterating IHOP for I'll on growth just is this sales wrap comp up support consecutive, nine we call. And by accident. of

are Our on brands income operating all a We right about higher guest. cylinders talked mix now. really having Applebee's

about, is our from loyalty its XXX,XXX family has that were diverse than And our likely know than our guests decade. program to just more growing, begun it's visit also members new younger, who it, more got to and members. We guest dine talked that as a they and most non-loyalty launched we and dig pre-pandemic. a spend and menu the significant research IHOP, Fuzzy's more into we more they in its active talk refresh as about we've

why quarters our And year. guidance we one just had to committed of the rest that's the example brand have about each why of from a string good and we're for

us, you spent will and with hour the appreciate to We questions. your you for talk soon. we all you thank So all

Operator

And and you for in conference. all now does may you thank disconnect. conclude the program, This participating today's

Dine Brands Global (DIN) 3 May 232023 Q1 Earnings call transcript