Dine Brands Global, Inc.

Good day, and thank you for standing by. Welcome to the Dine Brand Second Quarter 2025 Earnings 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 the question during the session, you will need to press star 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1-1 again. We ask that you limit yourself to one question and one follow-up. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your host today, Matt Lee, Senior Vice President, Finesse, and Investor Relations. You may begin.

Good morning, and welcome to Dine Brand Global's Second Quarter Conference Call. This morning's call will include prepared remarks from John Paine, CEO and President of Applebee's, and Vance Cheng, CFO. Following those prepared remarks, Lawrence Kim, President of IHOP, will also be available, along with John and Vance, to address questions from the investment community 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, 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 pressure release and 10-Q filing. The forward-looking statements are as of today, and we assume no obligation to update or supplement these statements. We will refer to certain non-GAAP financial measures, which are described in our pressure release and available on Dine Brand's Investor Relations website. For calendar planning purposes, we are tentatively scheduled to release our Q3 2025 earnings before the market opens on November 5th, 2025, and to host a conference call that morning to discuss the results. With that, it is my pleasure to turn the call over to Dine Brand's CEO, John Payton.

Good morning, everyone. Thanks for joining us today. And today, I will share Dine's Q2 results and discuss trends in consumer behavior. I'll provide updates on our brand's key priorities, and then Vance will discuss our financial results and our updated full-year outlook. Dine carried momentum from March into the second quarter, delivering improved sales and traffic across our brands. We achieved this progress by remaining committed to our three main priorities, enhancing our menu and value platforms, communicating our brand's value more effectively through improved marketing, and elevating the guest experience. This focused approach, along with strategic investments, helped us showcase what makes our brand special, a welcoming atmosphere for friends and family, dependable value, and craveable food that brings people together. I'll begin by sharing thoughts on consumer behavior. Overall, we continue to operate in a competitive environment. Consumers are still feeling macroeconomic pressure, and as a result, guests continue to manage their check by ordering fewer beverages and appetizers, as well as trading down to lower-priced items on our menus. Across Applebee's and IHOP, the value mix decreased versus Q1. At Applebee's, the value mix was approximately 30% in Q2, and at IHOP, the mix was about 19%. With that, I'll walk through our key financial results. Applebee's reported a .9% increase in comp sales, and IHOP posted comp sales of negative 2.3. Applebee's outperformed BlackBox in both sales and traffic. Traffic was the primary driver of comp sales and was positive for the first time since Q1 2023. And notably, IHOP achieved its second consecutive quarter of traffic outperformance relative to BlackBox. Our adjusted EBITDA was $56 million, compared to 67 million in the same quarter last year. Adjusted free cash flow was $49 million, compared to 53 million in 2024. And last, we recently completed and are pleased with the upcoming of our refinancing, which you'll hear more about from Vance. So now I'll share some updates across our portfolio, starting with Applebee's. In Q2, Applebee's achieved positive comp sales for the first time in two years, supported by a significant increase in traffic. This allowed Applebee's to outperform BlackBox in both sales and traffic for the full quarter, which is a clear indicator of our improved performance within the segment. We noticed this positive shift starting in March, which continued throughout Q2 and even into Q3. So now I'll talk about menu innovation. We're introducing a new entree each quarter that is meant to appeal to our core Applebee's fans and also capture the next generation of loyal guests. To support this effort, we'll introduce a new menu item via the 2-4 section of our menu, which is a pillar of our everyday value platform. In Q1, we introduced our Bourbon Street Cajun pasta, in Q2, we introduced new skillets and steak, and a few weeks ago, we debuted our Chicken Parmesan fettuccine, all within our 2-4 menu. Pairing this new menu innovation with our -4-25 value platform is a key contributor to our traffic and sales growth. Off-premise is also a key driver of sales improvement over the past year, and we've made a focused effort to evolve our strategy to meet our guests where they are, including promoting national campaigns on this channel and introducing exclusive off-premise campaigns. -to-date, off-premise has posted positive sales and traffic every month, with Q2 seeing a positive .6% lift in sales. On the marketing front, we've strengthened our in-house team and significantly expanded our social media capabilities, enabling us to amplify our brand presence and make social media a central element of our marketing. In just the past three months, our engagement numbers are multiplying. On TikTok, video views have increased over 500%, user reach has grown 760%, and likes have climbed nearly 1,000%. Across X and Meta, we're seeing 215% increase in engagement. These figures show the benefits of our more agile, -house-led approach to social storytelling and the impact of meeting culture in real time where it lives. And last, to touch on our efforts to modernize the brand and elevate the guest experience, the Lookin' Good Remodel program continues to progress. Nine of our top 10 franchisees, representing 75% of the Applebee system, have already elected to accelerate remodels of their restaurants this year, and we expect to complete well over 100 remodels by year end. We were pleased with Applebee's Q2 performance, positive comp sales, positive traffic, and growing momentum across operations and marketing. All of this reinforces our confidence that we have the right strategy in place. We're not satisfied because we know we have more potential, and our team and our franchisees are energized and ready to press ahead to become even more relevant and more competitive. Now, moving on to IHOP. The House Faves menu continues to impress, driving incremental traffic and dollar margin for franchisees during the quarter. This year, IHOP beat black box traffic metrics every month, and we also saw a sequential improvement in comp sales in Q2 versus Q1. Check trends also improved as the quarter progressed, supported by a new strategy that amplifies awareness of our premium price items in our restaurants. After a successful in-market test, which produced increases in both traffic and sales in all test markets, we're excited to expand the House Faves value platform from five to seven days nationwide later this year. The development of this everyday value platform has been a multi-step process. The first step was attracting guests and driving traffic, which we've done for the past three quarters since it launched. Now in phase two, we're working on increasing check averages by leveraging a barbell strategy and highlighting other higher-priced items and promotions, such as our pancake of the moment. On the marketing front, similar to Applebee's, IHOP also recently brought its social, creative, and content teams in-house to drive -the-moment conversations and engagement with a wider audience, particularly Gen Z consumers. Quarter over quarter, IHOP achieved over 400% more engagement and increased followers 30% across TikTok and Meta, creating more conversations with new fans. IHOP's exploring new ways to connect with guests beyond social media. In Q2, IHOP partnered with Amazon Prime and NASCAR to create a custom spot with Dale Earnhardt Jr. promoting our IHOP and Go off-premise channel. It's a strong example of how we're tapping into different platforms and cultural moments to stay on top of mind with guests. The IHOP field team has significantly enhanced restaurant operations by encouraging a strong focus on foundational basics. By increasing adoption of server tablets and reducing the number of product windows, we've improved order accuracy by five percentage points and we've improved table turns by four minutes year to date. Building on this progress, we continue to improve restaurant profitability by focusing on menu innovation, labor, training, and technology. IHOP continues to see steady improvement in traffic and comp sales, supported by the success of house faves, and strategic moves like expanding value offerings, bringing creative in-house, and launching new partnerships are keeping the brand relevant and well positioned for continued progress in the second half of the year. And now to talk about Fuzzy's. In June, Fuzzy's launched its first Fast Casual Plus location in Sugarland, Texas. This new format combines the convenience of fast casual dining with the hospitality of a full service restaurant. We've previously discussed our goal to leverage Fuzzy's full bar offerings and this new service model encourages guests to order a second drink or a second taco. This is part of Fuzzy's plan to reposition the restaurant in a way that will drive more sales growth. Based on its potential, as of today, Fuzzy's has added five new franchisees and opened three new restaurants. Turning to our international business, we continue to have positive engagement with both new and existing international franchisees around development, expanding our already robust dual brand pipeline. The unit growth in the international market is helping offset some macroeconomic headwinds that impact sales and we remain on track to nearly double our total international dual brand restaurants by the end of the year. During the quarter, we opened our first dual brand non-traditional travel center location in Mexico and we also opened our first non-traditional airport IHOP in Felipe Angelis International Airport in Mexico City. We remain bullish about the white space opportunity in Latin America and are excited to introduce new concepts and formats in these key markets. And last, we recently signed a development agreement with a franchisee in Saskatchewan, Canada to open three dual brand stores over the next few years. Now a brief update on our company owned portfolio. We added 12 Applebee's to our company portfolio in May and now operate 59 Applebee's, 10 IHOPs and one Fuzzy's for a total of 70 company operated restaurants representing approximately 2% of our total restaurant count. We have plans in place to convert over 10 of these restaurants into dual brands and are excited about the opportunity to further prove that concept. Our strategy here while maintaining our asset light model is to reinvest in our system to improve the health of the brands and help advance our long-term goals. We're doing this by accelerating our remodeling efforts, improving operations and investing in local marketing, all of which will drive higher sales and profitability at the four wall level. Our own portfolio showed solid progress in Q2 with comp sales improving over Q1 and now performing near the system average. So overall, we're pleased to see the steady improvement across our portfolio resulting from our deliberate steps to enhance performance and support long-term growth through strategic ownership and innovation. And finally, to discuss our development plans in more detail. Our development efforts continue to gain momentum with dual brand growth and new restaurant formats playing a key role in our success. On July 8th, our second domestic dual brand opened in Uvalde, Texas and is owned by the same franchisee who built the first domestic dual brand restaurant in Seguin. Like Seguin, the Uvalde restaurant is performing at a higher sales level than when it was a standalone single branded restaurant. While it's early, sales out of the gate are approximately two to three times higher than the pre-dual brand restaurant. Our first two domestic dual brand restaurants now represent a compelling case study. For example, inspired by our 20 international dual brands, a seasoned IHOP franchisee acquired an Applebee's portfolio in 2024 with the intent of converting eight locations to dual brands by the end of 2026. Working together, we applied learnings from both domestic and international openings to build expertise in how best to integrate Applebee's and IHOP under one roof. With the second restaurant in Uvalde, the franchisee was able to significantly reduce construction costs as well as the construction and training timelines and was able to open the restaurant in four weeks. Franchisee interest for dual brands remains strong and our pipeline continues to grow. The initial results from domestic dual brand restaurants and the demand from franchisees speak to the uniquely complimentary day parts of the two brands. There's a lot of demand for building dual brands and our pipeline is oversubscribed for 2026. We look forward to working with more franchisees to further enhance our expertise and execute the strategic priority. We remain on course to open at least a dozen dual brands by year end. And so with that, I'll turn the call over to Vance, who will speak to the updated guidance and walk you through our financial performance for the quarter in more detail.