DIN - Earnings call transcript Q2 2024 | Dine Brands Global, Inc.

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Operator

Good day, and thank you for standing by. Welcome to the Dine Brands Second Quarter Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Matt Lee, Senior Vice President, Finance and Investor Relations. Please go ahead.

Matt Lee

Good morning, and welcome to Dine Brands Global Second Quarter Fiscal 2024 Conference Call. include CFO. from will and Peyton, call Chang, Vance morning's prepared John remarks CEO; This

prepared Tony be those the Safe President questions Following Harbor remarks, the Q&A of Jay Applebee's; from information. call. Please IHOP, Johns, portion and regarding of will remember community forward-looking also investment available the address Moralejo, to during President our of

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

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

our are to For earnings Dine host calendar and is to to we call market purposes, a XXXX, John turn before CEO, discuss planning to Peyton. conference tentatively to that, call that the QX on X, my it results. With the Brands' over morning XXXX opens November the release pleasure scheduled

John Peyton

positive experienced discuss operational the morning, QX discuss saw Despite earnings highlights as to Good for quarter behavior. and address across challenges, discuss a financial and QX. the thank portfolio, share appeal and our economic from joining Dine's results results update also our full-year for the we call. this, then guests, us guidance. Dine to and everyone, toward guests you began second-quarter the QX on I'll pullback provide broaden on a consumer with unfolded. will of Vance Today, trends I'll an we strategy and strong in our second end build our momentum

higher-priced industry-wide this growth, performance. We are economic recognize When a tough able our that been consistent experiences. we expensive pricing, brand's to in While by more top their trend guests' to are spot in few enduring to less to eat data over past check menu at a that reducing This choosing our our been choose our portions, items behaviors. We this were restaurants, we, quarters, at through along This adapt approach they're competitive has indicates actively maintain guests evolving restaurant from our offerings the options. value deliver and down to our affected home. dine to trading franchisees, have guests trust. line earned exceptional our and visits needs and cycle, managing do with generous our and has bottom and line guests managing their

satisfaction. beyond extends discounts, on long-term temporary strategy focusing Our guest

are in and remainder the the long-term. We're to for unique guest in toward today. year. ourselves adjustments approach for promotions making We'll refine respond to by first sustainable near collectively well profitable innovation, promotions, conditions. to can and we choppy on we've campaigns the versed while have waters, we term that adapt on evolving changes to address shifting strategic dynamics the navigate Our behavior, time the creation to focused refinements isn't menu to the and market deploy how franchisees the market remaining deep the This continue to in value-driven more a and positioning of our value had arsenal of marketing real-time of consumer

the solid our line. our our to impact to and stakeholders. It's business to how this underlying of we're the foundation us tackle this to leveraging asset-light and current and hear the interest of today bottom to and Dine brands important our remains create headwinds, model limited perform that guests franchisees also continue advantage the strategic iconic a Our in platform, you'll for solid the all and model value with best give remember is of fundamentals

strong Our improved cash flow and is year-over-year.

around to a market taking what and disciplined can margins approach continuing to to our return Our control on cycle, remains continue manage we we're we to our leverage while And tough long-term objectives and this shareholders. value solid, steady. our focused growth remain remain

an from million this $XX.X of overview quarter quarter, same numbers in $XX for the we Now EBITDA last of million to generated year. the compared

revenue will X% guidance $XX.X our posted Vance our say expectation the revising conditions. top our light and will are our all throughout year, in in X.X% from QX detail date Our the pulling was levers our and last flow the in to year. of and development was disappointed We're applying last our to slow free full-year comp the learnings of available pressures quarters support that guidance. in continue to although from sales, two remainder of the reported but to the million. that performance sales, quarter and same we line the committed largely we're refine market our first XXXX on the Applebee's comp adjusted we're top IHOP through strategies it's X.X% line later cash growth, down call, remainder negative driven market to by year. greater the momentum financial In negative speak I'll

our comp with third I'll quarter to Black QX. Key Box with Boneless Favorite limited-time Applebee's sales to and guests, offers and for an QX, I'll So begin America's delivered outperform allowing row. that, Applebee's. improvement turn with and promotions traffic updates brand us resonated in a traffic In Wings like on versus the

experienced momentum putting we and headwinds pressure quarter the develop this end on Applebee's macroeconomic at were growth at QX. started significant, to the of we the However,

Applebee's how the as of we This performance on helped as also is ensuring right. second new Whole such with our drive following to the capabilities our Bacon second in the Chicken the with traffic hand-breaded Burger, innovations its look menu new for the we're remain promotions very of LTO. In will National that launch the testing paves to menu menu while which the year, The restaurants. exemplifies fun. showcased value commitment the Applebee's we success opportunity June, a and consumer of unlocked new us while an And connections chicken expansion. and attract of menu Lotta to for innovation half one and the diverse During The also further price our of menu quarter, we brand price range at way exciting and extends beyond toward ran combine that Hand-Breaded our certainly Sandwich socializing, as and excited work world's dining it's strongest opportunity NFL the timely brands, Football through partnership with League. entertainment, to the is the

and guest menu content items Grill our Applebee's we'll all long. partner of and provide and build NFL, with enhance League As Bar nearly will for season the exciting Official engaging to + million club the members experience loyalty the the X

on the moving sales and to traffic Now improved IHOP. versus quarter. Similar Applebee's, to first

by the in the progressed, the and As competitive pressures was performance though, quarter promotional increase challenged environment. QX

affordable, response, strategy in successfully and more to during offer our agility So menu the operational needs, leveraging barbell pivoted quarter promotion IHOP items. meet to our value-priced guest

and simple. Dining to barbell XxXxX outperformed strategy our In check. segment traffic our value XxXxX mid-June, balances which in like Our our while conscious in the [ menu launched the ] offerings customers promotion, our to is via IHOP It Family weeks appealing three provide break-feasts the sales, premium both of options $X first combo.

purposeful to support with at of and strategies, franchisees calendar Looking help more the aggressive be have half traffic. built sales the we to value-driven and the second our our a drive of year, we've

million members. to plan nearly personalized deliver also offers to our loyalty XX We

score that loyalty scores most overall, And that Our our Customer XXXX the more our improving. who, data validated by guest also IHOP satisfaction Food results shows American and showed peers internal satisfaction the guests, frequent is impactful shows Satisfaction which are often. are our of This Delivery remained promotions X% increased with while importantly, IHOP Study, Index that IHOP's data flat. our Restaurant guest

expand with actively of X,XXX the with syrups opportunity Overall, line we're strong, headwinds we Kraft brand. X,XXX of for two nationwide the Amazon.com. Walmart last initiatives an bolstered while by stores retail retail and CPG varieties we're our expanded locations also on performance syrups front, believe partnership shelves On for additional new available distribution the the Heinz the in launch nationwide. pursuing introduce the ongoing in mitigate the our to remains to And and in month, expected retail coffee the satisfied quarter, to to IHOP continue to demand available to not now with Currently, grocery are locations recent long-term nationwide.

we'll Fuzzy's IHOP pipeline addition exciting and launched Applebee's second for of Margarita Turning We create Fuzzy's. proven to now $X, but at was launch respond at promotions Taco menu. pair with by the Star Chicken Fuzzy's collaboration the Building Rhett's tequila Thomas A on which XX-ounce a future soft our Fuzzy's and Spicy this developed promotions leveraged its market with quarter, Fuzzy's brand recent in Cali-Style as is better Steak paired guests offering by for last with from the drink was insights Dos Country Watermelon company this example The Hot position from Applebee's, combo, the promotion the to with during Dine first-ever and a conditions formula in QX, well successful value of of value-driven received Music was new to this of IHOP franchisees. also impacted the integration a expertise. Fuzzy's. Using and and platform in Tacos success quarter result Honey a in Primos. to innovations week's

Vice Chief Kirk the we Bar of President the end Fuzzy's and a for of and side, On will as April marketing Fuzzy's Marketing opportunity brand with Patrick channels. Applebee's, Patrick announced Patrick having the across has we supporting platform, served that ground the continue Officer. at significant appointment and see hit previously expertise Bar develop be of Fuzzy's Beverage and the to Beverage Patrick's running initiative. in work to to expand as critical all

On dual-branded to dual-brand IHOP recently the average, restaurants see international size. X of twice approximately are have locations our they side We're of pleased for future are Kuwait. These same the of we a locations generate, opened locations significant new strong standalone revenue strategy that Saudi according on the in momentum of supporting domestically. to or point of and business, restaurants expansion dual-brand performing our optimism the dual-brand Arabia thesis Applebee's and as international

we have potential of deals In early XX restaurant as XXXX. approved target dual-brand opening for first domestic as with fact, the a sites QX

non-traditional, of to and to the Dine both with is traditional platform entire Speaking across our capabilities sites, expand support build development new and for franchisees the internal and we're their actively closely opportunities working reviewing development our strategy, to team plans. continuing

system, borrowing for higher Dine has impacted which costs timeline pillar to quarter, for from has for approachable development provide pleased to new by make As of our our franchisees team We remain capital. to more headwinds programs support rates, our industry important development access new times and experiencing franchisees an lead introduced the incentives longer the still across cross-pollination restaurant thesis. The for to shared opportunities looking with is and last Dine's the construction openings.

will Vance on these to As we've address development guidance IHOP's moment, shifts a full-year expand openings. in and adjusted

However, three on we growth. remain focused all the brands to development for opportunity further long-term unlock

that, over I will call And so Vance. to the with turn

Vance Chang

quarter, environments John. like in we while flow this model asset-light and return the cycle. challenges continue strong our Thanks, In protecting generated well sheet. our difficult economic free faced and positions cash balance to Despite EBITDA this to shareholders attractive as business weather our to we're now, cash

QX and On in $XXX.X driven a a rental million in top in total franchise consolidated year, the by segment primarily prior in line, revenues. revenue decrease million revenues the to $XXX.X decreased versus decrease

X.X% the of million to $XXX.X for decreased compared $XXX.X revenues franchise total XXXX. to million quarter same Our

for XXXX, in X.X% franchise G&A mostly the prior IHOP initiative to million down of expenses period advertising Adjusted to same of million. million stopping an increase $XXX $XX.X from compared $X.XX, and was $XX diluted decreased XXXX. of year, year. in diluted in remain revenues, increase last revenues last depreciation. an for flat QX $XX.X of million from expenses to Adjusted in offset period at same to Flip'd of decreased second by EPS $X.XX EBITDA quarter of of in EPS the in adjusted year, for XXXX compensation-related due the the QX XXXX $XX.X QX million Excluding the

$XX.X of well end to from inflows same and notes cash cash equipment flows. $XX.X as XXXX. second flow decrease cash statement free increase provided driven months of spending million from the favorable reduced for compared of end at quarter $XXX with at through the million $XX.X million principal CapEx for XXXX, same period of for quarter X the same Now, was in cash due first to $XX.X million We of operations $XXX.X quarter. as profit. CapEx the of XXXX. with from $XX.X turning of second operations had capital, cash million, primarily QX compared to roughly by of for to contract We period the compared additional adjusted period receivables. Cash XXXX the and total million the The in provided the offset of XXXX year, finished unrestricted partially the of $X.X first receipts operations million segment unrestricted working million, of by a of of last the was compared to cash increase was by a

Additionally, shares dividend is investors. million we capital XXXX, $X of our to one continue of returns in return QX in repurchased the dividends in We which to $X.X paid highest and million category. in

XX.X% or Next, let industry were to-go from including QX from discuss of sales to which including was from Average XX% of off-premise, due was weekly and Applebee's from of was performance. was weekly and QX total were off-premise, same-store X.X% headwinds me from same-store comps. or X.X%, challenging sales strong sales to-go XX.X% over negative over headwinds $XX,XXX, XX.X% delivery. IHOP's challenging that were year-over-year delivery. from total were performance. moderated Average XX.X% over sales of sales, and $X,XXX which negative $XX,XXX, X.X% reflecting sales, $XX,XXX sales

labor the costs labor continued that are steady. front, On franchisees to have staffing and remain reporting

Turning for full to baskets IHOP expectations be the deflation at single-digit our to QX, which costs is market we consistent discussed at stabilize in due low the Applebee's to what and continue at single-digit with brands. seeing commodities, inflation low and varying we're year

differences, As period X.X% commodity these a grew same commodity and result the this of XXXX. versus quarter X.X% fell cost of IHOP Applebee's cost

the opportunities continues system. the support identify systems implemented operational date, million Our of projects restaurant To supply improvements and initiatives to chain and IHOP to profitability savings across across over and in cost both CSCS additional costs. input in through XXXX, work co-op we've Applebee's annualized $XX savings resulting

over call back to year. on Before John for like the for our turning update Q&A, provide the guidance to I'd an

continued year, expect year during market Given fall the the top second we half we now as we're anticipate the the our system-wide line, domestic today to revising and sales comp what follows. with we between we negative expect share of fiscal At guidance pressures X% Starting X% to IHOP, between initially range the of to previous range X% to to X% domestic X% to compared to range X%. to provided. negative sales compared X% growth X% of system-wide comp negative the we Applebee's

On our bottom end to to million million, $XXX depreciation bringing EBITDA, the bottom includes On ] remaining reducing line, million range guidance top at to and $XXX compared to of expense compensation million the end stock-based of this previous our the and $XXX we're [ approximately $XX of $XXX down non-cash our million million. total G&A we're range million. $XXX to $XXX with

XX Lastly, net we're our million of million of to store XXXX John. last previous guidance to approximately in to opening XX of over spend the now to range to XX development, million CapEx IHOP compared to call restaurants, remain Applebee's in we provided an $XX domestic closures fewer new zero $XX domestic range compared hand the of expect restaurants increase million. On lowering unchanged. With $XX previously XXXX range back XX to I'll of XX new net be the to to restaurants timelines to that, the delays compared year. reflecting new $XX and net

John Peyton

Thank strong. you, Dine's Vance. fundamentals remain

for While in quarter landscape and growth. recipe in the we're long-term of navigating, confident we're our our believe this and reflect model economic results business committed strategy. all remain our We strategy to the challenging resilience our

So any call now, I'm may for happy to questions open you the have.

Vance, address to and are questions. Tony us here addition and in reminder, a As also prepared are your Jay with to

our with first ahead And open that, please line and for go so the question.

Operator

first question of Gonzalez Our Eric from the line [Operator comes KeyBanc. Instructions] with

Eric Gonzalez

spending. now highlighting that But is having didn't case, about value right pull struggling Applebee's is consumers it sure to on environment. by I'm competitor help It's competitive relative viral it back food. industry offers a My as go obvious the question direct discretionary the that the fast

normalize the geographic of your Chili's much how think past, believe impact of said had? first, outlook to in much there wondering, overlap that sales I'm Because if that wondering a the your outsized might I'm you that Chili's the did wasn't between subsides. And So to what you something and maybe, can And you business, approach the way strategy? Chili's the same-store Chili's assuming replicate might an actually results I from extent after you in hype conservative, brands. do And perhaps an And marketing reevaluate future? you impact relatedly, X have your mitigate can you prove has impact such learn caused to content there's success Applebee's?

John Peyton

as specifically to multi-part it's then, of to Good we it would question couple try We'll to Thank about course, as Tony of get Eric, you over Applebee's. I of couple of morning. can. make talk things. say a for going to the turn I'm comments, it John. to much a about Chili's.

at competitive that great sandwich one a is competitors with or we And strategy quick months experience. as do for a the The we together service, burger And with for first to in What we thought Applebee's very right than the You Applebee's. XX good example X did is from not quarters that XXXX, of our [ from put have that for adjustments we that's our closer when we're Appetizers to to we of we're prices Endless Applebee's, a alluded for full calendars $XX.XX first is market, learn a to, strategy, the Can flexible what as in what Eat and confident the one lean doing, are select certainly toward and is that service, agile. need service one more you price for promotions, become believe but regard. we another. of the more Fries difficult conflate ago first closer and our X were and we we're way sort and that that ] There portion to be to value quarters chicken has started learned another approach sense the is we making have only all and brands. a All market that that. And a of becoming all to promotions

So have what franchisees serve, us X but well we we're to some continues but say Chili's. we're what's Tony, our gaining Applebee's share to an last and certainly what sticking X And which first because your have term. that to like that our quick market the long we learning the And in can that will what losing to in particularly us also quarters. I the significant plan pricing, I cognizant opportunity our that we may go after data from we're tell there, not serve would happening upon actually the are is with approach of traffic is to believe quarters, thunder add? of modest you based forgive stolen me.

Tony Moralejo

Eric. Thanks, Good morning, John.

So correct. you're great It's question. a

have by aggressive promotions We competitors. seen

So any brand. And conducted a share concluded, losing single we're modeling of a whether to dive we've determine to that of the we any that, or activity, other was this it's brand. recently any if as to from any from done, deep and lost, research we if determine our it Chili's competitor, we've result not promotional if one

factors have pricing on one pricing. remains In impacting impacted on household most focus based performance, guest, fact, highly brand like guest that the single our the dining why their John isn't meaningful It's There to core strategy income. factors, and right, today to our they're where sensitive highly, our our results. casual mentioned, is income that's external as

as incredibly if we our quarter. environment, important this outperformed the to traffic in So John And going category market during share. mentioned, the we're becomes value maintain

during and quarter. guest So, materially the that this didn't it discounting seeing, activity aggressive like we're really visits impact all our of promotional

Eric Gonzalez

in. one That's maybe could if really I sneak helpful. And more

this LTO. out lean that that You on a us given shake how just wondering XX% half, bit strategy for more the said I'm heavily update think might and last give you about orders quarter were second number in you if value? quarter an on on the little could of to

John Peyton

$XX Applebee's second that are looking of that to The menu, in as number can the portion just at the of is clarify the the number which Yes. for X way we're everyday half. and value about approach his tickets then well is menu. Eric, of Tony portion LTOs, talk the the that as number,

percentage the the up talk want of XX%, Tony, year. And XXs to then, about do low year? you're that is how the to thinking tickets so is back which about time And you half about from mid of same last

Tony Moralejo

Yes.

NFL also So disruptive second to on you us going the because on and for of and feature dose unexpected a partnership, about. the going a have our NFL that Eric, really playful in inflationary the are to our that unlock side Applebee's will see the relationship way, abundant of fun -- of our partnership right? side count for think a playful year, pressures we NFL value with and of that with our in We our we'll will it of is sort dial the can brand half the and and of heavy on a value brand natural spoke sort you're of offerings guests. to resolidify the But promotions

Operator

Our of UBS. comes Geiger Dennis line from next from question the

Dennis Geiger

Great.

of to of challenging a I wanted both systems sounds to a you could brands of and about now, First, It the build right environment. relates of as guess, on as any relates and the color things both please? Applebee's just macro talk is of kind lot this particularly, development like side incremental development. ask for sort just timelines, it both, development sort to across demand for to the sentiment it But IHOP

John Peyton

of that International, year. an more for the track to Sure. that, for give the Dennis. it, about do some we specifically details. that the Applebee's, for can Dennis, And It's we name so plans change Fuzzy's, guidance. are for portfolio. reinforce It's ask correctly, where Jay have you IHOP And to since and pronounced for based we talk John. comment on it's Jay we your where then that's got the of and IHOP adjustment upon our important broadly specifically did dynamics I'll made we

Jay Johns

lot to of open Dennis, answer is think desire still our question more I have to and by Jay. directly Look, this IHOPs. your a franchisees is, demand we

of trying I years. changed It's we year. old on past things this. like challenging thing but not the going a have every set as got toughest you've when that of a is know in is had these every standpoint an it the We we've the issues things same a And are to to from have it's guidance pandemic. one do predict have predicting different since timing still open. story, the circumstances similar It's situation year. We becomes

You see that deal last still and Difficulty], to of timeline a little with something contractors hoping year, to different for and out trying to correction exactly weeks They're I in municipalities more of different the to different We're think going better a we ones on. If realistic to put franchisees. get et you [Technical instead and what manage trying early with be that. do a guidance, same the those every through there and they're cetera. not we got guidance year our make job to the we're this

be little fiscal So compared to year. in this we where year the were thought the we of going there's a to bit number softening in

ticked the when cycle off bit new up come late activated that's and as have So leases kind cyclical far we little all of a in many backed this the have, due that. and how And many our with get how like as and the renewals and you things openings closures well. as year

restaurants our have pipeline this for year. And a So years. so opened already be we're realistic. still just IHOPs, demand dozen filled future up trying far still almost great for and is we getting We to still

development bullish to our our going We're IHOPs. on keep future. we're So and opening still

John Peyton

John. it's Dennis,

marketing the test got at a And brand. out XX of that IHOP franchisees little plus there important we're context restaurants number to restaurants remarkable this And talking bit pipeline couple year, add already to of to for minus, a we're reaching XX. the open box. which dual that, it's is and to X Just XX-year-old looking a to XX being just of on means about their is a very note a little that existing we've brand or brands, with to waters also to for about second are net time, same the going

So well part we restaurants. And open franchisees' in to that of you've any unique as of closures. and said, net. how are interest supposed building story a Jay important we encouraged And get by the an year, as what's willingness as given to got composition that's is understanding in

Dennis Geiger

I helpful, could in. That's one And another guys. if get

to come to the satisfaction want Just back guest scores.

spoke the Applebee's, But how I customers solid are half to at you are telling if trending? about the frequency. And biggest anything you to the to guess, wondering scores Tony, think there's really I increase scores add on more -- the what was you IHOP. might have opportunities I maybe couple of to sort was it it feedback learnings of or relates alluded in how macro. can mainly a brand-specific? drive on mentioned of frequency minutes back to Is anything of scores kind share as there ago Anything to beyond? some that and those the on you

John Peyton

Sure. That's a good question for Tony.

Tony Moralejo

calendar later. to restaurants issues to convenience sure stay have got your app. to drive about more solve our open functionality franchisees to staffing website that We the enhance some frequency, an certainly or But you Dennis, the stay have for a to compelling of ongoing valuing greater access Thanks, to offerings, inclusive. make be We're of we And new improved value offerings. we've And been and John, our right, doing we brand. and frequency, more it's and good we've morning, example, with we Like, mind focus. off-premise think obviously, When working late-night our and Dennis. with can have that. so top provide to

able was example, promotion, at at for Favorite that which dine-in Wings we were beginning to leverage the a and we $X.XX, off-premise America's quarter, Boneless this available of guests. made So, to our

drive the accessible want more and us about it's drive making greater greater be. to about meeting brand frequency. making really it's where So to It's the they -- consumers to

Operator

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

Jeffrey Bernstein

X questions. Great.

-- the terms first trends. in was just that you're or into up the comp comp wondering you or maybe to of past details then just and of at changed following XQ months? that on idea? mentioned traffic, And whether least to kind comps And color support, The XQ the brand. can over trends up. you or one, I sequential of some components follow share the industry I through sequential outpacing the any brand know trends few each on the each materially behind the if not at the to support at how

John Peyton

take question. will that Vance first

Vance Chang

Jeff. morning, Good

the So QX, we're the quarter encouraged so, early momentum year. to of QX pressure so in on we persisted, and in we the intensified anticipate last the half the seeing macro really really QX, as trends and the right were second QX. of in based the or as throughout part the progressed, last we continue into said X pressure And by months

And so, Jeff, before, that approach competency, that's to many been noting -- it's in down it's brands we've or our cycles, this right? important been to core because taken And guidance. through we've values -- cycles and so our always our up many, And like update about conservative franchisees, this our our guests. worth but

we're our turn need So a like to may we in bit offering value playbook. running but our comfortable tough this, up times core

Jeffrey Bernstein

components traffic for the And in of terms the of pricing mix. each brand comp

Vance Chang

reminding for you Thank Yes. me.

our also was their was pricing X%-ish about it, and So PMIX pricing then as And check. about, X%-ish for range. X% was Applebee's menu manage down X.X%, and menu PMIX down was increase increase then call for consumers IHOP

the that's components. -- So the those are

Jeffrey Bernstein

for been on on thoughts of deal. and follow-up my I the it discounting is know second you've wondering, are the actually to conversations comes stronger with that to like the this your that year, And try But those which damage many cycles seemingly how know traffic. half brand, can conversations some through then, go? I deals, in on seems you return of more only about is cause I just the franchisees mean, industry aggressive about And encouraging. mentioned Understood. these a a maybe more just franchisees in franchisees. quite consumer talk based peers supportive discounting times,

So that could about I'm and of if And guess the if just profitable. and by how wondering in the gets of just that it's promotions, you then at them are they're talk the maybe end day, these of you promotions. all I means, profitability avoid profitable marketing risk the these people

those just risk about conversations talk So bigger and franchisees? go with to trying aggressive discounting the how of picture

John Peyton

that process all all the for brands. because X take can Jeff, it's I is brands same John. for X the

we it of brand, And promotion follow, you drive which forward. made like we cost based of including collaboratively We an number our we lot profitable, are Committee. all brand adjustments of at in right? There's is should have math they we on, it part franchisees the do art and a a with be committees the protein you marketplace. it think one, has said that a committees And make that those team headquarters. terms what should And and going to constructing Advertising there with franchisees promotions up traffic, some select do. science to it plan Marketing And our is principles then The -- share promotion. a each for extensive about this a in do post-mortem what -- which did should would upon of we science

period support So on there there. not the one runs it is isn't franchisees that of that. a of The with alignment that in agreement it. any in leave brands I'll promotion our in and

Jeffrey Bernstein

I Okay. And lastly, know was said inflation just labor you stable. you can comment,

know each Just in inflation the year And or back brand? quarter? gave what maybe labor But at the wondering, the was inflation half what us you're for thinking I the full second commodities. for the you

Tony Moralejo

is the Jeff, franchisee's because our varies cost It's what talk market, inflation us to is food because about centrally so commodity with costs chain more and for anymore, the line co-op. facing than pressures and that, outside are inflation for labor franchisees are it's but predict sign. But are so right? sharing pressure us have positive elevated, it labor side. financials that of It's a on still managed is But cost top the supply definitely seen we to increasing by not right? the by Obviously, labor. expectations, that's that, the that's us franchisees harder based it's easier stabilizing

about John that $XX So us helps just offsetting are initiatives. P&L, as being But to that they're elsewhere profitability also campaigns the work we're system, talked shifted. while engaged ever improve million restaurant on annualized And not helps in of as value as P&L. which while these -- on with we savings implementing has their the franchisees but increases mentioned, implementing

Operator

comes line Wedbush. of Setyan Our Nick from next question the from

Nick Setyan

of overall, know, at competitive would profitability are decisions supportive just the I some more But end given how if profitability Just we of could just thinking and franchisee you you initiatives environment? their pricing about franchisees kind very health get about getting the even And forward, talk said are the their around margins. around day, and to the the aggressive. visibility love value and going

John Peyton

Nick, it's John.

Let's start can talk with to that franchisees health. And Vance overall.

Vance Chang

the has we is others, are some And steady, earlier, cost said control. expect under size. system But you touched Yes. relatively inflation system a our that of franchisees but comes a bit course, of as health doing pressure right? would as earlier, on have down little I than better it the Nick, I from as come of the

I pressures. we're are campaigns. leaders. talked before, the of what with typically now, at are we with topline working is as the engaged so sort we're about working said on And don't John on We run and campaigns. And addressing us loss And that run franchisees campaigns profitable that, the

you So sense of a currently. that give should their health

John Peyton

that now it when running annual are X% said years couple raise X% what a And the franchisees peaked seeing year. to Nick, at above increases, of our last a in right, that, a down But that increases of back what to prices last post-COVID, And that years, the that. rate run year to to comes come historically the for Yes. and X% beginning to historical pricing, we're rate is X%. been is they've X we've

to their which done price at year-over-year that increases. and pretty great have increase, a think is X.X% the moderate just close Applebee's fact, cautious -- job being we in franchisees In just price with really year-over-year,

traffic take future X Black row they're about quarters the in the at driving overperformance a they rate. of term in that the as what's Box. thinking in price a versus modest that's long think, I And

Operator

from Our Raymond James. of Vaccaro the question from next line Brian comes

Brian Vaccaro

Just following to them value to profitable recent you profitability be a for lift up it as for need on more as for the your the what the traffic value well? And aggressive value mix of you mix. Could do of type relates promotions, provide IHOP franchisees?

John Peyton

about It's the they're XX%, to on is and Tony that more is the reason the portion $XX an for. about lower, context, John, to forward. number But of to number tickets Brian. a corresponding that that on $XX, mix moment for I'm is XX.X%. that's going to the the talk X that the IHOP for focusing looking Applebee's Applebee's the than going in pass And area you the the portions on actually And to standing Jay for menu. is give that IHOP menu attracts X IHOP is it

the begin sort forward, well value talk going promotion? Jay, looking to you given with strategy you're how as you for So any we about don't the as of about why think lift on

Jay Johns

money and buy of it to discount and trade that's what initiatives risk, make a If number When it's Brian, price whatever, trades real at trade you risk, was the depends it with. in item only on franchisees what is possible that's a one a is thing what's the Jay. think all And items. for coming down. $XX they see takes that's someone is, make on just full The to what risk a down these or offer they it about $X, the down, what on at is to these trade right? you

items, proposing art look done we on to financial other this the promotions we trade items that there's going we science at what the figuring items trade it analysis is, predict and at on what the of, what would on will does where cost to We price what it out with. do with historical what offer be, can and trade look we're out. But is at the type we this menu. based pretty is, do have what So, much looking Which it's post-mortems be. which based similar will

you trade check down. a by that can So to project impact kind of potential

something attract Month much you offer strategy. figure that's break to that out discount, of maybe you it an after we does So getting out into also, you though, promotion. positive traffic than why flip put to that. choose the get to then now, it becomes when just them don't have some that another to trade there. Like take about Barbell and rather a that's also then That's do even, maybe an that right a incremental make everyone discount, how or Algebraic equation to reason new Pancake people new out excited discount, a innovation we need the the Because

every innovation brand actually So at got are pancakes. Those full we've new on new month price. a

running we're also some a new while having simultaneously promotion, So innovations. be we'll

menu, of franchisees. to areas balance for out which demand on very try we makes profitable guest So the it these the different

John Peyton

Applebee's? for And Tony, would you like to add anything

Tony Moralejo

I going the aggressive, if during and just support answer, the our a and was it Applebee's I'll approach. where brief. to in value-based that's the strategies said, because half. tends add to environment to profitable. And everything same be applies It's Jay full it's thing And is, then that this the second as methodology to terrific But same well. the environment which I to more franchisees I'll that our more Yes, that I make the promotion loss just traffic. X, loss to What in you're Every visible, going that, second we're think important run we Jay add important this think I'll leader is, it's have drive be think support I'll be believe promotions. add to of be I'll add-ons profitable we not leader what is additional We in -- implementing promotions. One don't important said. sales

Brian Vaccaro

And the could are IHOP, any differences just helpful. And in also That's on you're weekday seeing be elaborate at most quarter comp Jay, a in worth might you trends, there, you right. versus seeing, recent curious, I prior out? Any weekend day-part from calling versus follow-up All that I'm could difference what if perspective? quarters?

Jay Johns

more continue we restaurants last have to within great XXX of I open been XX-hour to that's of highest best and we're of a few That's quarters. this get Again, -- restaurants performing overall. our up one because overnight. place restaurants. think level and overnight, just Most over more our about tick-up difference we usually comp increase seen is actually is no the The

helps to depends on overnight no huge though of it what we're that driving that keep So promoting. comp. But difference, part

you that what Sometimes weekend. do weekdays promotions want a weekday moment. you'll traffic, spur through times you be, we'll we're do running overindexing So at that those see about an spend promotion. a again, your at the highest Well, Friday-only of discount depends volume going weekend? what on toward traffic, is to their promotion strategy just Monday as our what and guests, kind it to that's the managing the of traffic is opposed promotions, to But it's do one if

John Peyton

and it's John, is Applebee's that IHOP, both for both It's big for in-restaurant context and Brian, bit for I thanks, there would is off-prem the and that's a little us. flat. brands, Jay. soft The opportunity that's add about dining brands

Brian Vaccaro

close squeeze And to just the just could could -- those. one more broadly, I that gross at set of if just level your in reduced Perhaps each due And targets on more closures? of Is openings kind us level Great. on and development IHOP. regarding increased you Okay. on the potential lower level internally or at negative Any helpful. negative Any IHOP future be EBITDA? would percent be to can of Applebee's. closures both just or concern stores level speak there perspective are provide to that might generating store stats you the EBITDA of

John Peyton

couple not bit And of both, John. the a take it's I'll Brian, fewer are closures, concerned we a Yes, quickly. It's about couple #X little a openings. more long-term. question

of I IHOP. particularly to As in for continuing a of tenure the a brand of open franchisees mentioned, number restaurants, significant our are size

Operator

of Bartlett of Truist question line Securities. comes the from next Jake Our

Jake Bartlett

had months. Great. what couple you're you and I'm still this but you at in characterize of follow-up demand. trajectory the business, And demand underlying in very at of at point? and whether lowered, the on really of of kind much could this it's is mentioned of that Mine stability in it it characterize the point? this past softened seeing or flux do you was stable point a uncertain as the kind stable, wondering demand the How

Vance Chang

Jake. Yes,

say I could So suppose we that.

stable, when say quantifying comp that, want sure we're that flat not implying make you to you Just but? are

Jake Bartlett

from taken fast food And that for not. it have same getting -- worse. roughly stepped I'm in the guessing concepts, I down I'm a the incrementally trying think, not heard the most summer, the say It seems to but level was down instance, I'm to June, Demand over across stability. of step what July. there no. remained we No, was industry. in

couple kind months stepped stabilized? it understand to whether as Understanding decelerated the the or that is to demand continues trajectory X characterize environment of incrementally had trying business. step the just last the you whether down, down months, I'm the of stable? or it's of mentioned, So Whether over you wondering last but

Vance Chang

In It's of sort yes. stabilized context, sense. that that in

to rest provided. as we context So what saw trends worse, that June Not not you That's forecasting similar be year we getting deteriorating, the the the yes. of stabilizing of helpful, and sort is in are July. in

Jake Bartlett

Great. an the had much from innovation, Lotta incremental the XXXX but pipeline a part Applebee's. It And Burger, then Bacon lot specifically Okay. there. else. sales got We had story, of work Whole kind was other at of done building I question to I tell, the on can was menu driver what not of in same-store the

menu in of And so in more would the the innovation innovation? a pipeline the much of leaning value heavy just value back question for is, there crowd of how year? innovation And or be environment value have in the the more the kind otherwise -- could for around expecting be menu rest promotional menu heavy what context should we kind on been out maybe or half, of

John Peyton

Jake, it's John.

you innovation. Have NEW tried I of Chicken got to Hand-Breaded what? it say, Sandwich? Tony, fantastic. Before Not to pass a lot It's the I've

Jake Bartlett

improvement, it. was a a yes, that new thought But, product. new but an I I but not get concept --

John Peyton

is Hand-breaded better the menu Tony, Chicken innovation? why fantastic. But and The don't about talk you

Tony Moralejo

Jake. morning, it's and sandwich. will, Good I an amazing

innovation which of actually this is we've So had John's point. a lot year,

products year In did part April, of our of in more February. Then Cheddar Bacon we've we off in of a prior new this lot & Skillet, burger out in "X with new years our as was in new year that a started which years. than collectively, one the first right? our probably you was in we items menu Bacon in best-tested whole campaign total, the fact, We X again mentioned, was item for" the of had half which rolled

I don't tuned in with for calendar the which mean, in along targets, I later a our promoted on a well, come. Crispy launched Chicken-loaded and the we menu. to more lot away So the that half new part promotional it and we but much our XXXX there's our a meeting just more permanent back of June, give because Chicken of to that year May. In Hand-Breaded was most followed appetizer performed that lot new now there's tap beyond. We stay it's so Fries, with the of this of and And innovation year, Sandwiches. want menu DOLLARITA

Jake Bartlett

question last brands. my on IHOP And and is virtual Okay. the

-- You partner last I lost believe, mention a you obviously, don't didn't year.

kind to real the IHOP What that here. that dynamic still under comp bring the on you're the virtual brands business. driver be going the for you be back -- -- a that. would to half Is the be brands I that starting should with significant you're in the you That impression virtual and additional potentially of year? is cover lapping of think as that or I incremental was remainder case?

John Peyton

Jay will take that question.

Jay Johns

Yes, this is Jay.

to you been went story got QX, brand first new they Major Baseball from few virtual not adapted brands virtual, Again, They mandatory. roll brands time of did are that they're the we out. these We away. restaurants. right year. the went NASCAR at X the away address Just this programs, Nextbite quarter last or the of almost is kind of out our point last brand have into At end League a voluntary quite late rolled

restaurants. not added on, level of have of but Nextbite to the hundreds -- that quite restaurants So you got many those the probably

what up first to looks year. making having like. difference that it of cover second -- at relative So We'll at that will But don't and the part wait in on the the half know if the of full they all to not that help a year. will the have see

bit tell be. that's it's So to little to actually give assistance, soon a how much us of it'll just too going

Operator

the of Our Brian line Mullan comes question Piper from Sandler. next from

Brian Mullan

a address you've or debt. you until maturity to question the Just of the might Vance, date on I got 'XX June on before think tranche key sheet. balance have a

but or not may entering of So be a you tougher got macro just plenty may time, environment.

be you move that what to approach if Just current forward? that topic? influences great. is So how And just plan this thoughts any curious thinking would as we on your

Vance Chang

has materially levels our other on, based levels improved market, general for if market, the this -- the investors. well for actually products Securitization available secondary Whole product pretty you Brian. Yes, as at bonds market, trading look demand as that Business for deals printed, WBS the actually got versus The the

So it's a deeper market.

refi the the about -- I'm fairly refi optimistic comfortable for and us. So upcoming

Brian Mullan

a the but franchise just a been Not handful then And a this to There's question year. lot, Fuzzy's unit a Okay. on handful. counts. closures specific of

then or any would to speak whether address of the that to balance this entering be of next? I or cleanup but Just dynamic it's that, you'd color -- not on over more any expect year and see a the system, great. Just imagine

John Peyton

seeing are it's there. And It's pipeline large would we're Arizona quarter agreements some up focused we're the Brian, they I and reiterate, the older have in exactly of X It's cleaning current a last Texas. of and reflect That's particularly the a or of that really signed we moved where for new don't away really pleased on building, handful. restaurants, right. in John. outside markets total Houston what in and XX restaurants. we're with we investing prototype

Operator

Todd next Instructions] comes The question of from [Operator Benchmark line the from Our Brooks Company.

Todd Brooks

you the to the at question. on QX environment that sales XXX more and the balance out match you down guide at call obviously, try us through value. how look guidance decline with little heard more the it what QX. Can you towards magnitude up on with we I a versus in points? we've First value, and opportunities then as NFL call? basis what bit about If the get tough and maybe on Applebee's, late the just And focus a partnership walk of approaches of And same-store a deeper then conservancy laid drove the these the novel magnitude to better

Vance Chang

Todd, Vance. this is

of range why the a we provided So part of upside that's the range. and end lower the reason

So of could going on we're And talked June then, that we the in and how predict there's the campaigns exactly easing magnitude of of to saw where end of end range Tony lower the that what's on. then half of headwinds so sort the it's value that going and think hard to higher largely depends guiding the the the the about And it's but the out. working sort -- to to land, that range second happen provide. I July, the macroeconomic that's we in extent we is see hence pressures, -- that

Todd Brooks

in talked need I know new the Okay. Great. cost units. past we've about to follow-up, lower And for then my build the

you're -- get Applebee's there? fruit efforts side, with Just as but boxes, color kind across seeing that some to costs wondering, both dual-branded kind any especially the in there markets would brands around lift if these build then of of love some revenue far of as those hold that international of we seeing with early dual-branded the bearing what we're in locations? And Xx

John Peyton

Todd, Thanks, it's here. John

a For we're to reveal and in not -- partnership U.S., costs of dual that's the we in our the brands, actually learn franchisees. prepared the because process built with haven't tests with of part yet couple them

some to want is on making progress do that? Tony, color to And However, add efforts. its Applebee's you

Tony Moralejo

conduct entire to new sure September to seen make is then, an we've Yes. optimized of step And of we'll happy the plan track. do Applebee's, the pleased design I'm that system assess we've we're house and test with October. From the there, it as so value-engineered that refine report And back I'm them. next with the consumer the far going in to then, new necessary. the what it's XXXX. our happy to. we're We're and because is to with adjust introduce on prototype in encouraged The operations resonates we'll in an the test to value-engineered to going prototype. with and incredibly

Operator

from Our last Andrew Wolf CL of King. question comes

Andrew Paul Wolf

on the the earlier ad NFL a been an Sunday If and not like already that Football in partnership, on hoc has night also announced doing ask to year. basis. partnership wanted in was understand I Applebee's you that Just -- maybe but just Night

this So this going of games national a Applebee's? up how of the is prior commitment of more is kind to thing? what a for of increased way of commitment magnitude step of marketing and much more basis, Was regional of the football scale So in is be a this?

John Peyton

That's a question for Tony.

Tony Moralejo

before the maintain was watched full brand. pre-game, And and America, partnership bullseye, in Thanks, et Sunday world's Archery, access the edges, to right half-time we relationship of ] the were [ the the John. with Night, the relationship for so cetera. say the were more continue In NFL the entire that spirit us, to center, power NBC post-game, It's We it show and it's in on we with about is and that We event new It's or has right? well Olympics -- had and weren't the we bullseye. popular worked NFL the of most throughout relationship. The sporting the the drop right? dead year. let's

Applebee's. see you'll And that to And best bring think give our out to come to going the great attributes and their too value, fun, away, and of we're I the so, enjoy but have have guests experience. promotions the are and don't to full incredible going both engaging NFL to ability an restaurant incredibly to that you'll much catalog see September. I access leverage life assets. And in of want

Andrew Paul Wolf

not great ironclad? brand Is you're Is right? of if the it, as novel, it much? this take-off to And to not the or commitments follow-up agreements bit Or first to a or fulfill or going flexibility contracted partner much a kind restaurant and it's grill because think of pretty between you if that things I things as Just do are don't or built expand way. the there way? it within NFL bar the

John Peyton

flexibility. too get done, legal a commitment and does but of specifics certain of Yes. long-term give multiyear XX-year us X-, not a going the either. into a agreement, amount X agreement much I'm not year and it's a to it's that It's not the

there. built So we've flexibility in some got

Andrew Paul Wolf

to sense or of a traffic? like in Or gap give -- gap Got Black a has couple on points? housekeeping. Is And percent If a had casual outperformance? Applebee's relative the that a looks us of what Box it. like outperform basis dining, just just of the

John Peyton

that, you since do is take to this want question? Tony, Applebee's

Tony Moralejo

Happy to.

a specific tool. we using Box color numbers. don't competitive Black do set, to share So specifically provide traffic as as We some the

very have Andrew the as mentioned last credit In in well. And the outperform our again, the pricing. over pricing X ], the continued traffic, category months we've -- we XXXX, their of been to lot franchisees outperformed the as the earlier we've category very, (sic) terms conservative to of that a Todd [ with and call, that on goes and strategic

in to we're stand So the we traffic. happy of relative terms category where

well for that long us I think sets up the term.

Operator

Thanks the concludes to for your remarks. That like closing Peyton, Brands' would questions. I now John Dine question-and-answer session. for to turn back CEO,

John Peyton

the because Gerald. the my because add I go to thanks, great for guys, just in Super to addition advertising mark, super the digital the activation all from marks, program excited about channels, of to in it television bowl. NFL the on I would questions. we've that the on access to well. trip Thanks, and one particularly have the ability Appreciate a their as it, of we for perspective, have for guests got the we'll to restaurants Bowl Super our team like

involved, of So, it's about. is extra us great it's create a well. Applebee's level for all way to restaurants And cost-efficient that as fun members again, team actually that the and and get our

in the we're only take super And to that. space on and we the are this with restaurant partnership. So, CDR pleased first

So for questions. great your thank a day. you it. have all And Appreciate

Operator

program. conference. today's in does participation This your for conclude the you Thank

You may now disconnect.

Dine Brands Global (DIN) 7 Aug 242024 Q2 Earnings call transcript