Dine Brands Global NYSE: DIN said first-quarter fiscal 2026 sales improved across its restaurant portfolio, even as executives warned that inflation, higher gas prices and weak consumer sentiment are pressuring lower-income diners.
On the company’s earnings call, Chief Executive Officer and President John Peyton said Dine Brands began the year “building upon the momentum from last quarter,” with flat to positive comparable sales across Applebee’s, IHOP and Fuzzy’s for the first time in several years. He said all three brands outperformed Black Box benchmarks on comparable sales.
Applebee’s posted a 1.9% increase in comparable sales, while IHOP’s comparable sales were flat. Peyton said weather affected comparable sales by 94 basis points at Applebee’s and 80 basis points at IHOP during the quarter.
“As the quarter progressed, the operating environment became more dynamic and in many ways more challenging,” Peyton said, citing food-away-from-home inflation and higher gas prices. He said lower-income consumers are showing the most pressure and are evaluating lower-cost alternatives across restaurants, grocery and other food channels.
Revenue rises, adjusted EBITDA declines
Chief Financial Officer Vance Chang said consolidated total revenue increased 4.8% to $225.2 million in the first quarter, compared with $214.8 million in the prior-year period. The increase was primarily driven by the acquisition of company-owned restaurants since the first quarter of 2025.
Excluding advertising revenue, franchise revenue declined 2.1%, which Chang attributed mainly to lower proprietary product sales and international franchisee performance. Comparable sales increases were offset by restaurant closures, while rental segment revenue was consistent with the prior year.
Adjusted EBITDA fell to $50.8 million from $54.7 million a year earlier. Chang said the decrease was driven by lower IHOP proprietary product sales due to timing with distribution partners, higher general and administrative and pre-opening support costs tied to company restaurants and dual-brand openings, and restaurants taken back from franchisees that remain in turnaround mode.
Adjusted diluted earnings per share were $1.07, compared with $1.03 in the first quarter of 2025. Adjusted free cash flow was negative $3 million for the first three months of 2026, compared with $14.6 million in the prior-year period, reflecting higher capital spending for company restaurants and compensation payment timing. Capital expenditures rose to $12.1 million from $3.3 million, with nearly two-thirds tied to remodels and dual-brand conversions of company-owned restaurants.
Dine Brands ended the quarter with $104.2 million of unrestricted cash, down from $128.2 million at the end of the fourth quarter. The company returned $24 million to shareholders, including $22 million of share repurchases, which Chang said represented about 5% of shares outstanding at the beginning of the year. He said the company is maintaining its full-year financial guidance.
Applebee’s leans on value and targeted marketing
Peyton said Applebee’s sales were driven by the Two for $25 value platform and new menu items. The O-M-Cheese Burger, launched in January at an $11.99 price point and included on the Two for $25 platform, became the highest-ordered burger on that platform, he said.
The company tied the burger launch to Valentine’s Day, positioning Applebee’s as an affordable date-night option. Peyton said the campaign generated more than 9 billion impressions, reached 96 million people on social media and helped drive the highest single-day sales volume in Applebee’s history. The full week ranked among the brand’s top five sales weeks ever.
Applebee’s off-premise comparable sales increased approximately 3.5% in the quarter, supported by third-party delivery and promotions tied to events such as the Super Bowl and NCAA Basketball Tournament. Chang said domestic average weekly franchise sales per Applebee’s restaurant were $56,300, including $13,500 from off-premise sales, or 23.9% of total sales.
During the question-and-answer session, Peyton said Applebee’s April sales softened as lower-income and value-focused guests reacted to higher gas prices and broader cost-of-living pressures. He said about 26% of Applebee’s tickets included value items in the quarter, though the company believes the comparable figure remains closer to one-third when considering items such as Ultimate Trio that are no longer counted nationally as value promotions.
Peyton said Applebee’s average check remained about $39, helped by a slight menu price increase by franchisees. He noted some migration toward lower-priced items and away from drinks or appetizers, but said the overall check level was maintained.
IHOP highlights value menu, off-premise growth
IHOP outperformed Black Box in both sales and traffic for the second consecutive quarter, Peyton said. He attributed the performance to value offerings, product innovation, culturally driven marketing and operational improvements.
Comparable sales were supported primarily by check improvement, including the Everyday Value Menu and premium offerings. Peyton cited breakfast combos tied to the Bottomless Pancake campaign and limited-time items such as New York Cheesecake Pancakes. In the second quarter, IHOP is promoting Stuffed and Stacked Omelets, including a Barbecue Pulled Pork Omelet, and has launched a new proprietary coffee blend, its first new coffee in almost 20 years.
IHOP off-premise comparable sales increased 2.6% year over year, largely due to third-party delivery. Off-premise represented 22% of sales, and Peyton said catering is showing early momentum, with an approximately 16% improvement in comparable sales and catering.
Lawrence Kim, President of IHOP, said the brand’s value mix was about 22% in the first quarter, up slightly from about 20% in the fourth quarter, primarily due to the Bottomless Pancakes promotion. Kim said IHOP will continue emphasizing its $6 Everyday Value Menu while pairing it with premium innovation under a “barbell” strategy.
Chang said IHOP’s domestic average weekly franchise sales per restaurant were $38,300, including $8,300 from off-premise, or 21.5% of total sales. IHOP’s average check was about $35, and both Applebee’s and IHOP saw negative traffic in the quarter, he said.
Dual-brand strategy gains traction
Dine Brands continued to emphasize dual-brand restaurants that combine Applebee’s and IHOP. Peyton said there are 43 dual-brand restaurants open and 13 additional locations under construction, with the company on track to have approximately 80 open domestically by year-end.
Most dual-brand restaurants are generating about 1.5 times to 2.5 times the sales of the original standalone restaurant, Peyton said. The company’s first domestic dual-brand location in Seguin, Texas, continues to deliver roughly two times its pre-conversion sales levels.
Peyton said 10 different operators have opened dual-brand restaurants, including two new franchisees to Dine Brands. He said guest behavior supports the concept: 62% of dine-in tickets include at least one item from each brand, and guests purchasing from both brands spend an average of 24% more than guests purchasing from one brand.
In response to an analyst question, Peyton said the company has identified 900 U.S. opportunities for dual-brand restaurants over the next eight to 10 years, split evenly between 450 new builds and 450 conversions of existing restaurants. He said franchisee interest is growing and the pipeline is becoming balanced between Applebee’s and IHOP franchisees.
Chang said dual-brand conversions can generate attractive returns because incremental sales have higher flow-through margins. He gave an example of a $2 million restaurant adding $1 million in sales, with roughly $300,000 flowing through to the bottom line, against conversion costs of a little more than $1 million depending on site-specific work.
Development, remodels and company-owned restaurants
Dine Brands opened 24 restaurants in the quarter, up from 10 in the same period last year, and said it remains on track with full-year domestic development guidance. The company also completed 11 Applebee’s Lookin’ Good remodels, with early results showing an average mid-single-digit percentage sales lift. Peyton said about one-third of the Applebee’s system is expected to be remodeled by year-end, while later on the call he said about 40% of the Applebee’s portfolio is expected to be current by year-end.
IHOP is beginning a three-year renovation cycle called California Heritage. Kim said the design is bright and modern and is still in the early stages, with more details expected in future quarters.
Chang said Dine Brands operated 86 company-owned restaurants at the end of the first quarter, about 2% of the total system. The company took back 12 Applebee’s restaurants in Virginia in February, with potential for about five dual-brand conversions. Chang also said Dine Brands is acting as a stalking horse bidder for about 53 restaurants being sold by franchisee Neighborhood Restaurant Partners as part of its bankruptcy process.
Peyton said the company is more willing than in past years to take back restaurants to strengthen the system, prevent closures, advance initiatives and eventually refranchise them. He said the company remains asset-light and is comfortable with company-owned restaurants reaching up to about 5% of the portfolio, though that is not a goal.
Executives said closures were slightly elevated because more franchise agreements are coming due than in normal years, but Chang said Dine Brands is maintaining its net development outlook due to a strong pipeline of dual-brand and standalone IHOP openings.
About Dine Brands Global NYSE: DIN
Dine Brands Global, Inc is a leading franchisor and operator of full‐service restaurants in the casual dining and breakfast segments. The company's primary brands include IHOP®, known for its wide variety of breakfast offerings and pancakes, and Applebee's Neighborhood Grill + Bar®, a casual dining concept featuring a range of American entrées, appetizers and cocktails. Through its franchise model, Dine Brands works with independent restaurant owners to develop, market and support both domestic and international locations.
The origins of Dine Brands Global date back to the founding of the International House of Pancakes (IHOP) in 1958 in California.
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