Core Insights - Dine Brands reported a 3.1% increase in same-store sales at Applebee's for Q3, marking the second consecutive positive quarter after a challenging start to 2023 [1] - Average weekly sales at Applebee's were $52,600, with off-premises sales contributing approximately $12,000, or 22.9% of total sales [2] Applebee's Performance - Positive traffic was driven by new menu items, including the Chicken Parmesan Fettuccine, which became the best-selling standalone pasta dish, accounting for about 13% of transactions [3] - The Ultimate Trio Appetizer Sampler also performed well, averaging 13.5% of transactions and contributing to check growth [3] - Off-premises sales increased by 9% year-over-year, aided by the Ultimate Trio's availability for takeout [4] - The company is committed to ongoing menu innovation, with plans to introduce a new appetizer and entrée each quarter [4] Marketing and Engagement - Applebee's has focused on enhancing social media engagement, achieving a 266% increase compared to the same period last year [5] Remodeling and Growth Strategy - The "Lookin' Good" remodeling plan has seen approximately 80 restaurants updated, with over 100 expected to be completed by year-end, leading to strong post-remodel sales lifts [6] - The company aims to strengthen brand relevance and competitive edge for long-term growth [6] IHOP Performance - IHOP reported a -1.5% change in same-store sales, but traffic turned positive during the quarter, driven by the launch of the House Faves menu [7] - The introduction of an everyday value menu has generated encouraging momentum, which is expected to continue into Q4 [7]

Financial Data and Key Metrics Changes - Consolidated total revenues increased by 10.8% to $216.2 million in Q3 2025 compared to $195 million in the prior year, primarily driven by an increase in company restaurant sales, offset by a decrease in franchise revenues [17] - Adjusted EBITDA decreased to $49 million from $61.9 million in Q3 2024 [17] - Adjusted diluted EPS for Q3 2025 was $0.73, down from $1.44 in Q3 2024 [18] - Year-to-date adjusted free cash flow was $68.2 million, compared to $77.8 million in the same period last year [18] - G&A expenses increased to $50.2 million in Q3 2025 from $45.4 million in the same period last year [17] Business Line Data and Key Metrics Changes - Applebee's reported a 3.1% increase in comparable sales, while IHOP posted a negative 1.5% in comparable sales [6][22] - Applebee's average weekly franchise sales in 2025 were $52,600, with off-premise sales contributing approximately $12,000 or 22.9% of total sales [22] - IHOP's average weekly franchise sales were $36,700, with off-premise sales contributing $7,750 or 20.4% of total sales [22] - Applebee's commodity costs increased by 0.3%, while IHOP's commodity costs increased by 5.7% compared to the prior year [23] Market Data and Key Metrics Changes - IHOP outperformed Black Box Traffic metrics every month in 2025, marking Q3 as the third consecutive quarter of traffic outperformance versus industry benchmarks [11] - The value mix at IHOP remained at about 19%, while Applebee's value mix slightly increased to about 30% in Q3 [5][50] Company Strategy and Development Direction - The company is focusing on a dual-brand strategy, combining IHOP and Applebee's to drive higher sales and create operational efficiencies [25][26] - The dual-brand concept has shown promising results, with international locations delivering 1.5X sales compared to single-branded restaurants [26] - The company plans to double its total international dual-brand restaurants by the end of the year [15] Management's Comments on Operating Environment and Future Outlook - Management noted slightly higher macroeconomic anxiety leading to more intentional spending decisions among consumers [5] - The company is optimistic about the growth opportunities across key international markets despite macroeconomic headwinds [15] - Management expects to maintain full-year financial guidance, anticipating to be on the low end of the EBITDA range due to investments in company restaurants [24] Other Important Information - The company repurchased $22.5 million in stock and paid $7.8 million in dividends in Q3 2025 [21] - The board declared a reduction of the dividend from $0.51 per share to $0.19 per share to fund a larger share repurchase program [32] Q&A Session Summary Question: What is the expected impact of company-owned stores on future performance? - Management indicated that disruptions from remodels and closures would not be present next year, expecting a $9-$10 million segment profit hit from company restaurants this year [35] Question: How is IHOP addressing check growth amidst a focus on value? - Management shared a three-prong approach to drive transactions, including upselling strategies and featuring premium-priced items [38] Question: Can you elaborate on franchisee demand for dual-branded concepts? - Initial demand is characterized by conversions rather than new builds, with more interest from IHOP franchisees due to existing dinner challenges [41] Question: What is the current consumer demographic trend? - Management noted a slight shift towards higher-income guests, while lower-income guests and Gen Z are dining out less [47] Question: What is the expected number of dual-brand openings by year-end? - The company expects approximately 30 dual-branded restaurants to be open or under construction by year-end, with a total of 50 expected in 2026 [51]

Core Insights - Casual dining has experienced a significant turnaround in performance, becoming the best-performing segment in the restaurant industry as of August, after years of underperformance [3][4] - Major casual dining chains like Chili's and Applebee's have reported positive same-store sales growth, with Applebee's achieving a 4.9% increase in Q2 [2][6] - The shift in casual dining's success is attributed to value-driven strategies that have put it in direct competition with fast food and fast casual segments [2][3] Industry Performance - Casual dining has moved from being the second-worst performer in the restaurant industry to the best-performing segment, as indicated by Black Box Intelligence data [3] - The industry's success is not merely due to easy comparisons, as casual dining has shown consistent performance improvements over a two-year basis [4] Consumer Trends - Casual dining chains are focusing on affordability and smaller portion sizes to attract a diverse consumer base across different income levels [4] - Olive Garden's strategy of testing smaller menu items at reduced prices has resulted in traffic growth among consumers from all income brackets during its fiscal Q1 [4] Company Strategies - Applebee's has successfully returned to traffic growth by enhancing its value perception, primarily through its 2-for-$25 promotion [6] - The 2-for-$25 offering serves not only as a value proposition but also as a platform for menu innovation, with new entrees introduced to drive sales growth [7]