# Dine Brands Global, Inc.: Form 10-Q for the period ended Mar 31, 2025

- Company: [Dine Brands Global, Inc.](/companies/din.md) (CIK 49754)
- Form: 10-Q
- Filed: 2025-05-07
- Accepted by EDGAR: May 7, 2025, 07:34 ET
- Period: 2025-03-31
- Accession: 0001628280-25-022869
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/49754/000162828025022869/din-20250331.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/49754/000162828025022869/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2025-03-31.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2025-01-01 to 2025-03-31 | $214.8m | us-gaap:Revenues |
| Cost of revenue | 3 months, 2025-01-01 to 2025-03-31 | $124.5m | us-gaap:CostOfRevenue |
| Gross profit | 3 months, 2025-01-01 to 2025-03-31 | $90.3m | us-gaap:GrossProfit |
| Income tax | 3 months, 2025-01-01 to 2025-03-31 | $4.6m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2025-01-01 to 2025-03-31 | $8.2m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2025-01-01 to 2025-03-31 | $0.53 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2025-01-01 to 2025-03-31 | $0.53 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2025-01-01 to 2025-03-31 | 14,907,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 3 months, 2025-01-01 to 2025-03-31 | $16.1m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 3 months, 2025-01-01 to 2025-03-31 | $3.3m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Dividends paid | 3 months, 2025-01-01 to 2025-03-31 | $7.8m | us-gaap:PaymentsOfDividendsCommonStock |
| Share repurchases | 3 months, 2025-01-01 to 2025-03-31 | $1.6m | us-gaap:PaymentsForRepurchaseOfCommonStock |
| Cash and equivalents | at 2025-03-31 | $186.5m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2025-03-31 | $360.1m | us-gaap:AssetsCurrent |
| Total assets | at 2025-03-31 | $1.77bn | us-gaap:Assets |
| Current liabilities | at 2025-03-31 | $414.7m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2025-03-31 | $1.98bn | us-gaap:Liabilities |
| Long-term debt | at 2025-03-31 | $1.09bn | us-gaap:LongTermDebtNoncurrent |
| Current portion of debt | at 2025-03-31 | $100.0m | us-gaap:LongTermDebtCurrent |
| Shareholders' equity | at 2025-03-31 | −$215.7m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 46,192 characters.

You should read the following Management's Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) in conjunction with the consolidated financial statements and the related notes that appear elsewhere in this report and the MD&A contained in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2024. Statements contained in this report may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Please refer to the section of this report under the heading “Cautionary Statement Regarding Forward-Looking Statements” for more information. Except where the context indicates otherwise, the words “we,” “us,” “our,” “Dine Brands Global” and the “Company” refer to Dine Brands Global, Inc., together with its subsidiaries that are consolidated in accordance with United States generally accepted accounting principles (“U.S. GAAP”).

### Overview

Through various subsidiaries, we own and franchise the Applebee's Neighborhood Grill & Bar® (“Applebee's”) concept in the American full-service segment within the casual dining category of the restaurant industry, the International House of Pancakes® (“IHOP”) concept in the mid-scale full-service restaurant segment within the family dining category of the restaurant industry, and the Fuzzy's Taco Shop® (“Fuzzy's”) concept in the Mexican limited-service restaurant segment within the fast-casual dining category of the restaurant industry. References herein to Applebee's®, IHOP® and Fuzzy's Taco Shop® restaurants are to these three restaurant concepts, whether operated by franchisees, area licensees and their sub-licensees (collectively, “area licensees”) or by us. With over 3,500 restaurants, we believe we are one of the largest full-service restaurant companies in the world.

We identify our business segments based on the organizational units used by management to monitor performance and make operating decisions. We currently have six operating segments: Applebee's franchise operations, IHOP franchise operations, Fuzzy's franchise operations, rental operations, financing operations, and company-operated restaurant operations. We have four reportable segments: franchise operations (an aggregation of each restaurant concept's franchise operations), rental operations, financing operations, and company-operated restaurant operations.

### Key Financial Results

The financial tables appearing in this MD&A present amounts in millions of dollars that are rounded from our consolidated financial statements presented in thousands of dollars. As a result, the tables may not foot or crossfoot due to rounding.

*(In millions, except per share data)*

|  | Three Months Ended March 31, 2025 | 2024 | Favorable (Unfavorable) Variance |
| --- | ---: | ---: | ---: |
| Income before income taxes | $12.8 | $24.0 | $(11.3) |
| Income tax provision | (4.6) | (6.6) | 2.0 |
| Net income | $8.2 | $17.5 | $(9.3) |
| Effective tax rate | 35.9% | 27.3% | (8.6)% |
| Net income per diluted share | $0.53 | $1.13 | $(0.60) |
|  |  |  | **% decrease** |
| Weighted average diluted shares | 14.9 | 15.0 | (0.5)% |

The effective tax rate for the three months ended March 31, 2025 was higher than the rate of the prior comparable period primarily due to a lower tax deduction related to stock-based compensation, resulting from the changes in our stock price.

The following table highlights the primary components of the decrease in our income before income taxes for the three months ended March 31, 2025, compared to our income before income taxes for the comparable prior period (in millions):

| Increase (decrease) in gross profit: | Favorable (Unfavorable) Variance Three Months Ended March 31, 2025 |
| --- | ---: |
| Applebee's franchise operations | $(3.6) |
| IHOP franchise operations | (1.2) |
| Fuzzy's franchise operations | 0.4 |
| Company restaurant operations | (0.4) |
| Rental and financing operations | (2.3) |
| Total decrease in gross profit | (7.1) |
| Decrease in general and administrative ("G&A") expenses | 0.9 |
| Decrease in interest expense, net | 0.3 |
| Change in loss (gain) on disposition of assets | (0.1) |
| Increase in closure and impairment charges | (5.2) |
| Decrease in income before income taxes | $(11.3) |

Income before income taxes for the three months ended March 31, 2025 decreased compared to the prior year period primarily due to a decrease in gross profit and an increase in closure and impairment charges, partially offset by a decrease in G&A expenses. Total gross profit for the three months ended March 31, 2025 decreased compared with the same period of the prior year due to decreased revenue from franchise and rental operations. The increase in closure and impairment charges was primarily attributable to the strategic realignment of the IHOP Cincinnati market resulting in the acquisition and closure of certain IHOP restaurants in March 2025. The decrease in G&A expenses is primarily attributable to a decrease in compensation-related expenses, partially offset by an increase in legal and professional services.

Increases in commodity, labor and other restaurant operating costs experienced at restaurants owned and operated by our franchisees could impact us to the extent our franchisees are adversely impacted by a sustained decline in their operating margins. At company operated restaurants, when applicable, increases in commodity, labor and other restaurant operating costs impact us directly.

See “*Consolidated Results of Operations - Comparison of the Three Months Ended March 31, 2025 and 2024”* for additional discussion of the changes shown above.

### Key Performance Indicators

In evaluating the performance of each restaurant concept, we consider the key performance indicators to be the system-wide sales percentage change, the percentage change in domestic system-wide same-restaurant sales (“domestic same-restaurant sales”), net franchise restaurant development and the change in effective restaurants. Changes in both domestic same-restaurant sales and in the number of Applebee's, IHOP and Fuzzy's restaurants will impact our system-wide retail sales that drive franchise royalty revenues. Restaurant development also impacts franchise revenues in the form of initial franchise fees and, in the case of IHOP and Fuzzy's restaurants, sales of proprietary products.

Our key performance indicators for the three months ended March 31, 2025 were as follows:

|  | Three Months Ended March 31, 2025 Applebee's | IHOP | Fuzzy's |
| --- | ---: | ---: | ---: |
| Sales percentage decrease in reported retail sales - 2025 vs. 2024 | (3.9)% | (3.0)% | (16.9)% |
| % Decrease in domestic system-wide same-restaurant sales | (2.2)% | (2.7)% | (12.2)% |
| Net franchise restaurant reduction (1) | (20) | (20) | (3) |
| Net decrease in total effective restaurants (2) | (39) | (1) | (13) |

(1) Franchise and area license restaurant closings, net of openings, during the three months ended March 31, 2025.

(2) Change in the weighted average number of franchise, area license and company-operated restaurants open during the three months ended March 31, 2025, compared to the weighted average number of those open during the same period of 2024.

The change in total effective restaurants for each brand reflects both permanent closures, net of openings, over the past 12 months as well as the weighted effect of restaurants temporarily closed during each period.

Applebee’s system-wide domestic same-restaurant sales decreased 2.2% for the three months ended March 31, 2025 as compared to the same period of 2024. The decrease in same-restaurant sales was primarily due to a decrease in traffic, partially offset by an increase in average check.

Based on data from Black Box Intelligence, a restaurant sales reporting firm (“Black Box”), Applebee's same-restaurant sales for the three months ended March 31, 2025 underperformed the casual dining segment of the restaurant industry (excluding Applebee's) during the same period.

| Applebee's Off-Premise Sales Data | Three Months Ended March 31, 2025 | 2024 |
| --- | ---: | ---: |
| Off-premise sales (in millions) (1) | $241.8 | $237.5 |
| % sales mix | 23.5% | 22.1% |

(1) Primarily to-go, delivery and catering sales for comparable 2025 and 2024 restaurants.

IHOP's system-wide domestic same-restaurant sales decreased 2.7% for the three months ended March 31, 2025 as compared to the same period of 2024. The decrease in same-restaurant sales was primarily due to a decrease in traffic and a decrease in average check.

Based on data from Black Box, IHOP's same-restaurant sales for the three months ended March 31, 2025 underperformed the family dining segment of the restaurant industry (excluding IHOP) during the same period.

| IHOP Off-Premise Sales Data | Three Months Ended March 31, 2025 | 2024 |
| --- | ---: | ---: |
| Off-premise sales (in millions) (1) | $153.8 | $155.7 |
| % sales mix | 21.2% | 21.0% |

(1) Primarily to-go, delivery and catering sales for comparable 2025 and 2024 restaurants.

### Quarterly Domestic Same-Restaurant Sales - Fuzzy's

Fuzzy's system-wide domestic same-restaurant sales decreased 12.2% for the three months ended March 31, 2025 as compared to the same period of 2024. The decrease in same-restaurant sales was primarily due to a decrease in traffic and a decrease in average check.

| Fuzzy's Off-Premise Sales Data | Three Months Ended March 31, 2025 | 2024 |
| --- | ---: | ---: |
| Off-premise sales (in millions) (1) | $14.6 | $18.3 |
| % sales mix | 38.8% | 40.8% |

(1) Primarily to-go, delivery and catering sales for comparable 2025 and 2024 restaurants.

### Restaurant Data

The following table sets forth the number of “Effective Restaurants” in the Applebee’s, IHOP and Fuzzy's systems and information regarding the percentage change in sales at those restaurants compared to the same period of the prior year. Sales at restaurants that are owned by franchisees and area licensees are not attributable to the Company and, as such, the percentage change in sales at Effective Restaurants is based on non-GAAP sales data. However, we believe that presentation of this information is useful in analyzing our revenues because franchisees and area licensees pay us royalties and advertising fees that are based on a percentage of their sales, and, where applicable, rental payments under leases that partially may be based on a percentage of their sales. Management also uses this information to make decisions about plans for future development of additional restaurants as well as evaluation of current operations.

| Applebee's Restaurant Data Global Effective Restaurants(a) | Three Months Ended March 31, 2025 | 2024 |
| --- | ---: | ---: |
| Franchise | 1,549 | 1,635 |
| Company | 47 | — |
| Total | **1,596** | **1,635** |
| **System-wide(b)** |  |  |
| Domestic sales percentage change(c) | (3.9)% | (5.9)% |
| Domestic same-restaurant sales percentage change(d) | (2.2)% | (4.6)% |
| **Franchise(b)** |  |  |
| Domestic sales percentage change(c)(e) | (5.7)% | (5.9)% |
| Domestic same-restaurant sales percentage change(d) | (2.1)% | (4.6)% |
| Average weekly domestic unit sales (in thousands) | $54.7 | $54.7 |

28

| IHOP Restaurant Data Global Effective Restaurants(a) | Three Months Ended March 31, 2025 | 2024 |
| --- | ---: | ---: |
| Franchise | 1,643 | 1,644 |
| Area license | 153 | 156 |
| Company | 3 | — |
| Total | **1,799** | **1,800** |
| **System-wide(b)** |  |  |
| Sales percentage change(c) | (3.0)% | 0.2% |
| Domestic same-restaurant sales percentage change, including area license restaurants(d) | (2.7)% | (1.7)% |
| **Franchise(b)** |  |  |
| Sales percentage change(c)(e) | (2.9)% | 0.2% |
| Domestic same-restaurant sales percentage change(d) | (2.6)% | (1.9)% |
| Average weekly unit sales (in thousands) | $36.5 | $37.6 |
| **Area License(b)** |  |  |
| Sales percentage change(c) | (5.0)% | 0.0% |
| **Fuzzy's Restaurant Data** |  |  |
| **Global Effective Restaurants(a)** |  |  |
| Franchise | 114 | 127 |
| Company | 1 | 1 |
| Total | **115** | **128** |
| **System-wide(b)** |  |  |
| Domestic sales percentage change(c) | (16.9)% | (13.1)% |
| Domestic same-restaurant sales percentage change(d) | (12.2)% | (9.8)% |
| **Franchise(b)** |  |  |
| Domestic sales percentage change(c) | (16.9)% | (11.9)% |
| Domestic same-restaurant sales percentage change(d) | (12.2)% | (9.8)% |
| Average weekly domestic unit sales (in thousands) | $26.5 | $28.6 |

(a) “Effective Restaurants” are the weighted average number of restaurants open in each fiscal period, adjusted to account for restaurants open for only a portion of the period. Information is presented for all Effective Restaurants in the Applebee’s, IHOP and Fuzzy's systems, which consist of restaurants owned by franchisees and area licensees as well as those owned by the Company. Effective Restaurants do not include units operated as ghost kitchens (small kitchens with no store-front presence, used to fill off-premise orders).

(b) “System-wide sales” are retail sales at Applebee’s and Fuzzy's restaurants operated by franchisees and IHOP restaurants operated by franchisees and area licensees, as reported to the Company, in addition to retail sales at company-operated Applebee's, IHOP and Fuzzy's restaurants. System-wide sales do not include retail sales of ghost kitchens. Sales at restaurants that are owned by franchisees and area licensees are not attributable to the Company. An increase in franchisees' reported sales will result in a corresponding increase in our royalty revenue, while a decrease in franchisees' reported sales will result in a corresponding decrease in our royalty revenue. Unaudited reported sales for Applebee's and Fuzzy's franchise restaurants, IHOP franchise restaurants, IHOP area license restaurants, and Applebee's, IHOP and Fuzzy's company-operated restaurants were as follows:

| Reported sales (in millions) | Three Months Ended March 31, 2025 | 2024 |
| --- | ---: | ---: |
| Applebee's franchise restaurant sales | $1,055.1 | $1,120.9 |
| Applebee's company-operated restaurants | 20.1 | — |
| IHOP franchise restaurant sales | 780.3 | 803.8 |
| IHOP area license restaurant sales | 73.9 | 77.8 |
| IHOP company-operated restaurants | 1.3 | — |
| Fuzzy's franchise restaurant sales | 39.3 | 47.3 |
| Fuzzy's company-operated restaurants | 0.2 | 0.3 |
| Total | $1,970.2 | $2,050.1 |

(c) “Sales percentage change” reflects, for each category of restaurants, the percentage change in sales in any given fiscal period compared to the prior period for all restaurants in that category.

(d) “Domestic same-restaurant sales percentage change” reflects the percentage change in sales in any given fiscal period, compared to the same weeks in the prior period, for domestic restaurants that have been operated during both periods that are being compared and have been open for at least 18 months. Because of new restaurant openings and restaurant closures, the domestic restaurants open throughout both fiscal periods being compared may be different from period to period.

(e) The franchise sales percentage change for 2025 was impacted by the acquisition of 47 Applebee's restaurants in November 2024 and 10 IHOP restaurants in March 2025 now reported as company-operated.

| Restaurant Development Activity Applebee's Summary - beginning of period: | Three Months Ended March 31, 2025 | 2024 |
| --- | ---: | ---: |
| Franchise | 1,567 | 1,642 |
| Company | 47 | — |
| **Beginning of period** | **1,614** | **1,642** |
| Franchise restaurants opened: |  |  |
| Domestic | 1 | — |
| International | — | 2 |
| Total franchise restaurants opened | 1 | 2 |
| Franchise restaurants permanently closed: |  |  |
| Domestic | (13) | (5) |
| International | (8) | (3) |
| Total franchise restaurants permanently closed | (21) | (8) |
| **Net franchise restaurant reduction** | **(20)** | **(6)** |
| **Summary - end of period:** |  |  |
| Franchise | 1,547 | 1,636 |
| Company | 47 | — |
| **Total Applebee's restaurants, end of period** | **1,594** | **1,636** |
| Domestic | 1,489 | 1,531 |
| International | 105 | 105 |

30

| Restaurant Development Activity IHOP Summary - beginning of period: | Three Months Ended March 31, 2025 | 2024 |
| --- | ---: | ---: |
| Franchise | 1,670 | 1,657 |
| Area license | 154 | 157 |
| Company | — | — |
| **Total IHOP restaurants, beginning of period** | **1,824** | **1,814** |
| Franchise/area license restaurants opened: |  |  |
| Domestic franchise | 4 | 5 |
| Domestic area license | — | — |
| International franchise | 3 | 2 |
| International area license | 1 | — |
| Total franchise/area license restaurants opened | 8 | 7 |
| Franchise/area license restaurants permanently closed: |  |  |
| Domestic franchise | (16) | (8) |
| Domestic area license | — | (1) |
| International franchise | (2) | (3) |
| International area license | — | — |
| Total franchise/area license restaurants permanently closed | (18) | (12) |
| **Net franchise/area license restaurant addition (reduction)** | **(10)** | **(5)** |
| Franchise restaurants acquired by the Company | (10) | — |
| **Net increase (decrease) in franchise/area license restaurants** | **(20)** | **(5)** |
| **Summary - end of period:** |  |  |
| Franchise | 1,649 | 1,653 |
| Area license | 155 | 156 |
| Company | 10 | — |
| **Total IHOP restaurants, end of period** | **1,814** | **1,809** |
| Domestic | 1,682 | 1,692 |
| International | 132 | 117 |
| **Fuzzy's** |  |  |
| **Summary - beginning of period:** |  |  |
| Franchise | 116 | 131 |
| Company | 1 | 1 |
| **Beginning of period** | **117** | **132** |
| Franchise restaurants opened: |  |  |
| Domestic | 1 | — |
| Franchise restaurants permanently closed: |  |  |
| Domestic | (4) | (4) |
| **Net franchise restaurant addition (reduction)** | **(3)** | **(4)** |
| Refranchised from Company restaurants | — | — |
| **Net franchise restaurant addition (reduction)** | **(3)** | **(4)** |
| **Summary - end of period:** |  |  |

31

| Restaurant Development Activity | Three Months Ended March 31, 2025 | 2024 |
| --- | ---: | ---: |
| Franchise | 113 | 127 |
| Company | 1 | 1 |
| **Total Fuzzy's restaurants, end of period** | **114** | **128** |
| Domestic | 114 | 128 |
| International | — | — |

The restaurant counts and activity presented above include 19 dual-branded international and one dual-branded domestic Applebee's and IHOP restaurants at March 31, 2025, and eight dual-branded international Applebee's and IHOP restaurants at March 31, 2024, which are separately counted in each of our brands' restaurant counts and activity. Dual-branded restaurants are defined as restaurants that reside in one location and operate two of our restaurant concepts under two separate franchise agreements.

The closures presented in the tables above represent permanent closures of restaurants. Temporary closures, which can occur for a variety of reasons, are not reflected as reductions in this table and are included in the summary counts at the beginning and end of each period shown. Temporary closures are reflected in the weighted calculation of Effective Restaurants presented in the preceding Restaurant Data table.

Closures of restaurants adversely impact our system-wide retail sales that drive our franchise royalty revenues as well as, in the case of IHOP and Fuzzy's restaurants, sales of proprietary products. Further, with certain restaurants, we own or lease the underlying property and sublease it to the applicable franchisee. Thus, our rental income also could be adversely affected due to the loss of such income, as well as our obligation to make rental or other payments for such properties.

### CONSOLIDATED RESULTS OF OPERATIONS

### Comparison of the Three Months Ended March 31, 2025 and 2024

### Events Impacting Comparability of Financial Information

#### Acquisition of Franchise Restaurants and Refranchising of Company-Operated Restaurants

During the three months ended March 31, 2025, we operated 47 Applebee's restaurants across Georgia, Texas, Arkansas, Illinois, Kentucky, Tennessee, Mississippi and Missouri acquired in November 2024 and 10 IHOP restaurants in Ohio and Kentucky acquired in March 2025. During the three months ended March 31, 2024, we did not operate any Applebee's and IHOP restaurants.

While we currently intend to own and operate these restaurants for the near term, we will assess and monitor opportunities to refranchise these restaurants under favorable circumstances. From time to time, we may acquire restaurants from franchisees for a variety of reasons which is consistent with and should not be considered a change in our business strategy to operate as a highly franchised company.

### Financial Results

*(In millions)*

| Revenue 2025 | Three Months Ended March 31, 2024 |  | Favorable (Unfavorable) Variance |
| --- | ---: | ---: | ---: |
| Franchise operations | $166.2 | $175.9 | $(9.7) |
| Rental operations | 26.7 | 29.5 | (2.8) |
| Company restaurant operations | 21.6 | 0.3 | 21.3 |
| Financing operations | 0.3 | 0.5 | (0.2) |
| Total revenue | $214.8 | $206.2 | $8.6 |
| Change vs. prior period | 4.1% |  |  |

Total revenue for the three months ended March 31, 2025 increased compared with the same period of the prior year, primarily due to the operation of 47 Applebee's restaurants acquired in November 2024 and 10 IHOP restaurants acquired in

March 2025, partially offset by the decrease in franchise and rental operations revenue. The decrease in franchise operations revenue was primarily attributable to the decrease in domestic same-restaurant sales, the decrease in the number of effective restaurants and the decrease in proprietary product sales at IHOP. Rental operations revenue for the three months ended March 31, 2025 decreased compared with the same period of the prior year, primarily due to lease terminations and a decrease in percentage rent due to lower system sales.

*(In millions)*

| Gross Profit | Three Months Ended March 31, 2025 | 2024 | Favorable (Unfavorable) Variance |
| --- | ---: | ---: | ---: |
| Franchise operations | $85.0 | $89.4 | $(4.4) |
| Rental operations | 5.4 | 7.6 | (2.2) |
| Company restaurant operations | (0.4) | 0.0 | (0.4) |
| Financing operations | 0.3 | 0.4 | (0.1) |
| Total gross profit | $90.3 | $97.4 | $(7.1) |
| Change vs. prior period | (7.3)% |  |  |

Total gross profit for the three months ended March 31, 2025 decreased compared with the same period of the prior year, primarily due to the decrease in franchise and rental operations revenue. The franchise operations gross profit decreased primarily due to Applebee's and IHOP decreased franchise operations gross profit. The decrease in rental operations gross profit for the three months ended March 31, 2025 was primarily due to decreased rental revenue as described above.

*(In millions, except number of restaurants)*

| Franchise Operations Effective Franchise Restaurants:(1) | Three Months Ended March 31, 2025 | 2024 | Favorable (Unfavorable) Variance |
| --- | ---: | ---: | ---: |
| Applebee’s | 1,549 | 1,635 | (86) |
| IHOP | 1,796 | 1,800 | (4) |
| Fuzzy's | 114 | 127 | (13) |
| Franchise Revenues: |  |  |  |
| Applebee’s franchise fees | $41.0 | $43.4 | $(2.4) |
| IHOP franchise fees | 52.5 | 54.3 | (1.8) |
| Fuzzy's franchise fees | 2.3 | 2.9 | (0.6) |
| Advertising fees | 70.5 | 75.3 | (4.8) |
| Total franchise revenues | 166.2 | 175.9 | (9.7) |
| Franchise Expenses: |  |  |  |
| Applebee’s | 1.8 | 0.6 | (1.2) |
| IHOP | 8.7 | 9.3 | 0.6 |
| Fuzzy's | 0.2 | 1.3 | 1.1 |
| Advertising expenses | 70.5 | 75.3 | 4.8 |
| Total franchise expenses | 81.2 | 86.5 | 5.3 |
| Franchise Gross Profit: |  |  |  |
| Applebee’s | 39.1 | 42.7 | (3.6) |
| IHOP | 43.8 | 45.0 | (1.2) |
| Fuzzy's | 2.1 | 1.6 | 0.4 |
| Total franchise gross profit | $85.0 | $89.3 | $(4.3) |
| Gross profit as % of franchise revenue (2) | 51.2% | 50.8% |  |
| Gross profit as % of franchise fees (2)(3) | 88.8% | 88.9% |  |

(1) Effective Franchise Restaurants are the weighted average number of franchise and area license restaurants open in each fiscal period, adjusted to account for restaurants open for only a portion of the period.

(2) Percentages calculated on actual amounts, not rounded amounts presented above.

(3) From time to time, advertising fee revenue may be different from advertising expenses in a given accounting period. Over the long term, advertising activity should not generate gross profit or loss.

Applebee's franchise fee revenue for the three months ended March 31, 2025 decreased 5.6% as compared with the same period of the prior year, primarily due to fewer effective franchise restaurants, the number of which declined due to our acquisition of 47 Applebee's restaurants in November 2024 and restaurant closures, and a 2.1% decrease in domestic franchise same-restaurant sales.

Applebee's franchise expenses for the three months ended March 31, 2025 increased $1.2 million compared with the same period of the prior year primarily due to an increase in bad debt expense and an increase in IT franchisee support costs.

IHOP's franchise fee revenue for the three months ended March 31, 2025 decreased 3.4%, as compared with the same period of the prior year, primarily due to a 2.6% decrease in domestic franchise same-restaurant sales and a decrease in the number of effective franchise restaurants as well as a decrease in proprietary product sales.

IHOP's franchise expenses for the three months ended March 31, 2025 decreased $0.6 million as compared with the same period of the prior year, primarily due to a decrease in franchisor advertising contribution and a decrease in the cost of proprietary product sales, partially offset by an increase in bad debt expense.

Fuzzy's franchise fee revenue for the three months ended March 31, 2025 decreased $0.6 million as compared with the same period of the prior year, primarily due to the unfavorable impact on royalties of a 12.2% decrease in franchise same-restaurant sales and a decrease in the number of effective franchise restaurants.

Fuzzy's franchise expenses for the three months ended March 31, 2025 decreased $1.1 million as compared with the same period of the prior year primarily due to a decrease in franchisor advertising contribution.

*(In millions)*

| Advertising Revenues and Expenses | Three Months Ended March 31, 2025 | 2024 | Increase (Decrease) |
| --- | ---: | ---: | ---: |
| Applebee’s | $41.7 | $45.2 | $(3.5) |
| IHOP | 28.0 | 29.1 | (1.1) |
| Fuzzy's | 0.8 | 0.9 | (0.1) |
| Total advertising revenues and expenses | $70.5 | $75.3 | $(4.8) |

Applebee's advertising revenues and expenses for the three months ended March 31, 2025 decreased $3.5 million compared to the same period of the prior year primarily due to fewer effective franchise restaurants, the number of which declined due to our acquisition of 47 Applebee's restaurants in November 2024 (whose contributions to the national advertising fund are reflected as company restaurant expenses instead of advertising revenues) and restaurant closures, and a 2.1% decrease in domestic franchise same-restaurant sales. IHOP advertising revenues and expenses for the three months ended March 31, 2025 decreased 3.9% compared to the same period of the prior year, primarily due to a 2.6% decrease in domestic franchise same-restaurant sales and a decrease in the number of effective franchise restaurants.

It is our accounting policy to recognize any deficiency in advertising fee revenue compared to advertising expenditure or any recovery of a previously recognized deficiency in advertising fee revenue compared to advertising expenditure in the fourth quarter of our fiscal year.

*(In millions)*

| Rental Operations | Three Months Ended March 31, 2025 | 2024 | Favorable (Unfavorable) Variance |
| --- | ---: | ---: | ---: |
| Rental revenues | $26.7 | $29.5 | $(2.8) |
| Rental expenses | 21.2 | 22.0 | 0.8 |
| Rental operations gross profit | $5.4 | $7.6 | $(2.2) |
| Gross profit as % of rental revenue (1) | 20.4% | 25.7% |  |

(1) Percentages calculated on actual amounts, not rounded amounts presented above.

Rental operations relate primarily to IHOP franchise restaurants. Rental income includes sublease revenue from operating leases and interest income from real estate leases. Rental expenses are costs of prime operating leases and interest expense on prime finance leases.

Rental operations gross profit for the three months ended March 31, 2025 decreased as compared to the same period of the prior year, primarily due to lease terminations and a decrease in percentage rent due to lower system sales.

*(in millions)*

| Company Restaurant and Financing Operations Company Restaurant Operations | Three Months Ended March 31, 2025 | 2024 | Favorable (Unfavorable) Variance |
| --- | ---: | ---: | ---: |
| Company restaurant sales | $21.6 | $0.3 | $21.3 |
| Company restaurant expenses | 22.0 | 0.3 | (21.7) |
| Total company restaurants operations | $(0.4) | $0.0 | $(0.4) |
| Financing Operations |  |  |  |
| Financing revenues | $0.3 | $0.5 | $(0.2) |
| Financing expenses | 0.1 | 0.1 | 0.0 |
| Total financing operations | $0.2 | $0.4 | $(0.2) |

As discussed under "*Events Impacting Comparability of Financial Information*," company restaurant operations for the three months ended March 31, 2025 included 47 Applebee's restaurants acquired in November 2024, 10 IHOP restaurants acquired in March 2025, and one Fuzzy's restaurant. Company restaurant operations for the three months ended March 31, 2024 included one Fuzzy's restaurant. Company segment restaurant expenses may include costs associated with acquired restaurants in the process of being refranchised. There were no acquired restaurants expenses during the three months ended March 31, 2024.

Financing revenues primarily consist of interest income from the financing of IHOP equipment leases and franchise fees as well as interest income on notes receivable due from franchisees. Financing expenses are sales and use taxes related to IHOP equipment leases. Financing revenue and gross profit for the three months ended March 31, 2025 declined compared to the same period of the prior year, primarily due to progressive decline in interest income as note balances are repaid.

*(In millions)*

| G&A Expenses | Three Months Ended March 31, 2025 | 2024 | Favorable (Unfavorable) Variance |
| --- | ---: | ---: | ---: |
| Total G&A expenses | $51.3 | $52.2 | $0.9 |

G&A expenses for the three months ended March 31, 2025 decreased 1.6% compared to the same period of the prior year, primarily due to a decrease in compensation-related expenses, partially offset by an increase in legal and professional services.

*(In millions)*

| Other Income and Expense Items | Three Months Ended March 31, 2025 | 2024 | Favorable (Unfavorable) Variance |
| --- | ---: | ---: | ---: |
| Interest expense, net | $17.7 | $18.1 | $0.3 |
| Closure and impairment charges | 5.8 | 0.6 | (5.2) |
| Amortization of intangible assets | 2.7 | 2.7 | 0.0 |
| Loss (gain) on disposition of assets | (0.1) | (0.2) | (0.1) |
| Total other income and expenses | $26.1 | $21.2 | $(5.0) |

#### Interest expense, net

Interest expense, net for the three months ended March 31, 2025 was slightly lower than the same period of the prior year, primarily due to the decrease in interest rates on our Credit Facility as well as an increase in interest income from improved yields.

#### Closure and impairment charges

Closure and impairment charges for the three months ended March 31, 2025 increased $5.2 million compared to the same period of the prior year. The increase in closure and impairment charges was primarily attributable to the strategic realignment of the IHOP Cincinnati market resulting in the acquisition and closure of certain IHOP restaurants in March 2025.

*(In millions)*

| Income Taxes | Three Months Ended March 31, 2025 | 2024 | Favorable (Unfavorable) Variance |
| --- | ---: | ---: | ---: |
| Income before income taxes | $12.8 | $24.0 | $(11.3) |
| Income tax provision | $4.6 | $6.6 | $2.0 |
| Effective tax rate | 35.9% | 27.3% | (8.6)% |

Our income tax provision or benefit will vary from period to period in our normal course of business for two reasons: a change in income before income taxes and a change in the effective tax rate. Changes in our income before income taxes were addressed in the preceding sections of “*Consolidated Results of Operations - Comparison of the Three Months Ended March 31, 2025 and 2024."*

Our effective tax rate for the three months ended March 31, 2025 was higher than the rate of the prior comparable period primarily due to a lower tax deduction related to stock-based compensation, resulting from the changes in our stock price.

### Liquidity and Capital Resources

Key provisions of our long-term debt potentially impacting liquidity are summarized below. See *Note 7 — Long-Term Debt*, of the Notes to the Consolidated Financial Statements, for additional detail on long-term debt, including the balances outstanding at March 31, 2025 and 2024.

#### Instruments

Our long-term debt includes two series of fixed rate senior secured notes, the Series 2019-1 4.723% Fixed Rate Senior Secured Notes in an initial aggregate principal amount of $600 million (the “2019 Class A-2-II Notes”) and the Series 2023-1 7.824% Fixed Rate Senior Secured Notes, Class A-2 in an initial aggregate principal amount of $500 million (the “2023 Class A-2 Notes” and, together with the 2019 Class A-2-II Notes, the “Class A-2 Notes”).

Our long-term debt also includes a revolving financing facility, the 2022-1 Variable Funding Senior Notes, Class A-1 (the “Credit Facility”) that allows for drawings up to $325 million of variable funding notes on a revolving basis and the issuance of letters of credit.

#### Maturity

The final maturity of the 2019 Class A-2-II Notes is in June 2049, but it is anticipated that, unless repaid earlier, the 2019 Class A-2-II Notes will be repaid in June 2026.

The final maturity of the 2023 Class A-2 Notes is in March 2053, but it is anticipated that, unless repaid earlier, to the extent permitted under the Indenture, the 2023 Class A-2 Notes will be repaid in June 2029.

The renewal date of the Credit Facility is June 2027, subject to two additional one-year extensions at the option of the Company upon the satisfaction of certain conditions.

#### Payment of Principal and Interest

While the Class A-2 Notes are outstanding, payment of principal and interest is required to be made on the Class A-2 Notes on a quarterly basis. The payment of principal on the Class A-2 Notes may be suspended when the leverage ratio for the Company and its subsidiaries is less than or equal to 5.25x. As of March 31, 2025, our leverage ratio was approximately 4.15x. Therefore, quarterly principal payments are not required.

Exceeding the leverage ratio of 5.25x does not violate any covenant related to the Class A-2 Notes.

On February 16, 2023, the 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.

#### 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 March 31, 2025, there was no make-whole premium associated with voluntary prepayment of the 2019 Class A-2-II Notes. As of March 31, 2025, the make-whole premium associated with voluntary prepayment of the 2023 Class A-2 Notes was approximately $27.2 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. The mandatory make-whole premium requirements are considered derivatives embedded that must be bifurcated for separate valuation. We estimated the fair value of these derivatives to be immaterial as of March 31, 2025, based on the probability-weighted discounted cash flows associated with either event.

#### Covenants and Restrictions

Our long-term debt is subject to a series of covenants and restrictions customary for transactions of this type, including maintenance of a debt service coverage ratio ("DSCR"). In general, the DSCR ratio is net cash flow for the four quarters preceding the calculation date divided by the total debt service payments of the preceding four quarters. The complete definitions of the DSCR and all calculation elements are contained in the indenture, and subsequent amendments thereto, under which the Class A-2 Notes were issued.

Failure to maintain a prescribed DSCR can trigger the following events:

- DSCR less than 1.75x - Cash Flow Sweeping Event
- DSCR less than 1.20x - Rapid Amortization Event
- Interest-only DSCR less than 1.20x - Manager Termination Event
- Interest-only DSCR less than 1.10x - Default Event

Our DSCR for the reporting period ended March 31, 2025 was approximately 3.4x.

#### Credit Facility

In August 2022, the Co-Issuers entered into the Credit Facility that allows for drawings up to $325 million of variable funding notes on a revolving basis and the issuance of letters of credit. The applicable interest rate under the Credit Facility depends on the type of borrowing by the Co-Issuers. The applicable interest rate for advances is generally calculated at a per annum rate equal to the commercial paper funding rate or one-, two-, three- or six-month Secured Overnight Financing Rate (“SOFR”), in either case, plus 2.50%. The applicable interest rate for swingline advances and unreimbursed draws on outstanding letters of credit is a per annum base rate equal to the sum of (a) the greatest of (i) the prime rate in effect from time to time; (ii) the federal funds rate in effect from time to time plus 0.50%; and (iii) SOFR for a one-month tenor in effect at such time plus 0.50% plus (b) 2.00%.

As of March 31, 2025, the outstanding balance of the Credit Facility was $100 million. The amount of $0.6 million was pledged against the Credit Facility for outstanding letters of credit, leaving $224.4 million of the Credit Facility available for borrowing at March 31, 2025. It is anticipated that any principal and interest on the Credit Facility outstanding will be repaid in full on or prior to the quarterly payment date in June 2027, subject to two additional one-year extensions at the option of the Company upon the satisfaction of certain conditions. The letters of credit are used primarily to satisfy insurance-related collateral requirements. The weighted average interest rate on Credit Facility borrowings for the period outstanding during the three months ended March 31, 2025 was 6.95%.

### Capital Allocation

#### Dividends

Dividends declared and paid per share for the three months ended March 31, 2025 and 2024 were as follows:

|  | Three Months Ended March 31, 2025 | 2024 |
| --- | ---: | ---: |
| Dividends declared per common share | $0.51 | $0.51 |
| Dividends paid per common share | $0.51 | $0.51 |

During the three months ended March 31, 2025 and 2024, the Company paid dividends of $7.8 million and $7.8 million, respectively.

On November 22, 2024, the Board of Directors declared a fourth quarter 2024 cash dividend of $0.51 per share of common stock, paid on January 7, 2025 to the stockholders of record as of the close of business on December 20, 2024.

On February 21, 2025, the Board of Directors declared a first quarter 2025 cash dividend of $0.51 per share of common stock, paid on April 4, 2025 to the stockholders of record as of the close of business on March 17, 2025.

#### Stock Repurchases

On February 17, 2022, the Company's Board of Directors authorized a new share repurchase program, effective April 1, 2022, of up to $250 million (the “2022 Repurchase Program”).

During the three months ended March 31, 2025, the Company repurchased 64,869 shares of common stock at a cost of $1.6 million. Cumulatively, the Company has repurchased 1,930,268 shares at a cost of $118.4 million under the 2022 Repurchase Program.

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 for detail on this stock repurchase activity during the three months ended March 31, 2025.

### Cash Flows

In summary, our cash flows for the three months ended March 31, 2025 and 2024 were as follows:

*(In millions)*

|  | Three Months Ended March 31, 2025 | 2024 | Variance |
| --- | ---: | ---: | ---: |
| Net cash provided by operating activities | $16.1 | $30.6 | $(14.5) |
| Net cash used in investing activities | (1.9) | (1.2) | (0.7) |
| Net cash used in financing activities | (12.4) | (17.8) | 5.4 |
| Net increase (decrease) in cash, cash equivalents and restricted cash | $1.8 | $11.6 | $(9.8) |

#### Operating Activities

Cash provided by operating activities is primarily driven by revenues earned and collected from our franchisees, and profit from our rental operations, financing operations and our company-owned restaurant. Cash provided by operating activities decreased $14.5 million during the three months ended March 31, 2025 compared to the same period of the prior year. This decrease was primarily attributable to a decrease in gross segment profit and an unfavorable decrease in working capital resulting from timing of prepaid rent payments and the collection of an income tax settlement in the same period of the prior year, partially offset by a decrease in incentive compensation payments.

#### Investing Activities

Investing activities used net cash of $1.9 million for the three months ended March 31, 2025 compared to $1.2 million for the three months ended March 31, 2024. The increase in cash used by investing activities of $0.7 million was primarily attributable to an increase in long-term receivables and a decrease in principal receipts from notes and equipment contracts receivables compared to the same period of the prior year, partially offset by an increase in proceeds from the sale of assets primarily from the sale of the land and building on which an IHOP restaurant was located.

#### Financing Activities

Financing activities used net cash of $12.4 million for the three months ended March 31, 2025. The decrease in cash used by financing activities of $5.4 million was primarily due to a $4.4 million decrease in repurchase of common stock and a $0.6 million decrease in repurchase of surrendered shares.

### Adjusted Free Cash Flow

We define “adjusted free cash flow” for a given period as cash provided by operating activities, plus receipts from notes and equipment contract receivables, less additions to property and equipment. Management uses this liquidity measure in its periodic assessment of, among other things, payment of cash dividends on common stock and repurchases of common stock and 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-U.S. GAAP measure. This non-U.S. 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-U.S. 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:

*(In millions)*

|  | Three Months Ended March 31, 2025 | 2024 | Variance |
| --- | ---: | ---: | ---: |
| Cash flows provided by operating activities | $16.1 | $30.6 | $(14.5) |
| Principal receipts from notes and equipment contracts | 1.8 | 2.5 | (0.7) |
| Additions to property and equipment | (3.3) | (3.3) | 0.0 |
| Adjusted free cash flow | $14.6 | $29.7 | $(15.1) |

Adjusted free cash flow for the three months ended March 31, 2025 decreased $15.1 million compared to the same period of the prior year primarily due to lower cash flows from operating activities.

### 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 31, 2024.

### Critical Accounting Policies and Estimates

The preparation of financial statements in accordance with U.S. GAAP requires us to make estimates and assumptions affecting the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of net revenues and expenses in the reporting period. We base our estimates and assumptions on current facts, historical experience and various other factors that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. We continually review the estimates and underlying assumptions to ensure they are appropriate for the circumstances. Accounting assumptions and estimates are inherently uncertain and actual results may differ materially from our estimates.

A summary of our critical accounting estimates is included in 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 31, 2024. During the three months ended March 31, 2025, there were no significant changes in our critical accounting policies or in our critical accounting estimates.

## Market risk

As filed, 143 characters.

There were no material changes from the information contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024.

## Controls and procedures

As filed, 1,082 characters.

### Disclosure Controls and Procedures

The Company’s management, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Company’s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this report. Based on such evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of such period, the Company’s disclosure controls and procedures are effective at the reasonable assurance level.

### Changes in Internal Control Over Financial Reporting

There have been no changes in the Company’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter to which this report relates that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

## Risk factors

As filed, 174 characters.

There are no material changes from the risk factors set forth under Item 1A of Part I of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2024.

Filed May 7, 2025.
Source: SEC EDGAR, the filing index for accession 0001628280-25-022869. Last ingested by Listed: Nov 3, 2026, 10:44 ET. No prices; not investment advice.