Dine Brands Global Q2 Earnings Call Highlights

Key Points

• Mixed Q2 performance: Revenue rose 4.4% to $240.9 million, while adjusted EBITDA fell to $54.2 million and adjusted EPS was nearly flat at $1.16. IHOP’s comparable sales increased 1.5%, while Applebee’s declined 1.8% year over year but improved sequentially during May and June.
• Value and innovation supported demand: Management cited cautious, value-focused consumers but highlighted successful promotions, new menu items and strong off-premise trends. Applebee’s delivery comparable sales grew double digits for the fifth consecutive quarter, while IHOP catering sales rose 22%.
• Investment increased despite weaker cash flow: Dine Brands continued remodels and dual-brand conversions, which generate roughly twice the sales of single-brand locations, while targeting 80 dual-brand restaurants by year-end. First-half adjusted free cash flow fell to $3.7 million as capital expenditures and other costs rose, though the company maintained full-year guidance and continued share repurchases.

Dine Brands Global NYSE: DIN reported mixed second-quarter results as IHOP posted positive same-restaurant sales and Applebee’s improved through the quarter despite a year-over-year decline in comparable sales. The company maintained its full-year financial guidance, with management pointing to continued value-focused consumer behavior, menu innovation and investments in restaurant operations and dual-brand locations.

Adjusted EBITDA declined to $54.2 million in the second quarter from $56.2 million a year earlier, while adjusted diluted earnings per share were essentially flat at $1.16, compared with $1.17 in the prior-year period. Total revenue increased 4.4% to $240.9 million, driven primarily by the number and timing of restaurants acquired from franchisees, Chief Financial Officer Vance Chang said.

Comparable Sales and Consumer Spending

IHOP’s domestic same-restaurant sales increased 1.5% during the quarter, marking its third consecutive quarter of outperformance against Black Box industry benchmarks for sales and traffic, according to CEO John Peyton. IHOP’s traffic was nearly flat but slightly down, while its menu pricing increased 3.5%, Chang said.

Applebee’s domestic same-restaurant sales fell 1.8% year over year, though Peyton said results improved sequentially in May and June after a difficult April comparison against the prior year’s Sizzlin’ Skillets promotion. Applebee’s menu pricing increased 3.4%, while traffic declined during the quarter, Chang said.

Management said inflation in food-away-from-home prices, elevated gasoline prices and weaker consumer sentiment contributed to more deliberate dining decisions. However, average check increased slightly at both major brands, while value offerings represented 26% of Applebee’s sales mix and 22% of IHOP’s mix, consistent with first-quarter levels.

“Guests aren’t walking away from dining out, but they are making intentional choices of when and where they choose to go,” Peyton said.

Fuzzy’s Taco Shop also delivered positive comparable sales for the second consecutive quarter and outperformed its Black Box competitive set, Peyton said. The company attributed the improvement to technology enhancements, menu streamlining, better restaurant experiences and off-premise sales momentum.

Value Offers, Menu Innovation and Off-Premise Sales

At Applebee’s, the company highlighted the performance of its All You Can Eat promotion and its Poolio with Don Julio campaign during the latter part of the quarter. The promotions supported food and beverage sales, with liquor comparable sales rising 10.5% during the promotional period, Peyton said.

Applebee’s Loaded Potato Waves became the brand’s strongest appetizer launch since the pandemic, according to Peyton. During the third quarter, the chain introduced the Bacon Cheeseburger Wonton Taco on its 2 for $25 menu and brought back DOLLARITA. Peyton said the company was seeing positive third-quarter trends but did not quantify them.

IHOP expanded its $6 value menu in April with a BLT and fries offering. It also promoted Stuffed and Stacked Omelets and launched Dubai Chocolate Pancakes nationwide as a limited-time offer. Peyton said the pancake offering was exceeding its sales forecast in its first weeks.

Lawrence Kim, Dine Brands’ chief commercial officer and president of IHOP, said the IHOP value mix has remained in the low-20% range of total checks over the past year. The company plans to pair value offers with premium products and limited-time menu innovation to support check levels.

• Applebee’s off-premise comparable sales rose 1.5%, including a fifth consecutive quarter of double-digit delivery comparable-sales growth.
• IHOP off-premise comparable sales increased 3.5%, its fifth consecutive quarter of positive off-premise growth.
• IHOP catering comparable sales accelerated 22% in the second quarter, compared with 16% growth in the first quarter.

Restaurant Investments and Dual Brands

Dine Brands continued to invest in remodels, company-owned locations and its dual-brand strategy, which combines Applebee’s and IHOP in a single restaurant. The company had 45 domestic dual-brand restaurants open as of the call, including seven company-owned locations, and had 12 more under construction. Its target is to open 80 dual-brand locations by year-end.

The company’s dual-brand conversions are averaging roughly twice the sales of single-brand locations, Chang said. Peyton said conversion costs have stabilized at approximately $1 million, depending on the lead brand, and the company is reviewing operations, menu mix and cost assumptions to improve profitability.

Applebee’s completed 66 remodels year to date and expects more than 100 remodels in 2026, putting it on pace to have about one-third of its system remodeled by year-end. Peyton said remodels have generated a mid-single-digit sales lift on average.

Dine Brands ended the quarter owning 136 restaurants, including seven dual-brand units, representing about 4% of its system. Chang said the company ultimately intends to refranchise those locations when appropriate. The company has completed 30 remodels and seven dual-brand conversions among restaurants it has taken back from franchisees.

While construction closures affected company-owned restaurant profitability, Chang said the company was progressing toward its previously stated three-year timeline for improving the portfolio. He said management was receiving interest from franchisees in refranchising some locations and would evaluate proposals individually.

Cash Flow, Costs and Capital Returns

Adjusted free cash flow was $3.7 million for the first six months of 2026, down from $48.7 million a year earlier. Chang attributed the decrease to higher capital expenditures, marketing-spend timing, performance-based compensation payments, interest expense, and remodel and development incentives for franchisees.

Second-quarter capital expenditures rose to $23.2 million from $9.3 million a year earlier, largely reflecting company-owned remodels and dual-brand conversions. Unrestricted cash totaled $97.5 million at quarter-end, down from $104.2 million at the end of the first quarter.

The company returned $9 million to shareholders in the quarter, including $7 million in share repurchases and $2 million in dividends. Year to date, Dine Brands repurchased $29 million in stock, or approximately 7% of shares outstanding at the beginning of the year. In May, the board authorized an additional repurchase program of up to $100 million.

Commodity costs rose 8.2% at Applebee’s and 1.6% at IHOP, primarily because of higher beef prices. Management said projects implemented so far this year are expected to generate more than $12 million in annualized savings across both systems.

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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