Dine Brands’ second quarter results were met with a negative market reaction, as revenue growth surpassed Wall Street’s expectations but non-GAAP profit fell meaningfully short. Management attributed the quarter’s sales momentum to successful menu innovation and increased guest traffic at Applebee’s, as well as continued investment in marketing and guest experience. CEO John Peyton noted, “We achieved this progress by remaining committed to our three main priorities: enhancing our menu and value platforms, communicating our brand’s value more effectively through improved marketing, and elevating the guest experience.”
Is now the time to buy DIN? Find out in our full research report (it’s free).
Dine Brands (DIN) Q2 CY2025 Highlights:
- Revenue: $230.8 million vs analyst estimates of $223.5 million (11.9% year-on-year growth, 3.3% beat)
- Adjusted EPS: $1.17 vs analyst expectations of $1.45 (19.4% miss)
- Adjusted EBITDA: $56.19 million vs analyst estimates of $62.63 million (24.3% margin, 10.3% miss)
- EBITDA guidance for the full year is $225 million at the midpoint, below analyst estimates of $233.2 million
- Operating Margin: 18%, down from 25.4% in the same quarter last year
- Locations: 3,369 at quarter end, down from 3,436 in the same quarter last year
- Same-Store Sales rose 1.6% year on year (-1.6% in the same quarter last year)
- Market Capitalization: $324.2 million
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Dine Brands’s Q2 Earnings Call
- Pratik Mahendra Patel (Barclays): Asked about operational complexity from frequent menu changes at Applebee’s and the sustainability of the value mix. CEO John Peyton stated that franchisees are equipped to manage complexity through robust testing and training, and confirmed that value items remain higher than historical norms but are starting to moderate.
- Brian Hugh Mullan (Piper Sandler): Inquired about the impact of IHOP’s House Faves on franchisee profitability and the rationale for extending it to weekends. President Lawrence Kim confirmed positive test results in both traffic and sales, supporting the nationwide rollout.
- Brian Hugh Mullan (Piper Sandler): Followed up on operational complexity at IHOP. Kim explained that reducing limited-time offers and leveraging technology like server tablets improved speed and reduced kitchen complexity, resulting in better table turns.
- Todd Morrison Brooks (The Benchmark Company): Asked about the timeline for improving profitability at corporate-owned stores. Peyton and CFO Vance Chang outlined a multi-year path to refranchising, with near-term headwinds from liquor license delays and remodeling but a clear plan for future profitability.
- Todd Morrison Brooks (The Benchmark Company): Sought clarity on when corporate-owned stores would reach neutral profitability. Chang responded that performance will improve as construction and licensing are completed, with expectations for EBITDA margins to reach system averages over time.
Catalysts in Upcoming Quarters
In the coming quarters, our analysts will be tracking (1) the pace and impact of dual-brand restaurant openings and Applebee’s remodels, (2) the success of IHOP’s House Faves menu expansion in driving incremental traffic and check growth, and (3) improvements in margins as company-owned stores recover from remodeling and licensing headwinds. Execution on these initiatives will be key indicators of strategic progress.
Dine Brands currently trades at $21.09, down from $21.80 just before the earnings. Is the company at an inflection point that warrants a buy or sell? See for yourself in our full research report (it’s free).
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