Dine Brands Global, Inc. Piper Sandler 5th Annual Growth Frontiers Conference

Got it. IHOP welcomed Lawrence Kim, who came in as president two years ago. He had a long career at Yum! Brands and Taco Bell. We were attracted by his Taco Bell pedigree, as well as strong marketing, digital, social. What you are seeing now, the last couple of quarters of IHOP outperforming Black Box Intelligence and traffic, and most recently in comps is, the fruits of two years of the strategy that he has put in place, along with the team. The key components of that, Brian, are, believe it or not, IHOP never had an everyday value menu. Last year, we went to five days of everyday value. This year, seven days, and that is combo meals for $6. It is the lead of the barbell strategy, and it is driving traffic into the restaurants.

Once you are in the restaurant, we do a really good job of merchandising the higher end, higher margin, more exciting items. Second thing he has done is he has focused on accelerating menu innovation. Things like Dubai Chocolate Pancakes and the stuffed French toast that rolled out Monday are examples of the pipeline getting much stronger. Finally, what he is really good at is digital and social, and we are seeing a big difference there in terms of the way IHOP is playing and appearing in culture on a much more regular basis.

Yeah. Franchisees are on board for a couple of reasons, but one is we have got a very elaborate committee structure where the brand team and the franchisees work together. IHOP or Applebee's cannot and will not put a promotion in place that the franchisees do not agree with in terms of the price point, the margin, and the food item itself. They were on board from the beginning with everyday value. It was a sales process to convince them that the 5 days would generate the incremental traffic. We proved that. We went to 7 days, had to prove that. Then they voted this year to make it permanent. It is a process, but they are on board.

Yeah, sure. The answer for IHOP is very similar to Applebee's as well. Just for context, before COVID, off-prem was about 6%, 7%, 8% of sales for both brands. In the 5 years post-pandemic, it is 22%, 23% and growing. It has been very consistent there in terms of that opportunity. The two brands both became part of the off-prem consideration set in a way they were not before. We had to do a lot to learn how to do that, right? Those 3,000 restaurants were not built to have a quarter of their business going out the side door. There was a lot of MacGyvering back of house in terms of process and procedures in order to carve out the space to effectively do off-prem.

We had to look into and improve our packaging because it just wasn't as important when you're only doing 7% or 8% in terms of how the packaging looks, but also in how it functions in keeping the food hot. We had to learn how to work with DoorDash and Uber Eats and merchandise our product on the third-party sites, et cetera. Now, your point about catering, it's been double digit quarter-over-quarter growth since IHOP relaunched its catering program last quarter. There's a technology component to it, with the catering-enabled websites. All of our to-go packaging or catering packaging is new and accommodates the larger portions, and it's been driving off-prem, and we think there's a lot more upside.

Yeah. The biggest opportunity for Applebee's, if you step back a moment, the full service dining or the category that Applebee's competes in is having a bit of a shakeout, right? There are brands that seem to be fading a little bit, like Fridays and Red Lobster, and there are a couple of our competitors that have had a really good couple of years or a really good couple of quarters. Applebee's is posting 1%, 2% comp sales growth, and that is okay, but not good enough. What we are focused on, no surprises because the formula is pretty similar. We have spent the last year and a half really investing in a new menu innovation, and not just individual items, but categories and platforms that will be new and can be built out. You will see those begin to roll out in the first quarter of next year.