Q1 2024 Dine Brands Global Inc Earnings Call

Operator: Good day, and thank you for standing by. Welcome to the Dine Brands First Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star one on your telephone. You will then hear an automated message advising that your hand is raised. To withdraw your question, please press star 1 1 again.

Good day, and thank you for standing by.

Speaker Change: Welcome to the Dine Brands' first quarter earnings conference call.

At this time all participants are in a listen only mode.

Speaker Change: After the speaker's presentation, there will be a question and answer session.

Speaker Change: I'll ask a question during this session you will need to press star one on your telephone.

Dan here, an automated message advising your hand is raised.

Speaker Change: To withdraw your question. Please press star one again.

Operator: We ask that you limit yourself to one question and one follow-up. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your host today, Matt Lee, Senior Vice President, Finance and Investor Relations.

We ask that you limit yourself to one question and one follow up.

Speaker Change: Please be advised that today's conference is being recorded.

Speaker Change: I would now like to hand, the conference over sheer hosted eight Notley Senior Vice President Finance and Investor Relations.

Speaker Change: Please go ahead.

Matt Lee: Good morning, and welcome to Dine Brands Global's first quarter fiscal 2024 conference call. This morning's call will include prepared remarks from John Peyton, CEO, and Vance Chang, CFO. Following those prepared remarks, Tony Moralejo, President of Applebee's, and Jay Johns, President of IHOP, will also be available to address questions from the investment community during the Q&A portion of the call.

Speaker Change: Good morning, and welcome to Dine brands Globals first quarter fiscal 2020 for a conference call.

Speaker Change: This morning's call will include prepared remarks from John Payne, CEO and Vance Chang CFO.

Speaker Change: Following those prepared remarks, Tony Marone, Leighow President of Applebee's, and Jay Johns President of IHOP will also be available to address questions from the investment community during the Q&A portion of the call. Please.

Matt Lee: Please remember our safe harbor regarding forward-looking information. During the call, management will discuss information that is forward-looking and involves known and unknown risks, uncertainties, and other factors, which may cause actual results to be different than those expressed or implied. Please evaluate the forward-looking information in the context of these factors, which are detailed in today's press release and 10-Q filing. The forward-looking statements are as of today, and we assume no obligation to update or supplement these statements.

Speaker Change: Please remember our safe Harbor regarding forward looking information.

Matt Lee: During the call management will discuss information that is forward looking and involves known and unknown risks uncertainties and other factors, which may cause the actual results to be different than those expressed or implied.

Speaker Change: Please evaluate the forward looking information in the context of these factors, which are detailed in today's press release and 10-Q filings.

Speaker Change: The forward looking statements are as of today, and we assume no obligation to update or supplement these statements.

Matt Lee: We will refer to certain non-GAAP financial measures which are described in our press release and available on Dine Brands' Investor Relations website. For calendar planning purposes, we are tentatively scheduled to release our Q2 2024 earnings before the market opens on August 7th, 2024, and to host a conference call that morning to discuss the results. With that, it is my pleasure to turn the call over to Dine Brands CEO, John Payne.

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

Speaker Change: Calendar planning purposes, we are tended up lease scheduled to release, our Q2 2024 earnings before the market opens on August 7th 2024 and to host a conference call that morning to discuss the results.

Matt Lee: With that it's my pleasure to turn the call over to Dine Brands' CEO John Payne.

John W. Peyton: Good morning, everyone, and thank you for joining us for our first quarter earnings call. Today, I'll share Dine's Q1 results and discuss trends in consumer behavior, as well as discuss operational highlights across the portfolio. I'll also provide an update on our development strategy, and then Vance will discuss our financial results and capital allocation plans in more detail. During the first quarter, like others in our industry, we saw large areas of the country experience poor weather, impacting sales and traffic.

John W. Peyton: Good morning, everyone and thank you for joining us for our first quarter earnings call.

John W. Peyton: Consumer caution with respect to economic conditions persisted in the post-holiday period. As a result, the consumer has become more price-sensitive, as indicated by the response to our limited-time promotions. For example, at Applebee's, 28% of our transactions were tied to a limited-time offer or promotion, which was up from 19% in the previous quarter, as well as the prior year. We also continue to see guests trade down from higher-priced items at both IHOP and Applebee's, another indicator that guests are managing their wallets.

John W. Peyton: A day I'll share <unk> Q1 results and discuss trends in consumer behavior.

John W. Peyton: And discuss operational highlights across our portfolio I'll also provide an update on our development strategy and then Vance will discuss our financial results and capital allocation plans in more detail.

John W. Peyton: During the first quarter like others in our industry, we saw large areas of the country experienced poor weather impacting sales and traffic.

John W. Peyton: And consumer caution with respect to economic conditions persisted in the post holiday period as a result, the consumer has become more price sensitive as indicated by the response to our limited time promotions for example at Applebee's, 28% of our transactions were tied to a limited time offer or promotion, which was up from 19%.

John W. Peyton: In the previous quarter as well as the prior year.

John W. Peyton: We also continue to see guest trade down from higher priced items at both IHOP and applebee's another indicator that guests are managing their wallet.

John W. Peyton: Despite the volatile macro environment causing a slower start to 2024 than we anticipated, we are encouraged to see that our value-driven strategy helped to mitigate some of the challenges in Q1 and, importantly, drove sequential improvements throughout the quarter. Our approach was validated by guests' response to our LTOs and enthusiastic reactions to our continued menu innovation and reinforced by strong marketing calendars and brand-relative. So with that, I'll walk through our key financial highlights, recognizing that we're comping over a strong Q1 2023. In Q1, our EBITDA was $60.8 million, compared to $66.4 million in the same quarter last year. Revenues were down 3.5% for Q1.

John W. Peyton: Despite the volatile macro environment, causing a slower start to 2024 as we anticipated we are encouraged to see that our value driven strategy helped to mitigate some of the challenges in Q1, and importantly drive sequential improvements throughout the quarter.

John W. Peyton: Our approach was validated by guest response to our LTE OS.

John W. Peyton: And enthusiastic reactions to our continued menu innovation and reinforced by strong marketing calendars and brand relevancy.

John W. Peyton: With that I'll walk through our key financial highlights recognizing that we're comping over a strong Q1 2023.

John W. Peyton: In Q1, our EBITDA was $68 million compared to $66 4 million in the same quarter last year revenues were down three 5% for Q1 Applebee's reported a four 6% reduction in comp sales lapping last year's positive six 1% Q1 comp sales growth.

John W. Peyton: Applebee's reported a 4.6% reduction in comp sales, lapping last year's positive 6.1% Q1 comp sales growth. IHOP posted a negative 1.7% comp sales, lapping a positive 8.7% increase in comp sales the same time last year. And adjusted free cash flow was $29.7 million, which was an increase of $27.5 million.

John W. Peyton: <unk> posted negative one 7% comp sales lapping a positive eight 7% increase in comp sales at the same time last year.

John W. Peyton: And adjusted free cash flow was $29 $7 million, which was an increase of $27 $5 million.

John W. Peyton: Overall, despite the slow start to the year, we remain committed to our guidance for the full year. I'll turn now to highlights of Applebee's performance. In Q1, Applebee's results were impacted by the challenges I referenced related to weather and consumer pullback after the holiday season. However, the brand's performance steadily improved throughout the quarter, supported by effective marketing and promotional campaigns, which contributed to Applebee's outperforming black box traffic in Q1. Applebee's innovation pipeline was particularly strong in Q1, with three limited-time offerings strategically spaced throughout the quarter that delivered on our focus of offering compelling value aligned with our brand promise, meeting the guest where they are, and pairing the relevancy of our brands with important cultural moments.

John W. Peyton: Overall, despite the slow start to the year, we remain committed to our guidance for the full year.

John W. Peyton: I'll turn now to highlights of Applebee's performance in Q1, Applebee's results were impacted by challenges I referenced related to weather and consumer pullback. After the holiday season. However, the brands performance steadily improved throughout the quarter supported by effective marketing and promotional campaigns, which contributed to applebee's outperforming black box try.

John W. Peyton: <unk> in Q1.

John W. Peyton: Applebee's innovation pipeline was particularly strong in Q1 with three limited time offerings strategically spaced throughout the quarter that delivered on our focus of offering compelling value aligned with our brand promise meeting the guests where they are and pairing the relevancy of our brands with important cultural moments.

John W. Peyton: In January, we kicked off the new year with our All-You-Can-Eat promotion, which exceeded our expectations and outperformed All-You-Can-Eat from the prior two years. In February, the Applebee's Date Night Pass, launched just in time for Valentine's Day, offered guests over $1,500 in dining value for the unbeatable price of just $200.

John W. Peyton: In January we kicked off the new year with our all you can eat promotion, which exceeded our expectations and outperformed all you can eat from the prior two years.

John W. Peyton: It sold out within minutes, demonstrating the strong connection the brand holds with its guests. The date night pass and the media coverage were outstanding, generating more than 2.4 billion impressions, and the social conversation around Applebee's and date night increased by more than 115%. Turning now to March, following a national double-blind taste test of our classic buffalo-sauced boneless wings, Applebee's was crowned with the title of America's favorite boneless wings.

John W. Peyton: In February the Applebee's date night pass launched just in time for Valentine's day offer guests over $1500 in dining value for the unbeatable price of just $200. It sold out within minutes demonstrating the strong connection the brand holds with its guests.

John W. Peyton: The date night path and the media coverage was outstanding generating more than $2 4 billion impressions and the social conversation on Applebee's and date night increased by more than 115%.

John W. Peyton: Turning now to March following a national double blind taste test of our classic Buffalo source Boneless wings Applebee's was crowned the title of America's favorite Boneless wings, and we leveraged the spotlight the brand and draw guests to our restaurants.

John W. Peyton: And we leveraged this to spotlight the brand and draw guests to our restaurant. This was the basis of our national campaign that ran during March Madness, where we offered guests 50-cent boneless wings. It was the first time we extended a disruptive value promotion also to be available via to-go, which resulted in improved off-premise volumes while also maintaining a steady dine-in business. As we continue to look for new ways to reach our guests where they are, we're working to enhance our off-premise offerings, and we're pleased to see initial success with our Boneless Wings.

John W. Peyton: This was the basis of our National campaign that ran during March madness, where we offer guests 50 cent boneless wings. It was the first time, we extended a disruptive value promotion also to be available via to go which resulted in improved off premise volumes, while also maintaining a steady dine in business as.

John W. Peyton: As we continue to look for new ways to reach our guests where they are we're working to enhance our off premise offerings and we're pleased to see initial success with our boneless wings.

John W. Peyton: This dine-in and off-premise combination drove a strong finish to the quarter, outpacing Black Box five times in Q1, four of which were the last four weeks of the quarter, setting us up well for Q2. Our innovation pipeline is designed to drive a steady cadence of exciting developments to showcase the brand and give guests more reasons to come back to Applebee's. Some highlights currently rolling out include the Whole Lotta Bacon Burger, which launched in April, our recently announced NFL sponsorship as the official grill and bar of the NFL, followed by the return of Dollarita just last week, which features a new appetizer, our loaded chicken fries.

John W. Peyton: Dine in and off premise combination drove a strong finish to the quarter outpacing Blackhawks five times in Q1, four of which were the last four weeks of the quarter setting us up well for Q2.

John W. Peyton: Our innovation pipeline is designed to drive steady cadence of exciting developments to showcase the brand and give guests more reasons to come back to Applebee's. Some highlights currently rolling out include the whole lot of Bacon Burger, which launched in April our recently announced NFL sponsorship as the official grill and bar at the NFL.

John W. Peyton: Followed by the return of dollar reader just last week that features the new appetizer or loaded chicken fries.

John W. Peyton: Also of note, since the launch of Applebee's new website and mobile app in December, we've seen the highest conversion rates of the last two years. In fact, we're seeing a higher percentage of guests choosing to place their orders digitally, as well as higher check averages compared to our prior site and app. Applebee's performance improved throughout the quarter, and we're encouraged by the continued positive momentum so far in Q2, supporting our guidance for the year.

John W. Peyton: Also of note since the launch of Applebee's, New website and mobile App in December we've seen the highest conversion rates of the last two years in fact, we're seeing a higher percentage of guests choosing to place their orders digitally as well as higher check averages compared to our prior site and App Applebee's performance improved throughout the quarter and we are in.

John W. Peyton: <unk> by the continued positive momentum so far in Q2 supporting our guidance for the year.

John W. Peyton: Now, moving on to IHOP, while the top line experienced a slight pullback for the first time in three years, we maintained a steady flow of timely, relevant campaigns that helped offset the modest weather-related headwinds, a tough comp rollover due to the closure of our virtual brand partner, NextByte, and the impact of the economic pressures our guests are facing. Our strategy to focus on the guest experience, menu innovation, and targeted marketing, executed in a very nimble and creative way, will allow us to deliver positive comps for the full year.

Speaker Change: Now moving on to IHOP.

John W. Peyton: The top line experienced a slight pullback for the first time in three years, we maintained a steady flow of timely relevant campaigns that health offset the modest weather related headwinds a tough comp rollover due to the closure of our virtual brand partner next bite and the impact of the economic pressures our guests are facing.

John W. Peyton: Our strategy to focus on the guest experience menu innovation and targeted marketing executed in a very nimble and creative way will allow us to deliver positive comps for the full year, we had a great run of sequential growth with 11 quarters of positive comps leading up to this quarter and we're confident we will return to that pattern and now four.

John W. Peyton: We had a great run of sequential growth with 11 quarters of positive comps leading up to this quarter, and we're confident we will return to that pattern. And now, for a review of activity in the quarter. We started the year with the return of our guest favorite, Rooty Tooty Fresh and Fruity, featuring a new combo that allowed guests to customize their orders at a value price point of $7.00.

John W. Peyton: A review of activity in the quarter we.

John W. Peyton: We started the year with the return of our guest favorite Rudy Judy fresh and fruity featuring a new combo that allowed guest to customize their orders at a value price point of $7. As a result, IHOP comp sales outperformed the black box family dining segment in four out of six weeks during the promotion and.

John W. Peyton: As a result, IHOP's comp sales outperformed the Black Box Family Dining segment in four out of six weeks during the promotion. In February, we launched our new Pancake of the Month promotion, where each month we introduce a new pancake flavor and the opportunity for members to earn bonus loyalty points to keep guests engaged and coming back. In April, we launched national TV advertising to support the campaign, and sales have trended in line with our most popular flavored pancakes after only two months.

John W. Peyton: In February we launched our new pancake of the month, where each month, we are introducing a new pancake flavor and the opportunity for members to earn bonus loyalty points to keep guests engaged in coming back.

John W. Peyton: In April we launched national television advertising to support the campaign and sales have trended in line with our most popular flavored pancakes after only two months.

John W. Peyton: This is also a good example of how we pair new menu launches with exclusive loyalty benefits to continue to grow that platform. Our loyalty program sign-ups steadily increased during the quarter, and as of today, we have 9 million members. In February, we also celebrated IHOP's National Pancake Day. This year was particularly special as we served over 1 million pancakes to our guests, and we launched a new nationwide community platform, Stacking Up Joy, designed to bring people together in the communities we serve. The Stacking Up Joy platform garnered 2.3 billion impressions and raised enough money to donate over a million meals to people facing hunger.

John W. Peyton: This is also a good example of how we pair new menu launches with exclusive loyalty benefits to continue to grow that platform.

John W. Peyton: Our loyalty program sign ups steadily increased during the quarter and as of today, we are at 9 million members.

John W. Peyton: In February we also celebrated IHOP National Pancake day. This year was particularly special as we served over 1 million pancakes to our guests and we launched a new nationwide community platform stacking up joy designed to bring people together in the communities we serve.

John W. Peyton: Stacking up Joy platform garnered 2.3 billion impressions and raised enough money to donate over a million meals to people facing hunger.

John W. Peyton: As I mentioned earlier, the closure of our virtual brand partner, NexByte, impacted our year-over-year competition. However, we still see opportunity with virtual brands that target IHOP's off-peak hours and utilize kitchen capacity outside of our traditional daypart to support incremental sales growth. In partnership with Virtual Dining Concepts, we recently introduced two new virtual brands, Refuel Tenders and Burgers, developed in collaboration with NASCAR, and MLB Ballpark Bites, created in partnership with Major League Baseball.

John W. Peyton: As I mentioned earlier, the closure of our virtual brand partner next byte impacted our year over year comp sales. However, we still see opportunity with virtual brands that target I hopped off peak hours and utilize the kitchen capacity outside of our traditional day part to support incremental sales growth and partnership with virtual.

John W. Peyton: Dining concepts, we recently introduced two new virtual brands refuel tenders and burgers developed in collaboration with NASCAR and MLB ballpark bites created in partnership with Major League baseball.

John W. Peyton: Over 1,000 restaurants now offer at least one of these brands, and 50% offer two or more as of May. Outside of our IHOP restaurants, our CPG coffee line is on more than 30,000 retail shelves across the U.S. and continues to grow, with two new varieties launching soon. This past quarter, we announced our limited-time partnership with Lays to launch the IHOP Rooty Tooty Fresh and Fruity flavored Lays potato chip, which reinforced brand awareness and was a sellout in retail channels.

John W. Peyton: Over 1000 restaurants now offer at least one of these brands and 50% offer two or more as of May.

John W. Peyton: Outside of our IHOP restaurants are C. P. G. Coffee line is on more than 30000 retail shelves across the U S and continues to grow with two new varieties launching soon this past quarter, we announced our limited time partnership with Lay's to launch the IHOP Rudy to D fresh and fruity flavored lay's potato chip.

John W. Peyton: [noise], which reinforce brand awareness and was a sellout in retail channels.

John W. Peyton: Operationally, our point-of-sale rollout is nearly complete, and we are now starting to shift our focus to tablets and payment devices. More than 50% of the IHOP system has implemented tablets and payment devices to date, and we are encouraged to see that transactions taken on tablets with payment devices have a higher beverage attachment rate, improved table turn times, decreased voids, and higher tips for servers.

John W. Peyton: Operationally our point of sale rollout is nearly complete and we are now starting to shift our focus to tablets and payment devices.

John W. Peyton: More than 50% of the IHOP system has implemented tablets and payment devices to date and we are encouraged to see that transaction has taken on tablets with payment devices have a higher beverage attachment rate improved table turn times decreased voids and higher tips for servers.

John W. Peyton: As you can tell, there's a lot going on at IHOP. While the performance was obscured by tough conditions and the virtual brand rollover in Q1, these initiatives give us confidence for improved performance through the remainder of the year. Turning now to Fuzzies.

John W. Peyton: As you can tell there's a lot going on at IHOP, while their performance was obscured by tough conditions and the virtual brand rollover in Q1. These initiatives give us confidence for improved performance through the remainder of the year.

John W. Peyton: As a refresher, we acquired Fuzzy's in December 2022 to diversify our portfolio with a fast, casual concept, to offer franchisees in the Dine system a third brand in which to invest and, because of its potential, to accelerate our long-term growth. To contextualize its current scale, as of Q1 2024, Fuzzy's is a 128-unit brand in a highly concentrated geographic footprint with more than half of We've completed our integration and are starting to see the benefit of leveraging the capabilities and expertise of the Dime platform, particularly as it relates to Fuzzy's introduction of value-driven promotions and marketing.

John W. Peyton: Turning now to fuzzies as a refresher we acquired Fuzzies in December 2022 to diversify our portfolio with a fast casual concept to offer franchisees in the dine system, a third brand in which to invest and because of its potential to accelerate our long term growth.

John W. Peyton: To contextualize its current scale as of Q1 'twenty 'twenty four Fuzzies is 128 unit brand and a highly concentrated geographic footprint with more than half of its locations in Texas.

John W. Peyton: We've completed our integration and are starting to see the benefit of leveraging the capabilities and expertise of the dime platform, particularly as it relates to fuzzies introduction of value driven promotions and marketing.

John W. Peyton: While the quarter was impacted by weather and high prices from franchisees, we are executing near-term initiatives to support our long-term growth strategy for Fuzzy. For example, during the quarter, we tested a new advertising campaign, a first of its kind for Fuzzy, highlighting the launch of its Primo Baja menu.

John W. Peyton: While the quarter was impacted by weather and high pricing from franchisees, we are executing near term initiatives to support our long term growth strategy for fuzzies.

John W. Peyton: For example, during the quarter, we tested a new advertising campaign, a first of its kind for fuzzies highlighting the launch of its primo Baja menu. We're pleased with the initial results and we'll continue to explore additional opportunities to grow the brand, while we're not yet giving development guidance for fuzzies, we'd like to provide an update given its strategic.

John W. Peyton: We're pleased with the initial results and will continue to explore additional opportunities to grow the brand. While we're not yet giving development guidance for Fuzzies, we'd like to provide an update given its strategic relevancy to Dine's overall growth. Over the past year, Fuzzy's has been focused on cleaning up its system, which included some strategic closures.

John W. Peyton: He took relevancy to <unk> overall growth over the past year Fuzzies has been focused on cleaning up its system, which included some strategic closures.

John W. Peyton: We're excited to share that we recently signed two multi-unit deals. An existing Fuzzy's franchisee has committed to developing 15 restaurants, and an IHOP franchisee has committed to developing 25 Fuzzy's restaurants over the course of the next several years. While we won't see impact in 2024, these deals speak to the potential of Fuzzy's as our growth brand in 2025 and beyond. We're pleased with the opportunities we're seeing post-integration, and we'll continue to focus on driving brand awareness and supporting new functions. On the international side of the business, we're impacted by geopolitical conflict in some regions.

John W. Peyton: We're excited to share that we recently signed to multi unit deals and existing fuzzies franchisee has committed to developing 15 restaurants and an IHOP franchisee has committed to develop twenty-five fuzzies restaurants over the course of the next several years.

John W. Peyton: While we won't see impact in 'twenty 'twenty four these deals speak to the potential of fuzzies as our growth brand in 2025 and beyond.

John W. Peyton: We're pleased with the opportunities we're seeing post integration and we will continue to focus on driving brand awareness and supporting new functions.

John W. Peyton: On the international side of the business were impacted by geopolitical conflict in some regions and.

John W. Peyton: And we remain focused on our long-term growth plans for the quarter. Our international dual-branded Applebee's IHOP concepts are doing well and serve as a testing ground for future domestic applications. Overall development remains steady with four new openings and six planned closures in Q1 for a net closure of two restaurants. We remain optimistic about our international growth and strategically scaling our global footprint.

John W. Peyton: And we remain focused on our long term growth plans for the quarter.

John W. Peyton: Our international dual branded Applebees IHOP concepts are doing well and serve as a testing ground for future domestic application.

John W. Peyton: Overall development remained steady with four new openings in fixed plant closures in Q1 for a net closure of two restaurants.

John W. Peyton: We remain optimistic about our international growth and strategically scaling our global footprint.

John W. Peyton: And finally, to touch on our development strategy, we're continuing to establish a strong foundation to efficiently scale our development program, and we've made great progress this quarter, building our internal capabilities to support development across the entire Dine platform, investing in non-traditional development, marketing, and making several key hires. The team is actively in the market, reviewing opportunities for new sites, both traditional and non-traditional, and working closely with franchisees to support their growth plans that are aligned with our previously disclosed pipeline and guidance.

John W. Peyton: And finally to touch on our development strategy, we're continuing to establish a strong foundation to efficiently scale, our development program and we've made great progress this quarter building, our internal capabilities to support development across the entire dine platform investing in non traditional development marketing and making several key hires.

John W. Peyton: The team is actively in market reviewing opportunities for new sites, both traditional and nontraditional and working closely with franchisees to support their growth plans that are aligned with our previously disclosed pipeline and guidance.

John W. Peyton: We're creating a support team and developing incentives for our franchisees to make restaurant development more approachable, with new programs to provide access to capital. We continue to see, and are very pleased by, the cross-pollination of franchisees looking for new opportunities across the Dine system, an important pillar of Dine development these days. We're also looking to accelerate new builds by responding to the demand for dual-branded restaurants domestically. The interest we're receiving from franchisees about the dual-branded concepts is all very positive.

John W. Peyton: We're creating a support team in developing incentives for our franchisees to make restaurant development more approachable with new programs to provide access to capital. We continue to see and are very pleased by the cross pollination of franchisees looking for new opportunities across the <unk> system, an important pillar to the dine development thesis.

John W. Peyton: We're also looking to accelerate new builds by responding to the demand for dual branded restaurants domestically.

John W. Peyton: The interest we're receiving from franchisees about the dual branded concepts are all very positive.

John W. Peyton: Of course, there's still plenty of work and research to be done around this concept, and we're glad to see positive engagement from guests and franchisees alike. This quarter, we also launched the Dine Forward franchise program. Dine Forward is aimed at incentivizing potential franchisees from underrepresented communities to establish restaurants within our system and provide enhanced operational and financial support. We're thrilled to announce that our first participant, a general manager who's been in the IHOP system for over 20 years, will open his first restaurant in D.C. later this month.

John W. Peyton: Of course, there's still plenty of work and research to be done around this concept and we're glad to see positive engagement from guests and franchisees alike. This quarter. We also launched the dine forward franchise program known as dine forward.

John W. Peyton: <unk> forward is aimed at incentivizing potential franchisees from underrepresented communities to established restaurants within our system and provide enhanced operational and financial support.

John W. Peyton: We're thrilled to announce that our first participant a general manager who has been in the IHOP system for over 20 years will opened his first restaurant in D. C. Later this month.

John W. Peyton: It's important to reiterate that enhancements to our development function and the Dine Forward Program are funded by reallocating costs within Dine's existing cost structure and not by increasing overall spend. Now, to provide brand development updates for the quarter. As a reminder, we do not give quarterly guidance, but the following commentary is to offer context to how we remain in line with our annual domestic development guidance goals. First, at Applebee's.

John W. Peyton: It's important to reiterate that enhancements to our development function and the dine forward program are funded by reallocating costs within dines existing cost structure and not by increasing overall spend.

John W. Peyton: Now to provide brand development updates from the quarter as a reminder, we do not give quarterly guidance, but the filing commentary is to offer context to how we remain in line with our annual domestic development guidance goals.

John W. Peyton: We're making progress on the freestanding prototype, which is currently in phase one of a nine-month effort to significantly take out construction costs. In Q1, Applebee's had net domestic closures of 5, and we were on track with our domestic guidance of 25 to 35 net closures. These were planned closures and built into our guidance. For Q1 at IHOP, domestically, we opened 5 restaurants and closed 9 for a net closure of 4 restaurants

John W. Peyton: First at Applebee's, we're making progress on the freestanding prototype, which is currently in phase one of a nine month effort to significantly take out construction costs.

John W. Peyton: In Q1, Applebees had net domestic closures of five and we are on track with our domestic guidance of 25 to 35 net closures. These were planned closures and built into our guidance.

John W. Peyton: For Q1 that IHOP domestically, we opened five restaurants and closed nine for a net closure of four restaurants.

John W. Peyton: As is standard in IHOP's development cycle, we see more closures earlier in the year with new openings concentrated toward the latter half of the year. We remain on target for our full year guidance with net 15 to 25 new domestic restaurants. And with that, I'll turn the call over to Vance.

John W. Peyton: As is standard and IHOP development cycle, we see more closures earlier in the year with new openings concentrated toward the latter half of the year, we remain on target for our full year guidance with net 15 to 25, new domestic restaurants, and with that I'll turn the call over to Vance.

Vance Yuwen Chang: Thank you, John. While the quarter was not as strong as we had anticipated due to external headwinds, we remain committed to our guidance for the fall year. On the top line, consolidated total revenues decreased to $206.2 million in Q1 versus $213.8 million in the prior year, primarily driven by negative comp sales growth across our brand. Our total franchise revenues decreased 2.3% to $175.9 million compared to $180 million for the same quarter of 2023. Excluding advertising revenues, our total franchise revenues decreased 2.2%.

Vance: John Wilder quarter was not as strong as we had anticipated due to external headwinds we remain committed to our guidance for the full year.

Vance Yuwen Chang: On the topline consolidated total revenues decreased to $206 $2 million in Q1 versus $213 $8 million in the prior year.

Vance Yuwen Chang: Primarily driven by the negative comp sales growth across our brands.

Vance Yuwen Chang: Our total franchise revenues decreased two 3% to $175 $9 million compared to $180 million for the same quarter of 2023 excluding.

Vance Yuwen Chang: Excluding advertising revenues franchise revenues decreased 2.2%.

Vance Yuwen Chang: Rental settlement revenues for the first quarter of 2024 decreased compared to the same quarter of 2023, primarily due to prior year lease buyouts. G&A expenses increased 2.2% to $52.2 million in Q1 of 2024, up from $51.1 million in the same period of last year, mostly due to an increase in stock-based compensation and an increase in consumer research costs offset by a decrease in professional services. Adjusted EBITDA for Q1 of 2024 decreased to $60.8 million from $66.4 million in Q1 of 2023. Adjusted diluted EPS for the first quarter of 2024 was $1.33, compared to adjusted diluted EPS of $1.97 for the same period of last year. Now, let's turn to the statement of cash.

Vance Yuwen Chang: Rental segment revenues for the first quarter of 2024 decreased compared to the same quarter of 2023, primarily due to prior year lease buyouts.

Vance Yuwen Chang: G&A expenses increased 2.2% to $52 $2 million in Q1 of 'twenty 'twenty four up from $51.1 million in the same period of last year, mostly due to an increase in stock based compensation and an increase in consumer research costs offset by a decrease in professional services.

Vance Yuwen Chang: Adjusted EBITDA for Q1 of 'twenty 'twenty four decreased to $68 million from $66 $4 million in Q1 of 2023.

Vance Yuwen Chang: Adjusted diluted EPS for the first quarter of 2024 was $1.33 compared to adjusted diluted EPS of $1.97 for the same period of last year.

Vance Yuwen Chang: We had a just-to-free cash flow of $29.7 million for the first three months of 2024 compared to $2.3 million for the same period of last year, driven by an increase in cash from operations and a decrease in CapEx as we concluded our technology initiatives from last year. Cash provided by operations at the end of the first quarter of 2024 was $30.6 million, compared to cash provided by operations of roughly $16.1 million for the same period of 2023.

Vance Yuwen Chang: Now, let's turn to the statement of cash flows.

Vance Yuwen Chang: We had adjusted free cash flow of $29.7 million for the first three months of 2024 compared to $2.3 million for the same period of last year, driven by an increase in cash from operations and a decrease in Capex as we concluded our technology initiatives from last year.

Vance Yuwen Chang: Cash provided by operations at the end of the first quarter of 2024 was $30.6 million compared to cash provided from operations of roughly $16 $1 million for the same period of 2023.

Vance Yuwen Chang: The increase was primarily due to a favorable increase in working capital. CapEx through Q1 of 2024 was $3.3 million compared to $16 million for the same period of 2023. We finished the first quarter with total unrestricted cash of $145 million compared with $146 million at the end of the fourth quarter.

Vance Yuwen Chang: The increase was primarily due to a favorable increase in working capital.

Vance Yuwen Chang: Capex through Q1 of 'twenty 'twenty four it was $3.3 million compared to $16 million for the same period of 2023.

Vance Yuwen Chang: We finished the first quarter of total unrestricted cash of $145 million compared with unrestricted cash of $146 million at the end of the fourth quarter.

Vance Yuwen Chang: Additionally, we continue to return capital to investors. We repurchased $6 million in shares and paid $7.8 million in dividends in Q1 of 2024. Next, let me discuss Applebee's performance. Q1 same-store sales were negative 4.6% as we lapped strong comps from the prior year and will continue to face a price-sensitive consumer environment. Average weekly sales were over $54.7K, including over $12K from off-premise, or over 22% of total sales, of which 10.7% was from take-out and 11.4% was from delivery.

Vance Yuwen Chang: Additionally, we continue to return capital to investors.

Vance Yuwen Chang: We repurchased $6 million in shares and paid $7.8 million in dividends in Q1 of 'twenty 'twenty four.

Vance Yuwen Chang: Next let me discuss applebee's performance.

Vance Yuwen Chang: Q1 same store sales were negative four 6% as we lapped strong comps from the prior year and will continue to face a price sensitive consumer environment.

Vance Yuwen Chang: Average weekly sales were over $54 $7000, including over $12000 from off premise. We're over 22% of total sales of which 10.7% is from to go an 11.4% is from delivery.

Vance Yuwen Chang: IHOP's Q1 same-store sales were negative 1.7% as we lapped strong comps from the year prior. Average weekly sales were $37.6K, including $7.9K from off-premise, or 21% of total sales, of which 8% is from to-go and 13% is from delivery.

Vance Yuwen Chang: IHOP is Q1 same store sales were negative 1.7% as we lapped strong comps from the year. Prior average weekly sales were 37 point $6000, including seven point $9000 from off premise or 21% of total sales of which 8% is from Hugo and 13% is from dish.

Vance Yuwen Chang: On the labor front, franchisees are reporting that staffing continues to improve, and labor costs, while elevated, have stabilized. Turning to commodities, we are seeing improvement in both brands' full year-over-year market basket forecasts, with IHOP improving 20 basis points and Applebee's improving 30 basis points since January. Applebee's commodity costs this quarter improved 2.4% versus Q1 of 2023, and we anticipate flat to low single-digit deflation for the remainder of the year. At IHOP, commodity costs improved 3.3% compared to the same period of 2023.

Vance Yuwen Chang: Livery.

Vance Yuwen Chang: On the labor front franchisees are reporting that staffing continues to improve and labor costs, while elevated have stabilized.

Vance Yuwen Chang: Turning to commodities, we are seeing improvement in both brands full year over year market basket forecast with IHOP, improving 20 basis points and applebee's, improving 30 basis points since January.

Vance Yuwen Chang: Applebee's commodity costs this quarter improved 2.4% versus Q1 of 2023, and we anticipate flat to low single digit deflation for the remainder of the year.

Vance Yuwen Chang: At IHOP commodity costs improved three 3% compared to the same period of 2023. However, we're still expecting low single digit inflation for the full year due to pressure, primarily coming from bacon beef and orange juice.

Vance Yuwen Chang: However, we're still expecting low single-digit inflation for the full year due to pressure primarily coming from bacon, beef, and orange juice. Our Supply Chain Co-op, CSCS, is working across the Applebee's and IHOP systems to identify additional cost-saving opportunities and support restaurant profitability initiatives through both operational improvements and input costs. To date, in 2024, we have implemented projects resulting in over $12 million of annualized savings across the

Vance Yuwen Chang: Our supply chain co op C. S. C. S is working across the Applebee's and IHOP systems to identify additional cost saving opportunities and support restaurant profitability initiatives through both operational improvements and input costs.

Vance Yuwen Chang: To date in 'twenty 'twenty, four we have implemented projects, resulting in over $12 million of annualized savings across the system.

Vance Yuwen Chang: As a result of our restaurant profitability initiatives and the commodity deflation that we saw in Q4, on average, we have seen our franchisees' Q4 gross margins improve, and overall, their four-wall dollars improve year over year. Before turning the call back over to John for Q&A, I'd like to quickly provide an update on our financial guidance for the year. As I mentioned, we remain committed to the guidance we provided at the end of the fourth quarter.

Vance Yuwen Chang: As a result of our restaurant profitability initiatives and the commodity deflation that we saw in Q4 of <unk>.

Vance Yuwen Chang: Average, we have seen our franchisees Q4 gross margins improve and overall their four wall dollars improve year over year before turning the call back over to John for Q&A I'd like to quickly provide an update on our financial guidance for the year.

Vance Yuwen Chang: As I mentioned, we remain committed to the guidance we provided at the end of the fourth quarter.

Vance Yuwen Chang: GNA in the range of $200 to $210 million, including non-cash stock-based compensation and depreciation of approximately $35 million. EBITDA is between $255 million to $265 million. CapEx in the range of approximately $15 million to $20 million. Applebee's domestic system-wide comp sales are expected to range between zero and two percent. IHOP domestic system-wide comp sales to range between 1 and 3 percent. And on 2024 development, we're expecting 25 to 35 net fewer domestic Applebee's restaurants and 15 to 25 net new domestic IHOP restaurants. With that, I'll hand the call back over to John.

Vance Yuwen Chang: G&A in the range of $200 million to $210 million, including noncash stock based compensation and depreciation of approximately $35 million.

Vance Yuwen Chang: EBITDA between 255 million to $265 million.

Vance Yuwen Chang: Capex in the range of approximately $15 million to $20 million.

Vance Yuwen Chang: Applebee's domestic systemwide comp sales to range between zero and 2%.

Vance Yuwen Chang: I hopped domestic system wide comp sales to range between one and 3%.

John: And on 'twenty 'twenty four development, we're expecting 25 to 35 net fewer domestic applebee's restaurants, and 15 to 25 net new domestic IHOP restaurants.

Vance Yuwen Chang: With that I'll hand, the call back over to John.

John W. Peyton: Thanks, Vance. To wrap things up...

John: Thanks Vance to.

Operator: Thank you to our franchisees and team members for their ongoing work and commitment to growing our brands and serving our guests. In an environment in which our guests remain price-sensitive, our brands are known for delivering abundant value. We're confident our recipe for growth and our focused development strategy will generate sustainable value over the long term for our shareholders and franchisees. So now we'll open up the call for questions and turn it back to the audience.

John: To wrap up.

John: Thank you to our franchisees and team members for their ongoing work and commitment to growing our brand and serving our guests in an environment in which our guests remain price sensitive our brands are known for delivering abundant value. We're confident our recipe for growth and our focused development strategy will generate sustainable value.

Operator: Over the long term for our shareholders and franchisees and so now we'll open up the call for questions and turn it back to the operator.

Operator: As a reminder, to ask a question, you will need to press star 1 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 1 again. We ask that you limit yourself to one question and one follow-up. Please stand by while we compile the Q&A roster. Thank you. Our first question comes from the line of Eric Gonzalez of KeyBank. Your line is now open.

Operator: As a reminder to ask a question you will need to press star one on your telephone and wait for your name to be announced.

Operator: To withdraw your question. Please press star one again.

Operator: We ask that you limit yourself to one question and one follow up.

Operator: Please standby, while we compile the Q&A roster.

Operator: Thank you. Our first question comes from the line of Eric Gonzalez Keybanc. Your line is now open.

Eric Andrew Gonzalez: Hi, thanks for taking the question. I just want to go back to the guidance.

Eric Andrew Gonzalez: Alright, Thanks for taking the question I just wanted to go back to the guidance I mean, youre reiterating the zero to 2%.

Eric Andrew Gonzalez: I mean, you're reiterating the zero-two percent comp guidance for crop leaves. If I were to look at the midpoint of that range, you know, that really implies that you need to comp in the threes for the remainder of the year. You know, that three percent level is clearly above where the industry seems to be running the last few months. So I just want to talk about maybe some of the drivers of why you think you can get to that level or sustain at that level if you're already there.

Eric Andrew Gonzalez: <unk> guidance for at least if I were to look at the midpoint of that range.

Eric Andrew Gonzalez: Implies that you need to come in the threes for the remainder of the year.

Eric Andrew Gonzalez: Yeah.

Eric Andrew Gonzalez: 3% level, Thats, clearly above where the industry seems to be running the last few months. So I just wanted to talk about maybe some of the drivers.

Eric Andrew Gonzalez: Why do you think you can get to that level or sustained at that level. If you're already there. What you see what you saw in March and as we got into April and early May.

Eric Andrew Gonzalez: You know, what you've seen, what you saw in March and as we got into April and early May, you know, that tells you that you can kind of hit that range. And then I think you mentioned your prepared remarks. This is sort of a related question, but you said 28 percent of orders were on LTO. If you could put that into context, I think you said 19 percent last quarter last year, but I'm not really sure where you were before COVID. And are you comfortable with that range? And what's the ideal range for the value mix there?

Eric Andrew Gonzalez: As you that you can kind of hit that range and then I think you mentioned in your prepared remarks. This is sort of a related question, but you said, 28% of orders were on LTE you can put that into context. I think you said, 19% last quarter last year, but I'm not really sure where you were before Covid and are you comfortable with that range and whats the ideal range for value mix there.

John W. Peyton: Hey Eric, it's John. Good morning.

Eric Andrew Gonzalez: Hey, Eric it's Jon good morning.

John: I'll talk about the guidance at a high level and as Tony to still in the plans for the year that also add to our our confidence.

John W. Peyton: I'll talk about guidance at a high level and ask Tony to fill in the plans for the year, which will also add to our confidence. I mean, as I mentioned in the prepared remarks, you know, we saw Applebee's performance improving month over month, as well as improving versus BlackBox month over month, and that continued from March into April, so we're encouraged by the trend, and we're also encouraged by the plan for the year, which includes, you know, additional menu innovation that Tony will describe.

John W. Peyton: As I mentioned in the prepared remarks, we saw applebee's performance improving month over month, as well as improving versus black box versus black box month over month and that continued from March into April. So we're encouraged by the trends.

John W. Peyton: And we're also encouraged by the plan for the year, which includes additional menu innovation that Tony described.

John W. Peyton: The 28% LTO context, you know; it was 18% the quarter before and tends to run in the mid-teens. One of the reasons it was accelerated in Q1 is because Applebee's ran three promotions during the quarter that Tony can give you some more detail on, and so that does drive up the number somewhat. We're comfortable with that number because it's what we think is necessary now in an environment where the guest is so promotion-driven across the segment. And then, Tony, I think it would be helpful if you filled in a little bit more color on what you've got planned for the year. Yeah, absolutely.

Tony: The 28% L T O context it.

John W. Peyton: It was 18% the quarter before and tends to run in the mid in the mid teens one of the reasons. It was accelerated in Q1 is because applebee's ran three promotions during the quarter that Tony can give you some more detail on it and so that does drive up the number.

Tony: Somewhat we're comfortable with that number because it's what we think is necessary now in an environment, where the guest is so promotion driven.

John W. Peyton: Ross the statement and then Tony I think it'd be helpful. If you fill in a little bit more color in and what you've got planned for the year.

Tony Moralejo: Yeah, absolutely, John. I'm happy to.

Tony: Yeah, absolutely John happy to so.

Tony Moralejo: From a big picture perspective, I'm, not going to get into the details of our entire strategy, but.

Tony Moralejo: We it's important to have the right value proposition to work for your guests that means.

Tony Moralejo: So, you know, from a big picture perspective, I'm not going to get into the details of our entire strategy, but, you know, it's important to have the right value proposition to work for your guests. That means, you know, we're going to make sure our promotional strategy continues to resonate with our guests. We'll have new, compelling, value-based promotions and mix them in with some of our fan favorites. We'll ramp up, as you've already seen in Q1 and Q2, our culinary and beverage innovation, really across the entire barbell of the menu platform.

Tony Moralejo: We're going to make sure our promotional strategy continues to resonate with our guests will have new compelling value based promotions.

Tony Moralejo: In mixed in with some of our fan favorites will ramp up as you've already seen in Q1, and Q2, our culinary and beverage innovation.

Tony Moralejo: Across the entire barbell menu platform.

Tony Moralejo: We're going to continue to focus on our off-premise business, which improved in Q1. We'll continue to focus on our operational efficiency, and we'll make sure that we improve our operations and refresh our restaurants. So, that's a sort of big picture recap of our strategy. The confidence that we have for the balance of the year is because we moved in the right direction at the end of Q1 and certainly at the beginning of Q2.

Tony Moralejo: We're going to continue to focus our off premise business, which improved in Q1 will continue to focus on our operational efficiency and we'll make sure that we elevate our our operations and refresh our restaurants.

Tony Moralejo: Big picture sort of recap of our strategy and the confidence that we have for the balance of the year is because we moved in the right direction at the end of Q1 and certainly.

Tony Moralejo: The America's Favorite Boneless Wing campaign, which offered wings for 50 cents, helped us significantly in March, and that trend extended into early April. It was a very disruptive campaign that really changed the trend line that we saw from January and February. We obviously followed that campaign with the whole lot of bacon burgers that John referenced in his opening comments, and that was at $9.99, which, again, is tremendous value when you consider the quality of that product.

Tony Moralejo: At the beginning of Q2.

Tony Moralejo: The Americas favorite Boneless wing campaign, which we offered wings at 50 since it helped us significantly in March.

Tony Moralejo: And and that trend extended into early April. So it was a very disruptive campaign that really changed the trend line that we saw from January and February and then we obviously followed that campaign with the whole lot of Bacon Burger that John referenced in his opening comments and that was at 999, which again is.

Tony Moralejo: And this value when you consider the quality of that product and then a week ago, We launched dollar Rita and dollar EDA is another abundant value campaign that has a really strong history of sales and traffic performance in that promotional run for the for the entire month of May So.

Tony Moralejo: And then a week ago, we launched Dollarita, and Dollarita is another abundant value campaign that has a really strong history of sales and traffic performance, and that promotion runs for the entire month of May. So, look, it's a difficult road, as you pointed out in your question, and there will be some bumps down the road, but we've got the right promotional strategy, and that's why we've reaffirmed our guidance Thank you.

Tony Moralejo: As a difficult road as you as you pointed in your question and Theres going to be some bumps down the road, but we've got the right promotional strategy.

Tony Moralejo: And that's why we've reaffirmed our guidance today.

John W. Peyton: And Tony, it's John. The last comment I would make is that the guest satisfaction, you know, OSAT for Applebee's and for IHOP as well, improved each month during the quarter and into April as well, reflecting that during tough times like this, our guests, our restaurants really focused on the guest experience, which is a big part of distinguishing ourselves from alternatives and drawing them into the restaurant.

Speaker Change: Okay. Thank you.

Tony Moralejo: And Toni it's John the last comment I would make is that the.

John W. Peyton: We get satisfaction, Oh sat for Applebee's, and IHOP as well improved each month during the quarter and into April as well.

John W. Peyton: Collecting that during during tough times like this our guests our restaurants really focused on the guest experience, which is a big part of distinguishing ourselves from alternatives and.

John W. Peyton: Drawing them into the restaurants.

Tony Moralejo: Got it.

Operator: One moment for our next question. Thank you. Our next question comes from the line of Nick Setyan of Wedbush. Your line is now open.

Speaker Change: One moment for our next question.

Operator: Yeah.

Nerses Setyan: Sure. You know, the short answer on that, Nick, is that IHOP also was improving sequentially throughout the quarter, which is encouraging. And we'll go right to Jay for his response, his counter response to Tony's comment. Hey Nick, this is Jay. Just to put that in context, you know, I think Tony said...

Nerses Setyan: Thank you. Our next question comes from the line of Nick <unk> of Wedbush. Your line is now open.

Jay: Thanks that was really helpful color on that.

Jay: Our promotional cadence around applebee's can we.

Nerses Setyan:

Speaker Change: How about same discussion around IHOP as well coming out of the quarter.

Jay: Maybe quarter to date.

Jay: Trends and what's driving it.

Jay: Sure short answer on that Nick is that IHOP also was improving sequentially throughout the quarter, which is encouraging and we will go right to.

Nerses Setyan: To Jay for his response kits counter response to Tony's comments.

Jay D. Johns: Hey Nick, it's Jay. Just to put that in context, you know, I think Tony said that really well, value is critically important when you get these kinds of economic times. You know, as the question was posed before, what gives you confidence you're going to be able to finish the year well? And, you know, in our position, we had two big impacts that John spoke about in his opening comments. And you had a weather impact which we don't think is going to repeat, obviously, as we get into the next quarter.

Jay: Hey, Nick as Jay.

Jay D. Johns: Just to put that in context.

Jay D. Johns: I think Tony said that really well.

Jay D. Johns: Values critically important when you get these kind of economic times as the question was posed before is what gives you confidence that youre going to be able to finish the year wallet.

Jay D. Johns: Our position, we had two big impacts that.

Jay D. Johns: <unk> spoke about in his opening comments that you had a weather impact, which we don't think is going to repeat obviously as we get into the next quarter and then you've got for US. We had this rollover of our next bite virtual brand concepts that closed down at the end of Q2 last year.

Jay D. Johns: And then you've got for us, we had this rollover of our next bite virtual brand concepts that closed down at the end of Q2 last year. And we do have replacements for those coming with new virtual brands that we have been launching, starting in about February, and they've been kind of cascading into our restaurants continuously until now also. So kind of a February through May launch for those should help replace those lost sales.

Jay D. Johns: We do have replacements for those coming with new virtual brands that we have been launching <unk>.

Jay D. Johns: Starting in about February and they've been kind of cascading into our restaurants continuously until now also.

Jay D. Johns: So kind of a February through May launch for those those should help replace those lost sales.

Jay D. Johns: From that you eliminate the weather impact you still have economic challenges, but we were not quite as aggressive on the price pointed value is applebee's was.

Jay D. Johns: Youll see us.

Jay D. Johns: A little more of that.

Jay D. Johns: Plant start of the year. This is not a reaction to what's going on we intentionally went for a little more of an abundant value play in March with promoting our very popular omelets, but I think what we found was the guests are in a position where price pointed value may be more important to them than <unk>.

Jay D. Johns: Even abundant value at this point so.

Jay D. Johns: I think youll see a little bit of a correction on that as we move through the rest of the year, but that was preplanned already.

Jay D. Johns: Just timing wise, when we try to do certain things during the year, we have a strategy that we always want to kind of pulse and not only price pointed value, but abundant value.

Jay D. Johns: Innovations with new menu items. We just launched a new promotion this week, actually, with the movie If, with a kids-eat-free promotion tied to that. And family movies, in particular, when we have a kids-eat-free promotion tied to them and unique food offerings tend to do very well for us, and that's what we're moving into right now.

Jay D. Johns: <unk> with new menu items, we just launched a new promotion.

Jay D. Johns: This past this week actually with the movie F.

Jay D. Johns: With our kids eat free promotion with that family movies in particular, when we have our kids eat free promotion tied with them and unique food offerings tend to do very well for us and that's what we're moving into right. Now. So we're also very confident that we're going to see improvement as we get through the year and we were rolling over 8.7 from <unk>.

Jay D. Johns: So we're also very confident that we're going to see improvement as we get through the year. And we were rolling over 8.7 from last year in the first quarter. We knew that was going to be a tough lap, probably the toughest for the year.

Jay D. Johns: Last year in the first quarter, we knew that was going to be a tough lap probably the toughest for the year.

Speaker Change: Thank you and then just.

Jay D. Johns: For both concepts.

Jay D. Johns: That kind of what was the pricing in Q1, and what's the expected pricing in Q2 and for the full year.

Nerses Setyan: Sure. Hi Nick.

Speaker Change: Sure Hey, Nick I'll take that for both brands, we've talked for a long time about how the historical price increases that our franchisees take before this inflationary period was about 2% to 3% and then we saw over the last six or eight quarters.

John W. Peyton: I'll take that for both brands. We've talked for a long time about how the historical price increases that our franchisees took before this inflationary period were about 2% to 3%. And then we saw, over the last six or eight quarters, that spiked anywhere from sort of 5% to 8% or 9% on an annual basis. Because, as Vance mentioned in his remarks, we're seeing the cost of goods into the restaurants stabilize, you know, around a flat rate.

John W. Peyton: That spiked anywhere from sort of five to eight or 9% on an annual basis.

John W. Peyton: Because as Dan mentioned in his remarks, we're seeing the cost of goods into the restaurants stabilize around that flat rate and because we're also seeing labor stabilize a bit with the exception of California.

John W. Peyton: And because we're also seeing labor stabilize a bit, with the exception of California, franchisee margins are improving, or beginning to improve. And so we expect that they'll begin to move back toward that historical 2% to 3% over time. Can't tell you exactly when, but

John W. Peyton: Franchisee margins are improving but beginning to improve and so we expect that they'll begin to move back towards that historical 2% to 3% over over time I can't tell you exactly when but the pressure for them to raise prices above the historical run rate is beginning to ease.

Speaker Change: Thank you.

Operator: One moment for our next question. Thank you. Our next question comes from the line of Dennis Geiger of UBS. Your line is now open.

Speaker Change: One moment for our next question.

Dennis Geiger: Thank you.

Operator: Our next question comes from the line of Dennis Geiger of UBS. Your line is now open.

Dennis Geiger: Great. Thanks, guys. I wanted to see if you could talk a little bit more about franchisee sentiment, perhaps at both Applebee's and IHOP right now. It sounds pretty encouraging as you kind of make some of those comments around margin. I'm curious, though, just with respect to how they're managing in the current environment, particularly as we think about value incidents, at least that Applebee's picking up, as well as any commentary on their thoughts on everything going on in the environment and again, maybe what that means from a development demand perspective.

Dennis Geiger: Great. Thanks, guys I wanted to see if you could talk a little bit more about franchisee sentiment, perhaps at both applebee's and IHOP right now it sounds pretty encouraging as we as you kind of make some of those comments around margins.

Dennis Geiger: Curious, though just with respect to how theyre managing in the current environment and particularly as we think about value incident at least at applebee's picking up.

Dennis Geiger: Just any commentary on their thoughts on everything going on in the environment and energy.

Dennis Geiger: And maybe what that means from a from a development demand perspective. Please sure. So why don't we begin Vance with you talking about margins and then we can ask Tony and Jay to talk about specifically how their franchisees are reacting in this environment.

John W. Peyton: So why don't we begin, Vance, with you talking about margins, and then we can ask Tony and Jay to talk about specifically how their franchisees are reacting in this environment.

Vance Yuwen Chang: Morning, Dennis. Hey, this is Vance.

Vance: Good morning, Dan.

Vance Yuwen Chang: So.

Vance: As we mentioned in the prepared remarks, both systems are in good shape based on <unk>.

Vance Yuwen Chang: So, as we mentioned in the prepared remarks, both systems are in good shape based on the financials that are shared with us from our franchisees. Of course, not all of them are back to 2019 levels yet, but their financial health is, a lot of it is driven by the strong AUV growth that we've seen. And then we talked about commodity inflation easing, so their cost of goods sold as a percent of sales is really trending towards pre-COVID levels at this point.

Vance Yuwen Chang: Initial town that.

Vance Yuwen Chang: But our shared with us from our franchisees.

Vance Yuwen Chang: Not all of them are back to 2019 levels yet.

Vance Yuwen Chang: Their financial Health is a lot of it is driven by by the stronger UV growth that we've seen.

Vance Yuwen Chang: And then we talked about commodity inflation easing so their cost of goods sold as a percent of sales is really trending towards pre COVID-19 levels at this point.

Vance Yuwen Chang: And then labor availability is better, and then labor percent of sales is also roughly par to pre-COVID levels. So all that equates... their formal dollars, trending towards pre-COVID levels and seeing growth year-over-year. And so those are a good sort of set-up for our franchises in both.

Vance Yuwen Chang: And then labor availability is better.

Vance Yuwen Chang: And labor percent of sales is also roughly par to pre COVID-19 levels. So all of that equates to.

Vance Yuwen Chang: One more dollars.

Vance Yuwen Chang: Joining trending towards pre COVID-19 level.

Vance Yuwen Chang: Seeing growth year over year, and so those are good sort of setup or for our franchisees and both systems.

Vance Yuwen Chang: I appreciate that, Vance. Maybe just one more.

Speaker Change: I appreciate that Vince maybe just one more I appreciate the color on.

Speaker Change: Some of the customer behaviors and spending patterns that you've observed in the quarter is there anything else and maybe I missed it but anything else bye bye customer cohorts thinking about income demographics et cetera, where where that shifted is it still sort of lower income and where the most pressure is being observed is that reason at all to the middle.

Vance: Any any kind of other observations on the customer in the quarter would be curious thank you Dennis.

Dennis Geiger: I appreciate the color on some of the customer behaviors and spending patterns that you observed in the quarter. Is there anything else, and maybe I missed it, but anything else by customer cohorts, thinking about income demographics, etc., where that shifted? Is it still sort of lower income where the most pressure is being observed? Has that risen at all to the middle? Any kind of other observations on the customer in the quarter? I would be curious. Thank you.

John W. Peyton: Yeah, Dennis, it's John. That's exactly right.

Vance Yuwen Chang: Dennis It's Sean that's exactly right we see the.

John: The biggest movement in by movement, we see I mean less business from less visits from the lower cohort, which we defined as $50000 and below.

John: And the higher you go in the income streams income ranges the more consistent performance has been quarter to quarter.

John W. Peyton: We see the biggest movement, and by movement, I mean, less business from, and less visits from the lower cohort, which we define as $50,000 and below. And the higher you go in the income streams, the income ranges, the more consistent the performance has been quarter to quarter. You know, and we've also observed that when our guests are in the restaurant, particularly our lower income consumers, they're more aggressively managing their check, finding our value-oriented items, you know, et cetera. And that's been consistent in the last couple of quarters but more pronounced in Q1.

John: <unk> also observed that when our guests are in the restaurant again, particularly our lower income consumers.

John W. Peyton: They are more aggressively managing their check finding our value oriented items.

John W. Peyton: Et cetera, and Thats been consistent the last couple of quarters, but more pronounced in Q1.

Dennis Geiger: I appreciate it; thanks, guys.

Speaker Change: I appreciate it thanks guys.

Operator: As a reminder, to ask a question, you will need to press star 1 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 1 again. One moment for our next question. Thank you. Our next question comes from the line of Todd Brooks of The Benchmark Company. Your line is now open.

Speaker Change: As a reminder to ask a question you will need to press star one on your telephone and wait for your name to be announced to withdraw your question. Please press star one again.

Operator: One moment for our next question.

Operator: Thank you. Our next question comes from the line of Todd Brooks of the Benchmark Company. Your line is now open.

Todd Morrison Brooks: Hey, great. Thanks for taking my question. I know you don't talk about current quarter, same store sales trends. I'm just wondering how unique Q1 was with the difficult compares, a lot of that being kind of the Omicron emergence earlier in the quarter, the weather compares. Would you be willing to talk about exit rates to same store sales in March for both brands so that we can get a sense of where things normalize as we move farther away from some of those pressures earlier in the quarter?

Todd Morrison Brooks: Hey, great. Thanks for taking my question.

Todd Morrison Brooks: I know you don't talk kind of current quarter same.

Todd Morrison Brooks: Same store sales trends I'm, just wondering with how unique.

Todd Morrison Brooks: Q1 was with the difficult compares a lot of that being kind of AUM a crown emergent is earlier in the quarter with the weather compares.

Todd Morrison Brooks: Would you be willing to talk kind of exit rates. The same store sales in March for both brands. So that we can we can get a sense of where things normalize as we move farther away from some of those pressures earlier in the quarter.

Vance Yuwen Chang: Vance, I'll defer to you in terms of what we can and what we can't share.

Speaker Change: Sure Vance I'll defer to you in terms of what we can what we can share there.

Vance Yuwen Chang: Of course, yes, Todd. So, so, first of all, just a quick reminder, Todd, that on a two-year basis, Q1 was actually positive comfort for both of our bands. But, but, of course, this is not the quarter we like to post, but, you know, generally speaking. As John and Jay and Tony mentioned, the sequential improvements throughout the quarter have been encouraging, and that trend should continue well into Q2. So, we won't quantify exactly, but, you know, it's month-to-month, but it's encouraging to see this positive momentum in both comps and traffic for both farmers.

Vance: Of course, it's Todd so so.

Vance Yuwen Chang: First of all it just just a quick reminder, Todd.

Vance Yuwen Chang: Todd that on a two year basis Q1 was actually positive coffer.

Vance Yuwen Chang: But of course. This is this is not the quarter, we'd like to post but.

Vance Yuwen Chang: Generally speaking.

Vance Yuwen Chang: As John and Jay and Tony mentioned, the sequential improve.

Vance Yuwen Chang: Improvement throughout the quarter, its been encouraging and that trend to continue.

Vance Yuwen Chang: Continue well into Q2, so so we've we won't quantify exactly but.

Vance Yuwen Chang: The month to month.

Vance Yuwen Chang: But.

Vance Yuwen Chang: It's encouraging to see this this positive momentum in both both comps and traffic for both brands.

Todd Morrison Brooks: Okay, great. And then there is my second question. Given the difficult environment, just the lens that you look at your DNA spend through and, We've been at kind of a 200 million plus type of level now for a few years, would love to know kind of what initiatives are maybe within GNA that couldn't be delayed some, and especially thinking other potential uses of capital, including maybe some accelerated share repurchase at historically low valuations if we were a little bit more efficient with GNA. Would love Sure.

Todd: Okay, Great and then my second question Gil.

Todd Morrison Brooks: Given the difficult environment, just the lens that you look at your G&A spend through and.

Todd Morrison Brooks: We've been kind of a $200 million plus type of level now for a few years would love to know kind of what initiatives or maybe within G&A that couldnt be delayed some and especially thinking other potential uses of capital, including maybe some accelerating share repurchase at historically low values.

Todd Morrison Brooks: <unk>, if we were a little bit more efficient with G&A would love to get some thoughts on that thank you.

Vance Yuwen Chang: Sure, so the GNA level we have right now is what we believe is the right level to run the company going forward with the growth plan that we have in mind. You know, as we talked about before, the technology initiatives we've concluded with that, so that's impacting GNA and CapEx both, right? But within GNA, we're redeploying those GNA resources towards development now. So we're keeping GNA at a fairly constant level, but we're investing in the development capabilities, and that includes a lot of the functionalities that John talked about before, which is to source deals in a different way, to support the franchisees in a different way that we, you know, in a more centralized fashion.

Speaker Change: Sure. So the G&A level, we have right now is is what we believe that the right level to two.

Vance Yuwen Chang: To run the company going forward with the growth plan that we have in mind.

Vance Yuwen Chang:

Vance Yuwen Chang: As we talked about before.

Vance Yuwen Chang: The technology initiatives, we've concluded with that's what that's impacting G&A and Capex, both right, so but within G&A work with redeploying those.

Vance Yuwen Chang: The DNA resources towards development now so so we're keeping G&A at a fairly constant level.

Vance Yuwen Chang: But.

Vance Yuwen Chang: But we're investing in the development capability and that includes a lot of the functionalities.

Vance Yuwen Chang: John talked about before which is two two to source deals in a different way to support the franchisees and the different ways that we know.

Vance Yuwen Chang: And so that's what we plan on doing going forward. One other reminder is just that for this quarter, if we do not count the non-cash items, which is stock-based common depreciation and amortization within our G&A, the cash portion of the G&A is actually two to three million dollars lower versus the year before.

Vance Yuwen Chang: On a more centralized.

Vance Yuwen Chang: And so that's that's what we plan on doing going forward.

Vance Yuwen Chang: One part one other.

Vance Yuwen Chang: Other reminder, is just that for for this quarter.

Vance Yuwen Chang: If you if we do not count the noncash items, which is stock based comp and depreciation.

Vance Yuwen Chang: Amortization within our G&A.

Vance Yuwen Chang: The cash portion of that G&A is actually $2 million to $3 million lower versus the year before so.

Vance Yuwen Chang: So we have been, and we will always be, very disciplined with G&A bank management. And then your second part of the question in regards to buybacks, we know, we believe that, you know, there's growth potential with the stock and with the company and their opportunities to create shareholder value for us in the long term. So we have been, and we will always be in the market when we see that there is a disconnect between the intrinsic value of the company and where the shares are trading at. So that will always be an important part of how we return capital to shareholders.

Vance Yuwen Chang: We have been and will always be very disciplined with <unk> management.

Vance Yuwen Chang: Management and your second part part of the question in regards to buybacks.

Vance Yuwen Chang: We know we believe that the.

Vance Yuwen Chang: There is there is growth potential with with the stocking with the company and enter opportunities to create shareholder value for us in the long term. So we have been and we will we will always be in the market.

Vance Yuwen Chang: When we see that there is a disconnect with the intrinsic value of the company in.

Vance Yuwen Chang: Where the shares are trading so so that will be will always be an important part of how we return capital to shareholders.

Speaker Change: Okay, great. Thanks, Vince.

Vance Yuwen Chang: Yeah.

Speaker Change: One moment for our next question.

Operator: One moment for our next question. Thank you. Our next question comes from the line of Brian Vaccaro of Raymond James. Your line is now open. Hi, thanks.

Speaker Change: Thank you.

Vance Yuwen Chang: Our next question comes from the line of Brian Vaccaro of Raymond James Your line is now open.

Brian Michael Vaccaro: Hi, thanks, and good morning. Just a few follow-ups if I could. I believe you said that Applebee's traffic outperformed in the first quarter. Just to make sure we're all on the same page, could you level out what the average check was for each brand in the first quarter?

Brian Michael Vaccaro: Hi, Thanks, and good morning.

Brian Michael Vaccaro: Two follow ups, if I could I believe you said that applebee's traffic outperformed in the first quarter just to make sure. We're all on the same page could you level set where average check was for each brand in the first quarter.

Vance Yuwen Chang: Sure, I don't have that data in front of me, Vance. Can you address that question? Sure, yeah.

Speaker Change: Sure I don't have that data in front of me Vance can you address that question Jordan.

Vance Yuwen Chang: Sure, yeah. So, Brian, average check for Applebee's is slightly positive, offsetting the negative traffic, but the traffic within the black box for the quarter. For iHop, average check was probably more than... that high single-digit range, given the many price increases, you know, the effective many price increase in Q1.

Vance Yuwen Chang: Brian So average check for applebee lightly positive offsetting the negative drivers, but the traffic.

Vance Yuwen Chang: The black box.

Vance Yuwen Chang: For the quarter.

Vance Yuwen Chang: Average check was probably more of that.

Vance Yuwen Chang: High single digit range.

Vance Yuwen Chang: Given the the menu price increase.

Vance Yuwen Chang: So that that's the contact.

Vance Yuwen Chang: Menu price increase in Q1.

Vance Yuwen Chang: So that.

Vance Yuwen Chang: That's the context.

Brian Michael Vaccaro: Okay, so check slightly positive at Applebee's and IHOP in the high single digits. Okay, thank you. I might have misheard it, but I think your comments on franchise e-profitability were those as of the fourth quarter? I guess that's the most recent quarter you have visibility on, and you have financials on. Okay, so with sales mix on value promotions jumping now into the high 20s, can you speak to the impact that's having on franchise e-profitability? It sounds like you've got a good guy on the commodity side insulating, but to what degree has that jump in promotion impacted profitability, and is that level sustainable in your view?

Speaker Change: Okay, so check slightly positive.

Brian Michael Vaccaro: At Applebee's.

Brian Michael Vaccaro: And I have been the high single digits.

Speaker Change: Okay. Thank you.

Brian Michael Vaccaro: Might have misheard, it but I think your comments on franchise profitability, where those as the fourth quarter I guess, that's the most recent quarter you have visibility on financials.

Brian Michael Vaccaro: Financials on okay.

Brian Michael Vaccaro: So with sales mix on value promotions jumping now into the high Twenty's can you speak to the impact that's having on franchisee profitability. It sounds like you've got a good guy on the commodity side insulating but.

Brian Michael Vaccaro: To what degree has that jumped in promotion impacted profitability. It is this level sustainable in your view.

John W. Peyton: Yeah, Brian, it's John. I can; I'll start with that. And Vance, fill in if I miss anything you think is important.

Brian Michael Vaccaro: Yes, Brian it's John I'll start with that and advanced fill in if I. Miss anything you think is important the most important thing about our approach, meaning all three brands approach to promotions, Brian is that they are profitable promotions as theyre designed and that is the case in its insured.

John: The fact that.

John: We construct promotions with input from our franchisees and they're on board with doing them.

John: A good example is is even dollar read it right for a Margarita for a dollar is profitable in itself and the last time, we ran it in the fall.

John W. Peyton: The most important thing about our approach, meaning all three brands' approach to promotions, Brian, is that they are profitable promotions, as they're designed, and that is the case. And it's ensured by the fact that we construct promotions with input from our franchisees, and they're on board with doing them. You know, a good example is even Dollarita, right? A margarita for a dollar is profitable in itself.

John W. Peyton: <unk> plus percent of those salaried at tickets included other items, which is exactly what it's what it's designed to do so.

John W. Peyton: We believe that as long as the promotions are constructed to drive profit as a stand alone to be profitable stand alone and then drive additional business that is the strategy that we're following.

John W. Peyton: And the last time we ran it in the fall, you know, 90 plus percent of those Dollarita tickets included other items, which is exactly what it's designed to do. So, you know, we believe that as long as the promotions are constructed to drive profit as a standalone to be profitable standalone, and then drive additional business, you know, that is the strategy that we're following. In conjunction with our franchisees, Vance, is there any color you can add that would be helpful? Yeah, Brian, so

John W. Peyton: In conjunction with our franchisees Vance is there any color you can add there would be helpful.

Vance Yuwen Chang: Yeah, Brian, so as John mentioned, it's all about driving incremental profitable traffic. So another detail I would add on the Dollarita is that, you know, it's more than just the Dollarita itself. There are different shots, flavors, different additions we can offer that adds to the margin of that drink in addition to the food detachment rate of that order, right? So the point of it is to drive the lifetime value of that guest and increase the sort of the long-term market share of the brand. So, we're not giving things away; these are prudent, methodical, creative campaigns that we're running.

Vance: Yes, Brian so.

Vance Yuwen Chang: As John mentioned, it's all about driving incremental profitable traffic. So so another detail I would add on the dollar EDA is that it's more than just just a halloween itself there are different shops flavors.

Vance Yuwen Chang: Additionally, we can.

Vance Yuwen Chang: We're offering that adds to the margin of factoring and then in addition to the food attachment rate.

Vance Yuwen Chang: Right. So that the point of it is to drive the the lifetime value of that guest.

Vance Yuwen Chang: Increased sort of the long term.

Vance Yuwen Chang: Our market share.

Vance Yuwen Chang: And so so.

Vance Yuwen Chang: We're not giving giving things away. This these are these are prudent.

Vance Yuwen Chang: Article creative campaigns that we're running.

Brian Michael Vaccaro: Okay, and then just the last one for me. In the first quarter, just looking at the financials, it looked like advertising revenue at Applebee's was down, you know, 4% or so. And is that representative of the actual spend or TRPs in the market in the first quarter? I know sometimes there can be differences versus what's in the financials versus actual spend. But if that was the case, did that have a negative impact on your comps?

Speaker Change: Okay and then just the last one for me in the first quarter.

Brian Michael Vaccaro: Looking at the financials it looks like advertising accrual at outflow at Applebee's was down 4% or so is that representative of the actual spend or trp's in the market in the first quarter I know, sometimes there can be differences versus what's in the financials versus actual spend but if that was the.

Brian Michael Vaccaro: Case did that have a negative impact on your comps.

Brian Michael Vaccaro: And just thinking more broadly in the more competitive value environment, what's a reasonable expectation for advertising at Applebee's for the rest of the year? Might that be down as well? Or just any color, that would be great. Thank you.

Speaker Change: Just thinking more broadly in the more competitive value environment, what's a reasonable expectation on advertising at applebee's for the rest of the year.

Brian Michael Vaccaro: Might that be down as well or just any color there would be great. Thank you.

Vance Yuwen Chang: John, I can take it. So I'm going to, on a very high level basis, think of advertising spend as roughly a, you know, it should trend similarly as comps, right? So if sales are up, advertising spend will be up; if sales are down, advertising spend will be slightly down. But what you're referring to is also driven by timing. So the dollar The dollar spend isn't exactly tied to, it just depends on payment timing, depends on the campaigns we're running, depends on things we'll work out with our agency. So there's gonna be some of that noise in there, but for the most part, it should be fairly consistent with sales.

Speaker Change: John I can take it.

Vance Yuwen Chang: Very high level basis think of advertising spend.

Vance Yuwen Chang: Roughly a push.

Vance Yuwen Chang: It should trend similarly.

John: Right. So so.

Vance Yuwen Chang: Sales of our advertising spend will be a discussion down advertising spend will be slightly down, but but what you're referring to also.

Vance Yuwen Chang: Is driven by timing so that's the dollar.

Vance Yuwen Chang: <unk> spend isn't exactly tying to it just depends on.

Vance Yuwen Chang: Payment timing depends on the campaigns were run Panther things will work out with our agency, so theres going to be some of that noise in there but for most part.

Vance Yuwen Chang: It should be fairly consistent with sales trends.

Vance Yuwen Chang: And then, Vance, I think it would be helpful if Tony addressed the advertising strategy overall for Brian.

Speaker Change: And then Vince I think it would be helpful.

Vance Yuwen Chang: Tony address that advertising strategy overall for Brian, Yes, Yes, happy too John Hey, Brian I can't get into specific plans, obviously due to competitive reasons, but we feel really confident where calendar sits for the remainder of the year, we're not going to be spending less.

Tony Moralejo: Yeah, happy to, John. Hey, Brian.

Tony Moralejo: I can't get into specific plans, obviously, due to competitive reasons, but we feel really confident where our calendar sits for the remainder of the year. We're not going to be spending less money. We are spreading it out over more calendars and windows, and we're changing our mix a little bit between traditional media and digital. But the strategy remains the same, and the volume, the breadth, and depth of the marketing plan remain the same. We're going to provide our guests with value, especially during these inflationary times, and we'll lean hard on our award-winning advertising and our robust fund to support the entire portfolio of propositions that you'll see for 2024.

Tony Moralejo: Less money, we are spreading it out over more calendars and windows and we're changing our mix a little bit between.

Tony Moralejo: Traditional media and digital.

Tony Moralejo: But the strategy remains the same.

Tony Moralejo: The volume the breadth and depth of it of the marketing plan remains the same we're going to we're going to provide our guests with value, especially during these inflationary times and will will lean hard on our award winning advertising and our robust fund to support the entire portfolio.

Tony Moralejo: Propositions that youll see for 2024.

Brian Michael Vaccaro: All right, that's helpful. I'll pass it along. Thank you.

Speaker Change: Alright, that's helpful I'll pass it along thank you.

Operator: One moment for our next question. Thank you. Our next question comes from the line of Jeffrey Bernstein of Barclays. Your line is now open.

Speaker Change: One moment for our next question.

Operator: Thank you. Our next question comes from the line of Jeffrey Bernstein of Barclays. Your line is now open.

Jeffrey Andrew Bernstein: Hi, good morning. This is Product On for Jeff. Thanks for taking the question. I just had a quick modeling question and then a real question. I apologize if it's already out there, but are we going to get four quarters worth of historical results for Fuzzy now that the brand is fully integrated, or will we just kind of continue to get quarterly updates with the current quarter and the prior year quarter?

Product: Hi, Good morning. This is product on for Jeff. Thanks for taking the question.

Jeffrey Andrew Bernstein: I just had a quick.

Jeffrey Andrew Bernstein: Modeling question and then a real question.

Jeffrey Andrew Bernstein: I apologize if its already out there, but are we going to get four quarters worth of historical results for now that the brand is fully integrated or will we just kind of continue to give quarterly updates with the with the current quarter in the prior year quarter.

Vance Yuwen Chang: I can answer that. So, the reason why we didn't provide comps the year before is because last year was the first year we owned the company. And so going forward, we'll provide quarterly comp performance, you know, versus last year. But we wouldn't provide last year's comp because we didn't own the company the year before that, if that makes sense.

Jeffrey Andrew Bernstein: Got it, yes, understood. And then my real question was really, I'm following up on Dennis' question.

Speaker Change: I can answer that so.

Jeffrey Andrew Bernstein: The reason why we didn't provide comps the year before is because last year was the first year with the company and so going forward, we'll provide quarterly comp performance.

Speaker Change: Versus last year, but we wouldnt provide last year's comp because we didn't own the company a year before that if that makes sense.

Speaker Change: Got it understood and then my real question was really about following up on David <unk> question.

Jeffrey Andrew Bernstein: You know, your brands have obviously always been positioned for value, and there's been a lot of talk from your peers the past few days about consumers feeling pressured. Can you just talk about whether you've seen a meaningful change in the types of guests that you're seeing in your brands? Like, maybe some at the low end have been trading out, but, you know, maybe some other guests have been trading into your brands. Just any color on what you're seeing right now would be really helpful. Thank you.

Speaker Change: Our brands have obviously always been positioned for value and theres been a lot of talk from your peers. The past few days about consumers feeling pressure can you just talk about if you've seen a meaningful change in the types of guests that youre seeing in your brands like maybe some of the low end have been trading out, but maybe some other guests have been trading into your brands any.

Jeffrey Andrew Bernstein: And what you are seeing right now would be really helpful. Thanks.

John W. Peyton: Hey, it's John. Yeah, I don't know that we have that much more to add to what we've already said in that we are. What I can clarify, though, is that we're seeing more change in terms of our lower income guests having fewer visits with us than we are seeing, you know, growth in the upper tiers of our income band, meaning we're not seeing as much trade down into the brands. We're seeing some, but the most impactful change in consumer behavior is clearly at the fifty thousand dollar mark and below.

Jeffrey Andrew Bernstein: Yes.

Speaker Change: Hey, Brian.

John: It's John.

Speaker Change: Yes, I don't know that we have that much more to add to what we've already said in that we are what I can clarify though is that we are seeing more change in terms of.

John W. Peyton: Our lower income guests, having less visits with us than we are in seeing.

John W. Peyton: Growth in the upper tiers of our income band, meaning we're not seeing we're not seeing as much trade down into the brands, we're seeing some but.

John W. Peyton: The most.

John W. Peyton: Impactful change in consumer behavior is clearly at the $50000 and below segment.

Jeffrey Andrew Bernstein: Got it. Thanks for that clarification. I appreciate it.

Speaker Change: Got it thanks for that clarification I appreciate it.

John W. Peyton: I am showing no further questions at this time. I would now like to turn it back to John Peyton, Dine Brands CEO, for closing remarks.

Jeffrey Andrew Bernstein: I am showing no further questions at this time I would now like to turn it back to John Peyton Dine Brands' CEO for closing remarks.

John W. Peyton: Julia, thank you for your expert moderation. We appreciate it. Thanks to Jay, Tony, and Vance, and thank you guys for joining us this morning and asking us your questions. We'll talk to you throughout the quarter and look forward to next August call. Have a great day, everybody.

John W. Peyton: Julia Thank you for your expert moderation, we appreciate it thanks to Jay Tony and Vance and Thank you guys for joining us this morning, and asking us for your questions.

John W. Peyton: We'll talk to you throughout the quarter and look forward to next August call have a great day everybody.

Operator: Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.

Speaker Change: Thank you for your participation in today's conference. This does conclude the program you may now disconnect.

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