Dine Brands Global, Inc. (DIN) Q1 2026 Earnings Call Transcript

O-M-Cheese Burger launch: Introduced in January with a $11.99 price point, included in the 2 for $25 value platform. Became the highest ordered burger on the platform, driving significant engagement and sales.

IHOP's Stuffed 'N Stacked Omelettes and new coffee blend: Promoted new omelette offerings and launched a proprietary coffee blend, the first in 20 years, to enhance menu innovation.

Dual brand restaurant expansion: 43 dual brand restaurants open, with 13 under construction and plans for 80 by year-end. Dual brand restaurants generate 1.5 to 2.5x sales of original stand-alone restaurants.

New restaurant openings: Opened 24 new restaurants in Q1, up from 10 last year. Relocations within markets showed over 50% sales increase compared to prior locations.

Operational improvements at Applebee's: Simplified kitchen operations, increased manager presence in dining rooms, and improved off-premise order accuracy. Preparing for a system-wide launch of a new Toast POS platform.

IHOP operational enhancements: Improved table turn times by 6%, reduced guest complaints, and enhanced order accuracy with new POS and handholds.

Focus on value and cultural relevance: Applebee's and IHOP emphasized value platforms and culturally relevant marketing to connect with guests and drive sales.

Company-owned restaurant investments: Invested in remodeling and dual brand conversions, with plans to refranchise at the right time. Company-owned dual brand restaurants showed a 2.5x sales lift.

Inflation and Consumer Sentiment: Rising inflation for food away from home and higher gas prices are straining household budgets, leading to declining consumer sentiment and reduced discretionary spending. This is particularly impacting lower-income consumers, who are evaluating lower-cost alternatives, including grocery and other food channels.

Competitive Pressures: The company faces competitive pressures from grocery stores and other food channels as consumers seek lower-cost alternatives. This could impact sales and market share.

Weather Impact: Adverse weather conditions negatively impacted sales for Applebee's and IHOP, reducing comp sales by 94 and 80 basis points, respectively, during the quarter.

Profitability Challenges: Decreased profitability was reported, with EBITDA declining from $54.7 million to $50.8 million year-over-year. This is attributed to investments in dual brands, company-owned portfolio initiatives, and higher G&A expenses.

Commodity Costs: Higher commodity costs, particularly for beef, are increasing operational expenses. Applebee's saw a 6.3% increase, and IHOP experienced a 3% rise in commodity costs.

Franchisee Bankruptcy: One of the franchisees, Neighborhood Restaurant Partners, filed for bankruptcy protection, leading to operational and financial uncertainties. Dine Brands is stepping in as a stalking horse bidder to secure these restaurants.

International Franchisee Performance: A decrease in franchise revenues was noted, partly due to the underperformance of international franchisees.

Operational Execution Risks: The company is investing in new POS systems and operational improvements, but these initiatives carry execution risks and may not yield the expected efficiencies or financial benefits.

Revenue Growth: The company expects to maintain its full-year financial guidance for 2026, with consolidated total revenues increasing by 4.8% in Q1 2026 compared to the prior year.

Dual Brand Expansion: Plans to expand dual-brand restaurants to approximately 80 locations domestically by year-end 2026, with 13 additional locations currently under construction. Dual-brand restaurants are generating 1.5 to 2.5 times the sales of standalone restaurants.

Remodeling Initiatives: Applebee's Lookin' Good remodel program is expected to cover about one-third of the system by year-end 2026, with early results showing a mid-single-digit percent sales lift. IHOP is beginning a three-year renovation cycle with a new California Heritage design.

Commodity Costs: Commodity costs are expected to increase by mid-single digits for Applebee's and low single digits for IHOP in 2026, primarily driven by higher beef prices.

Company-Owned Restaurants: The company plans to complete over 30 remodels and 8+ dual-brand conversions in company-owned restaurants by the end of 2026. Early results show a 2.5x sales lift in dual-brand conversions.

Off-Premise Sales: Off-premise sales represent 23.9% of total sales for Applebee's and 21.5% for IHOP, with continued growth opportunities in delivery, digital ordering, and catering channels.

Catering Channel Growth: IHOP's catering channel has shown an approximately 16% improvement in comp sales, supported by investments in digital ordering, packaging, and local store marketing.

New Product Launches: IHOP plans to launch a new proprietary coffee blend, the first in almost 20 years, and promote new menu items like the Bold Barbecue Pulled Pork Omelette.

Franchisee Support: The company is stepping in as a stalking horse bidder for 53 restaurants from a franchisee in bankruptcy, with plans to invest in these units through development initiatives.

Capital Returned to Shareholders: $24 million of capital was returned to shareholders in Q1 2026, including $22 million in share repurchases and dividends.

Share Repurchases: $22 million was spent on share repurchases, representing approximately 5% of shares outstanding at the beginning of the year.

Dividend Payments: Part of the $24 million returned to shareholders included dividends, though the specific amount allocated to dividends was not detailed.

Share Repurchase Program: The company repurchased $22 million worth of shares in Q1 2026, which is above the commitment made in Q3 2025. This represents approximately 5% of shares outstanding at the start of the year.