Dine Brands Global, Inc. Common Stock · NYSE:DIN
Dine Brands Global, Inc. Common Stock — Investor Day (February 2018)
168 slides from Dine Brands Global, Inc. Common Stock's investor day presentation, Feb 21, 2018
Slide 1: Dine Brands Global, Inc. Investor Day
Dine Brands Global, Inc. Investor Day FEBRUARY 21, 2018 Exhibit 99.1
Slide 2: Forward-Looking Information
Forward-Looking Information: The content contained in this presentation is as of February 21, 2018. The Company assumes no obligation to update or supplement the information. Statements contained in this press release may constitute forward-looking statements within the meaning of Section 27A of the
Slide 3: Agenda
8:00-8:20 a.m. 8:20-8:50 a.m. 8:50-9:20 a.m. 9:20-9:50 a.m. 9:50-10:10 a.m. 10:10-10:25 a.m. 10:25-10:45 a.m. 10:45-11:15 a.m. 11:15-11:30 a.m. 11:30 a.m.- Noon Agenda Introduction and Dine Brands Overview Vision 2022 IHOP Strategic Review Applebee’s Strategic Review International Strategic Review B
Slide 4: Dine Brands Overview
Dine Brands Overview Steve Joyce CHIEF EXECUTIVE OFFICER
Slide 5: Dine Brands Overview contents
Business Overview Dine Brands Overview Leadership Team Investment Highlights Financial Goals Dine Brands Overview
Slide 6: Business Overview
Two iconic brands – IHOP and Applebee’s 3,700+ restaurants $7.4 billion in system sales #1 in U.S. Family and Casual dining(1) Expanding international presence 100% franchised model 2017 revenue of $738mm(2) and EBITDA of $224mm(3) Industry-leading margins and significant cash generation(4) Business
Slide 7: Leadership Team: Steve Joyce, CEO
Previously President and CEO of Choice Hotels Has served on Dine Brands board of directors since 2012 Spent 26+ years with Marriott in senior positions Active member of the hospitality industry and business community Served on a variety of boards and community organizations, including Chair of the I
Slide 8: Leadership Team: Deep & Experienced
Leadership Team: Deep & Experienced Steve Joyce CEO Bryan Adel Senior Vice President, Legal, General Counsel & Secretary Amy Mason Senior Vice President, Communications, Public Affairs & Consumer Insights Adrian Butler Senior Vice President, CIO Gregg Kalvin Interim CFO & Senior Vice President, Corp
Slide 9: Commitment to Success
Implementing a plan to stabilize and grow performance at both brands Executing a new strategy Optimistic about the future Commitment to Success OUR GOAL: RETURN TO GROWTH & CREATE SIGNIFICANT VALUE FOR SHAREHOLDERS & FRANCHISEES Dine Brands Overview
Slide 10: Investment Highlights
Investment Highlights Significant Scale in the U.S. Expanding International Presence Favorable Guest Dynamics 100% Franchised Model with Strong and Improving Franchisee Base Leader in U.S. Family and Casual Dining Robust EBITDA Margins Substantial Cash Flow Generation History of Significant Capital
Slide 11: Two Iconic Brands
Two Iconic Brands Founded in 1958 Leader in Family Dining category IHOP system has 1,786 locations globally 2017 system-wide sales: $3.3 billion 2017 franchise revenue: $185 million(1) #1 among Family Dining restaurants in the U.S.(2) All 50 states 13 Countries International 6% United States 94% Fou
Slide 12: Significant Scale in the U.S.
Significant Scale in the U.S. 51 or more locations 21 - 50 locations 20 or fewer locations Alaska Hawaii Total U.S. Locations 1,671 International 115 Total Locations 1,786 Existing IHOP System December 2017 51 or more locations 21 - 50 locations 20 or fewer locations Alaska Hawaii Existing Applebee’
Slide 13: Expanding International Presence
Expanding International Presence Bahrain: (3 locations) Guam & North Mariana Islands: (4 locations) Egypt: (1 location) India: (1 location) Indonesia: (2 locations) Kuwait: (13 locations) Lebanon: (1 location) Qatar: (8 locations) Saudi Arabia: (35 locations) Thailand: (1 location) United States: (3
Slide 14: Favorable Guest Dynamics
Favorable Guest Dynamics Source: NPD Consumer Reports on Eating Share Trends (CREST) Includes Denny’s, Cracker Barrel, Bob Evans and Panera Includes Chili’s, Ruby Tuesday, TGI Fridays, Outback and Olive Garden 49% of guests are age 34 and below 45% of guests are age 34 and below IHOP GUEST AGE DEMOG
Slide 15: 100% Franchised Model
100% Franchised Model % FRANCHISED VS. FAMILY/CASUAL DINING PEERS (2) % FRANCHISED TODAY VS. AT 2007 MERGER Includes restaurants operated by area licensees Public company 10-K filings Source: Company’s Form 10-K filings, earnings press releases and internal Company data (1) (1) Dine Brands is the hi
Slide 16: Strong and Improving Franchisee Base
321 franchisees globally Franchisee operates average of 5 units Strong financial health Strong and Improving Franchisee Base FRANCHISEES AT BOTH BRANDS ARE HIGHLY ENGAGED AND SUPPORTIVE OF BUSINESS STRATEGY 60 franchisees globally Franchisee operates average of 32 units Notable improvements realized
Slide 17: Leader in U.S. Family and Casual Dining
Leader in U.S. Family and Casual Dining Source: Nation’s Restaurant News, “Top 100,” June 19, 2017 2016 U.S. SYSTEM-WIDE SALES VS. KEY PEERS Peer Average $1.9 Peer Average $3.4 #1 in Family Dining #1 in Casual Dining 2016 U.S. SYSTEM-WIDE SALES VS. KEY PEERS ($bn) Dine Brands Overview
Slide 18: Robust EBITDA Margins
Robust EBITDA Margins Source: FactSet, Company’s Form 10-K filings for fiscal years 2016 and 2017 and Company projections Note: Excludes advertising revenue See Appendix for reconciliation of non-GAAP financial measures (1) Highly Franchised peers include Denny’s, Dominos, Dunkin’, Restaurant Brands
Slide 19: Substantial Cash Flow Generation
FULLY-FRANCHISED AND ASSET-LITE MODEL GENERATES SUBSTANTIAL ADJUSTED FREE CASH FLOW Investment to drive growth at both brands Attractive capital return to shareholders Minimal capex requirements Substantial Cash Flow Generation (1) See appendix for reconciliation of the Company's cash provided by op
Slide 20: History of Significant Capital Return
Shareholder-friendly capital return policy via dividends and share repurchases Quarterly cash dividend of $0.63 per share in Q1 2018 (implied yield of ~4.7%(1), attractive vs. industry peers) History of Significant Capital Return SINCE 2015, DINE HAS RETURNED ~$340 MILLION TO SHAREHOLDERS THROUGH CA
Slide 21: New Culture and Philosophy
New Culture and Philosophy Returning to growth High-performance, values-based culture SHIFT IN CULTURE AND STRATEGY Actively supporting brands, not overseeing them Being bolder Restructuring to ensure brands have necessary resources Taking risks and moving forward Dine Brands Overview
Slide 22: Vision 2022
Significant Investment in Existing Brands Continued Partnership with Franchisees Greater Emphasis on Data and Analytics New Technology to Enable Future Growth G&A Expense Discipline Shifting Capital Allocation Priorities Scalable Platform for New Opportunities Strong Projected Financial Performance
Slide 23: Significant Investment in Existing Brands
Remodels and culinary innovation Enhanced traditional & digital marketing Dedicated training and operations Technology to enable greater guest access New growth platforms (e.g., To-Go, new formats) Data insights and advanced analytics Reassigning key functions to create greater efficiency for both b
Slide 24: Continued Partnership with Franchisees
Continued partnership on a unified approach going forward Additional contributions to national advertising to fuel breakthrough content Restructured organization to best support the needs of our franchisees Emphasis on agility and innovation at Dine Brands to create opportunities for our franchisees
Slide 25: Greater Emphasis on Data and Analytics
Greater Emphasis on Data and Analytics Who our guests are What matters to them Why they care about our brand Deliver the value and experience our guests expect Make each guest visit more compelling and unique Drive traffic and conversion to a higher average check …AND WE’RE USING THIS INFORMATION TO
Slide 26: New Technology to Enable Future Growth
New Technology to Enable Future Growth UTILIZING TECHNOLOGY TO ENHANCE THE GUEST EXPERIENCE Creating greater access through technology Improving guest and team member experience Server tablets, table-side payments and WiFi Online ordering now available nationwide Currently testing delivery Vision 20
Slide 27: General & Administrative Expense Discipline
We are committed to maintaining significant cost discipline and targeting G&A growth at or below inflation General & Administrative Expense Discipline 2017A 2018E $151M $166M ~9% YoY Reduction G&A “RIGHT SIZED” IN 2018E (1) Based on midpoint of 2018 guidance Vision 2022 Source: Internal Company data
Slide 28: Shifting Capital Allocation Priorities
Quarterly cash dividend of $0.63 per share in Q1 2018 ($2.52 per share annualized) Payout ratio of ~44%(1) Opportunity for meaningful share repurchases Shifting Capital Allocation Priorities RETURNING CAPITAL TO SHAREHOLDERS REMAINS A TOP PRIORITY DIVIDEND YIELD ~4.7%(2) Dividend remains amongst hig
Slide 29: Scalable Platform for New Opportunities
Existing platform of corporate infrastructure Extensive experience operating franchised model Strong and well capitalized future franchisee base Proficiency in building and growing brands Robust cash flow for continued investment Scalable Platform for New Opportunities STRATEGIC EXPANSION OF PORTFOL
Slide 30: Strong Projected Financial Performance
Strong Projected Financial Performance 30 REVENUE Low single digit growth(1) Applebee’s: +3% IHOP: +2% International: +15% ADJUSTED EPS (3) $63 $175+ $4.15 $10.00+ $738(1) $900+(1) $492(2) $565+(2) EBITDA(3) Mid single digit growth 10%+ margin expansion $224 $315+ ADJUSTED FREE CASH FLOW (3) Increas
Slide 31: IHOP Strategic Review
IHOP Strategic Review Darren Rebelez PRESIDENT, IHOP
Slide 32: IHOP Strategic Review contents
Business & Industry Overview Franchise Portfolio Guest Insights Growth Strategy Future Performance IHOP Strategic Review
Slide 33: IHOP Business Overview
SCALE Founded in 1958 Leader in Family Dining category 1,671 IHOP locations domestically 301 domestic franchisees in the system Business Overview BRAND OVERVIEW DINING OCCASIONS Late Night 7% Breakfast 49% Dinner 16% Lunch 28% Source: Company’s fiscal 2017 Form 10-K filing and fourth quarter fiscal
Slide 34: The Family Dining Category is Attractive and Growing
The Family Dining Category is Attractive and Growing (1) Hypothesis, Inc. Peers include Waffle House, Cracker Barrel, Denny’s and Bob Evans (2) Lieberman Research Worldwide (3) The NPD Group, Inc. And breakfast food item servings are also increasing at PM day parts (3) BREAKFAST TRAFFIC IS GROWING…(
Slide 35: Family Dining Has Significant Global Opportunities
Family Dining Has Significant Global Opportunities (1) 2017 Technomic, Inc. Distributor Intelligence Report Note: Global 150 includes world’s 150 largest chains; industry includes smaller chains and independents The global foodservice industry represents over $3 trillion in sales, of which only 25%
Slide 36: Leader in Family Dining
Leader in Family Dining for the Last 10 Years Source: Annual ranking by Nation’s Restaurant News, “Top 100,” June 19, 2017 (IHOP rank based on U.S. system-wide sales in the family dining category). #1 in System Sales 2016 SYSTEM-WIDE SALES VS. PEERS 2016 UNIT COUNT VS. PEERS #2 in Unit Count
Slide 37: Historical Performance vs. Peer Average
Historical Performance vs. Peer Average NPD NPD Recount Source: NPD Crest through year end December 31, 2017 CAGR 2012-2017 (December) (1) SYSTEM SALES GROWTH NET UNIT GROWTH CAGR 2012-2017 (Fall 2017)(2) Peer Average Peer Average
Slide 38: Historical Financial Performance
Historical Financial Performance Source: Internal Company data, Company’s fiscal 2017 Form 10-K filing and fourth quarter fiscal 2017 earnings press release dated February 20, 2018 (1) Excludes advertising revenue Steadily improving margin profile despite structural run-off of receivables from Renta
Slide 39: Strong Brand Equity and Innovation Leader
Strong Brand Equity and Innovation Leader Source: Lieberman Research Worldwide Peer average consists of Denny’s, Bob Evans, Cracker Barrel and Waffle House 8-IN-10 CONSUMERS SAY THEY LOVE IHOP * Momentum = Brand is on the way up / has a lot going for it IHOP GUEST PERCEPTION
Slide 40: Strong Franchisee Base
Strong Franchisee Base (1) Data as of December 31, 2017. IHOP FRANCHISEES BY PORTFOLIO SIZE(1)
Slide 41: IHOP Leadership Team
IHOP Leadership Team Jay Johns SVP, Operations Brad Haley SVP, Chief Marketing Officer Carrie Stojack VP, Consumer Insights Adam Snow VP, Strategy & Business Analytics VP, Development Gregg Benvenuto Nevielle Panthaky VP, Menu Dev & Innovation Alisa Gmelich VP, Marketing
Slide 42: IHOP's Strategy For Success
42 IHOP’s Strategy For Success Reinvent the Run great Drive treffie Be where Guest experience restaurants the Guest is
Slide 43: Cultural Context
43 * Cultural Context and i More i Divided than in the Past Distribution of Democrats and Republicans on a 10-i ale of political values 1994 2004 2014 Democrat Republican Democrat Republican Democrat Republican Ma Me, PEW RESEARCH CENTER
Slide 44: Purpose
44 "Purpose Give all folks a place to pancake together Dictionary pancake pan-cake /‘pan_kak/ 4) verb 1. To indulge in any way you want knowing you'll always be accepted ‘We don't judge, we pancake > >
Slide 45: Deep Consumer Understanding
A deep consumer understanding Where are they going? Why are they going there? When are they going? Who are they going with? What are they ordering? Dedicated Consumer Insights Team Agencies Consultants Partners Consumer trends Suppliers Project Teams Social Data Business Analytics Brand Insight Prod
Slide 46: The IHOP Guest
HALF OF IHOP GUESTS ARE YOUNGER THAN 35 THIS REPLENISHES OUR LONG-TERM DEMAND AND PROVIDES A LIFE-LONG SENSE OF FUN AND BELONGING The IHOP Guest Source: NPD CREST Deep Understanding of Guest Needs IHOP GUEST AGE DEMOGRAPHICS 46
Slide 47: Rise N' Shine Remodel Program
Completed 620 remodels since 2016, representing approximately 37% of total domestic system Rise N’ Shine Remodel Program Reinvent the Guest experience Enhances guest experience and improves operational efficiency Low single-digit sales improvement observed at remodeled locations Source: Internal Com
Slide 48: Evolving In-Store Technology
UTILIZING TECHNOLOGY TO IMPROVE THE GUEST EXPERIENCE Evolving In-Store Technology Reinvent the Guest experience
Slide 49: Implemented Mobile Ordering Technology
IHOP IS NOW MORE ACCESSIBLE THAN EVER Implemented Mobile Ordering Technology Reinvent the Guest experience
Slide 50: Run Great Restaurants
Be Brilliant at the Basics Create a culture of iHospitality Evolution of DinePlate training platform New employee recognition program New regional field team structure Continue to drive high standards of execution IT’S ALWAYS ABOUT THE GUEST EXPERIENCE, ALL DAY, EVERY DAY Run great restaurants Guest
Slide 51: Drive Traffic
OFFER VALUE Drive traffic MENU OPTIMIZATION Continued Culinary Innovation EXPAND & INNOVATE EVOLVE & CLOSE GAPS PROTECT
Slide 52: Compelling Value Proposition for Consumers
Drive traffic IHOP COMBINES VALUE WITH ITS CORE EQUITIES TO DRIVE FREQUENCY AMONG CORE GUESTS Compelling Value Proposition for Consumers Food Attributes Source: NPD CREST
Slide 53: Refreshed Marketing Direction
Insights and analytics-driven menu innovation State-of-the-art, analytics-based media planning New advertising campaign with agency powerhouse Droga5 Refreshed Marketing Direction AGENCY OF THE YEAR 2016 INDEPENDENT AGENCY OF THE YEAR 2017 AGENCY OF THE YEAR 2016 MOST EFFECTIVE INDEPENDENT AGENCY 20
Slide 54: Pancakes, Pancakes, Pancakes
Pancakes, Pancakes, Pancakes Drive traffic
Slide 55: Optimized Marketing Plan: Advertising
Optimized Marketing Plan: Advertising Drive traffic “WANDERER” :45 (IMAGE FPO, SHIPPING FEB 6) NEW TV ADVERTISING FROM DROGA5:
Slide 56: Optimized Marketing Plan: Advertising
NEW TV ADVERTISING FROM DROGA5: Optimized Marketing Plan: Advertising Drive traffic “STACKS” :30 “PILOTS” :30
Slide 57: Optimized Marketing Plan: Advertising
Optimized Marketing Plan: Advertising Drive traffic “DECLARATION OF PANCAKES” :30 (IMAGE FPO, SHOOTING FEB 5) NEW TV ADVERTISING FROM DROGA5:
Slide 58: Optimized Marketing Plan: Social / Digital Media
…AND ELEVATE OUR BRAND’S RELEVANCE ACROSS ALL DIGITAL AND SOCIAL CHANNELS Optimized Marketing Plan: Social / Digital Media Drive traffic GENERATE UNPAID / FREE VIEWS… …ADVANCED MEDIA ANALYTICS DRIVE TARGETED PLACEMENTS BASED ON ACTUAL GUEST VIEWING & DIGITAL BEHAVIOR
Slide 59: IHOP Leads in Social Media
IHOP Leads in Social Media Drive traffic Cracker Barrel 10% IHOP WAS MENTIONED IN 49% OF BRANDED BREAKFAST CONVERSATIONS 4.3MM Members Source: Crimson Hexagon, Unmetric, Spredfast Intelligence and social media channels IHOP HAS 4.8MM FANS AND FOLLOWERS
Slide 60: A Strategic Approach to Off-Premise
A Strategic Approach to Off-Premise TECHNOLOGY QUALITY PACKAGING IN-STORE SERVICE Be where the Guest is
Slide 61: Growing Our Off-Premise Business
TO-GO AND DELIVERY BUSINESSES TO DRIVE SIGNIFICANT FUTURE GROWTH Growing Our Off-Premise Business Be where the Guest is OFF-PREMISE COMP SALES OFF-PREMISE AVERAGE CHECK Online Orders Call-in Orders Source: Internal Company data
Slide 62: Consistent Restaurant Development
Continued domestic development Non-traditional and small formats Significant growth opportunities in urban/rural areas Consistent Restaurant Development Be where the Guest is Source: Company’s fiscal 2017 Form 10-K filing and Company projections.
Slide 63: Development of Non-Traditional Restaurant Formats
Development of Non-Traditional Restaurant Formats Be where the Guest is WINSTAR WORLD CASINO & RESORT – THACKERVILLE, OK LOVE’S TRAVEL STOPS-FRANCHISED IHOP EXPRESS – WHITEHOUSE, TN HARTSFIELD–JACKSON ATLANTA INTERNATIONAL AIRPORT DALLAS/FORT WORTH INTERNATIONAL AIRPORT
Slide 64: Doing Good is Good for Business: Community Giving
Doing Good is Good for Business: Community Giving $30MM collected for charity partners since 2006(1) National Pancake Day is both our highest traffic day and our signature giving event Veterans Day is another cornerstone for both IHOP traffic and giving – we focus on our partnership with Children of
Slide 65: Projected Financial Performance
SEGMENT REVENUE(1) Projected Financial Performance Franchise Revenue Rental + Financing Revenue $314 $340+ Source: Company’s fiscal 2017 Form 10-K filings, fourth quarter fiscal 2017 earnings press release dated February 20, 2018 and Company projections (1) Excludes advertising revenue 2%+ CAGR 4%+
Slide 66: Conclusion
New, world-class leadership team in place Franchisees unified behind go forward strategy Distinctive consumer insights and improved analytics Continued development of traditional and new formats Significant daypart expansion opportunities Growth through urban and underpenetrated markets Conclusion O
Slide 67: Applebee's Strategic Review
Applebee’s Strategic Review JOHN CYWINSKI PRESIDENT, APPLEBEE’S
Slide 68: Applebee's Strategic Review contents
Business Overview Franchisee Portfolio Leadership Team Our Guest Growth Strategy Future Performance Applebee’s Strategic Review
Slide 69: Applebee's Business Overview
SCALE Founded in 1980 Leader in Casual Dining category 1,782 Applebee’s locations domestically 35 domestic franchisees in the system Business Overview BRAND OVERVIEW DINING OCCASIONS Source: Company’s fiscal 2017 Form 10-K filing and fourth quarter fiscal 2017 earnings press release dated February 2
Slide 70: Casual Dining Overview
Category showing improvement Favorable economic conditions Chains outperforming independents on traffic (+1% vs. -5%) Significant independent closures Bar & Grill gaining CDR share (+0.7% since 2012) Off-premise driving growth Casual Dining Overview Source: NPD CREST and BlackBox
Slide 71: Casual Dining Leader
Casual Dining Leader #1 in System Sales 2016 SYSTEM-WIDE SALES VS. PEERS 2016 UNIT COUNT VS. PEERS #1 in Unit Count ($bn) Source: Nation’s Restaurant News, “Top 100”, June 19, 2017
Slide 72: Historical Financial Performance
Historical Financial Performance APPLEBEE’S REVENUE & PROFITABILITY(1) APPLEBEE’S RESTAURANT COUNT & AUV $2.4 $2.5 $2.4 $2.3 AUV 78% 82% 86% 94% Segment Profit Margin ($mm) ($mm) Source: Company’s fiscal 2017 Form 10-K filing and fourth quarter fiscal 2017 earnings press release dated February 20, 2
Slide 73: Brand in Transition
2017 was a transition year for Applebee’s Growth plan underway Enhanced relevance Sustained profitable growth Early momentum Partnership, structure, strategy and execution Brand in Transition
Slide 74: Applebee's Franchisee Portfolio
35 franchise entities Majority are strong performers Strong alignment going forward Fully leveraging entrepreneurial spirit and best-practice sharing Re-established trust, partnership & belief Providing financial assistance for those in need Portfolio will evolve… by design Applebee’s Franchisee Por
Slide 75: Applebee's Structure
Re-establish brand identity and culture Shift shared-service model to dedicated brand resources Clear focus and accountability Best-in-class leadership team in place Applebee’s Structure
Slide 76: Applebee's Leadership Team
Applebee’s Leadership Team Kevin Carroll Chief Operations Officer Joel Yashinsky Chief Marketing Officer Stephen Bulgarelli Chief Culinary Officer Scott Gladstone VP, Strategy/Off-Premise Steve Levigne VP, Consumer Insights Patrick Kirk VP, Bar/Beverage Reid Leslie VP, Marketing Pamela Long Division
Slide 77: Applebee's Starting Point
Honest look in the mirror Re-define who we are and what we stand for Embrace our brand essence Guest-led … Insight-driven Applebee’s Starting Point
Slide 78: D AMERIGAN
D AMERIGAN FAMILY, COMFORTABLE plebees AUTHENTIC , ohroace FRIENDLY Atbebess
Slide 79: Applebee's Guest Profile
Broadly appealing demographics Middle income Family skew Diverse age composition Applebee’s Guest Profile Source: NPD CREST Applebee’s Traffic by Age Gen Z Millennial Gen X Boomer 15.3% (111) 29.9% (147) 28.3% (104) 26.4% (68)
Slide 80: Applebee's Core Target
Routine Traditionalists Prefer CDR chains … will pay more … older … loyal Value Seekers Prefer CDR chains … price important … brand switchers Applebee’s Core Target
Slide 81: Essential Brand Metric
Essential Brand Metric Source: NPD CREST Value for the Money 81
Slide 82: Applebee's Restaurant-Level Goal
+$300,000 (2018-2022 AUV) Applebee’s Restaurant-Level Goal Source: Company projections.
Slide 83: Applebee's Quarterly Comp Sales
Applebee’s Quarterly Comp Sales Source: Company’s fiscal 2017 Form 10-K filing
Slide 84: Applebee's Growth Strategy
Applebee’s Growth Strategy Restaurant Excellence Technology Investment Culinary Innovation World-Class Marketing Off-Premise Relevance Return to Unit Growth in 2020
Slide 85: Applebee's Restaurant Excellence
New Chief Operations Officer Reduce operational variability Guest-satisfaction metrics/accountability Operations simplification Kitchen/recipe complexity Engaged consultants to improve restaurant-level profitability Applebee’s Restaurant Excellence
Slide 86: Applebee's Ops Metrics Continue to Improve
RESTAURANT TABLETOP SURVEY (5,700,000 ANNUAL RESPONSES) Applebee’s Ops Metrics Continue to Improve 2016 2017 Overall Satisfaction 69% 76% + 7% Attentive Server 80% 85% + 5% Pace 75% 81% + 6% Cleanliness 73% 78% + 5% Experience A Problem 8% 5% - 3% Source: Applebee’s Internal Guest Information Feedba
Slide 87: NPD Guest Overall Satisfaction
NPD Guest Overall Satisfaction (% Top Box) Source: NPD Group CREST, YE November 2017. Point changes reflect top box scores (% excellent) on 5 pt scale.
Slide 88: Applebee's Technology
Investing heavily to enable brand initiatives Tabletop device evolution Enhanced website and App functionality Carside arrival notification Carside hand-held transacting Modernizing POS Applebee’s Technology
Slide 89: Applebee's Culinary Innovation
New Chief Culinary Officer Broadly appealing/mainstream flavors and recipes Embrace variety (something for everyone) Restore abundant & indulgent value Guest-driven, ops-validated innovation Address quality and value gaps Applebee’s Culinary Innovation
Slide 90: World-Class Marketing
New Chief Marketing Officer Buzzworthy promotional calendar Disciplined testing & validation Refined media strategy Right target + right programming + right message Distinctive brand voice and personality World-Class Marketing
Slide 91: Balint in
Balint in the n Naighborksed Applebees
Slide 92: Keep It Comin' AYCE Riblets & Tenders
Keep It Comin’ AYCE RIBLETS & TENDERS
Slide 93: Keep It Comin'
93 =" VIDEO CALL Keep it Comin’ Applebees
Slide 94: It's All Coming Back To Me
It’s All Coming Back To Me AYCE RIBLETS & TENDERS
Slide 95: It's All Coming Back To Me
VIDEO CALL It’s All coming back to me
Slide 96: Handcrafted Burgers
Brunch Burger Quesadilla Burger Whisky Bacon Burger $7.99 HANDCRAFTED BURGERS
Slide 97: Brunch Burger
Brunch Burger Quesadilla Burger Whisky Bacon Burger VIDEO CALL
Slide 98: Alcohol 15% of Sales
Alcohol 15% of Sales Source: Internal Company data
Slide 99: Off-Premise Relevance
New Vice President, Off-Premise Growth engine, highly incremental Ongoing optimization (technology, packaging, service) Best-positioned brand in CDR Actively implementing delivery Off-Premise Relevance TO-GO % OF SALES Source: Internal Company data and projections
Slide 100: Get Outta My Dreams Applebee's To-Go
Get Outta My Dreams Applebee’s To-Go
Slide 101: Get Outta My Dreams
VIDEO CALL get outta my dreams
Slide 102: Come To My Window Applebee's To-Go
Come To My Window Applebee’s To-Go
Slide 103: Come To My Window
103 * VIDEO CALL come to my window Applebees
Slide 104: Growing Our Off-Premise Business
Growing Our Off-Premise Business
Slide 105: Strong Asset Base
92% of restaurants remodeled between 2012-2015 Closing under-performing, non-viable restaurants (~60 in 2018) Begin traditional and non-traditional development again in 2020 Strong Asset Base RESTAURANT COUNT Source: Internal Company data and projections
Slide 106: Projected Financial Performance
Projected Financial Performance Applebee’s Revenue $161 $180+ 3%+ CAGR APPLEBEE’S PROFITABILITY 82% ($mm) Note: Excludes advertising revenue Source: Internal Company data and projections
Slide 107: Conclusion
New and talented leadership team Plan to stabilize performance and accelerate growth Continued innovation and restaurant-level execution Genuine franchisee partnership, confidence and enthusiasm Conclusion Our goal is to create significant value for shareholders & franchisees
Slide 108: Franchisee Perspective
Franchisee Perspective Greg Flynn FOUNDER,CHAIRMAN & CEO Apple American Group
Slide 109: International Strategic Review
International Strategic Review William Urrego REGIONAL VICE PRESIDENT AND GENERAL MANAGER THE AMERICAS
Slide 110: International Strategic Review contents
Global Footprint Business Overview Historical Performance International Strategy Ingredients for Success International Strategic Review International Strategic Review
Slide 111: Dine Brands: Broad Global Footprint
Dine Brands: Broad Global Footprint Bahrain: (3 locations) Guam & North Mariana Islands: (4 locations) Egypt: (1 location) India: (1 location) Indonesia: (2 locations) Kuwait: (13 locations) Lebanon: (1 location) Qatar: (8 locations) Saudi Arabia: (35 locations) Thailand: (1 location) United States:
Slide 112: Global Footprint by Brand
Global Footprint by Brand 115 restaurants 13 countries 20 franchisees Key markets include: Canada Latin America Middle East 154 restaurants 15 countries 25 franchisees Key markets include: Canada Latin America Middle East Source: Internal Company data
Slide 113: Historical Growth
Historical Growth 269 TOTAL UNITS International Strategic Review Source: Company’s 10-K filings for fiscal years 2013-2017
Slide 114: Expected Growth Acceleration
Expected Growth Acceleration INTERNATIONAL UNITS OVER TIME +60 units over 4 years +200 units over 4 years International Strategic Review Source: Company’s 10-K filings for fiscal years 2013 & 2017 and Company projections
Slide 115: IHOP: Spreading Happiness
IHOP: Spreading Happiness International Strategic Review
Slide 116: Applebee's: There's Always A Reason To Celebrate
Applebee’s: There’s Always A Reason To Celebrate International Strategic Review
Slide 117: Four Pillar International Strategy
Four Pillar International Strategy International Strategic Review
Slide 118: Brand Evolution Incorporated Throughout the Guest Experience
Brand Evolution Incorporated Throughout the Guest Experience CELEBRATION DESIGN IHOP CALIFORNIA HERITAGE DESIGN International Strategic Review
Slide 119: Place: International IHOP Locations
Place: International IHOP Locations International Strategic Review
Slide 120: Place: International Applebee's Locations
Place: International Applebee’s Locations International Strategic Review
Slide 121: Key Growth Initiatives
Key Growth Initiatives SMALLER FOOTPRINTS Allow flexibility for our developing international partners Compelling unit economics in larger cities with restrictive real-estate costs IHOP BANGKOK, THAILAND Smallest IHOP in the world (750 sq. ft) Strong sales performance 1st of 10 units in 5 years Inter
Slide 122: Flexibility Extends to New Prototypes
Express / To-Go IHOP Fresh & Go, Panama Small 1200 sq. ft. size 4th Alpha unit, more under development Featuring packaged pre-prepared foods and shortened menu Flexibility Extends to New Prototypes ABILITY TO TEST INITIATIVES INTERNATIONALLY PRIOR TO LEVERAGING BEST PRACTICES IN THE U.S. Internation
Slide 123: Marketing Strategy
Established national advertising fund for Applebee’s in Mexico and the Middle East Developing national advertising fund for IHOP in Canada Strategic partnership with 20th Century Fox for IHOP, driving positive sales for locations in Mexico Marketing Strategy International Strategic Review
Slide 124: Applebee's Mexico: National Advertising Fund
Applebee’s Mexico: National Advertising Fund International Strategic Review
Slide 125: International Local Marketing Initiatives
International Local Marketing Initiatives REMEMBRANCE DAY (CANADA) NOV 11TH International Strategic Review
Slide 126: Creating a Service Culture
Creating a Service Culture International Strategic Review
Slide 127: Unique International Menu Offerings
Unique International Menu Offerings International Strategic Review
Slide 128: Key Target Markets
Strong affinity for American brands, especially at breakfast Many emerging markets with growing disposable income Key Target Markets MEXICO & LATIN AMERICA MIDDLE EAST CANADA Developed, diversified economy with high disposable income Affinity for classic American brands The Middle East is the strong
Slide 129: Franchisees Have Committed to Meaningful Openings
EXISTING COMMITMENTS TO OPEN OVER 130 INTERNATIONAL RESTAURANTS OVER THE NEXT 5 YEARS Franchisees Have Committed to Meaningful Openings Over Next 5 Years Middle East 50 units Canada & Latin America 54 units India & SE Asia 31 units International Strategic Review Source: Internal Company data
Slide 130: Dedicated and Diverse International Team
Dedicated and Diverse International Team International Infrastructure Supports Growth Plan DEDICATED TEAM MEMBERS IN CANADA, MEXICO, THE MIDDLE EAST AND ASIA PACIFIC OUR TEAM REPRESENTS 11 DIFFERENT NATIONALITIES WE ARE FLUENT IN A COMBINED 10 LANGUAGES WE LIVE THE CULTURE International Strategic Re
Slide 131: Conclusion
Fastest growing part of the business Significant existing commitments for new development globally Expected to almost double international footprint over next 5 years We are excited about the future of the international business Conclusion INTERNATIONAL IS EXPECTED TO SERVE AS A SIGNIFICANT GROWTH E
Slide 132: Dine Brands Global, Inc. Investor Day
Dine Brands Global, Inc. Investor Day FEBRUARY 21, 2018
Slide 133: Technology & Innovation
Technology & Innovation Adrian Butler SVP, CHIEF INFORMATION OFFICER
Slide 134: Technology & Innovation contents
Industry Trends Progress To Date Strategic Approach Technology & Innovation Technology & Innovation
Slide 135: Guest Expectations Driving Current Trends
Driving additional traffic through digital platforms Expansion of delivery driven by consumer demand Manage upward pressure on operational cost (i.e. labor) Business Intelligence and Marketing platforms that deliver customized offers Guest Expectations Driving Current Trends Technology & Innovation
Slide 136: Guest Convenience 2017 Focus
GUEST CONVENIENCE 2017 Focus SPEED OF SERVICE REDUCING FRICTION - SEAMLESS INTEGRATED DESIGN AVAILABILITY – OMNI-CHANNEL & OFF-PREMISE / DELIVERY Technology & Innovation
Slide 137: Strategic Approach: 4D Technology Strategy
ELEVATING GUEST AND TEAM MEMBER EXPERIENCE BOTH IN RESTAURANTS AND OFF-PREMISE THROUGH: Strategic Approach TRANSFORMING THE GUEST EXPERIENCE THROUGH 4D TECHNOLOGY STRATEGY: SMART DEVICES ONLINE DATA DELIVERY DINING DISCOVERY APPS Technology & Innovation
Slide 138: Data: Personalized 1:1 Marketing
1:1 PREDICTIVE MARKETING (1) Source: Deloitte Digital DEEP INSIGHTS & RICH ANALYTICS TRANSFORMING THE GUEST EXPERIENCE THROUGH 4D TECHNOLOGY STRATEGY: DATA DELIVERY DINING DISCOVERY 138 Technology & Innovation Data: Personalized 1:1 Marketing
Slide 139: Discovery: Advancing Digital and Mobile Technologies
ROBUST NEW APPS NEW .COM PLATFORMS CONNECTED CAR ORDERING AND LOCATION SERVICES VOICE ORDERING TRANSFORMING THE GUEST EXPERIENCE THROUGH 4D TECHNOLOGY STRATEGY: DATA DELIVERY DINING DISCOVERY Technology & Innovation Discovery: Advancing Digital and Mobile Technologies
Slide 140: Dining: Modernizing In-Restaurant Technology
GUEST WiFi MOBILE ORDERING AND PAYMENT TABLE SIDE PAYMENT NEXT GENERATION TABLETOP MODERNIZED POS KITCHEN DISPLAY SYSTEM (KDS) TRANSFORMING THE GUEST EXPERIENCE THROUGH 4D TECHNOLOGY STRATEGY: DATA DELIVERY DINING DISCOVERY Technology & Innovation Dining: Modernizing In-Restaurant Technology SPEED O
Slide 141: Delivery: Collaboration with Leading Providers
ONLINE ORDERING WORKING WITH LEADING DELIVERY PROVIDERS INTEGRATED WITH MOBILE APP TRANSFORMING THE GUEST EXPERIENCE THROUGH 4D TECHNOLOGY STRATEGY: DATA DELIVERY DINING DISCOVERY Technology & Innovation Delivery: Collaboration with Leading Providers
Slide 142: Conclusion
Our aim is to create a unique and innovative personalized experience for our guests, wherever and whenever they want Utilizing data and analytics to better serve our guests Leveraging technology to enhance the guest and team member experience Facilitating broader access to brands through web, mobile
Slide 143: Financial Summary
Financial Summary Gregg Kalvin Interim CFO and SVP, Corporate Controller
Slide 144: Financial Summary contents
Historical Financial Performance Projected Financial Performance Significant Margin Improvement Opportunity Tax Implications Cash Flow Generation Capital Allocation Priorities Shareholder Growth Algorithm Financial Summary Financial Summary
Slide 145: Commitment to Financial Success
Commitment to Financial Success We are implementing a plan to return to growth at both brands We continue to pursue cost optimization opportunities We expect to generate substantial cash flow and earnings going forward We are committed to making the necessary investments to further strengthen the bu
Slide 146: Historical Financial Performance: Unit Count & AUV
Total Units Historical Financial Performance: Unit Count & AUV International AUV ($mm) 146 AUV ($mm) Financial Summary $2.5 $2.4 $2.3 Source: Company’s Form 10-K filings for fiscal years 2015-2017 and internal Company data
Slide 147: Historical Financial Performance: Revenue & Segment Profit
Historical Financial Performance: Revenue & Segment Profit Segment Profit International International Revenue(1) Source: Company’s Form 10-K filings for fiscal years 2015-2017 and Company information. (1) Includes IHOP domestic advertising revenue, IHOP international advertising revenue and Applebee
Slide 148: Projected Financial Performance: Revenue
Projected Financial Performance: Revenue CONSOLIDATED REVENUE (Excludes Advertising) $565+ International Low-single digit growth Financial Summary ($mm) Source: Company’s fiscal 2017 Form 10-K filings, internal Company data and projections
Slide 149: Projected Financial Performance: Unit Count & AUV
Projected Financial Performance: Unit Count & AUV AUV ($mm) International Calculation of percentages may be subject to rounding of average unit volumes TOTAL UNITS +2% CAGR +3% CAGR +3% CAGR AUV ($mm) Financial Summary Source: Company’s fiscal 2017 Form 10-K filings, internal Company data and projec
Slide 150: General & Administrative Expense
General & Administrative Expense Financial Summary Includes $9mm of one-time severance Reduction of third-party professional services and other G&A expected to increase at or below inflation Source: Company’s Form 10-K filings for fiscal years 2015-2017 and Company projections (1)Based on midpoint o
Slide 151: Significant Margin Improvement
Significant Margin Improvement Source: FactSet, Company’s fiscal 2017 Form 10-K filing and Company projections. Note: Excludes advertising revenue See Appendix for reconciliation of non-GAAP financial measures (1) Highly Franchised peers include Denny’s, Dominos, Dunkin’, Restaurant Brands Internati
Slide 152: Tax Implications
WE EXPECT TO UTILIZE ADDITIONAL CASH TO: INVEST IN EXISTING BRANDS OPPORTUNISTICALLY REPURCHASE SHARES AND POTENTIALLY PURSUE NEW SCALE OPPORTUNITIES Tax Implications Blended Tax Rate 40%~26% Additional Cash Generated ~$15mm in 2018 Financial Summary Source: Internal Company data and projections
Slide 153: Substantial Cash Flow Generation
FULLY-FRANCHISED AND ASSET-LITE MODEL GENERATES SUBSTANTIAL ADJUSTED FREE CASH FLOW Investment to drive growth at both brands Attractive capital return to shareholders Minimal capex requirements Substantial Cash Flow Generation Source: Company’s fiscal 2017 Form 10-K filing and Company’s projections
Slide 154: Capital Allocation Priorities
Invest in Existing Brands Dividends Repurchase Shares Manage Long-Term Debt Scalable Platform Capital Allocation Priorities Financial Summary
Slide 155: Invest in Existing Brands
Culinary innovation to enhance the guest experience Technology to create more ways for consumers to access our brands New growth platforms (e.g., To-Go and new formats) Rigorous quantitative analysis in insights and analytics Establishing more responsibility and accountability at the brand level Rea
Slide 156: Dividends
Quarterly cash dividend of $0.63 per share in Q1 2018 ($2.52 per share annualized) Payout ratio of ~44%(1) Opportunity for meaningful share repurchases Dividends RETURNING CAPITAL TO SHAREHOLDERS REMAINS A TOP PRIORITY DIVIDEND YIELD ~4.7%(2) Dividend remains amongst highest in restaurant category S
Slide 157: Repurchase Shares
Committed to best-in-class capital returns to shareholders Reduced dividend provides opportunity for meaningful share repurchases Continuously evaluate timing and attractiveness of share repurchases Repurchase Shares (1) See Appendix for reconciliation of non-GAAP financial measures Source: Company’
Slide 158: Manage Long-Term Debt
$1.3 billion of 4.277% Fixed Rate Senior Notes last refinanced in 2014 Make-whole goes away in September 2018, creating an opportunity to refinance debt to increase flexibility Manage Long-Term Debt Source: Wall Street research and company filings. (1)As of 12/31/17. LEVERAGE IN-LINE WITH FRANCHISED
Slide 159: 2018 Guidance
2018 Guidance 159 Guidance ($mm) Domestic Same Restaurant Sales Applebee's 0% - 3% IHOP 0% - 3% Gross Development (Global) Applebee's 10 - 15 IHOP 85 - 100 Closures (Global) Applebee's 60 - 80 IHOP 30 - 40 Franchise Segment Profit (mm) $289 - $307 Rental and Financing Segment Profit (mm) ~$37 Consol
Slide 160: Strong Projected Financial Performance
Strong Projected Financial Performance 160 REVENUE Low single digit growth(1) Applebee’s: +3% IHOP: +2% International: +15% ADJUSTED EPS (3) $63 $175+ $4.15 $10.00+ $738(1) $900+(1) $492(2) $565+(2) EBITDA(3) Mid single digit growth 10%+ margin expansion $224 $315+ ADJUSTED FREE CASH FLOW (3) Increa
Slide 161: Projected Annual Shareholder Growth Algorithm
Projected Annual Shareholder Growth Algorithm ADJUSTED EPS GROWTH DIVIDEND YIELD WE ARE COMMITTED TO CREATING SIGNIFICANT FUTURE VALUE FOR SHAREHOLDERS EXPECTED TOTAL SHAREHOLDER RETURN High teens ~4.7% 20%+ Financial Summary Source: Internal Company data and projections
Slide 162: Closing Remarks
Closing Remarks Steve Joyce Chief Executive Officer
Slide 163: Dine Brands
DI NE BRANDS
Slide 164: Dine Brands Global, Inc. Investor Day
Dine Brands Global, Inc. Investor Day FEBRUARY 21, 2018
Slide 165: Dine Brands
165 DI NE BRANDS
Slide 166: Appendix: Adjusted Free Cash Flow
Appendix: Adjusted Free Cash Flow Source: Company Form 10-K filings and earnings press releases See non-GAAP financial measures disclosure 166 Adjusted free cash flow is a non-GAAP financial measure. Reconciliation of the cash provided by operating activities to adjusted free cash flow is as follows
Slide 167: Appendix: Adjusted Earnings per Share
Adjusted earnings per share is a non-GAAP financial measure. Reconciliation of net income available to common stockholders to the diluted net income available to common stockholders, as adjusted, is as follows: Appendix: Adjusted Earnings per Share 2017 Net Income Available to Common Stockholders Ne
Slide 168: Appendix: EBITDA
Appendix: EBITDA Definitions of all components used in calculating the above ratios are found in the Base Indenture and the related Series 2014-1 Supplement to the Base Indenture, dated September 30, 2014, filed as Exhibits 4.1 and 4.2, respectively, to our Current Report on Form 8-K filed on Octobe