Dine Brands Global, Inc.

Good day and thank you for standing by. Welcome to the Dying Brands first quarter 2026 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 a question during the session, you'll need to press star 11 on your telephone. You will hear an automated message advising that your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your host, Matt Lee, Senior Vice President, Finance and Investor Relations. Please go ahead, sir.

Good morning, and welcome to Dying Brands Global's first quarter fiscal 2026 conference call. This morning's call will include prepared remarks from John Ping, CEO and President of Applebee's, and Vance Chang, CFO. Following those prepared remarks, Lawrence Kim, President of IHOP, will also be available, along with John and Vance, to address questions 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 and involves known and unknown risk, 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 10Q following. 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 press release and available on DynBrand's Investor Relations website. With that, it is my pleasure to turn the call over to DynBrand's CEO, John Payton.

Good morning, everyone, and thanks for joining us. Today, I'll walk through Dyn's Q1 results and share insights on consumer behavior as well as our brand's performance in the current environment. and now I'll hand it over to Vance for a deeper dive into our financials. We started the year building upon the momentum from last quarter, achieving flat to positive sales growth across all three brands for the first time in several years. This performance reflects progress against our key priorities, which include enhancing the guest experience through operational improvements, strengthening and simplifying our marketing to better connect with guests, particularly through more targeted culturally relevant engagements, and advancing menu innovation and everyday value platforms to meet evolving consumer needs. As the quarter progressed, the operating environment became more dynamic and, in many ways, more challenging as inflation for food away from home and higher gas prices put a strain on households. With consumer sentiment declining to historically low levels, discretionary spending has become harder to justify, prompting some guests to more carefully evaluate lower-cost alternatives across restaurants, grocery, and other food channels. We're seeing the most pressure on lower-income consumers, and as a result, this is driving greater focus on offerings that combine compelling price points with quality, abundance, and differentiated experiences, like Applebee's 2 for 25 platform and IHOP's Everyday Value menu. Against this backdrop, the importance of our strategy and the relevance of our brands becomes even more central to our performance. We operate scaled, well-recognized brands built around value and everyday occasions, and offering experiences that can't be easily replicated at home, delivered at an accessible price point. This remains a strength of our business, even within a more challenging landscape. And while we recognize there's more work to do to strengthen our financial performance this year, we are pleased with our first quarter sales performance and believe our focus on value, cultural relevance, and disciplined execution positions us well to compete and deliver sustainable results. So I'll turn now to our key financial highlights for the quarter. All of our brands outperformed Black Box on comp sales. Applebee's reported a 1.9% increase in comp sales, and IHOP posted flat comps, despite weather impacting Applebee's by 94 basis points and IHOP by 80 basis points in the quarter. Our EBITDA was $50.8 million compared to $54.7 million in the same quarter last year. Our decreased profitability reflects our investments in our dual brands and company-owned portfolio initiatives, and we expect these current investments to create value over the long term. And last, we return $24 million of capital back to shareholders. Overall, our results reflect a balance between continued investment in the business and solid top-line performance across the portfolio. And now with that, I'll share some updates across our portfolio, starting with Applebee's. Building on our sales momentum from 2025, Applebee's posted positive comp sales in the first quarter, outperforming BlackBox. The continued focus of our $2 for $25 value platform and new menu innovation serves our primary sales drivers as these initiatives continue to resonate with our guests. Our strategy this quarter remained consistent, communicating new menu innovation through high-impact targeted marketing and maintaining strong execution in the restaurants. Rather than relying on broad-based campaigns, we're leaning into our two-for-$25 value platform and demand-led activations tied to cultural moments, allowing us to connect more efficiently and compete more effectively for share of wallet. The OM Cheeseburger launch is an example of our value strategy in action. Since its introduction in January, the burger has driven high interest and engagement, supported by its compelling $11.99 price point, and inclusion on our 2 for 25 value platform. In just a few months, it became the highest-ordered burger on that platform, reinforcing Applebee's everyday value positioning. Because LM Cheeseburger launched in time for Valentine's Day, we further pushed our 2 for platform to deliver an affordable yet experiential date night occasion. The OM Cheeseburger news generated more than 9 billion impressions, reached 96 million people on social media, and sparked nearly 80 times more organic reviews than typical campaigns. By providing guests with incredible value during this seasonal moment, it drove the highest single-day sales volume in Apple's history, with the full week ranking among the top five sales weeks ever. Across digital channels, Off-premise comp sales increased approximately 3.5% in the quarter, supported by third-party delivery and targeted promotions tied to key occasions, like the Super Bowl and the NCAA basketball tournament. From an operations standpoint, our strategy is centered around driving excellence through simplicity, focus, and accountability. We are implementing initiatives that simplify kitchen operations, increase manager presence in the dining room, and improve off-premise order accuracy. In fact, during the quarter, manager visibility contributed to higher guest satisfaction scores as reflected in improved guest surveys and Google review scores. As part of these efforts, we're also preparing for a system-wide launch of a new Toast point-of-sale platform. We expect this to meaningfully increase beverage order incidences, reduce voids, and increase tips while providing better data and tools for our teams. Collectively, these efforts position us to operate more efficiently and support long-term growth. And while April sales have softened against tougher prior year comps, our focus on value, targeted marketing, and operational discipline will support our performance in a dynamic environment. And now turning to IHOP, for the second consecutive quarter, IHOP outperformed BlackBox in both sales and traffic, and that's in the category where traffic remains under pressure. This reflects the brand's focus on great value, product innovation, culture-driven marketing, and an improved guest experience. all of which are helping to build momentum. Comp sales are primarily supported by check improvement as we balance IHOP's everyday value menu with increased awareness of premium offerings. Breakfast combos tied to our bottomless pancakes campaign perform well alongside limited-time offerings, including this quarter's featured spotlight stack, New York Cheesecake Pancakes. This approach continues in Q2 with the promotion of IHOP's signature stuffed and stacked omelettes. including the new bold barbecue pulled pork omelet and the launch of a new proprietary coffee blend, the first new coffee introduced at IHOP in almost 20 years. IHOP continued to see momentum in off-premise, with comp sales increasing 2.6% year-over-year, largely driven by incremental third-party delivery volume. Beyond driving comp sales, third-party channels enhance brand visibility and enable engagement with guests across multiple channels. Off-premise represents 22% of sales, with continued opportunity across delivery, digital ordering, and emerging areas like catering. And while early, we're already seeing an approximately 16% improvement in comp sales and catering, and we've made targeted investments over the past year in digital ordering, packaging, and local store marketing to further support the catering channel. IHOP's differentiated breakfast offering translates well to group occasions, and we're seeing meaningful upside on this channel as it continues to scale. Beyond expanding how guests access the brand, we're also focused on how to connect with them. We're showing up in culturally relevant moments that have resulted in incredible buzz for IHOP, allowing us to engage with new fans and consumers. Initiatives like National Pancake Day and the Bottomless Pancake campaign with NFL star Malik Nabors have been successful in driving engagement and keeping the brand top of mind with guests. During National Pancake Day, we saw a 316% year-over-year increase in engagement across social channels, demonstrating the effectiveness of our investments to reach a broader audience. Underpinning all of this is a relentless focus on operational excellence and the guest experience. Speed is progressively improving, with table turns that are approximately 6% faster than they were in Q4. Guest complaints are down year over year, reflecting strong execution and consistency across the system, while investments in our new POS and handholds continue to enhance order accuracy and efficiency in our restaurants. Overall, IHOP continues to deliver steady performance in a challenging environment, with April sales holding steady behind our value menu and barbell strategy with premium offerings. And now to discuss Fuzzy's, the momentum from our Q4 promotions carried into Q1, contributing to Fuzzy posting positive comp sales for the first time in three years and enabling the brand to outperform its competitors in sales every month in Q1. This progress is a result of the hard work we've done to strengthen the business with a focus on improving technology, streamlining the menu, and enhancing the in-restaurant experience. We're encouraged by Fuzzy's performance this quarter and remain focused on sustaining and building on this progress. And now for dual brands. It's been one year since we opened our first domestic dual brand in Sagin, Texas, and our confidence in the platform continues to grow. Across the system, most of these restaurants are generating about 1.5 to 2.5 times the sales of the original standalone restaurant, while maintaining a healthy check balance across both brands. The Seguin restaurant is still delivering roughly two times its pre-conversion sales levels. Today, we've got 43 dual-brand restaurants open, with 13 additional locations under construction, and we remain on track to have approximately 80 open domestically by year-end. Interest in our dual brands remains strong among existing and new franchisees. In fact, we now have 10 different operators that have opened a dual-brand restaurant, and of these, two are new franchisees to the dine system. The dual brand model provides a flexible path to unlock additional value across our existing footprint. It allows franchisees to reposition lower performing restaurants, including those that may have otherwise reached the natural end of their life cycle, while also enhancing performance at higher sales restaurants. In fact, a long-standing Applebee's franchisee opened its first dual brand in Hawthorne, New York, just a month ago. The successful conversion of a high-sales, single-brand restaurant validates the dual-brand models adaptable and scalable across a range of sales profiles. The unit was already a strong-performing restaurant, and since converting and reopening in March, it has delivered an approximately 1.8-time sales lift. During the last few months, we've learned more about these restaurants from a guest perspective. A few highlights include that guests are excited to have the option to choose between two complementary iconic brands. 62% of our dining tickets contain at least one item from each brand. Guests who do purchase from both brands are spending on average 24% more than those who purchase from just one brand, leading to an overall higher check average at the dual-brand restaurants. And lastly, sales remain balanced across all day parts, proving our thesis about the complementary nature of these brands. We also made operational improvements, including updating our online ordering flow to make the experience more seamless for guests, which has driven an increase in average off-premise check, and improving efficiencies in back-of-house operations such as kitchen design. We continue to improve our pre-opening training at restaurants and are seeing newer restaurants achieve faster table turn times. Taken together, these results reinforce our confidence in dual brands as a big idea and a compelling growth vehicle, driving strong unit economics and continued franchisee demand. Now, turning to our broader development initiatives, we maintained momentum this quarter in new restaurant openings, opening 24, up from 10 at this time last year. We remain on track to meet our full-year domestic development guidance. Development remains a key priority for long-term growth driven by our dual brand formats, the Applebee's Looking Good Remodel Program, and targeted investments in our company-owned portfolio. In addition to new unit growth, we're also seeing meaningful opportunity within our existing footprint through relocations and real estate optimization. Two recent new restaurant openings are relocations within their existing markets, and while early, In both cases, sales increased over 50% compared to the prior location, highlighting both the continued relevance of the brand and the importance of site selection in unlocking incremental growth. We made progress on the Applebee's Looking Good Remodel Program, completing 11 remodels this quarter. This program has consistent engagement among franchisees, and early results remain encouraging, with, on average, a mid-single-digit percent sales lift, and we expect about a third of the system to be remodeled by year-end. At IHOP, we're beginning a three-year renovation cycle with a fresh, modern design called California Heritage. It's a light, bright, and joy-filled design that brings a warm, welcoming feel to the restaurant while staying unmistakably IHOP. So before turning the call over to Vance, I do want to note that while we expect to see some near-term headwinds, we remain focused on executing against our priorities and positioning the business to drive sustainable long-term growth in this challenging environment. And now I'll turn the call over to Vance.