Dine Brands Global Inc.
11/04/2026 | Press release | Distributed by Public on 11/04/2026 06:31
Quarterly Report for Quarter Ending September 27, 2026 (Form 10-Q)
Management's Discussion and Analysis of Financial Condition and Results of Operations.
Management's Discussion and Analysis of our results of operations and financial condition should be read in conjunction with the Condensed Consolidated Financial Statements included in this Form 10-Q. This Item 2 is organized as follows:
•Consolidated Results
•Key Performance Indicators
•Segment Results
•Non-Segment Results
•Liquidity and Capital Resources of the Company
•Critical Accounting Estimates
Consolidated Results
| Three Months Ended | Change | Nine Months Ended | Change | |||||||||||||||||||||||||||||||||||
| September 27, 2026 | September 28, 2025 | September 27, 2026 | September 28, 2025 | |||||||||||||||||||||||||||||||||||
| (In millions) | ||||||||||||||||||||||||||||||||||||||
| Revenues: | ||||||||||||||||||||||||||||||||||||||
| Franchise revenues | $ | 159.0 | $ | 161.3 | $ | (2.3) | $ | 490.9 | $ | 502.3 | $ | (11.4) | ||||||||||||||||||||||||||
| Company-owned restaurant revenues | 64.4 | 27.5 | 36.9 | 145.1 | 77.3 | 67.8 | ||||||||||||||||||||||||||||||||
| Rental revenues | 25.5 | 27.3 | (1.8) | 79.0 | 82.1 | (3.1) | ||||||||||||||||||||||||||||||||
| Total revenues | 248.9 | 216.1 | 32.8 | 715.0 | 661.7 | 53.3 | ||||||||||||||||||||||||||||||||
| Cost of revenues: | ||||||||||||||||||||||||||||||||||||||
| Franchise expenses | (78.3) | (78.4) | 0.1 | (241.4) | (246.1) | 4.7 | ||||||||||||||||||||||||||||||||
| Company-owned restaurant expenses | (66.4) | (32.0) | (34.4) | (150.3) | (84.9) | (65.4) | ||||||||||||||||||||||||||||||||
| Rental expenses | (19.6) | (21.2) | 1.6 | (60.1) | (63.6) | 3.5 | ||||||||||||||||||||||||||||||||
| Total cost of revenues | (164.3) | (131.6) | (32.7) | (451.8) | (394.6) | (57.2) | ||||||||||||||||||||||||||||||||
| Gross profit | 84.7 | 84.6 | 0.1 | 263.2 | 267.1 | (3.9) | ||||||||||||||||||||||||||||||||
| General and administrative expenses | (51.6) | (50.2) | (1.4) | (160.3) | (152.3) | (8.0) | ||||||||||||||||||||||||||||||||
| Interest expense, net | (21.3) | (20.8) | (0.5) | (65.1) | (56.3) | (8.8) | ||||||||||||||||||||||||||||||||
| Closure and impairment charges | (1.4) | (0.6) | (0.8) | (6.2) | (7.6) | 1.4 | ||||||||||||||||||||||||||||||||
| Amortization of intangible assets | (4.2) | (2.9) | (1.3) | (11.8) | (8.3) | (3.5) | ||||||||||||||||||||||||||||||||
| Loss on extinguishment of debt | - | - | - | - | (0.9) | 0.9 | ||||||||||||||||||||||||||||||||
| Gain on disposition of assets | 0.6 | - | 0.6 | 3.1 | 0.1 | 3.0 | ||||||||||||||||||||||||||||||||
| Income before income taxes | $ | 6.8 | $ | 10.0 | $ | (3.2) | $ | 22.9 | $ | 41.8 | $ | (18.9) | ||||||||||||||||||||||||||
Total revenues for the three months ended September 27, 2026 increased $32.8 million compared to the prior year quarter. The increase was driven by a $36.9 million increase in company-owned restaurant revenues from restaurants acquired and opened since the third quarter of 2025. This increase was partially offset by a $2.3 million decrease in franchise revenues and a $1.8 million decrease in rental revenues. The decrease in franchise revenues was from the acquisition of 12 Applebee's restaurants in February 2026 and 48 Applebee's restaurants in June 2026 and closures, partially offset by higher revenues from an increase in domestic same-restaurant sales change. The decrease in rental revenues was primarily driven by restaurant closures and our continued investment in the system by our exiting sublease arrangements with franchisees allowing them to enter master leases directly with landlords. Total cost of revenues increased $32.7 million primarily due to the increase in the number of company-owned restaurants, higher bad debt expense compared to the prior year quarter, partially offset by lower rental expenses resulting from early lease terminations.
Income before income taxes in the three months ended September 27, 2026, was lower due to an increase in general and administrative expenses, an increase in amortization of intangible assets and an increase in closure and impairment charges. The increase in general and administrative expenses is primarily due to higher professional service fees, higher employee-related costs associated with our investment in company-owned and dual-branded restaurant initiatives, partially offset by fees recovered from franchisees. The increase in amortization of intangible assets is primarily due to the reclassification of certain
indefinite-lived intangible assets to finite-lived in the fourth quarter of 2025. Closure and impairment charges increased primarily due to closure charges related to properties for which we are the lessee but have ceased using in the current year quarter.
Total revenues for the nine months ended September 27, 2026 increased $53.3 million compared to the prior year period, driven by a $67.8 million increase in company-owned restaurant revenues primarily from the acquisition of 12 Applebee's restaurants in February 2026 and 48 Applebee's restaurants in June 2026, and from the acquisition of 10 IHOP restaurants in March 2025 and 12 Applebee's restaurants in May 2025. This increase was partially offset by a $11.4 million decrease in franchise revenues driven by a reduction in the number of franchised restaurants, lower franchisee termination fees, lower proprietary product sales due to the removal of gluten friendly product offerings, and lower advertising revenues. The reduction in the number of franchised restaurants was primarily driven by acquisitions completed since the third quarter of 2025 and closures. Total cost of revenues increased $57.2 million primarily due to an increase in company-owned restaurants, partially offset by lower rental expenses resulting from early lease terminations and lower advertising expenses.
Income before income taxes in the nine months ended September 27, 2026, was lower due to a decrease in gross profit, an increase in interest expense, an increase in general and administrative expenses, and an increase in amortization of intangible assets, partially offset by a gain on disposition of assets. The increase in interest expense is primarily the result of the refinancing of our 2025 Class A-2 Notes completed in June 2025 which resulted in increased principal and a higher interest rate. The increase in general and administrative expenses is driven by higher year to date incentive compensation due to an increase in the number of employees and higher expectations for the remainder of the year as compared to the prior year period, higher employee-related costs associated with our investment in company-owned and dual-branded restaurant initiatives, an increase in professional service fees from the acquisition of company-owned restaurants, and increased reorganization costs. The increase in amortization of intangible assets is primarily due to the reclassification of certain indefinite-lived intangible assets to finite-lived in the fourth quarter of 2025. Gain on disposition of assets was primarily related to the sale of land and building of two IHOP restaurants and a gain on lease terminations.
Key Performance Indicators
In addition to revenues, cost of revenues, and gross profit in evaluating the performance of each of our brands, management also considers the following key performance indicators in evaluating our business:
"System sales" are retail sales at IHOP, Applebee's and Fuzzy's restaurants operated by franchisees reported to the Company and revenues generated at company-owned restaurants. Sales at restaurants that are operated by franchisees are not revenues attributable to the Company. An increase in system sales of franchised restaurants will result in a corresponding increase in our royalty revenues, while a decrease will result in a corresponding decrease in our royalty revenues.
"Domestic same-restaurant sales change" reflects the percentage change in sales of domestic restaurants in any given fiscal period that operated during the comparable prior year period and have been open for at least 18 months. Due to new restaurant openings and restaurant closures, the restaurants open throughout both fiscal periods being compared may be different from period to period.
"Same-restaurant sales change" reflects the percentage change in sales of domestic and international restaurants in any given fiscal period that operated during the comparable prior year period and have been open for at least 18 months. Due to new restaurant openings and restaurant closures, the restaurants open throughout both fiscal periods being compared may be different from period to period.
"Domestic average weekly unit sales" represents the average sales generated per restaurant per operating week during the reporting period. This is calculated by dividing total restaurant sales by the number of operating weeks for all restaurants open during the period. For restaurants that were open for only part of the period, adjustments are made to the number of operating weeks to correspond to the period there were restaurant sales.
"Net development" refers to the overall change in the number of restaurants during a period, calculated as total openings less total closures.
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IHOP
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Applebee's
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Fuzzy's
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| Three Months Ended | Three Months Ended | Three Months Ended | ||||||||||||||||||||||||||||||||||||
| September 27, 2026 | September 28, 2025 | September 27, 2026 | September 28, 2025 | September 27, 2026 | September 28, 2025 | |||||||||||||||||||||||||||||||||
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System Sales (in millions)
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Franchise
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$ | 853.8 | $ | 844.6 | $ | 954.0 | $ | 988.4 | $ | 37.5 | $ | 42.8 | ||||||||||||||||||||||||||
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Company
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4.6 | 4.1 | 59.5 | 23.2 | 0.2 | 0.3 | ||||||||||||||||||||||||||||||||
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Total
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$ | 858.4 | $ | 848.7 | $ | 1,013.5 | $ | 1,011.6 | $ | 37.7 | $ | 43.1 | ||||||||||||||||||||||||||
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System:
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Domestic same-restaurant sales change
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0.8 | % | (1.5) | % | 0.9 | % | 3.1 | % | (2.7) | % | (1.5) | % | ||||||||||||||||||||||||||
| Same-restaurant sales change | 0.7 | % | (1.6) | % | 0.9 | % | 2.8 | % | n/a | n/a | ||||||||||||||||||||||||||||
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Franchise(a):
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| Domestic same-restaurant sales change | 0.8 | % | (1.4) | % | 1.0 | % | 3.1 | % | (2.6) | % | (1.5) | % | ||||||||||||||||||||||||||
| Same-restaurant sales change | 0.7 | % | (1.6) | % | 1.0 | % | 2.8 | % | n/a | n/a | ||||||||||||||||||||||||||||
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Domestic average weekly unit sales (in thousands)
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$ | 38.5 | $ | 37.8 | $ | 53.7 | $ | 52.6 | $ | 30.6 | $ | 30.3 | ||||||||||||||||||||||||||
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Company:
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| Domestic average weekly unit sales (in thousands) | $ | 23.4 | $ | 31.3 | $ | 39.1 | $ | 33.4 | $ | 16.7 | $ | 17.8 | ||||||||||||||||||||||||||
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Development
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Franchise(b)
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Beginning
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1,796 | 1,786 | 1,439 | 1,514 | 96 | 112 | ||||||||||||||||||||||||||||||||
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Opened
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15 | 14 | 8 | 3 | 1 | - | ||||||||||||||||||||||||||||||||
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Closed
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(13) | (7) | (15) | (5) | (1) | (4) | ||||||||||||||||||||||||||||||||
| Ending | 1,798 | 1,793 | 1,432 | 1,512 | 96 | 108 | ||||||||||||||||||||||||||||||||
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Company(b)
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Beginning
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17 | 10 | 118 | 59 | 1 | 1 | ||||||||||||||||||||||||||||||||
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Opened
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- | - | - | - | - | - | ||||||||||||||||||||||||||||||||
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Closed
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- | - | - | - | - | - | ||||||||||||||||||||||||||||||||
| Ending | 17 | 10 | 118 | 59 | 1 | 1 | ||||||||||||||||||||||||||||||||
| Total Development | 1,815 | 1,803 | 1,550 | 1,571 | 97 | 109 | ||||||||||||||||||||||||||||||||
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Domestic
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(1) | 3 | (4) | (3) | - | (4) | ||||||||||||||||||||||||||||||||
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International
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3 | 4 | (3) | 1 | n/a | n/a | ||||||||||||||||||||||||||||||||
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Net Development
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2 | 7 | (7) | (2) | - | (4) | ||||||||||||||||||||||||||||||||
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IHOP
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Applebee's
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Fuzzy's
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| Nine Months Ended | Nine Months Ended | Nine Months Ended | ||||||||||||||||||||||||||||||||||||
| September 27, 2026 | September 28, 2025 | September 27, 2026 | September 28, 2025 | September 27, 2026 | September 28, 2025 | |||||||||||||||||||||||||||||||||
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System Sales (in millions)
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Franchise
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$ | 2,598.4 | $ | 2,571.1 | $ | 3,062.9 | $ | 3,148.5 | $ | 114.7 | $ | 125.2 | ||||||||||||||||||||||||||
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Company
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14.1 | 9.3 | 130.3 | 67.3 | 0.7 | 0.7 | ||||||||||||||||||||||||||||||||
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Total
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$ | 2,612.5 | $ | 2,580.4 | $ | 3,193.2 | $ | 3,215.8 | $ | 115.4 | $ | 125.9 | ||||||||||||||||||||||||||
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System:
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Domestic same-restaurant sales change
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0.8 | % | (2.2) | % | 0.3 | % | 1.9 | % | 1.4 | % | (8.7) | % | ||||||||||||||||||||||||||
| Same-restaurant sales change | 0.6 | % | (2.2) | % | 0.2 | % | 1.7 | % | n/a | n/a | ||||||||||||||||||||||||||||
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Franchise(a):
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| Domestic same-restaurant sales change | 0.8 | % | (2.1) | % | 0.4 | % | 2.0 | % | 1.4 | % | (8.7) | % | ||||||||||||||||||||||||||
| Same-restaurant sales change | 0.7 | % | (2.2) | % | 0.4 | % | 1.8 | % | n/a | n/a | ||||||||||||||||||||||||||||
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Domestic average weekly unit sales (in thousands)
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$ | 38.8 | $ | 38.2 | $ | 55.9 | $ | 55.1 | $ | 30.3 | $ | 29.0 | ||||||||||||||||||||||||||
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Company:
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| Domestic average weekly unit sales (in thousands) | $ | 25.8 | $ | 39.6 | $ | 38.7 | $ | 33.8 | $ | 17.8 | $ | 18.0 | ||||||||||||||||||||||||||
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Development
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Franchise(b)
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Beginning
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1,812 | 1,824 | 1,520 | 1,567 | 105 | 116 | ||||||||||||||||||||||||||||||||
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Opened
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32 | 29 | 23 | 4 | 1 | 3 | ||||||||||||||||||||||||||||||||
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Closed
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(46) | (60) | (111) | (59) | (10) | (11) | ||||||||||||||||||||||||||||||||
| Ending | 1,798 | 1,793 | 1,432 | 1,512 | 96 | 108 | ||||||||||||||||||||||||||||||||
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Company(b)
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Beginning
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12 | - | 59 | 47 | 1 | 1 | ||||||||||||||||||||||||||||||||
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Opened
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5 | 10 | 60 | 12 | - | - | ||||||||||||||||||||||||||||||||
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Closed
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- | - | (1) | - | - | - | ||||||||||||||||||||||||||||||||
| Ending | 17 | 10 | 118 | 59 | 1 | 1 | ||||||||||||||||||||||||||||||||
| Total Development | 1,815 | 1,803 | 1,550 | 1,571 | 97 | 109 | ||||||||||||||||||||||||||||||||
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Domestic
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(8) | (24) | (26) | (36) | (9) | (8) | ||||||||||||||||||||||||||||||||
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International
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(1) | 3 | (3) | (7) | n/a | n/a | ||||||||||||||||||||||||||||||||
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Net Development
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(9) | (21) | (29) | (43) | (9) | (8) | ||||||||||||||||||||||||||||||||
_________________________________________
(a) The calculation of franchise sales percentage change and average weekly unit sales excludes restaurants that were closed or acquired by the Company.
(b) For the nine months ended September 28, 2025, IHOP franchise closures and company-owned openings included 10 restaurants acquired in March 2025. Applebee's franchise closures and company-owned openings included 12 restaurants acquired in May 2025 for the nine months ended September 28, 2025; 12 acquired in February 2026 for the nine months ended September 27, 2026; and 48 acquired in June 2026 for the nine months ended September 27, 2026.
(a) The calculation of franchise sales percentage change and average weekly unit sales excludes restaurants that were closed or acquired by the Company.
(b) For the nine months ended September 28, 2025, IHOP franchise closures and company-owned openings included 10 restaurants acquired in March 2025. Applebee's franchise closures and company-owned openings included 12 restaurants acquired in May 2025 for the nine months ended September 28, 2025; 12 acquired in February 2026 for the nine months ended September 27, 2026; and 48 acquired in June 2026 for the nine months ended September 27, 2026.
Dual-branded restaurants are defined as restaurants that operate our IHOP and Applebee's restaurant concepts under two separate franchise agreements but within one restaurant location. Because of this, each dual-branded restaurant is counted in both IHOP and Applebee's restaurant count and activity.
As of September 27, 2026, we had 49 dual-branded domestic IHOP and Applebee's restaurant locations. During the three months ended September 27, 2026, we had three existing Applebee's franchised restaurants which added the IHOP brand, and two new franchised restaurants which added to both brands. This totaled seven dual-branded domestic openings.
During the nine months ended September 27, 2026, we had five existing company-owned Applebee's restaurants which added the IHOP brand, nine existing Applebee's franchised restaurants which added the IHOP brand, three existing IHOP franchised restaurants which added the Applebee's brand, and five new franchised restaurants which added to both brands. This totaled 27 dual-branded domestic openings.
During the three months ended September 28, 2025, we had four existing Applebee's franchised restaurants which added the IHOP brand and one existing IHOP franchised restaurant which added the Applebee's brand. This totaled five dual-branded domestic openings.
During the nine months ended September 28, 2025, we had four existing Applebee's franchised restaurants which added the IHOP brand and two existing IHOP franchised restaurants which added the Applebee's brand. This totaled six dual-branded domestic openings.
As of September 27, 2026, we had 41 dual-branded international IHOP and Applebee's restaurant locations. During the three months ended September 27, 2026, we had one existing Applebee's franchised restaurant which added the IHOP brand and three new franchised restaurants which added to both brands. This totaled seven dual-branded international openings.
During the nine months ended September 27, 2026, we had one existing Applebee's franchised restaurant which added the IHOP brand, one existing IHOP franchised restaurant which added the Applebee's brand, eight new franchised restaurants which added to both brands, and one dual-branded international franchised restaurant location that closed. This totaled 18 dual-branded international openings and two dual-branded international closures.
As of September 28, 2025, we had 23 dual-branded international IHOP and Applebee's restaurant locations. During the three months ended September 28, 2025, we had one existing Applebee's franchised restaurant which added the IHOP brand and two new franchised restaurants which added to both brands, for a total of five dual-branded international openings.
During the nine months ended September 28, 2025, we had three existing Applebee's franchised restaurants which added the IHOP brand and two new franchised restaurants which added to both brands, for a total of seven dual-branded international openings.
The following table shows the effects of the domestic and international restaurant count methodology described above as of September 27, 2026 and September 28, 2025:
| IHOP | Applebee's | Dual-Branded | Total | |||||||||||||||||||||||||||||||||||||||||||||||
| September 27, 2026 | September 28, 2025 | September 27, 2026 | September 28, 2025 | September 27, 2026 | September 28, 2025 | September 27, 2026 | September 28, 2025 | |||||||||||||||||||||||||||||||||||||||||||
| Franchise | 1,798 | 1,793 | 1,432 | 1,512 | - | - | 3,230 | 3,305 | ||||||||||||||||||||||||||||||||||||||||||
| Company | 17 | 10 | 118 | 59 | - | - | 135 | 69 | ||||||||||||||||||||||||||||||||||||||||||
| Total Development | 1,815 | 1,803 | 1,550 | 1,571 | - | - | 3,365 | 3,374 | ||||||||||||||||||||||||||||||||||||||||||
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Domestic Dual-Branded |
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| Franchise | (42) | (6) | (42) | (6) | 42 | 6 | (42) | (6) | ||||||||||||||||||||||||||||||||||||||||||
| Company | (7) | - | (7) | - | 7 | - | (7) | - | ||||||||||||||||||||||||||||||||||||||||||
| International Dual-Branded | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Franchise | (41) | (23) | (41) | (23) | 41 | 23 | (41) | (23) | ||||||||||||||||||||||||||||||||||||||||||
| Total Locations | 1,725 | 1,774 | 1,460 | 1,542 | 90 | 29 | 3,275 | 3,345 | ||||||||||||||||||||||||||||||||||||||||||
As our dual-branded business expands, we may reevaluate how these restaurants are counted in future disclosures.
IHOP's system domestic same-restaurant sales increased 0.8% for the three months ended September 27, 2026 as compared to the prior year period, due to an increase in average check partially offset by a decrease in traffic. IHOP's system domestic same-restaurant sales increased 0.8% for the nine months ended September 27, 2026 as compared to the respective prior year period, due to an increase in average check partially offset by a decrease in traffic.
Based on data from Black Box Intelligence, a restaurant sales reporting firm ("Black Box"), IHOP domestic same-restaurant sales outperformed for the three and nine months ended September 27, 2026 in the family dining category (excluding IHOP). According to Black Box, for the three and nine months ended September 27, 2026 the family dining category experienced a decrease in same-restaurant sales resulting from a decrease in customer traffic, partially offset by an increase in average customer check.
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IHOP Off-Premise Sales Data
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Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||
| September 27, 2026 | September 28, 2025 | September 27, 2026 | September 28, 2025 | |||||||||||||||||||||||
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Off-premise sales (in millions) (1)
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$ | 153.5 | $ | 147.7 | $ | 461.7 | $ | 447.8 | ||||||||||||||||||
| % sales mix | 21.0 | % | 20.4 | % | 20.9 | % | 20.4 | % | ||||||||||||||||||
(1) Primarily to-go, delivery and catering sales.
IHOP's off-premise sales for the three and nine months ended September 27, 2026 increased by $5.8 million and $13.9 million, respectively, as compared to the respective prior year periods primarily due to the brand's focus on delivery promotions.
Applebee's system domestic same-restaurant sales increased 0.9% for the three months ended September 27, 2026 as compared to the prior year quarter due to an increase in average check partially offset by a decrease in traffic. Applebee's system domestic same-restaurant sales increased 0.3% for the nine months ended September 27, 2026 as compared to the respective prior year period due to an increase in average check partially offset by a decrease in traffic.
Based on data from Black Box, Applebee's domestic same-restaurant sales for the three and nine months ended September 27, 2026 underperformed the casual dining category (excluding Applebee's). Black Box reported that the casual dining category experienced a same-restaurant sales increase for the three months ended September 27, 2026, driven by an increase in average check and customer traffic, and a same-restaurant sales increase for the nine months ended September 27, 2026, driven by an increase in average check, partially offset by a decrease in customer traffic.
| Applebee's Off-Premise Sales Data | Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||
| September 27, 2026 | September 28, 2025 | September 27, 2026 | September 28, 2025 | |||||||||||||||||||||||
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Off-premise sales (in millions) (1)
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$ | 223.0 | $ | 220.6 | $ | 709.5 | $ | 699.9 | ||||||||||||||||||
| % sales mix | 23.1 | % | 22.9 | % | 23.3 | % | 22.8 | % | ||||||||||||||||||
(1) Primarily to-go, delivery and catering sales.
Applebee's off-premise sales for the three and nine months ended September 27, 2026 increased $2.4 million and $9.6 million, respectively, as compared to the respective prior year periods, primarily due to delivery and digital promotions.
Quarterly Domestic Same-Restaurant Sales - Fuzzy's
Fuzzy's system domestic same-restaurant sales decreased 2.7% for the three months ended September 27, 2026 as compared to the prior year quarter primarily due to a decrease in traffic. Fuzzy's system domestic same-restaurant sales increased 1.4% for the nine months ended September 27, 2026, as compared to the respective prior year period due to growth in average check resulting from menu price increases, partially offset by a decrease in traffic.
Segment Results
| Franchise Segment | Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||||||||||||||
| September 27, 2026 | September 28, 2025 |
Change
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September 27, 2026 | September 28, 2025 | Change | |||||||||||||||||||||||||||||||||
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(In millions)
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Franchise Revenues
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IHOP
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$ | 52.0 | $ | 51.8 | $ | 0.2 | $ | 154.5 | $ | 156.9 | $ | (2.4) | ||||||||||||||||||||||||||
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Applebee's
|
37.7 | 38.9 | (1.2) | 119.7 | 125.6 | (5.9) | ||||||||||||||||||||||||||||||||
|
Fuzzy's
|
2.0 | 2.3 | (0.3) | 6.5 | 7.5 | (1.0) | ||||||||||||||||||||||||||||||||
|
Advertising
|
67.3 | 68.2 | (0.9) | 210.2 | 212.2 | (2.0) | ||||||||||||||||||||||||||||||||
|
Total franchise revenues
|
159.0 | 161.3 | (2.3) | 490.9 | 502.3 | (11.4) | ||||||||||||||||||||||||||||||||
|
Franchise Expenses
|
||||||||||||||||||||||||||||||||||||||
| IHOP | (9.0) | (8.1) | (0.9) | (26.3) | (25.2) | (1.1) | ||||||||||||||||||||||||||||||||
|
Applebee's
|
(1.8) | (1.7) | (0.1) | (4.0) | (7.7) | 3.7 | ||||||||||||||||||||||||||||||||
| Fuzzy's | (0.2) | (0.4) | 0.2 | (0.9) | (1.0) | 0.1 | ||||||||||||||||||||||||||||||||
|
Advertising
|
(67.3) | (68.2) | 0.9 | (210.2) | (212.2) | 2.0 | ||||||||||||||||||||||||||||||||
|
Total franchise expenses
|
(78.3) | (78.4) | 0.1 | (241.4) | (246.1) | 4.7 | ||||||||||||||||||||||||||||||||
|
Franchise Segment Profit
|
$ | 80.7 | $ | 82.9 | $ | (2.2) | $ | 249.5 | $ | 256.2 | $ | (6.7) | ||||||||||||||||||||||||||
For the three months ended September 27, 2026 our total franchise segment profit decreased $2.2 million as compared to the prior year quarter.
Franchise revenues decreased as a result of the following:
•IHOP revenue increased $0.2 million primarily due to higher franchise transfer fees and new restaurant openings, largely offset by lower franchise termination fees and proprietary product sales. The decrease in franchise termination fees was primarily due to fewer franchisee restaurant closures as compared to the prior year quarter.
•Applebee's revenue decreased $1.2 million primarily due to a decrease in the number of franchise restaurants, partially offset by a 0.9% increase in domestic same-restaurant sales. The decrease in the number of franchise restaurants was the result of the acquisition of 12 Applebee's restaurants in February 2026, 48 Applebee's restaurants in June 2026, and closures.
•Fuzzy's revenue decreased $0.3 million primarily due to a decrease in royalty revenues as a result of a decrease in the number of franchise restaurants and a 2.7% decrease in franchise domestic same-restaurant sales.
•Advertising revenue decreased $0.9 million due to a decrease in the number of Applebee's and Fuzzy's franchise restaurants, partially offset by a 0.8% increase in IHOP domestic same-restaurant sales change and a 0.9% increase in Applebee's domestic same-restaurant sales change.
Franchise expenses decreased as a result of the following:
•IHOP expenses increased $0.9 million, primarily due to higher bad debt expense partially offset by a decrease in the cost of proprietary product sales.
•Advertising expenses decreased $0.9 million given the decrease in advertising revenue.
For the nine months ended September 27, 2026 our total franchise segment profit decreased $6.7 million as compared to the prior year period of 2025.
Franchise revenues decreased as a result of the following:
•IHOP revenue decreased $2.4 million primarily due to lower proprietary product sales and franchise termination fees. The decrease was partially offset by an increase in same-restaurant sales change and an increase from restaurant openings. The decrease in proprietary product sales was primarily due to the removal of gluten friendly product offerings. The decrease in franchise termination fees resulted from fewer franchisee restaurant closures as compared to the prior year period.
•Applebee's revenue decreased $5.9 million primarily due to a decrease in the number of franchise restaurants and lower franchisee terminations fees. The decrease in the number of franchise restaurants was primarily due to the acquisition of 12 Applebee's restaurants in May 2025, 12 Applebee's restaurants in February 2026 and 48 Applebee's restaurants in June 2026, as well as restaurant closures. The decrease in franchise termination fees was primarily due to fewer franchisee restaurant closures compared with the prior year period.
•Fuzzy's revenue decreased $1.0 million primarily due to a decrease in royalty revenues and proprietary product sales as a result of a decrease in the number of franchise restaurants, partially offset by a 1.4% increase in Fuzzy's domestic same-restaurant sales.
•Advertising revenue decreased $2.0 million due to a decrease in the number of Applebee's and Fuzzy's franchise restaurants, partially offset by an increase in the number of IHOP franchise restaurants, a 0.8% increase in IHOP domestic same-restaurant sales and a 0.3% increase in Applebee's domestic same-restaurant sales.
Franchise expenses decreased as a result of the following:
•IHOP expenses increased $1.1 million primarily due to higher bad debt expense, partially offset by a decrease in the cost of proprietary product sales.
•Applebee's expenses decreased $3.7 million primarily due to lower bad debt expense and lower refranchising costs in the current year period.
•Advertising expenses decreased $2.0 million given the decrease in advertising revenue.
| Company-Owned Restaurant Segment | Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||||||||||||||
| September 27, 2026 | September 28, 2025 | Change | September 27, 2026 | September 28, 2025 | Change | |||||||||||||||||||||||||||||||||
| (In millions) | ||||||||||||||||||||||||||||||||||||||
| Company-owned restaurant revenues | $ | 64.4 | $ | 27.5 | $ | 36.9 | $ | 145.1 | $ | 77.3 | $ | 67.8 | ||||||||||||||||||||||||||
| Company-owned restaurant expenses | (66.4) | (32.0) | (34.4) | (150.3) | (84.9) | (65.4) | ||||||||||||||||||||||||||||||||
| Company-owned restaurant segment loss | $ | (2.0) | $ | (4.5) | $ | 2.5 | $ | (5.2) | $ | (7.6) | $ | 2.4 | ||||||||||||||||||||||||||
The Company acquired 12 Applebee's restaurants from a franchisee in February 2026 and 48 Applebee's restaurants from a franchisee in June 2026. As of September 27, 2026, the Company owned 136 restaurants, which includes seven dual-branded restaurants, compared to 70 restaurants as of September 28, 2025. The change in company-owned restaurant revenue and expenses for the three and nine months ended September 27, 2026 is primarily driven by the increase in the number and timing of restaurants acquired since the third quarter of 2025. Company-owned restaurant segment loss for the three and nine months ended September 27, 2026 was primarily due to costs of transitioning the restaurants, including closures from remodeling activities.
|
Rental Segment
|
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||||||||||||||
| September 27, 2026 | September 28, 2025 |
Change
|
September 27, 2026 | September 28, 2025 | Change | |||||||||||||||||||||||||||||||||
| (In millions) | ||||||||||||||||||||||||||||||||||||||
|
Rental revenues
|
$ | 25.5 | $ | 27.3 | $ | (1.8) | $ | 79.0 | $ | 82.1 | $ | (3.1) | ||||||||||||||||||||||||||
|
Rental expenses
|
(19.6) | (21.2) | 1.6 | (60.1) | (63.6) | 3.5 | ||||||||||||||||||||||||||||||||
|
Rental Segment Profit
|
$ | 5.9 | $ | 6.1 | $ | (0.2) | $ | 18.9 | $ | 18.5 | $ | 0.4 | ||||||||||||||||||||||||||
For the three and nine months ended September 27, 2026, rental revenues decreased compared to the respective prior year periods, primarily due to restaurant closures and our continued investment in the system by our exiting sublease arrangements with franchisees allowing them to enter master leases directly with landlords. Rental expenses also decreased compared to the respective prior year periods, primarily due to lease terminations.
Non-Segment Items
| General and Administrative Expenses | Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||||||||||||||
| September 27, 2026 | September 28, 2025 | Change | September 27, 2026 | September 28, 2025 | Change | |||||||||||||||||||||||||||||||||
| (In millions) | ||||||||||||||||||||||||||||||||||||||
| General and administrative expenses | $ | (51.6) | $ | (50.2) | $ | (1.4) | $ | (160.3) | $ | (152.3) | $ | (8.0) | ||||||||||||||||||||||||||
Total general and administrative expenses for the three months ended September 27, 2026 increased $1.4 million compared to the prior year quarter, primarily due to higher professional services fees and higher employee-related costs associated with our investment in company-owned and dual-brand restaurant initiatives. These increases were partially offset by fees recovered from franchisees.
Total general and administrative expenses for the nine months ended September 27, 2026 increased $8.0 million compared to the prior year period, primarily due to higher employee-related costs associated with our investment in company-owned and dual-brand restaurant initiatives, higher professional services fees, increased reorganization costs, higher year to date incentive compensation due to an increased headcount and higher performance expectations for the remainder of the year as compared to the prior year, and higher long-term incentive compensation expense driven by an increase in the Company's share price. These increases were partially offset by fees recovered from franchisees, lower consumer research expenses, and lower conference related expenses.
| Interest Expense, Net | Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||||||||||||||
| September 27, 2026 | September 28, 2025 | Change | September 27, 2026 | September 28, 2025 | Change | |||||||||||||||||||||||||||||||||
| (In millions) | ||||||||||||||||||||||||||||||||||||||
| Interest expense, net | $ | (21.3) | $ | (20.8) | $ | (0.5) | $ | (65.1) | $ | (56.3) | $ | (8.8) | ||||||||||||||||||||||||||
Interest expense, net, increased $0.5 million for the three months ended September 27, 2026, primarily due to a decrease of interest income resulting from reduced cash balances.
Interest expense, net, increased $8.8 million for the nine months ended September 27, 2026, primarily due to the June 2025 refinancing of our 2025 Class A-2 Notes at a higher interest rate and with a higher principal balance, as well as lower interest income resulting from reduced cash balances.
| Closure and Impairment Charges | Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||||||||||||||
| September 27, 2026 | September 28, 2025 | Change | September 27, 2026 | September 28, 2025 | Change | |||||||||||||||||||||||||||||||||
| (In millions) | ||||||||||||||||||||||||||||||||||||||
| Closure charges | $ | (1.5) | $ | (0.6) | $ | (0.9) | $ | (3.0) | $ | (4.3) | $ | 1.3 | ||||||||||||||||||||||||||
| Other asset impairment charges | - | - | - | (3.2) | (3.3) | 0.1 | ||||||||||||||||||||||||||||||||
| Total | $ | (1.5) | $ | (0.6) | $ | (0.9) | $ | (6.2) | $ | (7.6) | $ | 1.4 | ||||||||||||||||||||||||||
For the three months ended September 27, 2026, we recorded closure charges primarily related to properties for which we are the lessee but have ceased using in current year quarter. For the nine months ended September 27, 2026, we recorded closure charges primarily related to properties for which we are the lessee but have ceased using in the current and prior periods.
For the nine months ended September 27, 2026, we recorded a $3.2 million trademark impairment charge related to the strategic realignment of the international market. For the nine months ended September 28, 2025, other asset impairment charges were primarily related to the impairment of an asset upon closure of certain IHOP restaurants in March 2025.
| Amortization of Intangible Assets | Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||||||||||||||
| September 27, 2026 | September 28, 2025 | Change | September 27, 2026 | September 28, 2025 | Change | |||||||||||||||||||||||||||||||||
| (In millions) | ||||||||||||||||||||||||||||||||||||||
| Amortization of intangible assets | $ | (4.2) | $ | (2.9) | $ | (1.3) | $ | (11.8) | $ | (8.3) | $ | (3.5) | ||||||||||||||||||||||||||
Amortization of intangible assets primarily relates to Applebee's and Fuzzy's franchise rights and the Fuzzy's tradename. Amortization increased $1.3 million and $3.5 million for the three and nine months ended September 27, 2026, respectively, compared to the prior periods due to the reclassification of certain indefinite-lived intangible assets to finite-lived in the fourth quarter of fiscal 2025. In addition, in the current year, the useful lives of certain finite-lived intangible assets were reduced.
| Gain on Disposition of Assets | Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||||||||||||||
| September 27, 2026 | September 28, 2025 | Change | September 27, 2026 | September 28, 2025 | Change | |||||||||||||||||||||||||||||||||
| (In millions) | ||||||||||||||||||||||||||||||||||||||
| Gain on disposition of assets | $ | 0.6 | $ | - | $ | 0.6 | $ | 3.1 | $ | 0.1 | $ | 3.0 | ||||||||||||||||||||||||||
The gain on disposition of assets for the three months ended September 27, 2026 is related to the gain on lease terminations. The gain on disposition of assets for the nine months ended September 27, 2026 primarily relates to the sale of land and building on which two IHOP properties were located, as well as gain on lease terminations.
| Income Tax Provision | Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||||||||||||||
| September 27, 2026 | September 28, 2025 | Change | September 27, 2026 | September 28, 2025 | Change | |||||||||||||||||||||||||||||||||
| (In millions) | ||||||||||||||||||||||||||||||||||||||
| Income tax provision | $ | (2.1) | $ | (2.7) | $ | 0.6 | $ | (6.6) | $ | (12.5) | $ | 5.9 | ||||||||||||||||||||||||||
| Effective tax rate | 31.2 | % | 27.2 | % | 4.0 | % | 28.8 | % | 29.8 | % | (1.0) | % | ||||||||||||||||||||||||||
The effective tax rate for the three months ended September 27, 2026 was higher than the rate of the prior year quarter primarily due to an increase in valuation allowances, partially offset by an increase in additional income tax credits.
The effective tax rate for the nine months ended September 27, 2026 was lower than the rate of the prior year period primarily due to a higher tax deduction related to stock-based compensation resulting from an increase in our share price, and higher tax credits in the current period. These benefits were partially offset by an increase in valuation allowances.
Liquidity and Capital Resources of the Company
Our total cash balances including restricted cash, net of revolving credit facility borrowings, at September 27, 2026 and December 28, 2025 were as follows:
| September 27, 2026 | December 28, 2025 | |||||||||||||
| (In millions) | ||||||||||||||
| Cash and cash equivalents | $ | 91.1 | $ | 128.2 | ||||||||||
| Restricted cash, current | 60.0 | 51.5 | ||||||||||||
| Restricted cash, non-current | 22.5 | 22.0 | ||||||||||||
| Total cash, restricted cash and cash equivalents | 173.6 | 201.7 | ||||||||||||
| Less: Revolving credit facility borrowing | (100.0) | (100.0) | ||||||||||||
| Total cash, restricted cash and cash equivalents, net | $ | 73.6 | $ | 101.7 | ||||||||||
Cash Flows
In summary, our cash flows for the nine months ended September 27, 2026 and September 28, 2025 were as follows:
| Nine Months Ended | ||||||||||||||||||||
| September 27, 2026 | September 28, 2025 | Change | ||||||||||||||||||
| (In millions) | ||||||||||||||||||||
| Net cash provided by operating activities | $ | 37.8 | $ | 83.3 | $ | (45.5) | ||||||||||||||
| Net cash used in investing activities | (16.8) | (15.8) | (1.0) | |||||||||||||||||
| Net cash used in financing activities | (49.1) | (65.0) | 15.9 | |||||||||||||||||
| Net (decrease) increase in cash, cash equivalents and restricted cash | $ | (28.1) | $ | 2.5 | $ | (30.6) | ||||||||||||||
Operating Activities
Net cash provided by operating activities decreased $45.5 million during the nine months ended September 27, 2026 compared to the same period of the prior year. The decrease was primarily driven by the timing of marketing spend, higher payments related to performance-based compensation and interest, as well as remodel and development incentives paid to our franchisees.
Investing Activities
Net cash used in investing activities was $16.8 million for the nine months ended September 27, 2026 compared to $15.8 million during the comparable prior period. The decrease in cash used was primarily attributable to capital expenditures for the remodeling of company-owned restaurants, partially offset by principal collections on notes and equipment receivables, net cash received from the sale of two properties, and net cash acquired from the acquisition of restaurants from franchisees.
Financing Activities
Net cash used in financing activities decreased $15.9 million for the nine months ended September 27, 2026. The decrease in cash used was primarily due to lower dividends paid and lower debt issuance costs, partially offset by higher common stock repurchases.
Long-Term Debt
In addition to the below, see Note 7 - Long-Term Debt, of the Notes to Condensed Consolidated Financial Statements, for additional detail on long-term debt, including key provisions potentially impacting liquidity.
On February 16, 2023, our Company's Board of Directors authorized a debt repurchase program of up to $100 million. Repurchases of the Company's debt, if any, are expected to reduce future cash interest payments, as well as future amounts due at maturity or upon redemption. Under the authorization, the Company may make repurchases of the Company's debt from time to time in the open market or in privately negotiated transactions upon such terms and at such prices as management may determine.
Our $500.0 million Series 2023-1 7.824% Fixed Rate Senior Secured Notes, Class A-2, become callable at par in December 2026. We will continue to monitor market conditions and evaluate potential refinancing opportunities when economically advantageous.
Make-whole Premiums
We may voluntarily repay the Class A-2 Notes at any time; however, if repaid prior to certain dates we would be required to pay make-whole premiums. As of September 27, 2026, the make-whole premium associated with voluntary prepayment of the 2023 Class A-2 Notes was approximately $2.9 million and for the 2025 Class A-2 Notes was approximately $14.2 million. We also would be subject to a make-whole premium in the event of a mandatory prepayment required following certain rapid amortization events or certain asset dispositions.
Capital Allocation
Dividends
During the nine months ended September 27, 2026 and September 28, 2025, we declared and paid dividends on common stock as shown in Note 8 - Stockholders' Deficit, of the Notes to the Condensed Consolidated Financial Statements. On September 4, 2026, our Board of Directors declared a third quarter 2026 cash dividend of $0.19 per share of common stock, paid on October 9, 2026 to the stockholders of record as of the close of business on September 16, 2026.
Share Repurchases
On May 14, 2026, the Company's Board of Directors authorized a share repurchase program of up to $100 million (the "2026 Repurchase Program") in addition to the Corporation's existing share repurchase program, approved in February 2022 (together with the 2026 Repurchase Program, the "Repurchase Programs"). A summary of shares repurchased under the Repurchase Programs, during the nine months ended September 27, 2026 and cumulatively, is as follows:
| Shares | Cost of shares | |||||||||||||
| Repurchase Programs | (In millions) | |||||||||||||
| Total authorized under the Repurchase Programs | n/a | $ | 350.0 | |||||||||||
|
Repurchases through December 28, 2025
|
4,218,035 | 176.8 | ||||||||||||
|
Repurchased during the nine months ended September 27, 2026
|
1,125,046 | 35.9 | ||||||||||||
| Cumulative (life-of-program) repurchases | 5,343,081 | 212.7 | ||||||||||||
| Remaining dollar value of shares that may be repurchased | n/a | $ | 137.3 | |||||||||||
From time to time, we also repurchase shares owned and tendered by employees to satisfy tax withholding obligations on the vesting of restricted stock awards. Shares are deemed purchased at the closing price of our common stock on the vesting date. See Part II, Item 2 of this Form 10-Q for detail of this stock repurchase activity during the nine months ended September 27, 2026.
Adjusted Free Cash Flow
We define "adjusted free cash flow" for a given period as cash provided by operating activities, plus net receipts from notes and equipment receivables, less additions to property and equipment. Management uses this liquidity measure in its periodic assessments of, among other things, the amount of cash dividends per share of common stock and the amount of repurchases of common stock. We believe it is important for investors to have the same measure used by management for that purpose. Adjusted free cash flow does not represent residual cash flow available for discretionary purposes.
Adjusted free cash flow is a non-GAAP measure. This non-GAAP measure is not defined in the same manner by all companies and may not be comparable to other similarly titled measures of other companies. Non-GAAP measures should be considered in addition to, and not as a substitute for, the U.S. GAAP information contained within our financial statements. Reconciliation of the cash provided by operating activities to adjusted free cash flow is as follows:
| Nine Months Ended | ||||||||||||||||||||
| September 27, 2026 | September 28, 2025 | Change | ||||||||||||||||||
| (In millions) | ||||||||||||||||||||
| Cash flows provided by operating activities | $ | 37.8 | $ | 83.3 | $ | (45.5) | ||||||||||||||
| Net receipts from notes and equipment receivables | 6.0 | 6.2 | (0.2) | |||||||||||||||||
| Additions to property and equipment | (31.0) | (21.3) | (9.7) | |||||||||||||||||
| Adjusted free cash flow | $ | 12.8 | $ | 68.2 | $ | (55.4) | ||||||||||||||
The decrease in adjusted free cash flow for the nine months ended September 27, 2026 compared to the same period of 2025 was primarily due to the decrease in cash provided by operating activities as discussed above and the increase in additions to property and equipment. Additionally, we continue to provide remodel and development incentives to our franchisees which also had a negative impact on adjusted free cash flow for the period.
Contractual Obligations and Commitments
There were no material changes to the contractual obligations as disclosed in our Annual Report on Form 10-K for the year ended December 28, 2025.
Critical Accounting Estimates
A discussion of our critical accounting policies and estimates and the related assumptions used in their application is included in Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations contained in our Annual Report on Form 10-K for the year ended December 28, 2025.
Dine Brands Global Inc. published this content on November 04, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on November 04, 2026 at 12:32 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]