Dine Brands (DIN) Q3 2026 Earnings Call Transcript

DATE

Wed, Nov. 4, 2026

CALL PARTICIPANTS

• Senior Vice President, Finance and Investor Relations - Matthew Lee
• Chief Executive Officer and President - John W. Peyton
• Chief Financial Officer - Vance Yuwen Chang
• Chief Commercial Officer and President of IHOP - Lawrence Y. Kim

TAKEAWAYS

• Total Revenues -- $248.9 million, representing a 15.1% increase driven by a $36.9 million rise in company-owned restaurant revenue.
• Adjusted EBITDA -- $49 million, remaining flat year over year as the company invested in deliberate brand initiatives.
• Adjusted Diluted EPS -- $0.82, an increase from $0.73 in the third quarter of 2025.
• Net Income Available to Common Stockholders -- $4.5 million, or $0.37 per diluted share, compared to $7.0 million in the prior year period.
• Applebee's Comparable Sales -- 0.9% growth in domestic same-restaurant sales, driven by strong traffic in July following the return of the Dollarita and new menu launches.
• IHOP Comparable Sales -- 0.8% growth in domestic same-restaurant sales, marking four consecutive quarters of sales outperformance versus industry benchmarks.
• Applebee's Off-Premise Sales -- 23% of the sales mix, with comparable sales in this channel rising 1.8% supported by delivery growth.
• IHOP Off-Premise Sales -- 21% of the sales mix, supported by 5.6% growth in comparable sales for the quarter.
• IHOP First-Party Online Sales -- 10% growth in to-go channels, reflecting increased digital engagement.
• Catering Sales -- 44% growth at IHOP, following investments in catering-specific technology and packaging.
• Company-Owned Portfolio -- 136 restaurants as of Q3, reflecting the opportunistic acquisition of 60 franchise locations year to date.
• G&A Expenses -- $51.6 million, an increase from $50.2 million due to higher professional fees and employee-related costs.
• Capital Expenditures -- $31 million for the first nine months of 2026, primarily focused on restaurant remodels and dual-brand conversions.
• Adjusted Free Cash Flow -- $12.8 million for the first nine months of 2026, down from $68.2 million due to higher capital expenditures and the timing of marketing spend.
• Unrestricted Cash -- $91.1 million at the end of the third quarter, compared to $97.5 million at the end of the second quarter.
• Share Repurchases -- $7 million of common stock repurchased in the third quarter, totaling $35.9 million year to date.
• Dividends -- $2 million paid to shareholders during the third quarter.
• Dual-Brand Expansion -- 60 domestic locations open as of the call date, with 14 more under construction and a target of 80 by year-end.
• Average Weekly Unit Sales -- $53,700 for Applebee's and $38,500 for IHOP franchise locations.
• Commodity Costs -- 5.4% increase for Applebee's and 1.3% for IHOP, driven by higher beef prices and the lapping of favorable contracts.
• Menu Pricing -- 3% to 4% increase for both brands, helping to offset slightly negative traffic and product mix.
• Applebee's Remodels -- 107 units completed year to date, which typically provide a mid-single-digit lift to sales following the refresh.

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RISKS

• Peyton stated, "Applebee's started the quarter somewhat soft," indicating mixed performance trends entering the final quarter of the fiscal year.
• Peyton warned that the company is "tracking toward the lower end of our full year guidance" due to varying consumer responses to recent promotions.
• Chang noted that "higher beef prices" are the primary driver for increased commodity costs, which rose 5.4% for Applebee's during the quarter.

SUMMARY

Dine Brands Global, Inc. (NYSE:DIN) reported third-quarter results driven by the strategic expansion of its company-owned restaurant portfolio and the continued rollout of its dual-brand concept. Management indicated that performance remained consistent with consumer behavior patterns observed over the past three years, characterized by a persistent focus on value propositions and stable average check levels. The company is prioritizing investments in restaurant remodels and technological enhancements, particularly in the catering and off-premise channels, while maintaining its asset-light franchising model. During the quarter, the board of directors rejected an unsolicited acquisition proposal and implemented a stockholder rights plan to protect shareholder interests.

• Peyton stated that the board "determined that the proposal was inadequate and substantially undervalued the company" regarding the recent unsolicited acquisition offer.
• The dual-brand platform is generating average sales volumes between 1.5 times to 2 times those of traditional standalone restaurants.
• Management reported that the company has completed 107 Applebee's remodels year to date, which typically provide a mid-single-digit lift to sales.
• Catering has become a significant growth lever for IHOP, supported by the implementation of new technology and packaging.
• The company intends to eventually refranchise its acquired restaurants, with Chang noting that "older portfolios are performing according to plan" and seeing year-over-year progress.
• Applebee's social media interactions more than tripled year over year, ranking among the top-performing restaurant brands for digital engagement.

INDUSTRY GLOSSARY

• Black Box: An industry benchmark that provides traffic and sales data for the restaurant sector.
• Dual-Brand: A restaurant model combining two brands, such as Applebee's and IHOP, in a single location to maximize unit volume.
• Dollarita: A recurring promotional offer from Applebee's featuring a margarita for $1.
• 2 for $25: An Applebee's value menu platform offering two entrées and one appetizer for $25.
• Everyday Value Menu: A foundational pricing strategy at IHOP designed to provide accessible options for price-sensitive guests.
• CSCS: Centralized Supply Chain Services, the purchasing cooperative for the Dine Brands restaurant systems.
• Lookin' Good Remodel: Applebee's restaurant refresh program focused on updating interior and exterior aesthetics.

Full Conference Call Transcript

Operator: Good day, and thank you for standing by. Welcome to the Dine Brands Third Quarter 26 Earnings Conference Call. At this time, participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press *11 on your telephone. If your question has been answered and you would like to remove yourself from the queue, simply press *11 again. As a reminder, today's program is being recorded. And now I would like to introduce your host for today's program, Matthew Lee, senior vice president, finance and investor relations. Please go ahead, sir.

Matthew Lee: Good morning, and welcome to Dine Brands Global's Third Quarter Fiscal 26 Conference Call. This morning's call will include prepared remarks from John W. Peyton, CEO and President of Applebee's and Vance Yuwen Chang, CFO. Following those prepared remarks, Lawrence Y. Kim, Chief Commercial Officer and President of IHOP, will also be available along with John and Vance to address questions during the Q&A portion of the call. 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 the 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, we assume no obligation to update or supplement these statements. We will refer to certain non GAAP financial measures which are described in our press release, and is available on Dine Brands' Investor Relations website. With that, it is my pleasure to turn the call over to Dine Brands' CEO, John W. Peyton.

John W. Peyton: Good morning, everyone, and thanks for joining us. Today, I will begin with an overview of Dine's Q3 performance. And share updates on the brand initiatives across Applebee's, Fuzzy's, and IHOP that are driving our results. After that, I will turn it over to Vance who will walk through our financial results in more detail. Dine delivered Q3 results in line with our expectations, while continuing to make deliberate investments in the brands and the business. For the quarter, Applebee's reported a 0.9% increase domestic comp sales driven by a strong July during which the brand outperformed Black Box on both traffic and sales.

IHOP posted domestic comp sales of positive 0.8% and delivered its 7th consecutive quarter of traffic outperformance and the 4th consecutive quarter of sales outperformance versus Black Box. And our adjusted EBITDA was $49 million compared to $49 million in the same quarter last year. With those results as the backdrop, let me share some insights on what is driving them, starting first with the consumer. Over the last 3 years, consumer behavior has been remarkably consistent. In the context of persistent inflation on food away from home, and higher gas prices, consumer sentiment has remained low, and guests are driven by a strong value proposition where they know the full price of the meal.

Notably, though, consumers are less likely to cut back on occasional dining and that is a benefit to us. We expect this dynamic to continue into 2027. Looking at guest behavior at our brands, specifically, average check levels have held steady reflecting mild check management. And value incidents also remained relatively consistent at 25% of transactions for Applebee's and 22% of transactions at IHOP. Which is roughly in the middle to high end of our historical range. This is another indication that value is a big decision driver. Overall, casual dining has shown resilience this year and, ultimately, our performance comes down to our consistency in messaging and conviction in our strategy.

So if you recall, in Q3 of last year, we made a deliberate set of changes. First, we introduced everyday value platforms at IHOP, and amplified 2 for $25 at Applebee's. We dialed up menu innovation at both brands. We sharpened our operational focus within the restaurants, and we rolled out a new marketing strategy to better integrate our brands into the cultural conversation. 1 of our greatest competitive advantages is that we own 2 of the most iconic brands. We have managed through different economic cycles, and we have demonstrated our ability evolve with our guest needs without sacrificing the core of what makes each brand so special.

And as we look ahead, we are prioritizing investments that improve both comp sales and the overall footprint of our brands, which includes refreshing restaurant appearance, through our remodel programs, and expanding our dual brand concept, both to drive more value out of each location and accelerating that work through our company owned portfolio as well. Of course, these investments require upfront capital, yet they yield significant long term upside. Over the past 2 years, we have been able to aggressively lean into this strategy for 2 reasons. First, our asset light model generates strong, consistent free cash flow, which gives us the flexibility to invest in our brands without compromising our financial discipline.

And second, we continue to see real commitment from our franchisees, who are investing in our brands and the strategy alongside of us. With the progress we are making on these strategic initiatives, we are well positioned to deliver long term sustainable value for our franchisees and shareholders. And so with that, I will share some updates across our portfolio beginning with Applebee's. Comp sales at Applebee's returned to growth in Q3, up 0.9% with traffic also improving versus the prior quarter. The quarter started strong with the return of our iconic Dollarita and the introduction of the Bacon Cheeseburger Wonton Taco on the 2 for $25 platform.

Leveraging the strength of our value platform and our bar and beverage program, these promotions delivered positive sales and traffic, during the period and outperformed Black Box. In fact, the Bacon Cheeseburger Wonton Taco, our strongest new appetizer launch since the pandemic, outperforming our previous best loaded potato WAVES that we launched just last quarter. Now I want to take a moment to put a finer point on this. Since reinvigorating our menu innovation engine about a year ago, each new menu item has built on the popularity of the last. And looking ahead, we expect to have more new food items launching over the next 12 months than we have had in the last few years.

Regarding off premise, we extended our streak of positive comp sales to a 7th consecutive quarter with comp sales growing 1.8%, supported by delivery growth. This is particularly notable given that only 1 of our 3 campaigns this quarter was available off premise, which tells us that demand is broadening beyond specific promotions. Applebee's also saw strengthening social media performance this quarter, with third party data from UBS showing that interactions more than tripled year over year, ranking among the top performing restaurant brands. On remodels, we have completed 107 Applebee's Lookin' Good remodels year to date, already exceeding our target of 100 for the year.

As part of a broader refresh cycle that will bring us to roughly half the portfolio remodeled by the end of 27. On average, these restaurants continue to see at least a mid single digit lift to sales driven by increased traffic following a reimage. From an operation standpoint, our focus on driving excellence through simplicity, and accountability continue to produce measurable results. Order accuracy is improved. Manager visibility in the dining room increased. Google ratings are up. All contributing to improving guest satisfaction. And last, I want to mention that we recently hosted our Applebee's global franchisee conference bringing together franchisees from across the system to align on priorities for the year ahead.

Our conversations reinforced our strong sense of partnership and our franchisees were engaged on the initiatives driving the brand forward, from menu innovation to remodels. And now moving on to IHOP. In Q3, comp sales at IHOP grew 0.8%. The brand also outperformed Black Box on both sales and traffic for the 4th consecutive quarter. With traffic app performance now extending to 7 consecutive quarters. Clearly, this is not a 1-quarter story, and it coincides with the launch of the everyday value menu last year. it is a steady performance, and that consistency is exactly the validation we are looking for in our strategy.

The growth in comp sales was supported by a healthy growth in check, driven by strong in store activations including server incentives and in restaurant point of purchase materials that drew attention to higher priced items. The everyday value menu is a foundational element of IHOP's barbell strategy providing accessible value while creating space for premium innovation led offerings as well. This quarter, the premium end was fueled by products like the Dubai Chocolate Pancakes, and our signature breakfast. Together, these offerings leverage cultural trends and menu innovation to drive incremental engagement and trade-up opportunities. Off premise recorded 5.6% comp growth, with 10% growth at our first party online to go channels.

We are also seeing early strength in catering, a newer part of our business, where sales grew 44% compared to a year ago. That growth reflects new technology and packaging built specifically to handle larger catering orders, and we believe there is still meaningful upside in this channel. Our social and earned media efforts also showed meaningful growth, with third party data from ListenFirst indicating engagement across all channels climbed 54% quarter over quarter. And finally, operationally, we continue to make good progress. Table turn times improved, and reached a new all time low post COVID, and average Google ratings also increased year over year reflecting improved and consistent in restaurant experience. Turning to fuzzies.

Traffic improved sequentially every quarter this year, driven by technology enhancements, menu simplification, a better in restaurant experience. Off premise remains a meaningful and consistent contributor to the brand's quarter over quarter progress. We are encouraged by Fuzzy's performance and are focused on sustaining this momentum through the end of the year. On development, our Dual brand platform is 1 of our strongest long term growth levers. Dual brand sales continue to perform well, averaging roughly 1.5 to 2x the sales of the original stand alone restaurant. As of today, we have 60 domestic Dual brand restaurants open, including 9 company-owned with 14 more under construction. We remain on track to reach 80 domestic Dual brands by year end.

As the platform has scaled, we have also refined how we operate. We have invested in additional training to help IHOP franchisees run the bar program more effectively, we have adjusted Applebee's kitchen operations and equipment to handle the volume of IHOP's scratch made breakfast daypart. With each new opening, we learn more, And together with our franchisees, we are getting better at running these restaurants. And that matters just as much to long term returns as the pace of our openings. Before turning the call over to Vance, I will note that Q4 trends have been mixed across the brand so far.

Applebee started the quarter somewhat soft, while IHOP is continuing its momentum, supported by the return of stuffed French toast in mid September. We are tracking toward the lower end of our full year guidance. All in all, we are pleased with the progress we are seeing across the business this quarter and we remain confident in the strategy we have laid out. Building long term value through consistent execution today and disciplined investment in our future growth. And with that, I will turn it over to Vance.

Vance Yuwen Chang: Thanks, John. You know, on the top line, total revenues increased 15.1% to $248.9 million in Q3, versus $216.2 million in the prior year. And it is driven by $36.9 million increase in company owned restaurant revenues from restaurants acquired or open since the third quarter of 25. So if we take out advertising revenues, franchise revenues in Q3 decreased by 1.5%, due to a reduction in the number of franchise restaurants, lower franchise termination fees due to fewer closures, and lower proprietary product sales due to the removal of gluten friendly product offerings.

Rental segment revenues for the third quarter of 26 decreased to $25.5 million versus $27.3 million in the prior year period primarily driven by restaurant closures as well as our decision to work with our franchisees to exit sub leases as they expire in favor of stimulating future. G&A expenses were $51.6 million in Q3 of 26, up from $50.2 million in the same period of last year, from higher professional services fees and higher employee related costs associated with our investment in company owned and Dual brand restaurant. Adjusted EBITDA for Q3 of 26 was flat at $49 million from $49 million in Q3 of 25.

Adjusted diluted EPS for the third quarter of 26 was $0.82, compared to adjusted diluted EPS of $0.73 for the third quarter of 25. Now turning to the statement of cash flows. We had adjusted free cash flow of $12.8 million for the first 9 months of 2026, compared to $68.2 million for the same period of last year. This decrease was primarily driven by a decrease in cash provided by operating activities which includes the impact of remodel and development incentives. And the increase in CapEx related to company owned restaurant remodels and Dual brand conversions. CapEx through Q3 of 26 was $31 million compared to $21.3 million for the same period of 2025.

We finished the third quarter with total unrestricted cash of $91.1 million, compared to unrestricted cash of $97.5 million at the end of the second quarter. On buybacks and dividends, we returned $9 million of capital to shareholders in Q3, including $7 million of shares repurchases and $2 million of dividends. Year to date, we have repurchased $35.9 million of shares which was approximately 8% of our shares outstanding at the beginning of the year. We continue to believe our shares are undervalued and remain committed to share repurchases. Our $500 million series 23 notes become callable at par in December. We will continue to monitor the market for opportunities to refinance these notes when beneficial to us.

Next, let me discuss Applebee's performance. Q3 domestic same restaurant sales increased 0.9% year over year. Domestic average weekly franchise sales per restaurant were $53.7 thousand including approximately $12.4 thousand from off premise, or 23% of total sales, of which 11.2% is from to go and 11.9% is from delivery. Our premise saw a positive 1.8% lift in comp sales in 2026 compared to the same period of last year. IHOP's Q3 domestic same restaurant sales increased 0.8%. Domestic average weekly franchise sales per restaurant were $38.5 thousand including $8.1 thousand from off premise or 21% of total sales. Of which 7.6% is from to go and 13.4% is from delivery.

Our premise saw a positive 5.6% lift in comp sales in 2026, compared to the same period of last year. Now turning to commodities. Applebee's commodity cost in Q3 increased by 5.4% and IHOP commodity costs increased by 1.3% versus the same period last year. Our coop supply chain partner, CSCS, continues to expect commodity costs in 2026 at mid single digits for Applebee's and low single digits for IHOP. The primary driver for both brands' commodity costs is higher beef prices, including the lapping of favorable beef contracts at Applebee's last year.

To date, in 2026, we implemented projects resulting in over $22 million of annualized savings across both systems and we continue to partner with CSCS to leverage our scale. Lastly, our company owned portfolio remains a focus in strengthening this health of the brands and supporting long term value creation for the business. As a reminder, we opportunistically took over restaurants with good opportunity for turnaround and value creation as we accelerate our Dual brand and remodeling initiatives. As of Q3, we own 136 restaurants, including 7 dual branded restaurants, represents approximately 4% of our system.

We believe we have an appropriate balance between the number of company owned restaurants versus franchise restaurants, so there is no reason to add to our company owned portfolio at this point. Our goal is to ultimately refranchise the restaurants as operations improve and we have already started to engage with the various franchisees who are interested in acquiring some of our restaurants. it is important to remember that because we have taken back these portfolios over time, each restaurant and portfolio is at a different stage in its multiyear investment plan. Which is why the portfolios are currently performing differently.

While we have seen an impact from increased loss operating days due to more Dual brand conversions and remodels, we are encouraged by the portfolios that have had the longest time to benefit from our ownership. Based on what we have seen in those cohorts, we expect our more recent portfolios to follow a similar path of improvement as they move through the same investment life cycle. Before turning the call back over to John for Q&A, I would like to add that we are maintaining the low end of our full year financial guidance at this time. With that, I will hand it back over to John.

John W. Peyton: Thanks, Vance. And to wrap up before Q&A, as you may have seen earlier this week, we filed an 8-K confirming receipt of an unsolicited offer for the company. The board, with the assistance of its outside advisers, carefully evaluated the offer and determined that the proposal was inadequate and substantially undervalued the company. And the board has since rejected that offer. Last week, the company also put in place a stockholder rights plan that protects all our all our stockholders from opportunistic share accumulations. Any further disclosures regarding this matter will be made by the Board, who will act in the best interest of all of our stockholders.

As such, we will not be answering any questions on this topic on today's earnings call. And as a management team, we are focused on delivering against our strategic priorities for the benefit of all of Dine Brands' stockholders and operating business as usual. And so now I will turn the call over to the operator to open up for Q&A.

Operator: Certainly. And ladies and gentlemen, we ask that you please limit yourself to 1 question and 1 follow-up. Our first question for today comes from the line of Nick Setyan from Mizuho. Your question, please.

Nerses Setyan: Hey, thank you. Just on the dual brands that you do own, I think you did the 7 that is under your control. Would you mind telling us, like, what the economics are in terms of, you know, sales, 4 wall margin? And know, the cost now, in terms of, you know, the conversion.

John W. Peyton: Good morning. Nick Vance can address that question.

Vance Yuwen Chang: Hey, Nick. You know, with our own dual brands, they are all fairly new, but we are seeing slightly higher top line lift than the franchise units just because the starting point is a little bit lower for these restaurants. And, also, the cost to convert for these restaurants are slightly higher. We are probably seeing somewhere in the $1 million to $1.5 million range. Including some of the deferred maintenance costs that we have to put up to convert these restaurants. But all in all, pleased with the progress, and we are going to continue to make to refine and improve the operations.

Nerses Setyan: Got it. And then just in terms of the quarterly cadence of the Applebee's comp, I think you said it kind of started off strong and then maybe slowed down a little bit. October has started off slow. You know, are just. So we are all on the same page. Are you implying negative same store sales growth at Applebee's in Q4?

Vance Yuwen Chang: No. Nick, actually. Nick, actually, this is Vance again. What we are seeing is a similar sort of sales volume in Q4 versus Q3. And so that is how we are getting to the lower end of our full year financial guidance for both of our brands.

Nerses Setyan: Got it. Thank you for that. No problem.

Operator: Thank you. And our next question comes from the line of Dennis Geiger from UBS. Your question please.

Dennis Geiger: Great. Thanks, guys. Encouraging to see some of that progress on the Applebee's traffic and sales driver plans. Wondering, following up on Nick's question, just on that quarter to date period, if that is something that is a bit more transitory in your view on the Applebee side. And anything that is kind of driven some of that incremental pressure? I know you guys would not be the only ones to see it. But anything more there? And you know, sort of how you are thinking about the underlying trend from here if that is a bit more transitory? that is point 1.

John W. Peyton: Yeah. Good morning, Dennis. it is John. I think for the quarter, we can point to a couple of specific issues or items that drive it. In July, as we mentioned, we overperformed black box, you know, riding Dollarita and the Cheeseburger Taco. We were dark for 2 weeks on television in August, which is often correlated to a slowdown in traffic for us. And then in September, you know, the market response to our promotion then was not as strong as it was for the--for the taco cheeseburger. That said, as we moved into the fourth quarter, we saw September similar to October and since then getting stronger.

Dennis Geiger: Got it. Very helpful. And then just another 1 on the dual branded. Appreciate the color and encouraging to see those early results. Can you talk a bit more about the demand beyond the 80 that you are on track for by the end of the year? Anything more on sort of what the demand pipeline might look like? Maybe it is little early to share that, but as we look beyond 2026 on that front as far as the franchisees go, Thanks, guys.

John W. Peyton: Yep. it is still John. So, you know, like we said, we have got 60 open, and we will have 80 open or under construction by the end of the year. We have not given guidance yet to your point, in which we will do that next year. However, I can tell you that as we look to the pipeline for 2027, it is strong and the strongest it is been, you know, in the 6 years that I have been here. Don.

Dennis Geiger: I appreciate it. Thank you.

Operator: And as a reminder, ladies and gentlemen, if you do have a question at this time, please Our next question comes from the line of Todd Brooks from Benchmark StoneX. Your question please.

Todd Brooks: Hey. Thanks for taking my questions, guys. 1, Vance, was just wondering if you. Kind of a bookkeeping here, but what the average check ran at both brands in the Q3?

Vance Yuwen Chang: For Applebee's, $39. For IHOP, $36.

Todd Brooks: Mean, from a composition of same store sales? What the average check contribution was?

Vance Yuwen Chang: Sorry. Yeah. So both brands had sort of 334%. pricing increase. For--we saw a slightly negative mix as traffic for both brands, and I just gave the average check for both of them.

Todd Brooks: Sorry to ask you to repeat that, Vance, but you broke up during the answer.

Vance Yuwen Chang: Yeah.

John W. Peyton: Vance is saying. It was hard to hear you.

Vance Yuwen Chang: Oh, okay. So both brands had 3% to 4% menu pricing increase for the quarter and we saw negative. Slightly negative P mix for both of our brands and negative traffic for both of our brands. And I just gave you the average check $39 for Applebee's and $36 for IHOP.

Todd Brooks: Okay. Perfect. Thank you and then yeah. I heard you better that time. Thank you. Right. John, not to not to harp on this start to the quarter for Applebee's, but I know we talked in the past about the NFL partnership and maybe more of a focus in this year's messaging around value, given the consumer's obvious desire for it, Do you feel like you have used the platform to really highlight that value message, and maybe any thoughts on at least early on here in the quarter, why it may not be resonating with the customer at Applebee's?

John W. Peyton: So this is year 3 of our NFL partnership, and we leaned into it less this year than in the past because the return on the investments was not as significant as we thought it would be. So we have been focusing with the NFL primarily on our off prem channel around our wings offers, and we have seen good success there. But when it comes to the broader message on television, know, unlike the investments we made in Dan Campbell the last 2 years, we have been focused on 2 for 2025 and the new food news in place of a stronger more thorough NFL message.

Todd Brooks: Okay. Perfect. I will hop back in. Thanks.

Operator: Thank you. And once again, ladies and gentlemen, if you do have a question And our next question comes from the line of Brian Vaccaro from Raymond James. Your question please.

Brian Vaccaro: Hi, thanks and good morning. I just had a question on the guidance. I believe you reiterated the low end of your EBITDA guide, which I think is $220 million If that is right, I think it embeds around $66 million for the fourth quarter, which is up pretty nicely versus the fourth quarter of last year. Can you just help us understand some of the moving pieces that would drive that year on year increase? Maybe within that, just remind us, what do you expect for G&A for the year?

John W. Peyton: Thanks, Brian. Vance, can you take that, please?

Vance Yuwen Chang: Of course. Hey, Brian. So we are we are really maintaining guidance range for 2 reasons. 1, you know, overall, we have a very steady sort of base franchise business, and we are expecting similar sales volume in Q4 as Q3, right, based on early trends. And the second thing is company restaurants. We believe company restaurants will continue to improve. Especially since we expect fewer construction related closure days in Q4 due to just normal seasonality, weather patterns etcetera. So we are not gonna have as many closure days.

John W. Peyton: And that is going to improve company restaurant performance and support-- But Vance, it is John. We are losing the end of your words. Vance, it is John. We lost the last minute or so of your answer.

Vance Yuwen Chang: Okay. So, Brian, let me know. So we are maintaining guidance for 2 reasons. 1, we have a steady base franchise and we are expecting similar sales volume in Q4 as Q3 based on what we are seeing right now. 2 is company restaurants. We believe company restaurants will continue to improve in Q4. Especially because we are expecting fewer construction related closure days in Q4 due to just normal seasonality. And that is going to improve company restaurant performance and support EBITDA performance for the company. And, you know, Brian, the short term EBITDA pressure is gonna moderate over time as we start to leverage the investment that we have made in our system. So. Okay.

More for next year. Okay.

Brian Vaccaro: And, Vance, following up on that, the company segment, I think it has been reporting a couple of million dollar loss in the last few quarters. Would you expect that to turn to a profit on the EBIT line for the fourth quarter within your guidance? Or will there still be a slight loss there?

Vance Yuwen Chang: It would still be a loss, but you know, the 1 thing that I mentioned, you know, in my prepared remarks is that we kind of know, depending on the timing of when we took over the portfolio, right, the performance will be mixed and so the later. The later-- the newer portfolios will need a little bit more time because we just took them. But the older portfolios are performing according to plan, and we are seeing that tracking in a similar pattern. And so it is a basis of the physical infrastructure improvements we have made, the training, the staffing changes we have made. So we are we are pretty optimistic about that.

And, Brian, last thing I would just remind you is that the goal is not to hold on to these restaurants. Permanently, and we are looking to refranchise them. And we have inbound interest from franchisees already, and we are going to continue those conversations They do not need to be fully turned around, you know, before they get refranchised.

Brian Vaccaro: Okay. that is great. Thank you. And then I guess just if I have time for a quick follow-up, John, I appreciate the comments you made at the beginning on the broader consumer. I am curious if you are seeing any changes in behavior across income cohorts any firming, potentially, in the lower income consumer or just any other behavior shifts you are seeing within your customer base? Thanks very much.

John W. Peyton: Yes. Thanks, Todd. I would say what we are seeing this past quarter is just very consistent with what we have seen past several quarters. I would summarize as we are seeing a growth in our higher income consumer, and we are seeing that our more value-oriented, price sensitive guests is more likely to add a QSR visit or stay at home. So that is very remarkably consistent. But I will tell you, I wanted to emphasize 2 points that are encouraging is what looks like encouraging data. You know, 1 is we often talk about the percentage of sales in each brand that represent our value. And the 2 for $25 or everyday value.

Applebee's this past quarter, it was 25%. At IHOP, it was 22%. And that is right in the middle of their typical ranges. And, slightly lower than what we have seen in the last couple of quarters. Which is an indication that, you know, guests who are coming out to full service dining and wanna celebrate an occasion are not quite selecting from our value menu to the extent they were the last couple of quarters. The other thing that is the beginning of an interesting statistic is the trade up on 2 for 25.

So as you know, we have the entry level of $25, and then you can spend a few more dollars for tier 2 and a few more dollars for tier 3. In Q1, 61% of guests traded up on 2 for 25, and that number last quarter was 68.5%. So, you know, up 7-plus points. Again, an indication that guests are willing to spend a few more dollars to trade up in the restaurant.

Brian Vaccaro: Very helpful. Thank you.

Operator: Thank you. Once again, if you have a question at this time, please press *11 on your telephone. Our next question is a follow-up from the line of Todd Brooks from Benchmark StoneX. Your question, please.

Todd Brooks: Hey, thanks. Just a quick follow-up question on Brian's questioning. If you look at the older portfolios that have been acquired, Vance, have those reached positive restaurant level EBITDA yet? And I do not know if this is for Vance or for John, but given maybe the improvement in those more mature portfolios, within that 3-year time frame that you had kind of spelled out, when would you expect potentially for these to trade back into the market with another buyer?

John W. Peyton: Yes. Thanks, Todd. Vance can address both those questions.

Todd Brooks: Hey, Todd. I apologize. Could you repeat your questions 1 more time? It was coming through really choppy for me. Sure. Hey, Todd, I apologize. Could you repeat your questions 1 more time? It was coming through really choppy for me. Sure. The oldest portfolio cohort on the acquired company stores, has that group of restaurants reached EBITDA profitability at the restaurant level? And given how those stores are kind of maturing, aging, and improving, What would you say the likelihood of getting a refranchising transaction done within that kind of loose 3 year target window. that you guys had originally communicated? Done.

Vance Yuwen Chang: Got it. Yes. The oldest cohort is profitable. And we expect more upside for them. I would say that, you know, we talked about the 3-year turnaround time line for each of the cohorts. Okay? But each deal, right, as we refranchise, as we get into the negotiation with the franchisees, each deal is bespoke. And franchisees are interested in the restaurants for different reasons. Such as you know, unlocking a certain territory for them or opening Dual brands. They are not necessarily all driven by operational financial metrics. only. So in the meantime, you know, we are focused on the fundamentals, which includes the physical infrastructure as well as training, staffing, guest experience overall.

And we are making year over year progress. But do not think of it as you know, financial improvement as the only reason why they would be refranchised. If that makes sense.

Todd Brooks: Okay. Great. Thanks, Vance.

Vance Yuwen Chang: Yeah.

Operator: Thank you. This does conclude the question and answer session of today's program. I would like to hand the program back to John W. Peyton, Dine Brands' CEO, for any further remarks.

John W. Peyton: Jonathan, thank you. Thank you all for your questions. We appreciate it. We will talk to some of you later today. Take care.

Operator: Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.

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