Dine Brands Global, Inc. Q1 FY2025 Earnings Call

Good day, and thank you for standing by. Welcome to the Dine Brands First Quarter 2025 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation there will be a question-and-answer session. Please be advised that today's conference is being recorded. I will now turn the conference over to Matt Lee, Senior Vice President in Finance and Investor Relations. Please go ahead.

Good morning, and welcome to Dine Brands Global’s first quarter fiscal 2025 conference call. This morning's call will include prepared remarks from John Peyton, Dine Brands' 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 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 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 10-Q filing. The forward-looking statements are as of today and we assume no obligation to update or supplement these statements. We’ll refer to certain non-GAAP financial measures, which are described in our press release and available on Dine Brands Investor Relations website. For calendar planning purposes, we are tentatively scheduled to release our Q2 2025 earnings before the market opens on August 6, 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 Brands CEO and President of Applebee's, John Peyton.

Good morning, everyone. Thanks for joining us today. On today's call, I'll share Dine's Q1 results. I'll discuss trends in consumer behavior, provide updates on the progress of our brand's key priorities, and then Vance will discuss our financial results in more detail. First, though, an update regarding the Applebee's leadership team. Over the last two months, I've been working closely with Applebee's leadership and franchisees to further develop our robust growth plan. While we initially planned to hire a new Applebee's President, the board and management team agree that continuity is crucial right now. To ensure stability and accelerate business growth, I'll continue to serve as President of Applebee's in addition to my role as Dine Brands CEO. The positive traction we're currently seeing with key initiatives reinforces the need for my focus on Applebee's success. We'll resume the search for a president eventually, but for now, I'll work alongside our franchisees to drive Applebee's forward and profitably grow the business. The strength and caliber of the Dine Brands team gives me great comfort that this decision is the right one. At the brand level, new Presidents at IHOP and Fuzzy’s are both executing clear visions for their brands. My confidence in the entire Dine system and our brands remains unwavering. Now, back to our results. As we outlined on our last earnings call, we started the year with a renewed focus on three key priorities. First is elevating the guest experience. Second is enhancing menu and value programs. And third is better communicating the value that our brands offer to our guests. In Q1, consumer confidence declined, which certainly influences the challenges that our guests continue to face. Guests remain cautious with their spending, particularly the lower-income guests, and we continue to see check management and trade down to lower-priced items. Across Applebee's and IHOP, the value mix increased versus Q4. At Applebee's, the value mix increased from 28% to 34%. At IHOP, that mix increased from 16% to 19% due to the broader rollout of House Faves. Despite this challenging backdrop, sales, traffic, and our development pipeline each improved in March, and that positive momentum continued into April. Of course, recent global trade tensions have also introduced new uncertainty into the operating environment. Although it's still early to assess the impact of tariffs, we can confirm that only a small portion of our market basket is sourced internationally. Approximately 13% of IHOP and 10% of Applebee's annual market basket comes from international markets. From a construction cost standpoint, the vast majority of the total equipment package for a new restaurant opening utilizes finished goods from the US, although we may have component parts that come from overseas. We're closely monitoring this dynamic situation and are actively working with our supply chain co-op, CSCS, to mitigate the impact of tariffs on our franchisees to the best of our ability. During a challenging environment like this, it's worth emphasizing that our asset-light business model serves us well when combating macro headwinds. We continue to generate significant free cash flow, enabling us to make investments in our brands such as the reimaging incentive program while also returning capital to our shareholders. Our scale, our infrastructure, and capital allows us to opportunistically take over restaurants to advance our long-term goals in a period of reinvestment in our system. Most importantly, our business model is rooted in the strength and relevance of our brands and the strength and expertise of our franchisees. With that, I'll now walk through our key financial results. In Q1, our EBITDA was $54.7 million, compared to $60.8 million in the same quarter last year. Revenues were up 4% to $214.8 million. For comp sales, Applebee's reported a 2.2% decline in comp sales, while IHOP posted comp sales of negative 2.7%. Adjusted free cash flow was $14.6 million, which was a decrease of $15.1 million. Now shifting to our brands, I'll share updates across our portfolio, starting with Applebee's. As I mentioned earlier, Applebee's saw improvement in sales and traffic, closing the gap between our performance in Black Box with positive comp sales in March driven by the growth of off-premise and the Big Easy promotion. Off-premise comp sales increased 3.7% compared to last year, largely driven by demand for the really big meal deal and our $0.50 America's Favorite Boneless Wings campaign featured during the NCAA Basketball Tournament. This positive trend in off-premise volume validates our deliberate effort to grow off-prem by including nationally advertised campaigns and featuring to-go-only promotions. Menu innovation is an important initiative at Applebee's, and we're now able to introduce a new item every quarter. In Q1, we launched our Big Easy menu, featuring two new Bourbon Street Cajun pasta dishes at a compelling price point starting at $11.99. This limited-time promotion leveraged the fan-favorite Bourbon Street section of our menu and the Big Easy menu drove both sales and checks in March, and that momentum continued into April. We also brought back our viral date night pass. This year, we made date night exclusively available through our loyalty program, Club Applebee's, as a way to expand the program and create deeper connections with our guests. This resulted in over 175,000 new signups, bringing our total Club Applebee's program to over 8.5 million members. Making date night exclusive to Club Applebee's is an example of how we're leaning into Club Applebee's in a way that we haven't done before. Providing early or exclusive access to new products and promotions is a key component of our loyalty strategy. We'll continue to leverage Applebee's strong brand relevance and tap into insights from IHOP's loyalty program to enhance the Club Applebee's platform and its offerings. Overall, we're encouraged by the results that we saw toward the end of the quarter, which have continued through April, and we attribute this momentum to our menu innovation, investments in social media, and the launch of Applebee's new guest training initiative. Now to talk about IHOP. In early March, we opportunistically took back 10 IHOP restaurants located in Cincinnati, and we already have plans in place to convert four of these restaurants to dual brands. We'll update investors on our progress as we move through the conversion process. Under Lawrence's leadership, IHOP is focused on several key programs. First is the House Faves value menu. Second, focusing on core breakfast equities, recalling that approximately 80% of total food sales at IHOP are breakfast items, and that's nearly 65% during the dinner day part. Third is streamlining operations to increase speed of service and reduce wait times. The fourth focus for IHOP is igniting social media and other marketing activations to be more culture-centric. Our commitment to the IHOP House Faves value menu, which launched in Q4 2024, is performing exactly as we expected and it's helped attract more guests to our restaurants. Despite headwinds in the family dining segment, the House Faves menu is a key driver for traffic growth, building on last quarter's momentum, and as a result, IHOP beat the family dining segment on traffic this quarter. As part of IHOP's ongoing marketing efforts to create bigger, more exciting moments to connect with guests, on Saturday, March 1st, IHOP set a Guinness Book of World Records for most pancakes served in eight hours by serving over 25,000 pancakes. This event brought strong marketing awareness, social buzz, and garnered over 3 billion impressions driving the largest national pancake day sales lift that we've seen since COVID. We're pleased to see the positive momentum after Lawrence's first quarter at the helm of IHOP and I look forward to seeing continued progress at the brand. And now to discuss Fuzzy's. Comp sales continued to be pressured as traffic trends remained challenging for the brand. During the quarter, Fuzzy's implemented several initiatives to enhance its performance, including introducing its first system-wide happy hour to help boost dine-in traffic and expand our bar business. To support off-premise sales, Fuzzy's revamped its online ordering website and partnered with third-party delivery services to increase market visibility and reach our guests where they are and how they want to order. On the operations front, Fuzzy’s is in the process of installing wireless and mobile pay systems in all locations, making the payment process more convenient for guests. This update will be completed by June. Turning to our international business, we are encouraged by the development discussions we've had with both new and existing international franchisees. In March, we detailed our plans to expand the dual brand concept with the goal of opening 13 additional dual brands while also completing 10 dual conversions this year, which will more than double our international dual brand restaurant count to 41. This includes our first-ever dual brand restaurant in Costa Rica, which will open in Q3, and the opening of the first non-traditional restaurant in Mexico. Latin America is a key international market for us, and we are excited to be working in partnership with our franchisees to strategically scale our presence in these countries and with new restaurant formats. Finally, I'll discuss our development plans in more detail. We're pleased with the performance of our dual brand concept and we remain on target for our 14 domestic dual brand openings this year. Our first domestic dual brand in Seguin, Texas, continues to perform above expectations, doing approximately three times the sales compared to when it was a standalone IHOP. Guest feedback is very positive, especially around the fully combined menu of brand favorites. Our franchisee in San Antonio just signed up to open eight more dual brands in the market over the next two years. As a result of the strong showing, we continue to receive interest from both new and existing franchisees to build or convert to this new concept, and based on our current pipeline, we plan to have more openings in 2026. Just last week, a current Applebee's and IHOP franchisee successfully acquired a portfolio of six additional Applebee's restaurants, and another IHOP franchisee acquired a portfolio of five Applebee's, all in Wisconsin. This strategic transaction marks a significant expansion, allowing these two strong operators to further diversify their portfolio and strengthen their presence in casual dining. The acquired Applebee's restaurants will either be converted to dual brands or they'll complete Applebee's re-image program. These deals are positive indicators that our development strategy is resonating with our franchisees for two reasons. First, it's a great example of franchisee cross-pollination between our brands. Second, it shows that our franchisees are engaged and interested in growing our brands, particularly with our new restaurant formats that are demonstrating great results. These recent deals also build on top of the approximately 100 franchise and corporate restaurants that we're expecting to remodel by the end of the year as part of the Applebee's Looking Good program. It's an important first step in the reimage cycle and reinforces our commitment to refreshing the Applebee's restaurants. We’re pleased to see the positive reaction from franchisees to our new development and restaurant experiences, which is an indicator of the enduring strength and relevance of our brands. Now regarding our company-owned portfolio, in addition to the 10 IHOPs we took back this quarter, we also took back 47 Applebee's in Q4 2024. This year will be a transition year with investments tied to operations, marketing, remodeling, and dual-brand conversions of these restaurants, and we're working quickly to execute on each of these initiatives. Since we acquired them last year, we've pulled a number of key levers around marketing and operations to improve performance. We adjusted our menu pricing based on a data-driven pricing optimization study, boosted local marketing efforts, increased staffing levels, and extended restaurant hours in the Atlanta market to capture more of the lunch day part. As of today, we've completed two remodels with 28 more planned for 2025. As a result of these initiatives, we've seen a steady improvement in comp sales and traffic since we took over, and we'll continue to update investors on our progress as the year progresses. Now I will turn the call over to Vance.

Thank you, John. On the top line, consolidated total revenues increased 4.1% to $214.8 million in Q1 versus $206.2 million in the prior year, primarily driven by a $21.3 million increase in company restaurant sales, partially offset by a $9.7 million decrease in franchise revenues. Our total franchise revenues decreased 5.5% to $166.2 million compared to $175.9 million for the same quarter of 2024. Excluding advertising revenues, franchise revenues decreased 4.9%. Rental segment revenues for the first quarter of 2025 decreased compared to the same quarter of 2024, primarily due to lease terminations and a decrease in percentage rent attributable to lower system sales. G&A expenses were $51.3 million in Q1 of 2025, down from $52.2 million in the same period of last year due to a decrease in compensation-related expenses, offset by an increase in legal and professional service fees. Adjusted EBITDA for Q1 of 2025 decreased to $54.7 million from $60.8 million in Q1 of 2024. Adjusted diluted EPS for the first quarter of 2025 was $1.03 compared to adjusted diluted EPS of $1.33 for the first quarter of 2024. Now turning to the statement of cash flows. We had adjusted free cash flow of $14.6 million for the first three months of 2025 compared to $29.7 million for the same period of last year, driven by lower cash flows from operating activities. Cash provided by operations at the end of the first quarter of 2025 was $16.1 million compared to cash provided from operations of $30.6 million for the same period of 2024. The decrease was primarily due to an unfavorable decrease in working capital, resulting from a shift in timing of prepaid rent payments and the collection of an income tax settlement in the prior period, as well as the decrease in gross segment profit offset by a decrease in incentive compensation payments. CapEx through Q1 of 2025 was $3.3 million compared to $3.3 million for the same period of 2024. We finished the first quarter with a total unrestricted cash of $186.5 million compared with unrestricted cash of $186.7 million at the end of the fourth quarter. Regarding capital allocation, organic investments will continue to be a focus along with balance sheet management and returning capital to shareholders. Remodeling the Applebee’s system is a key initiative, and as we mentioned last quarter, we are providing an early adopter incentive for franchisees which will have an impact on our P&L. On buybacks and dividends, we repurchased $1.6 million in shares and paid $7.8 million in dividends in Q1 of 2025. We continue to remain committed to returning capital to shareholders, while also ensuring reinvestment in our business and maintaining a healthy balance sheet. As we prepare for the upcoming anticipated repayment date of our remaining Series 2019 bonds, we will look for the best window over the next several months to refinance those notes. Next, let me discuss Applebee's performance. Q1 same-store restaurant sales were negative 2.2%. Average weekly sales in 2025 were $54,700, including approximately $12,800 from off-premise, or over 23% of total sales, of which 12.5% is from to-go and 10.9% is from delivery. IHOP's Q1 same restaurant sales were negative 2.7%. Average weekly sales were $36,500, including $7,700 from off-premise or over 21% of total sales, of which 8% is from to-go and 13% is from delivery. Turning to commodities. Applebee's commodity costs in Q1 increased by 0.5%, and IHOP commodity costs increased by 8.4% versus the prior year. Our supply chain co-op, CSCS, continues to expect pricing in 2025 at Applebee's to be flat to slightly down. At IHOP, we now expect commodity costs to increase by mid-single digits for the full year versus our prior expectations of low to mid-single digits for the full year, driven by the continued impact of elevated egg pricing as a result of avian influenza. While our egg costs have increased, as with the rest of the industry, CSCS continues to keep the system supplied with eggs at prices that are competitive with the overall marketplace. We have strong and reliable suppliers supporting the needs of our system in a very challenging environment. As John previously mentioned, the tariff situation remains very fluid. Therefore, while we continue to closely monitor how our food costs could be impacted, our forecast for commodity costs do not account for the impact of tariffs. CSCS continues to work across both systems to identify additional cost-saving opportunities and support restaurant profitability initiatives through both operational improvements and input costs. To date, in 2025, we have implemented projects resulting in over $14 million of annualized savings across both systems and will continue to partner with CSCS to leverage our scale and make progress on our cross-functional restaurant profitability initiatives. On the labor front, franchisees continue to report that staffing and labor costs remain relatively stable. Before turning the call back over to John for Q&A, I'd like to add that we are maintaining our full year financial guidance at this time.

Thank you, Vance. We continue to advance our strategic initiatives, including our value platforms, reimaging our restaurants, our dual brand conversions, our restaurant take backs, and strengthening our social media. I am pleased that we are making great progress on all fronts. So now, let's turn the call back to the operator, and we will open it up for questions.

Thank you. At this time, we will conduct a question-and-answer session. And our first question comes from the line of Eric Gonzalez with KeyBanc. Your line is now open.

Hi, good morning, and thanks for the question. I appreciate the comment on Applebee's in April. I'm just wondering if you could maybe give a little more context. I know last year you brought back the DOLLARITA in May, so I'm guessing your year-over-year comparison gets a little bit more difficult. Can you just help us understand what's going on from a multi-year perspective as you exited in March and went into April and what we should expect for the remainder of the second quarter? And then I have a quick follow-up.

Hey, good morning, Eric. It's John. Thanks. We’ll have Vance address the trend there.

Good morning, Eric. In January we really saw this modest improvement relative to Q4 at both of our brands. But as we got into February, we did see some pressure at the rest of the industry, but a much improved March, which is carrying into April, as you pointed out. So despite the tough compares from last year, we saw momentum continue beyond April as well. A big part of this momentum is driven by the big promotion and also the off-premise momentum that we saw in Q1.

Yes, and Eric, it's John. I'll just add a little more clarity. Strategically for Applebee's, we learned a lot last year about what drives our customer in terms of value. We tested a couple of different offerings, and what we concluded is that we really got back to the basics of what our guests tell us they love most about us. We went back to what our menu analysis tells us sells best and what we've been long known for. By leaning into the Bourbon Street portion of our menu, that's not an accident. That is one of our most favorite segments of our menu. With the introduction of two new Bourbon Street dishes, we drove traffic and sales in a way that we haven't in several quarters. That's why I think we were able to hold our own at a time when, as we all know, our guests are watching their wallets more than ever.

That's helpful. And just as it relates to the value incidence, I think you mentioned 34%, up from 28%. Is that a range that you're comfortable operating in or would you expect that to go up or down as we move ahead here?

We are comfortable with that. It's at the high end of what I would say is the historic range of the last couple of years that we've been in this more value-oriented context. We're comfortable with where it is because of the investment we're making in our two-for-$25 initiative, which, by the way, is a profitable margin area of our menu, particularly for value, and a place for us to introduce new entrees as well. I would suspect that if and when we return to an environment where guests feel less pressure on their wallets, that number would come down a bit.

One moment for our next question. The next question comes from the line of Jake Bartlett with Truist Securities. Your line is now open.

Hi, guys. This is Larsen on for Jake. I just had a question on IHOP. Looks like you're reiterating guidance; same-store sales would imply an acceleration throughout the remainder of the year. Is that solely due to ease in compares? Are you baking any changes from the industry into that? What gives you the most confidence in terms of your own self-help drivers to accelerate sales?

Thanks, Larsen. Vance, why don't you talk about the trend and how we're looking at it? And then Lawrence, I'd love for you to discuss the IHOP strategy that gives us confidence for the back half of the year.

Of course. The trend we saw with IHOP is similar to Applebee's. We saw the momentum of traffic building towards the later part of Q1 and continuing into the early part of Q2. A big part of it is driven by House Faves, the success of it and how our guests are reacting to it. We have more in the works for the later part of this year that Lawrence will talk about, which gives us comfort that we can maintain our IHOP comp sales guidance.

Yes. Hey, Larsen, good morning. As John mentioned earlier on the call, there are four key areas that the team is rallying for the year. The first is our focus on our core breakfast equities, which account for around 70% to 80% of our total food sales. Our primary messaging is driven towards these core breakfast equities. The second key priority is value. We have had the House Faves menu since last October, and we are amplifying our marketing, which we've been doing over the past quarter, and will continue to support this value program. We're also testing the evolution of our value strategy. The third area focuses on simplifying our operations. John mentioned areas of speed. We're looking at improving cleanliness and simplifying procedures. This is critical for enhancing both the consumer experience in restaurants and easing the experience for our team members. Lastly, the fourth key driver is culture-driven marketing. It is more important than ever to drive awareness; we amplified our media plans and want to be part of the conversation. The Guinness World Record event yielded over 3 billion impressions. We're excited about what's to come for the rest of the year.

I'll also add that Larsen, for all the people that IHOP comp traffic beat Black Box for the quarter. We were up 4.3% and improved each month of the quarter. We haven't done that in a couple of years. That is significant and tells us that the House Faves menu along with the IHOP leadership team's plans are resonating. Notably, absolute traffic was up in March and continued into April as well. We haven't seen absolute traffic growth for IHOP in years. The plan is coming together, and we're seeing it in these numbers.

One moment please for our next question. Our next question comes from the line of Dennis Geiger with UBS. Your line is now open.

Great. Thanks, guys. First, I just wanted to ask a little bit more on value and the value proposition right now at both brands. John, you provided a lot of good context there. I'm curious if you can highlight anything about how customers are viewing the value proposition across both brands. And Lawrence, you touched on it in relation to the evolution of value at IHOP. I'm curious how you think about value positioning and if there's a notable evolution from here on value plans, depending on the macro situation or if the brands are generally where you want them to be on value right now.

Thanks, Dennis. Lawrence, why don't you go first and I'll follow up.

Yes. Hey Dennis. We're always listening to our consumers. We have now seven months of the House Faves menu in markets, and one piece of feedback is that our consumers would like this to be an everyday program. That's what we're testing right now in several markets. Regarding value, we have four incredible breakfast offerings at $6 and $7 in some markets. We're evaluating price points, food options, and availability. We're also looking into other channels to drive value offerings, including digital delivery and our loyalty platform.

Yes, everything Lawrence said plus, Dennis, the word evolution resonates with us because that is how we're thinking about both brands, particularly at Applebee's. We're a learning and evolving organization. We learned a lot last year about how and when our value proposition resonates with guests. We found that when we tried to be something we weren't, we were less successful. When we returned this year to what we do best, we can see the performance. We will continue to lean into the two-for-$25 initiative and you'll see us evolve it throughout the year. We have a new campaign behind it and will use it as a mechanism to introduce new entrees as part of our messaging.

Great. Thanks, guys. One more question if I could. I'm encouraged by the initial results from the dual branded concepts and the positive franchisee demand. I'm curious about the overall franchisee sentiment for both brands and the long-term development of demand. Has that changed your views moving forward?

Yes, I believe you're asking if the mix of individual brand openings and dual brands changes how we're thinking about that as a result of dual branding. We expect to continue to open both single Applebee's and single IHOPs along with duals. Many factors influence this, including territories, as not every IHOP can take an Applebee's and not every Applebee's can take an IHOP due to territory considerations. IHOP is continuing to open 40 restaurants a year, a commitment shown by our franchisees, and Applebee's franchisees are beginning to build new restaurants again. We've completed work on the prototype. We've reduced costs, and we're going to build our own Applebee's in the later half of this year to demonstrate that cost model, serving as a catalyst going forward. Expect a healthy mix of openings in both formats.

One moment for our next question. Our next question comes from the line of Brian Vaccaro with Raymond James. Your line is now open.

Hi. Thanks and good morning. Just back to the Applebee's remodel package, the Looking Good program. Can you remind us of the different levels of investment within the various tiers of the remodel? Also, could you elaborate on the franchisee incentives associated with this program and its expected impact on your P&L in 2025?

Sure, Brian. Vance, do you recall if we've disclosed the general amount for renovations?

In broad terms, not specifically. It generally varies location by location and region by region, but we're looking at the $200,000 to $300,000 level.

That package includes refreshing the exterior, awnings, lighting, refacing the facade in some cases, new flooring, new wall covering, new lighting, refinishing tables, and new upholstery. The renovations truly make the restaurants look refreshed. The franchisees' renovated restaurants have shown a lift exceeding the ROI required, which is exactly what it's intended to do.

In terms of the incentive package for competitive reasons, we haven't disclosed specifics. It's a portion of that cost that we help the franchisees with as part of this program. The impact on our P&L depends on whether there is an extension of the franchise agreement. If there is no extension, it impacts G&A. If there is an extension, it gets amortized over the new term of the agreement.

Okay, that's helpful. Thank you. Just a quick follow-up: Can you provide us the year-on-year average check growth for each brand in Q1? I know pricing is decided by the franchisees, but what are your expectations for average check or pricing for each brand throughout the rest of 2025?

The pricing increases have normalized at both brands in the low to single-digit range, and we expect that to continue as commodity costs stabilize. In Q1, Applebee's checks slightly increased versus Q4 and last year due to new menu launches and the Big Easy campaign. IHOP's check dropped somewhat due to the P mix drop because of House Faves. We saw improved traffic for IHOP, which is significant.

One moment for our next question. Our next question comes from the line of Brian Mullan with Piper Sandler. Your line is now open.

Thank you. I wanted to follow up on IHOP regarding the ease of operations initiative this year. Can you provide a couple of examples of changes that could potentially impact operations, whether it's speed of service or franchisee margins? Also, how have franchisees responded to the new leadership's initiatives?

Lawrence, please.

Absolutely. Hey, Brian. From simplification of operations, one example is our servers' tablets. We optimized text size and flow based on team member feedback, improving ordering speed and impacting service times positively. We look to reduce operational steps to streamline processes. Our culinary and operations teams visit restaurants weekly to evaluate how to enhance the operational flow from prep to cook times. We've also enhanced training protocols by leveraging technology, such as short-form videos for training replacing traditional methods. This helps improve the team member experience and training success. In terms of franchisee engagement, it's been fantastic. We engaged a task force of franchisees for their feedback because they have vast experience in operations.

One moment for our next question. Our next question comes from the line of Todd Brooks with the Benchmark Company. Your line is now open.

Hi, thanks for taking my question. I wanted to ask about Applebee's promoting Date Night exclusively through Club Applebee's and driving membership growth. Can we discuss the direction for Club Applebee's and what the brand envisions moving forward?

Absolutely. Club Applebee's has been around for several years but received little focus. This year, we aim to lean into it as a primary way of engaging with our best customers for one-to-one marketing. Expect more strategies offering exclusive access to new items and promotions. Partnerships linked directly to Club Applebee's will also be announced soon. The direction revolves around making members feel like insiders and growing our share of those who visit us three or more times annually. Unlike IHOP, it won't have a classic point-based currency; instead, we'll focus on insider access and special privileges.

A follow-up on that, John. Given Club Applebee's has been around for several years, what's the quality of the data within the program? How well do you feel you can communicate frequently with consumers, and what work is left to enhance that?

Yes. We've reorganized our internal structure to combine Club Applebee's CRM, our digital, and off-premise business under one leader to accomplish your suggestions, Todd. We have good contact data for Club Applebee's members, and we're working to improve it with third-party matching data, helping us understand member demographics better like family situations and purchasing patterns. We also track purchases across our proprietary channels, allowing us to entice members with relevant offers. The data is good and steadily improving under focused management.

Thank you. As there are no further questions, I'll now turn it back to John Peyton for closing remarks.

Thank you for your attention to what we do best and communicating our core value to our guests. For the rest of the year, our focus is on continuing to elevate the guest experience. We're committed to enhancing our menus and value programs, with a strong emphasis on operations, particularly at IHOP. Both brands are diligently working to communicate their value and special guest experiences through all channels, especially social media, which we've challenged ourselves to master over the next year. Thank you again for your questions, everyone. Have a great day.

Thank you for your participation in today's conference. This concludes the program, and you may now disconnect.