Financial Data and Key Metrics Changes - Total revenue for Q1 2025 was $166.3 million, up from $157.9 million in Q1 2024, reflecting a year-over-year increase [28] - Same store sales declined by 3.1%, with a 3.4% benefit from menu price increases and a negative 6.5% impact from traffic and mix [28] - Restaurant level profit margin was 17.9%, compared to 18.1% a year ago, with restaurant level profit increasing by 4% year over year to $29.7 million [29] - Net loss for the quarter was $25 million, an improvement from a loss of $26.1 million in the prior year [30] - Adjusted EBITDA was $300,000 for the first quarter, indicating slight profitability [31] Business Line Data and Key Metrics Changes - Five new restaurants were opened, bringing the total to 251 [9] - The average unit volume (AUV) for the first quarter was $2.9 million [28] - The Infinite Kitchen format showed strong performance, delivering higher digital sales and operational efficiencies [11][34] Market Data and Key Metrics Changes - Same store sales grew in more than half of the markets, particularly in the Upper Midwest, Texas, and Colorado, which all experienced double-digit growth [28] - Los Angeles continued to be impacted by the aftermath of wildfires, affecting sales performance [57] Company Strategy and Development Direction - The company’s strategic pillars for 2025 include menu and technology innovation, strengthening guest connection, and expanding its footprint [8] - Plans to enter three new markets (Sacramento, Phoenix, and Cincinnati) and open at least 40 new restaurants, including 20 with the Infinite Kitchen format [13] - The company aims to enhance its loyalty program and menu innovation to drive customer engagement and sales [20][26] Management's Comments on Operating Environment and Future Outlook - The macro environment remains uncertain, with April sales trends reflecting a broader consumer slowdown [7] - Management expressed confidence in the long-term value delivery despite current challenges, emphasizing operational excellence and continuous improvement [7][25] - The company anticipates flat same store sales growth for the fiscal year, with revenue guidance between $740 million and $760 million [38] Other Important Information - The company launched a reimagined loyalty program, SG Rewards, which has seen strong adoption with 20,000 new digital customers added weekly [20] - The company is focused on optimizing operations and enhancing guest experience through technology and menu innovation [22][21] Q&A Session Summary Question: Clarification on tariff impacts on build-out costs - The build-out cost for new restaurants is expected to increase by approximately 10% due to tariffs, with specific impacts on the Infinite Kitchen format [42][44] Question: Plans for mid to lower-priced menu items - The company is exploring opportunities to introduce mid to lower-priced items through seasonal menus and loyalty programs, without presenting them as a traditional value menu [49][51] Question: Geographic performance differences - Notable performance differences were observed in Los Angeles due to wildfires and changes in Washington DC, where older stores experienced a decline [57][58] Question: Sales cadence expectations for 2025 - The second quarter is expected to be challenging, but the company anticipates improved performance in the second half of the year due to easier comparisons and seasonal menu launches [66] Question: Impact of tariffs on Infinite Kitchen deployment - Current tariff structures will not change the deployment strategy for Infinite Kitchens, as the return on capital remains favorable [68] Question: Updates on capital allocation and investment priorities - The company maintains a growth target of 15% to 20% for new unit openings, with strong returns on capital supporting this strategy [92][95] Question: Metrics on the SG Rewards program - The loyalty program has successfully acquired 20,000 new digital customers weekly, providing valuable data for customer engagement and menu development [96][98]

Financial Data and Key Metrics Changes - In Q1 2025, EBITDA decreased to $54.7 million from $60.8 million in the same quarter last year [13] - Revenues increased by 4% to $214.8 million compared to $206.2 million in Q1 2024 [28] - Adjusted free cash flow was $14.6 million, down from $29.7 million in the prior year [30] - Adjusted diluted EPS for Q1 2025 was $1.03, compared to $1.33 in Q1 2024 [29] Business Line Data and Key Metrics Changes - Applebee's reported a 2.2% decline in comp sales, while IHOP posted a negative 2.7% in comp sales [13][32] - Off-premise comp sales at Applebee's increased by 3.7%, driven by promotions [13] - IHOP's house faves value menu contributed to traffic growth, outperforming the family dining segment [18] Market Data and Key Metrics Changes - The value mix at Applebee's increased from 28% to 34%, while IHOP's value mix rose from 16% to 19% [9] - Approximately 13% of IHOP's and 10% of Applebee's annual market basket is sourced internationally [11] Company Strategy and Development Direction - The company is focused on three key priorities: elevating guest experience, enhancing menu and value programs, and better communicating brand value [7] - The dual brand concept is being expanded, with plans for 13 additional dual brands and 10 conversions this year [21][23] - The company is committed to remodeling Applebee's restaurants and has introduced an early adopter incentive for franchisees [31][75] Management's Comments on Operating Environment and Future Outlook - Management noted that consumer confidence has declined, affecting spending, particularly among lower-income guests [8] - Despite challenges, there was positive momentum in sales and traffic in March and April [9][94] - The company maintains its full-year financial guidance, indicating confidence in its strategic initiatives [35] Other Important Information - The company is actively monitoring global trade tensions and their potential impact on costs, with a small portion of market basket sourced internationally [10] - The company has implemented cost-saving initiatives resulting in over $14 million of annualized savings across both systems [34] Q&A Session Summary Question: Context on Applebee's performance in April - Management noted modest improvement in January, pressure in February, but a significant improvement in March that continued into April, driven by promotions and off-premise sales [41][42] Question: IHOP's same-store sales guidance - Management confirmed confidence in IHOP's guidance due to traffic momentum and successful marketing initiatives [50][56] Question: Value proposition at both brands - Management emphasized the importance of evolving the value proposition based on consumer feedback and market conditions [59][63] Question: Applebee's remodel package details - The remodel package is expected to cost between $200,000 to $300,000 per franchisee, with incentives provided for early adopters [72][75] Question: Average check growth expectations - Applebee's check increased slightly, while IHOP's check dropped due to a shift in product mix [77] Question: Operational simplification examples - Management highlighted improvements in ordering speed through technology and operational flow enhancements [81][84] Question: Future direction for Club Applebee's - The company plans to enhance Club Applebee's with more personalized marketing and exclusive offers for members [87][92]