Dine Brands Global, Inc.

Today, thank you for standing by. Welcome to the Dime Brands Global third quarter 2022 conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star one one on your telephone. Please be advised that today's conference is being recorded. I would like to call the hand the call over now to Brett Levy, and we apologize for all technical difficulties. Thank you.

Good morning, and welcome to Dine Brands' third quarter conference call. I'm Brett Levy, Vice President of Investor Relations and Treasury for Dine Brands Global, and I am joined this morning by John Payton, CEO, Vance Chang, CFO, John Sawinski, President of Applebee's, and Jay Johns, President of IHOP. Before we turn the call over to John, please remember our safe harbor regarding forward-looking information. During the call, management may 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 and assumes no obligation to update or supplement these statements. We may also refer to certain non-GAAP financial measures, which are described in our press release and also available on Dine Brand's Investor Relations website. While we may provide color on intra-quarter trends related to volatility and uncertainty, we have returned to our traditional quarterly reporting schedule. Please note our third quarter's results are inclusive of the company-operated Applebee's units, as the transaction had not closed during the quarter. With that, I'll turn the call over to John.

Thanks, Brett. And good morning, everyone. Thanks for joining us today. We delivered another solid quarter thanks to the strength of our brands, our operational and marketing agility, and most importantly, our seasoned team of franchisees, our Applebee's IHOP and DINE leaders, and our team members. As you know, and as you've heard from others, economic headwinds persist, particularly inflation and consumer sentiment. Despite this macro environment, our brands remained resilient, Applebee's and IHOP achieved positive comp sales of 3.8% and 1.9%, respectively. Q3 was Applebee's seventh consecutive quarter of comp sales growth and the sixth for IHOP. In addition, our dine-in results continue to improve, as Applebee's is ahead of 2019 and IHOP is continuing to gain ground. And our off-premise sales remained more than two times pre-pandemic levels. In Q3, Dine delivered adjusted EBITDA of over $63 million by focusing on what's in our control. Notably, G&A was $46 million, reflecting our prudent approach to spending. Through the first three quarters of 2022, we returned $145 million to our shareholders via dividends and buybacks. And importantly, during the quarter, we saw an easing in the inflation rate in the cost of food and supplies to the restaurants. Applebee's cost of goods inflation fell from 23% during the first six months of 2022 to a run rate that looks like 13% for the back half of the year. IHOP is experiencing a more modest decline from 21% to 19%. IHOP's costs remain inflated due to the stubborn cost of eggs and the impact of the Ukraine war on grain prices and ultimately pancake mix. I've talked before about the importance of strong brands during uncertain times. During moments like these, consumers stick with brands they know and trust and love. The value proposition at both our brands is well known. So right now, we're amplifying our value message to reflect our guests' mindset and financial situation. Now I'll walk you through the progress we made across our strategic priorities. This includes investments in technology, development, and new sources of revenue. Our world-class tech team is delivering products on time, and we've more than doubled our annual tech spend since 2019. We're enhancing both the in-restaurant and out-of-restaurant guest experience, as well as new back-of-house and front-of-house technology. Some examples of recently completed tech include our new learning management system, new IHOP websites and app, with Applebee's scheduled for next year, fly-by and pay-and-go technology that streamlines the guest interaction, and we continue the rollout of IHOP's new point of sale. Next is development. Our IHOP portfolio continues to expand. The combination of traditional and new restaurant formats is driving our confidence in our long-term unit growth, and Applebee's continues its path toward net openings. Our third priority is new sources of revenue. IHOP now offers its virtual brands in over 1,100 locations, and we have 55 ghost kitchens across Applebee's and international. IHOP's virtual brands are incremental to sales and target dinner and late night hours. Both are opportunities for the brand. We're building our virtual brand pipeline and believe there's an attractive long-term opportunity for virtual brands within our portfolio. While we expect challenges over the next few quarters, Guy is positioned well for challenging times. We're confident in our ability to navigate the near-term headwinds and deliver on our longer-term goals. We're confident in the resilience of our iconic brands We're confident that our scale allows us to mitigate, to some degree, supply and price disruptions, and we're confident because Dyn is financially sound, as are our franchisees. With that, I'll turn the call over to Vance to review our financial performance and outlook in more detail. Good morning, Vance.