Dine Brands Upgrades Applebee’s Sales Forecast to 1%-3% as Dual Brand Growth Speeds Up

Key Highlights from Dine Brands Global’s Q2 2025 Earnings Call

During the recent earnings call, Dine Brands Global (DIN) shared insights into its performance across its restaurant brands, Applebee’s and IHOP. The company emphasized a strong focus on strategic priorities such as menu innovation, marketing improvements, and guest experience enhancements. These efforts contributed to improved sales and traffic in the second quarter of 2025.

John W. Peyton, CEO of Dine Brands, highlighted that the momentum from March carried over into the second quarter, resulting in better sales and traffic across both brands. He noted that the company's success was driven by three main priorities: enhancing the menu and value platforms, improving brand communication through effective marketing, and elevating the overall guest experience.

Applebee’s reported a 4.9% increase in comparable sales, with traffic positive for the first time since Q1 2023. This marked the first time in two years that Applebee’s achieved positive comp sales. The brand introduced a new menu item each quarter, including Chicken Parmesan Fettuccine in the “2 for” menu category. Off-premise sales also showed strong performance, with a 7.6% lift in sales during Q2.

On the marketing front, Dine Brands expanded its in-house social media capabilities, particularly on TikTok, where video views increased over 500%, user reach grew 760%, and likes climbed nearly 1,000%. Additionally, nine of the top 10 franchisees representing 75% of the Applebee’s system have opted to accelerate restaurant remodels this year, with over 100 remodels expected to be completed by year-end.

For IHOP, the House Faves menu performed well, leading to traffic gains. The brand is also expanding its value platform to seven days nationwide. Operational improvements, such as increasing server tablet adoption and reducing product windows, have improved order accuracy by 5 percentage points and reduced table turns by 4 minutes year-to-date.

Internationally, Dine Brands continues its dual brand expansion, with new openings in Mexico and a development agreement in Saskatchewan. The company remains on track to nearly double its total international dual brand restaurants by the end of the year.

In terms of company-owned restaurants, Dine Brands added 12 Applebee’s to its portfolio in May, bringing the total to 70 company-operated locations, including 59 Applebee’s, 10 IHOPs, and 1 Fuzzy’s.

Financial Performance and Outlook

CFO Vance Yuwen Chang reported that consolidated revenues increased by 11.9% to $230.8 million in Q2 2025, compared to $206.3 million in the same period last year. However, franchise revenues and rental income saw declines. Adjusted EBITDA for Q2 2025 decreased to $56.2 million from $67 million in Q2 2024, while adjusted diluted EPS was $1.17, down from $1.71 in the previous year.

Chang also highlighted the completion of a refinancing transaction, securing a new $600 million senior secured notes at a fixed rate coupon of 6.72% per year with a maturity date of June 2030.

Looking ahead, Chang updated guidance, raising Applebee’s domestic system-wide comp sales forecast to between positive 1% and 3%, up from the previous range of negative 2% to positive 1%. For IHOP, the forecast was narrowed to between negative 1% and positive 1%, compared to the previous range of negative 1% to positive 2%. G&A expenses were raised to $205 million to $210 million, while EBITDA guidance was lowered to $220 million to $230 million. Capital expenditures were also increased to $30 million to $40 million.

Strategic Focus and Operational Improvements

The company continued to focus on menu innovation, value platforms, and dual brand expansion. Both Applebee’s and IHOP are accelerating their social media engagement and operational improvements. Key metrics showed Applebee’s reversing negative comp sales from Q1, while IHOP’s comp sales improved slightly.

Despite these positive developments, some risks remain. Consumer macroeconomic pressures continue, with guests ordering fewer beverages and appetizers and trading down to lower-priced items. IHOP faces elevated commodity costs, particularly for eggs and coffee, with management expecting mid-single-digit increases for the full year. Tariff and trade policy risks remain fluid, and future changes are not included in current cost forecasts.

Company-owned store profitability is currently impacted by liquor license delays, remodeling closures, and staffing investments, but management expects improvement as these disruptions abate.

Analyst Sentiment and Management Confidence

Analysts expressed slightly positive sentiment, highlighting enthusiasm for Applebee’s performance, menu strategy, and IHOP’s House Faves expansion. Questions focused on operational complexity and profitability of corporate stores. Management maintained a confident tone, emphasizing strategic clarity and execution. In Q&A, responses were detailed and constructive, with Peyton complimenting questions and providing direct answers.

Compared to the previous quarter, management’s tone became more confident due to improved performance. Analysts shifted from cautious to more constructive, especially regarding Applebee’s traffic and value initiatives. The focus this quarter was on sustainability of performance and operational execution rather than macroeconomic headwinds.

Final Thoughts

Dine Brands Global emphasized that both Applebee’s and IHOP saw improvements in sales and traffic, supported by new value campaigns, updated marketing strategies, and steady operational enhancements. The company reiterated confidence in its strategic direction and ability to drive continued progress across all brands.