Q1 2025 Dine Brands Global Inc Earnings Call
Please evaluate the forward-looking information in the context of these factors, which are detailed in today's press release and 10Q filing.
Before looking statements are as of today and we assume no obligation to update or supplement these statements.
We refer to certain non-GAAP financial measures which are described in our press release and available on Dine Brands Investor Relations website.
For counter-praying purposes, we are kind of least scheduled to release our Q2 2025 earnings before the market opens on August 6, 2025, 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 and president of Applebee's John Peyton. Good morning, everyone. Thanks for joining us today. Today's call, I'll share Dine's Q1 results.
I will discuss trends in consumer behavior, provide updates on the progress of our brand's key priorities, and in advance we'll discuss our financial results in more detail. First though, an update regarding the Applebee's leadership team.
Over the last two months, I've been working closely with Applebee's leadership and franchisees to further develop our robust growth plan.
And while we initially plan to hire new Applebee's president, the board and management team agree the continuity is crucial right now and to ensure stability and accelerate business growth, I'll continue to serve as president of Applebees in addition to my role as Dine Brands CEO .
The positive traction we're currently seeing with key initiatives reinforces the need for my focus on Applebee's success will resume the search for President eventually, but for now, I'll work alongside our franchisees to drive Applebee's forward and profitably grow the business.
The strength and caliber of the Dine Brands team gives me great comfort that this decision is the right one and at the brand level new
Now, back to our results. As we outlined in our last earnings call, we started the year with a renewed focus on three key priorities.
Second is enhancing menu and value programs and third is better communicating the value that our brands offer to our guests
and Q1 consumer confidence declined and that certainly influences the challenges that our guests continue to face.
Guests remain cautious with their spending, particularly the lower income guest, and we continue to see check management and trade down to lower priced items.
Across Applebees and IHOP, the value mix increased versus Q4. At Applebees, the value mix increased from 28% to 34%, and at IHOP, that mix increased from 16% to 19%, due to the rollout more broadly of house faves.
comes from international markets.
From a construction cost standpoint, the vast majority of the total equipment package for a new restaurant opening utilizes finished goods from the US although we may have component parts that come from overseas.
We're closely monitoring this dynamic situation and are actively working with our supply chain co-ops, CSCS, to mitigate the impact of tariffs on our franchisees to the best of our ability.
And during a challenging environment like this, it's worth emphasizing that our asset-like business model serves us well when combating macro headwinds.
First, we continue to generate significant free cash flow. This enables us to make investments in our brands such as the re-imaging incentive program while also returning capital to our shareholders.
and the strength and expertise of our franchisees.
With that, I'll now walk through our key financial results. In Q1, our EBITDA was $54.7 million compared to $60.8 million in the same quarter last year. Revenues were up 4% to $214.8 million.
and for CompSales, Applebee's reported a 2.2% declining CompSales and IHOP posted CompSales of negative 2.7%. Adjusted free cash flow was $14.6 million, which was a decrease of $15.1 million.
Now, shipping to our brands, I'll share updates across our portfolio, starting with Applebees.
As I mentioned earlier, Applebee saw improvement in sales and traffic closing the gap between our performance and black box with positive comp sales in March, driven by the growth of off-premise and the big easy promotion.
Off-premise comp sales increased 3.7% compared to last year, largely driven by demand for the really big meal deal, and our 50 cent America's favorite boneless wings campaign featured during the NCAA basketball tournament.
The positive trend in off-premise volume is validation of our deliberate effort to grow off-prem by including nationally advertised campaigns and featuring two-go-only promotions.
This limited time promotion leveraged the fan favorite bourbon street section of our menu and the big easy menu drove both sales and check in March and that momentum continued into April
We also brought back our viral date night pass. This year we made date night exclusively available through our royalty program, Club Apple Vs, as a way to expand the program and create deeper connections with our guests.
This resulted in over 175,000 new sign-ups bringing our total club Applebees program to over 8.5 million members. Making date night exclusive to club Applebees is an example of how we're leaning into club Applebees in a way that we haven't done so before.
Overall, we're encouraged by the results that we saw toward the end of the quarter, which have continued through April , and we attribute this momentum to our menu innovation, investments in social media, and the launch of Applebee's new guest training initiative.
Now to talk about IHOT.
In early March, we opportunistically took back 10 IHOP restaurants located in Cincinnati, and we already have plans in place to convert four of these restaurants to dual brands [inaudible]
We'll update investors on our progress as we move through the conversion process. Under Lawrence's leadership, I have
First is the House Faves value menu. Thank you.
Second, it's focusing on core breakfast equities. Recall that approximately 80% of total food sales at IHOP are breakfast items, and that's nearly 65% during the dinner day part.
Third is streamlining operations to increase speed of service and reduced wait times. And the fourth focus for IHOP is igniting social media and other mark-giving activations to be more culture-centric.
Our commitment to IHOP House Fave's value menu, which launched in Q424, is performing exactly as we expected, and it's helped attract more guests to our restaurants.
Despite headwinds in the family dining segment, the house phase menu is a key driver for traffic growth, building on last quarter's momentum, and as a result I have beat the family dining segment on traffic this quarter.
As part of IHOP's ongoing marketing efforts to create bigger, more exciting moments to connect with guests, on Saturday, March 1st, IHOP set a Guinness Book of World Records for most pancakes served at eight hours by serving over 25,000 pancakes.
This event brought strong-marketing awareness, social buzz, and garnered over three billion impressions driving the largest national pancake day sales lift that we've seen since COVID
Speaker Change: We're pleased to see the positive momentum after Lawrence's first quarter at the helm of IHOP and I'm looking forward to seeing continued progress at the brand.
Speaker Change: During the quarter, Fuzzy's implemented several initiatives to enhance its performance, including introducing its first system-wide happy hour to help boost diet and traffic and expand our bar business.
Speaker Change: To support off-premise sales, Fuzzy's revamped its online ordering website and partnered with third-party delivery services to increase market visibility and reach our guests where they are and how they want to order.
Speaker Change: And on the operations front, fuzz users in the process have installing wireless and mobile pay systems in all locations, making the payment process more convenient for guests. This update will be completed by June .
Speaker Change: Turning to our international business. We are encouraged by the development discussions we've had with both new and existing international franchisees.
Speaker Change: In March, we detailed our plans to expand the dual brand concept for the goal of opening 13 additional dual brands, while also completing 10 dual conversions this year, which will more than double our international dual brand restaurant count to 41.
Speaker Change: This includes our first-ever dual-brand restaurant in Costa Rica, which will open in Q3 and the opening of the first non-traditional restaurant in Mexico
Speaker Change: Latin America is a key international market for us, and we are excited to be working in partnership with our franchisees to strategically scale our presence in these countries and with new restaurant formats. And finally, I'll discuss our development plans in more detail.
Speaker Change: We're pleased with the performance of our dual brand concept, and we remain on target for our 14 domestic dual brand openings this year.
Speaker Change: Our first domestic dual brand in Sakeen, Texas continues to perform above expectations, doing approximately three times the sales compared to when it was a standalone iHOP.
Speaker Change: guest feedback is very positive, especially around the fully combined menu of brand favorites. In fact, our franchisee in San Antonio just signed up to open eight more dual brands in the market over the next two years.
Speaker Change: As a result of this strong showing, we continue to receive interest from both new and existing franchisees to build or convert to this new concept and based on our current pipeline, we plan to have more openings in 2026.
Speaker Change: So in fact, just last week, a current Applebee's and IHOP franchisee successfully acquired a portfolio of six additional Applebee's restaurants and another IHOP franchisee acquired a portfolio of five Applebee's, all in Wisconsin.
Speaker Change: This strategic transaction marks a significant expansion, allowing these two strong operators to further diversify their portfolio and strengthen their presence in casual dining.
Speaker Change: The acquired Applebee's restaurants will either be converted to dual brands or the complete Applebee's Reimage program.
Speaker Change: and these deals in particular are positive indicators that our development strategy is resonating with our franchisees for two reasons. First, it's a great example of franchisee cross-pollination between our brands, and second, it shows that our franchisees are engaged and interested in growing our brands.
Speaker Change: Particularly with our new restaurant formats that are demonstrating great results.
Speaker Change: So these recent deals also build on top of approximately 100 franchise and corporate restaurants that we're expecting to remodel by the end of the year as part of the Applebee's looking good program. It's an important first step in the Reimage Cycle and reinforces our commitment to refreshing the Applebee's restaurants.
Speaker Change: We're pleased to see the positive reaction from franchisees to our new development and restaurant experiences and that the indicator of the enduring strength and relevancy of our brands.
and now our company owned portfolio.
Speaker Change: As a reminder, in addition to the 10 IHOPs we took back this quarter, we also took back 47 Applebees in Q4, 24 This year we'll be a transition year with investments tied to operations, marketing, remodeling, and dual brand conversions of these restaurants, and we're working quickly to execute on each of these initiatives [inaudible]
Speaker Change: Since we acquired them last year, we've pulled a number of key levers around marketing and operations to improve performance.
Speaker Change: For example, we adjusted our menu pricing based on a data driven pricing optimization study and we boosted local marketing efforts.
Speaker Change: As of today, we've completed two remodels with 28 more planned for 2025.
Speaker Change: As a result of these initiatives, we've seen a steady improvement in comp sales and traffic since we took over and will continue to update investors on our progress as the year progresses.
Vance: And so now I will turn the call over to Vance.
partially offset by a $9.7 million decrease in franchise revenues.
Vance: Our total franchise revenues decrease 5.5% to $166.2 million, compared to $175.9 million for the same quarter of 2024. Excluding advertising revenues, franchise revenues decrease 4.9%.
Vance: Rental segment revenues for the first quarter of 2025 decrease compared to the same quarter of 2024, primarily due to least terminations and a decrease in percentage rent attributable to lower system sales.
Vance: GNA expenses were $51.3 million in Q1 of 2025 down from $52.2 million in the same period of last year due to a decrease in compensation related expenses offset by an increase in legal and professional service fees
Vance: Adjust the EBITDA for Q1 of 2025, decreased to $54.7 million from $60.8 million in Q1 of 2024.
Vance: Adjusted Diluted EPS for the first quarter of 2025 was a dollar and three cents compared to a dollar and thirty-three cents for the first quarter of 2024.
Vance: Now turning to the statement of cash flows. We had a juxtapree cash flow of $14.6 million for the first three months of 2025 compared to $29.7 million for the same period of last year driven by lower cash flows from operating activities.
Vance: Cash provided by operations at the end of the first quarter of 2025 was $16.1 million compared to cash provided from operations of $30.6 million for the same period of 2024.
Vance: The decrease was primarily due to an unfavorable decrease in working capital, resulting from a shift in timing of prepaid rent payments and a collection of an income tax settlement in the prior period.
Vance: as well as the decreasing growth segment profit offset by decreasing incentive compensation payments. CapEx through Q1 of 2025 was $3.3 million compared to $3.3 million for the same period of 2024.
Vance: We finished the first quarter with total unrestricted cash of $186.5 million, compared with unrestricted cash of $186.7 million at the end of the fourth quarter.
Vance: Regarding capital allocation, organic investments will continue to be a focus along with balance she management and returning capital to shareholders.
Vance: We modeling the Applebee system is a key initiative and as we mentioned last quarter we are providing an early adopter incentive for franchisees which will have an impact on our PNL.
Vance: On buybacks and dividends, we purchased $1.6 million in shares and paid $7.8 million in dividends in Q1 of 2025.
Vance: We continue to remain committed to returning capital to shareholders, while also ensuring we invest in our business and maintain a healthy balance sheet.
Vance: As we prepare for the upcoming anticipated repayment date of our remaining series 2019 bonds, we will look for the best window over the next several months to refinance those notes.
Next, let me discuss Applebee's performance.
Q1 think source restaurant sales were negative 2.2 percent
Vance: Average Weekly Sales in 2025 was $54.7,000, including approximately $12.8,000 from off-premise, or over 23% of total sales, of which 12.5% is from to go, and 10.9% is from delivery.
Vance: Average Weekly Sales were $36.5,000, including $7.7,000 from off premise, or over 21% of total sales, of which 8% is from to go, and 13% is from delivery. Turning to commodities.
Vance: Avovies Commodity Costs in Q1 Increase by 0.5%, then IHOP Commodity Costs increased by 8.4% versus the prior year.
Vance: Our Supply Chain co-op CSCS continues to expect pricing in 2025 at Apple Vs to be flat to slightly down.
Vance: At IHOP, we now expect commodity costs to increase by mid-single digits for the four-year versus our prior expectations of low to mid-single digits for the four-year, driven by the continued impact of elevated egg pricing as results of the avian influenza.
Vance: While our egg costs have increased as with the rest of the industry, CSCS continues to keep the system in supply of eggs at prices that are competitive to the overall marketplace.
Vance: We have strong and reliable suppliers supporting the needs of our system in a very challenging environment.
Vance: As John previously mentioned, the tariff situation remains very fluid. Therefore, while we continue to closely monitor how our food costs could be impacted, our forecast for commodity costs do not account for the impact of tariffs.
Vance: CSCS continues to work across both systems to identify the additional cost-saving opportunities and support restaurant profitability initiatives through both operational improvements and input costs.
Vance: Today, in 2025, we have implemented projects resulting in over $14 million of annual ice savings across both systems and would continue to partner with CSES to leverage our scale and make progress on our cross-functional restaurant profitability initiatives.
Vance: On a labor front, franchisees continue to report that staffing and labor costs remain relatively stable.
Vance: Before turning the call back over to John for Q&A, I'd like to add that we are maintaining our full year financial guidance at this time.
With that, I'll hand it back over to John .
John Peyton: Thank you, Vance. We continue to advance our strategic initiatives, including our value platforms, re-imaging our restaurants, our dual brand conversions, our restaurant take-backs, and strengthening our social media, and I am pleased that we are making great progress on all fronts.
Vance: So now let's turn the call back to the operator and we will open up for questions for you guys.
Vance: Thank you. At this time we will conduct the question and answer session. As a reminder, to ask a question you will need to press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again.
Vance: Due to time constraints, we asked that participants please limit themselves to one question and one follow-up question. One moment please while we compile the Q&A roster.
Eric Gonzalez: And our first question comes from the line of Eric Gonzalez with Keybank. Your line is now open.
Eric Gonzalez: Hi, good morning, thanks for the question. I appreciate the comment on Apple Bees in April .
Eric Gonzalez: I'm just wondering if you could maybe get a little more context. I know last year you brought up back to Dolorita in May, so I'm guessing your year will be your comparison gets a little bit more difficult, so
Eric Gonzalez: Can you just help us understand what's going on from a multi-year perspective as you exited in March and went into April and what we should expect for the remainder of the second quarter, and then have a quick follow-up.
Morning, Eric.
In general, you really saw this, the modus improvement [inaudible]
Relative to Q4, both of our Brands, but-
You know, as we got into a third, we did succeed [inaudible]
Some pressure by the industry.
Eric Gonzalez: but a much improved march, which is carried into April , as you pointed out, so...
Eric Gonzalez: despite the positive, you know, the tough compares last year, we saw momentum continuing and into
Eric Gonzalez: So this is part of the reason why we're optimistic that that the plan is working and
Eric Gonzalez: a big part of this momentum is driven by the big apple promotion and then also the primus momentum that we saw in Q1.
strategically for Applebeats we learned a lot last year about
Eric Gonzalez: what drives our customer in terms of value. We dipped our toe into a couple of different offerings and what we concluded, and is really influencing us this year, is that we really got back to the basics of what our guests tell us they love most about us.
Eric Gonzalez: We got back to what our menu analysis tells us sells best.
Eric Gonzalez: and what we've been long known for, and so by leaning into the Bourbon Street portion of our menu, that's not an accident. That is one of the most favorite segments of our menu. By introducing two new Bourbon Street dishes, we drove traffic and sales in a way that we have in several quarters.
Eric Gonzalez: and that's why I think we were able to hold our own at a time when, as we all know, our guest is watching his or her wallet more than ever.
Speaker Change: That's helpful. And just as it relates to the value incidence, if you mentioned 34% from 28%, is that a range that you're comfortable operating in, or would you expect that to go up or down as we move ahead here?
Speaker Change: We are comfortable with that. It's at the high end of what I would say is the historic range of the last couple of years that we've been in this more value oriented context.
Speaker Change: and we're comfortable with where it is because of the investment we're making in 2 for 25.
which by the way is a...
Speaker Change: a profitable, good margin area of our menu, particularly for value, and a place for us to introduce new entrees as well. I would suspect that if and when we return to an environment where guests feel less pressure on their wallet, that number would come down a bit.
One moment for our next question.
Speaker Change: Our next question comes from the line of Jake Bartlett with true securities. Your lines now open.
Hi guys, this is Larsen Onford Jake
Speaker Change: would imply an acceleration throughout the remainder of the year. Just wondering, is that solely due to ease in compares? Are you baking any changes from the industry into that? Like, what gives you the most confidence in terms of your own self-help drivers to accelerate?
Speaker Change: Thank you very much. Thank you. Thanks, Larson. Thanks, Larson. So Vance, why don't you talk about the trend and how we're looking at it? And then Lawrence, I'd love for you to talk about the IHOP strategy that gives us confidence for the back end of the year.
Speaker Change: Of course, so the trend we saw with Ahab is similar to Apple Bees.
Speaker Change: We saw at the momentum of traffic building towards later part of Q1.
and continuing to the early part of Q2.
and a big part of it is driven by…
Speaker Change: House phase, the success of it and how our guests are reacting to it. And, you know, we have more sort of more in the works for the later part of this year that Lawrence will talk about. That gives us comfort that we can maintain our life. I have calm sales guidance.
Speaker Change: Yeah, hey, Larsen, good morning. So as John mentioned really on the car call, there are 40 areas that the team is really rallying for the rear. The first is what we call, you know, the focus on our core breakfast equities.
Speaker Change: And, you know, as you mentioned, it's around 70% of our total food sales are accounted for in the breakfast of our breakfast offerings.
Speaker Change: So, you know, this is our core area. Our primary messaging is really driven towards these core breakfast equities, but that then follows into our second key priority, which is value.
Speaker Change: And so we've had now house phase since last October , so it's been almost seven months and we are amplifying our marketing, which we've been doing now for the house quarter and we're going to continue to support this value program. We're also testing the evolution of our value.
Speaker Change: And what this means for consumers, we mentioned this last quarter and we'll continue to test and learn and value is going to be an important play as we continue to the rest of the year.
And then the third is simplifying our operations of our operations.
Speaker Change: John mentioned areas of speed. We're looking at areas also focused on cleanliness, simplifying procedures, looking at ingredients, and this is a key focus of our operations team. Just because we want to enhance the not just the consumer experience and the guest experience in restaurants.
Speaker Change: but also we want to amplify and enhance and ease our team member experience as well.
Speaker Change: And the fourth key driver is this culture driving marketing. We all know it's critical more than ever to drive awareness, which we've done. We've amplified our media plans, but a big part of it is just being part of conversation.
Speaker Change: You know, driving top of mind awareness, we broke through with that Guinness World Record events, you know, with three billion impressions.
We'll continue to look at different activations.
Speaker Change: and really just figuring out how to stay engaged, whether it's social, whether it's PR and making sure that we're top of mind, especially you got a lot of cool stuff coming up and we're excited for the rest of the year.
Larson: I also added that Larson and for all the guys that
IHOP, Comtrafik, Beat Black Box for the Quarter
Larson: We are up 4.3% for the quarter and improved each and every month of the quarter. We haven't done that in a couple of years. And so that's significant and
Larson: tells us that the House Baves menu as well as the other plans that I hope leadership team is put in place is resonating, and also notably the absolute number of traffic.
Larson: Absolutely traffic was up in March and that continued into April as well. We haven't seen traffic growth on an absolute basis for IHOP in years also. So the plan is coming together and we're seeing it in the in these numbers. [inaudible]
One moment, please, for our next question.
Dennis Geiger: Our next question comes from the line of Dennis Geiger with UBS. Your line is now open.
Dennis Geiger: Great. Thanks, guys. First, I just wanted to ask a little bit more on value and the value proposition right now with both brands. Johnny, you give a lot of good color.
Dennis Geiger: there. I'm curious if anything the highlight is a relates to the kind of the customer value perception.
Dennis Geiger: how the customer's viewing the brand on value right now. And Laura, she kind of touched on it a bit for
Dennis Geiger: the brand as it relates to sort of an evolution of value that I have. But I'm curious as it relates to both brands, how you guys think about value positioning and kind of if there will be a notable evolution from here on value plans depending on the macro or if the brands are generally kind of where you want them to be on value right now.
Dennis Geiger: Thanks, Dennis. Lawrence, why don't you go first and I'll follow up.
Yeah, hey, Dennis Yes.
Peace, Joe.
Speaker Change: We're always listening to our consumers, you know, we have now seven months of health phase in markets and health phase right now is Monday to Friday.
Dennis Geiger: and one of the pieces of feedback and say, you know, could this be an everyday program and that is what we're testing currently in several markets today, but you know, when we look at value and right now we have four. Let's go.
Dennis Geiger: Incredible breakfast offerings at $6, $7 in some markets. We're, of course, looking at price points. We're looking at the food options. We're looking at, of course, available time, which is that every day test. [inaudible]
Dennis Geiger: And we're just going to continue to evaluate how value lives within our consumers, you know, minds but also the consumer experience. The other way we're thinking about value is also are there other channels.
Dennis Geiger: that we could drive value offerings, digital delivery, even our loyalty platform with our international bank of pancakes, what we call the stack market. These are all areas that we're finding not just increased value for loyal guests, but also just bringing you traffic in because we want to make sure that we have offerings from a value perspective on their minds on an everyday basis.
Speaker Change: Yeah, thanks Lawrence and everything Lawrence said plus Dennis I like the word in your question of evolution because that is the way we're thinking about it at both brands and particularly the Applebee's which which I'm now speaking for we are a Like any company we're a learning living and most importantly evolving organization we learned a lot last year about you
Speaker Change: How and when our value proposition resonates with guests. I think when we tried to be something we weren't we were less successful and when we returned you know this year to what we do best
We can see the performance. And so,
Speaker Change: We're going to continue to lean into 2 for 25 and you're going to see us evolve it throughout the year. We've got a new campaign that's coming behind it. We're using it as a mechanism to introduce new entrees as part of our 2 for 25 messaging. We've got a new campaign that's coming behind it. We've got a new campaign that's coming behind it. We've got a new campaign
Speaker Change: and the refining of our value proposition will really be through that platform.
Thank you.
Speaker Change: Great. Thanks, guys. And one more if I could encourage you to hear some of the initial results you're seeing from the dual branded concepts.
as well as what would tell the good French as the demand.
Speaker Change: I'm just curious bigger pictures as you kind of think about franchisey sentiment for both brands and kind of that new open demand sentiment
Speaker Change: If that's changed how you're thinking about the longer term, I know we don't want to get too far ahead of ourselves, but as it relates to the long-term development of demand and your confidence maybe in where long-term development for both brands can go.
Speaker Change: Yeah, I think you're asking if the mix of individual brand openings and dual brand changes or how we're thinking about that as a result of the dual brand
and we expect to continue to open.
Speaker Change: single app will be single iHOPs as well as duels and there's a lot of factors that that influence that Dennis
including things as...
Speaker Change: Very respectful of our existing franchisees, territories and making sure that the dual brands when we add an extra brand that it doesn't cringe on either restaurant that's in the in the territory. So for example, you know, I hop
Speaker Change: is continuing to open 40 restaurants a year. It's done that for the last couple of years. It'll do it again this year. We expect it to do so in the future. I think that's remarkable for a brand of it.
Speaker Change: Size, as well as its tenure. And it's obviously the commitment shown by our IHOP franchisees to that concept.
Speaker Change: And when it comes to to Applebees, you know, we are seeing our franchisees begin to build some new brand some new Applebees again and some of our largest franchisees are doing so [inaudible]
Speaker Change: We're going to build our own Apple Bees in the back cap of this year to demonstrate that cost model and so we can have that as a catalyst going forward. So I expect going forward that you'll see a healthy mix of dual brands as well as continuing single brands.
Speaker Change: Internationally, you're more likely to see dual brands as the primary vehicle.
One moment for our next question.
Speaker Change: Our next question comes from the line of Brian Vaccaro with Raymond James. Your line is now open.
Brian Vaccaro: Hi, thanks. Good morning. Just back to the Applebee's remodel package to look and good. You mentioned, could you remind us of the different levels of investment that are within the different tiers of the remodel? And I think you mentioned some franchisee incentives. Could you elaborate on that and how or quantify the impact you expect on your P&L in 2025?
Brian Vaccaro: Sure, Brian , one question, Vance, I think they don't recall, have we disclosed the general amount of the renovation?
Speaker Change: In broad terms, not specifically, obviously, Brian , it's a very location by location and then region by region, but broadly speaking sort of in the $200,000 to $300,000 model is what we're expecting for the package to be for the franchise.
Peace.
Speaker Change: and the lift required to justify the ROI there, which is exactly what it's intended to do.
Speaker Change: You know, for competitive reasons we haven't really discussed what we're offering to our franchisees It's a portion of that cost
that we will help.
Speaker Change: the franchisees with and support them, you know, as part of this early adopters program. But the way it's going to impact our P&L, you know, to your next question, which is, if there's no extension of the franchise agreement, it would come in as a GNA P&L impact.
Speaker Change: If there is an extension of the franchise agreement, then it gets to be amortized over the term, the new term of the franchise agreement.
Eric Gonzalez: Okay, that's helpful. Thank you. And then just a quick follow-up if I could. Could you level set us on what the year-on-year average check growth was for each brand in the first quarter? And I know pricing decisions are made by the franchisees, but any reasonable expectations on average check or pricing for each brand sort of looking through the rest through 2025? Okay, bye.
Speaker Change: The advance will take care of that. Sure. So, you know, we, we're seeing that the many of the the many pricing increases.
Speaker Change: definitely become more normalized by both our brand and the low to single digit range going forward. And we expect that to continue as commodity cost, not anything else that has come under control. As far as, you know, Q1 specific
Check, you know, Applebee's check, increase, slightly versus...
Speaker Change: Q4 in our versus Q1 last year because of the many launch and the big ED campaign that we talked about earlier. And I have to check actually drop a little bit versus Q4 and Q1 primarily because of the Phoenix.
Speaker Change: Drop Due to House Faith, but as we said, we saw a meaningful improvement in traffic for IHOP, so that's what makes up the check and traffic movement for both of our brands.
One moment for our next question.
Speaker Change: Our next question comes from the line of Brian Mullan with Piper Sandler. Your line is now open.
Brian Mullen: Thank you. Just a question on I have. I wanted to follow up on the ease of operations priority for this year. Just curious if there's an example or two. Lawrence and team have come across that could potentially be impactful. Thank you.
Brian Mullen: over the near term, you know, whether it's speed of service or franchisey margins. And then if you could maybe just talk about the early receptivity from the franchise, you community, relative ease or relative difficulty of getting them behind some of the initiatives from the new leadership. [inaudible]
Lawrence, please
Brian Mullen: Absolutely, hey Brian , how's it going? Yeah, so from, you know, simplification operation, let me give you, you know, one or two examples.
Speaker Change: So first, one of the things we know is very quickly, we have tablets that the servers utilize and we've made modifications, optimized anything from text size.
Speaker Change: all the way down to the flow of the tablets themselves to, you know, based on feedback from our team members. It's just helped them improve just ordering speed.
Speaker Change: But that also flows directly into the POS, which then flows into the restaurants of KDS. And so that alone, just levering tablets has improved speed by more speed of service and table turns by two minutes.
Speaker Change: So we are, of course, you know, looking to the further we want to figure out how we can even improve that [inaudible]
Speaker Change: But technology, of course, is an ease enabler and we're looking at our road map and evaluating, you know, we're going next The other thing is our culinary and our operations teams are in restaurants, actually on a weekly basis right now and we are evaluating [inaudible]
Speaker Change: From a step-by-step process standpoint, how do we improve the operational flow from anything from prep all the way down to cook times?
Speaker Change: and so, for example, if an item that is a little more complex has 17 steps...
Speaker Change: associated with it. How can we reduce that anywhere from 10 to 20% so that we can improve overall speed and just ease, which also ties to training. One of the best parts I think over the past few months.
Speaker Change: that we've done is we've looked at the training protocol and it fits.
Speaker Change: Paper-based or, you know, just standard protocol. What we thought is okay, well consumer behavior, you know, team member behavior has changed.
Speaker Change: How can we leverage technology, leveraging short form videos to actually make the training experience easier and also you can memorize a lot more visually than you can by reading a piece of paper so we're testing that format right now and it's getting a lot of positive feedback.
Speaker Change: And your question about franchisee engagement, receptivity has been fantastic. We've actually, as I mentioned, are going out for the restaurants, but the best thing is that early on in the process over the past few months.
is re-engaged to what we call a task force [inaudible]
Speaker Change: from our franchisees directly to get their feedback, because even though we may be in the restaurants, it's their operators, it's their GMs, it's themselves.
Speaker Change: Global all this experience in terms of reality and applications behind it so their feedback, their participation is even more critical than ever as we look to simplify operational protocol and you know part of what I'm doing so [inaudible]
One moment for our next question.
Speaker Change: Our next question comes from the line of Todd Brooks with the benchmark company. Your line is now open.
Todd Brooks: Hey, thanks for taking my question. What I asked on the Applepiece side, John , you talked about running
Todd Brooks: date night through loyalty only driving a nice boost in membership, who we talk about or through club
Todd Brooks: We talk about the path forward for club Applebee is what you see from a direction standpoint for where the brands looking to take that edge. You look at the success that I hops at with loyalty on their side.
Todd Brooks: Absolutely, thanks, Todd. So, Club Applebee has been in place for several years, and I would say was somewhat...
Todd Brooks: Benign, and our attention to it, it existed, but not as a result of a lot of
Todd Brooks: Innovation or energy. And so it's one of our focuses for this year is to really mean into that as one of our primary ways of talking to our best customers and doing one-to-one marketing. And so you'll see much more than in the past.
Todd Brooks: Strategy around inside access. So, you know, access first, first, first look at new items, promotions only available to people who are members of club Applebees.
Todd Brooks: Partnerships that we're excited to start to talk about in the next couple of weeks.
Todd Brooks: with third parties that will also be linked directly to club Applebees.
Todd Brooks: So it's all around creating them, enabling them to be much more of insiders and to grow our share of those guests that
Todd Brooks: visit us three or more times a year. Unlike IHOP, it's not going to have a classic currency and be points based. We've decided to...
Todd Brooks: While IHOP pursues that route, we're going to go with the insider access and special privilege and we'll learn the best of both from the orientation of the two programs.
Todd Brooks: You can follow up on that round if I can. You talked about
John Peyton: The program being several years old but really not having done a lot with it yet. What's the quality of the data in the program and you talked about communicating more frequently through it and trying to get more personalized in your communication? Where do you feel like club app uses for me?
John Peyton: Frequency Driver for specific consumers and how much more work do you have to do on that front?
John Peyton: So, one of the things that we did recently is we organized a bit internally and we put club app will be CRM and our digital and off-premise business all under one leader and we did that so that we can do exactly what you're suggesting.
John Peyton: like that. We also know if they're purchasing on our channels, on our proprietary channels, our .com, our app. We know what their purchase history is so that we can offer them.
John Peyton: entice them with things that are relevant to their past purchases and what other people like them look like. And so the data is pretty good and getting better, particularly now that we've put all of that under one leader within Applepiece.
Speaker Change: Thank you. Once again, if you have a question at this time, please press star 1-1 on your telephone.
Speaker Change: I'm showing no further questions. I would now like to turn the call back over to John Peyton, Dine Brands CEO for closing remarks.
John Peyton: Alright, thanks guys for your questions. Thanks, Andrew, for taking such good care of us today. We appreciate it. You know, as a quick summary of what we love what we communicated for the last 50 minutes is we're certainly encouraged by the
John Peyton: Sequential Progress we saw during the quarter and the progress continued into April . We certainly think it's due to our deliberate plans and lessons we learned last year and each of the brands, the big brands focus.
on what we do best.
John Peyton: What our core is in communicating that core value back to our franchise, our guests in compelling ways. For the rest of the year, our focus is on continuing to elevate the guest experience. We're going to continue to enhance our menus and our value programs.
John Peyton: Focus on operations, particularly at IHOP. And both brands are working really hard to make sure that we communicate our value and our guest experience. It's so special.
John Peyton: to our guests through all channels and particularly social media that we've challenged ourselves to really master over the next year. So thanks again for your questions everyone, have a great day.
John Peyton: Thank you for your participation in today's conference. This does conclude the program and you may now disconnect.
Speaker Change: This video is a derivative work of the author's own volition. Any resemblance to persons, living or dead, is coincidental and unintentional.
Speaker Change: How long it's taking me to love you to love you
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