Dine Brands Defies Expectations with Dual-Brand Gains and Share Buybacks

Date of Call: Feb 25, 2026

Financials Results

• Revenue: $217.6M for Q4, up 6.2% YOY; $879.3M for full year, up 8.2% YOY
• EPS: $1.46 adjusted diluted EPS for Q4, up from $0.87 YOY; $4.45 adjusted diluted EPS for full year, down from $5.34 YOY

Guidance:

• Applebee's domestic system-wide comp sales expected between 0% and 2% for 2026.
• IHOP domestic system-wide comp sales expected between 0% and 2% for 2026.
• G&A expected between $205M and $210M for 2026.
• EBITDA expected between $220M and $230M for 2026.
• CapEx expected between $25M and $35M for 2026.
• At least 50 incremental dual-brand openings expected in 2026.
• Applebee's expected to have 15-5 net fewer domestic restaurants; IHOP expected to have between 10 net fewer and 10 new domestic openings.

Business Commentary:

Revenue and EBITDA Performance:

• Dine Brands Global reported adjusted EBITDA of $59.8 million for Q4 2025, up from $50.1 million in the same quarter last year. For the full year, adjusted EBITDA was $219.8 million, compared to $239.8 million in 2024.
• The increase in adjusted EBITDA for Q4 was driven by the timing of national advertising fund benefits, while the full-year decline was unfavorably impacted by investments and transitory costs at company-owned restaurants.

Applebee's Sales and Value Strategy:

• Applebee's returned to positive sales growth in 2025 with a 1.3% increase in same-restaurant sales for the full year, compared to negative 4.2% in 2024. Off-premise comp sales increased 6.2% in Q4 and 6.5% for the full year.
• The improvement was driven by a focus on value, marketing, and guest experience enhancements, including the introduction of new menu items like the Grill Cheese Cheeseburger and the expansion of the 2 x 4 platform.

IHOP Traffic and Value Menu Impact:

• IHOP's same-restaurant sales were negative 1.5% for the full year, improving from negative 2% in 2024. Positive traffic was noted in Q4, with a 0.3% increase in comp sales.
• The introduction of an expanded value menu available seven days a week drove traffic and helped improve average check comp by approximately 130 basis points from Q3 to Q4.

Dual-Brand Expansion and Performance:

• The company opened 32 dual-brand restaurants in the U.S. in 2025, with an additional 9 under construction. These locations reported revenue 1.5 to 2.5x higher than single-brand locations.
• The dual-brand model was found to be complementary, with balanced performance across all dayparts, and franchisee interest remains strong, expecting at least 50 incremental dual-brand openings in 2026.

Capital Allocation and Share Repurchase:

• Dine Brands returned $92 million of capital to shareholders in 2025 through buybacks and dividends, including a commitment to repurchase at least $50 million of shares during Q4 2025 and Q1 2026.
• The company continues to view its shares as undervalued and remains committed to its capital return program as part of its disciplined capital allocation strategy.

Sentiment Analysis:

Overall Tone: Positive

• Management stated '2025 performance improved compared to 2024' and 'we're optimistic for the year ahead and achieving additional growth led by improved comp sales, improved traffic and net unit development.' They also noted 'positive sales trends despite severe weather.'

Q&A:

• Question from Jeffrey Bernstein (Barclays): How did Q4 comp trends compare to internal expectations, and are both brands now positive and within the 0% to +2% guidance for the full year?
  Response: Momentum built through Q4 but softened in December; brands recovered in Q1 and are now positive, within the guided range despite weather.

• Question from Jeffrey Bernstein (Barclays): What are the plans for full-year 2026 share repurchases given the valuation discount?
  Response: The company will continue the buyback program as long as it believes its shares are discounted versus their intrinsic value.

• Question from Dennis Geiger (UBS) via Paul: Have you seen any change in consumer behavior by income cohort, and are higher-income guests shifting in?
  Response: Consumer behavior was consistent; both brands saw growth in higher-income guests, with value mix stable (Applebee's ~33%, IHOP ~20%).

• Question from Dennis Geiger (UBS) via Paul: Regarding dual-brand openings and closures, how should we think about development beyond 2026?
  Response: Closures are expected to decline due to dual-brand conversions and expiring agreements; net unit growth inflection expected in 12-24 months.

• Question from Brian Mullan (Piper Sandler) via Alison Arfstrom: How is the weekend value menu at IHOP impacting franchisees?
  Response: The expanded weekend value menu maintained incidence at ~10% of checks; momentum is strong, and the program will extend into 2026.

• Question from Nick Setyan (Mizuho): How are you thinking about the cadence of value initiatives for 2026, and what else will drive comps?
  Response: Strategy is fewer, longer-running promotions focused on core value platforms (2 for 25 at Applebee's, $6 everyday value at IHOP) supplemented by innovation and marketing.

• Question from Nick Setyan (Mizuho): Why might operating cash flow not be in line with EBITDA guidance?
  Response: Timing issues with interest payments and higher remodeling incentives impacted 2025 cash flow; normalization and improved EBITDA are expected in 2026.

• Question from Brian Vaccaro (Raymond James): What were the traffic and check dynamics for each brand in Q4?
  Response: Applebee's comp sales -0.4% (check +3%, traffic negative); IHOP comp sales +0.3% (check flat, traffic positive).

• Question from Brian Vaccaro (Raymond James): What EBIT loss from company operations is layered into the 2026 EBITDA guidance?
  Response: Guidance assumes company restaurant portfolio at breakeven EBITDA for 2026, a meaningful improvement from the negative $10M (excluding depreciation) in 2025.

Contradiction Point 1

Company-Owned Restaurant EBIT Performance and Guidance

Contradiction on expected financial performance of company-owned restaurants for the upcoming year.

Could you provide more details on the recent earnings report? - Brian Vaccaro (Raymond James)

20260225-2025 Q4: For 2026, the company expects its company-owned restaurant portfolio to be at a breakeven level. - John Peyton(CEO)

Given the ~$8M EBIT loss for company-owned restaurants in 2025 was ahead of expectations, what EBIT loss is factored into the 2026 EBITDA guidance? - Eric Gonzalez (KeyBanc Capital Markets Inc.)

2025Q3: These disruptions are not expected to be a factor next year. - Vance Chang(CFO)

Contradiction Point 2

Value Menu Strategy and Check Growth at IHOP

Contradiction on the impact of the value menu rollout on check growth and operational strategy.

Could you discuss the implications of the recent strategic partnership on product development timelines? - Paul (UBS, on with Dennis Geiger)

20260225-2025 Q4: The value portion of tickets was stable (Applebee's ~34%, IHOP ~20%). Both brands saw growth in higher-income guests. - John Peyton(CEO)

Observed any shifts in consumer behavior across income groups from Q4 to Q1, particularly between high- and low-income guests? - Jeffrey Bernstein (Barclays Bank PLC)

2025Q3: IHOP's value mix grew to 19% from a low of around 10%... and is expected to increase further as the everyday value menu is available 7 days a week. - John Peyton(CEO), Vance Chang(CFO)

Contradiction Point 3

Net Unit Growth Timeline

Contradiction on when the company expects to return to positive net unit growth.

What is your perspective on the collaboration between UBS and Dennis Geiger? - Paul (UBS, on with Dennis Geiger)

20260225-2025 Q4: An inflection point toward positive net unit growth is expected in the next 12-24 months. - John Peyton(CEO)

Do the projected 50+ dual-brand openings in 2026 imply specific closure numbers, and how should we view development and closures beyond 2026? - Dennis Geiger (UBS Investment Bank)

2025Q3: The company is getting close to returning to net unit growth, driven by multiple products... - John Peyton(CEO)

Contradiction Point 4

Value Mix Target and Comfort Level

Contradiction on whether the current value mix level is considered comfortable or sustainable.

Nerses Setyan (Mizuho) - Nerses Setyan (Mizuho)

20260225-2025 Q4: The strategy is to have fewer promotions... focusing on the 2 for 25 platform. Consistent messaging... will drive excitement and performance. - John Peyton(CEO)

Is the value pivot sufficient for 2026, or is more needed, and why might operating cash flow not align with or exceed 2025 despite stronger EBITDA guidance? - Eric Gonzalez (KeyBanc)

2025Q1: The value mix at 34% is at the high end of the recent historic range and is comfortable due to profitable investments... It may decrease if the macro environment improves. - Vance Chang(CFO)

Contradiction Point 5

Company-Owned Restaurant Portfolio Performance Expectations

Contradiction on timeline for owned portfolio profitability.

What are your key takeaways from Q1 earnings? - Brian Vaccaro (Raymond James)

20260225-2025 Q4: For 2026, the company expects its company-owned restaurant portfolio to be at a breakeven level. - John Peyton(CEO)

What EBIT loss have you factored into the 2026 EBITDA guidance, given the ~$8M 2025 company-owned restaurant EBIT loss ahead of expectations? - Todd Morrison Brooks (The Benchmark Company)

2025Q2: Once these one-time disruptions subside, performance is expected to improve quarter-by-quarter... leading to an EBITDA margin in the low-to-mid single digits for the portfolio. - Vance Yuwen Chang(CFO)