Release Date: November 06, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Dine Brands Global Inc (DIN, Financial) reported an increase in adjusted EBITDA by $1.3 million to $61.9 million in Q3 compared to Q3 2023.
- The company has a strong pipeline of promotions, marketing campaigns, and menu innovations planned for the upcoming quarters.
- IHOP's new House Faves menu, offering value meals at attractive price points, has shown early positive results.
- The dual-brand concept is performing well internationally, achieving approximately 1.5 to 2 times the revenue of a single-branded restaurant.
- Dine Brands Global Inc (DIN) continues to generate strong free cash flow and EBITDA, supported by its asset-light business model.
Negative Points
- Total consolidated revenues decreased by $7.6 million to $195 million in Q3 2024 compared to the same period last year.
- Applebee's reported a negative 5.9% in comp sales, and IHOP reported a negative 2.1% in comp sales for the quarter.
- The operating environment remains highly competitive and promotional, impacting the company's performance.
- The consumer demographic is under financial pressure, leading to reduced discretionary spending and more dining at home.
- Franchise revenues decreased by 3.6% to $166.4 million compared to the same quarter of 2023.
Q & A Highlights
Q: Do you think you need to make operational adjustments similar to your largest peer, and is being a franchise business an impediment to this?
A: John Peyton, CEO, explained that while Applebee's overperformed in previous years, traffic is an issue in 2024. The focus is on consistency in operations, service, and quality. Franchisees are willing to invest, and the asset-light model is seen as beneficial, allowing for cash generation and support for franchisees.
Q: Are customers coming back after promotions like the NFL partnership or $0.50 boneless wings?
A: John Peyton noted that guest satisfaction scores are up, indicating that operations and service are not the issue. The challenge lies in ensuring marketing strategies and value propositions are compelling enough to drive repeat traffic in a promotion-driven environment.
Q: What are the biggest roadblocks in value messaging, and how can you tweak it in the near term?
A: John Peyton emphasized the focus on consistency and simplicity. Jay Johns, President of IHOP, mentioned the introduction of the House Faves program to provide stable, everyday value. Tony Moralejo, President of Applebee's, discussed building a new integrated value platform to enhance consistency and drive growth.
Q: Can you provide an update on the off-premise opportunity and its timeline?
A: John Peyton stated that Applebee's off-premise business improved due to offering dine-in promotions to off-premise guests, adjusting marketing strategies, and improving operational efficiencies. Jay Johns highlighted IHOP's focus on improving execution and introducing a call center solution to enhance off-premise sales.
Q: Can you discuss the trajectory of same-store sales throughout the quarter and expectations for Q4?
A: Vance Chang, CFO, noted consistent pressure across brands in Q3, with some improvements seen in mid-Q4. The company has baked these trends into their guidance, reaffirming the range provided last quarter.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
