Recent Posts

DIN: Updating Our Q1E Same-Store Sales Projections

Dine Brands — the owner and franchisor of the Applebee’s casual-dining concept and the IHOP family-dining concept — likely plans to report its fourth quarter earnings in late February or early March. There is the possibility that the company may choose to provide an update on Q1-to-date same-store sales trends on its related conference call that afternoon.

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7:00 AM

DIN: Updating Our Same-Store Sales and EPS Projections

We believe that family-dining segment same-store sales in the U.S. likely came in worse than the Street expected for Q4 2021. This seems to have been caused in part by consumer concerns about rising U.S. Covid cases (particularly in December), as well as concerns about the Omicron variant (also primarily in December).

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7:01 AM

DIN: Conference Call with CFO Highlights Advantages and Opportunities

This past Thursday, Kalinowski Equity Research hosted a conference call featuring Dine Brands. We thank for their participation on the call Dine Brands’ CFO Vance Chang, and Executive Director, Investor Relations Ken Diptee. A replay of this call is available upon request. Here are some of the highlights of the conference call:

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7:00 AM

DIN: “Ask the Experts” Call Series: Dine Brands, December 16th @ 1 PM Eastern

Kalinowski Equity Research invites you to participate in our latest “Ask the Experts” conference call, to take place tomorrow — Thursday, December 16th — starting at 1:00 PM Eastern time. The featured speakers will be Dine Brands’ CFO, Vance Chang; and Executive Director, Investor Relations, Ken Diptee. Institutional investors interested in joining the call are asked to register at: Campaign Registration (force.com)

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2:00 PM

DIN: “Ask the Experts” Call Series: Dine Brands, December 16th @ 1 PM Eastern

Kalinowski Equity Research invites you to participate in our latest “Ask the Experts” conference call, to take place on Thursday, December 16th starting at 1:00 PM Eastern time. The featured speakers will be Dine Brands’ CFO, Vance Chang; and Executive Director, Investor Relations, Ken Diptee. Institutional investors interested in joining the call are asked to register at: Campaign Registration (force.com)

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7:00 AM

DIN: Street May be Underestimating 2022 G and A Expenses

Now that sell-side consensus has settled out following Dine Brands’ recent Q3 earnings release, we notice that consensus (according to Consensus Metrix) for 2022E G&A/Revenues is at 19.1% (with consensus for 2021E at 19.5%). In other words, consensus presumes that G&A/Revenues is likely to be down by about -40 basis points for next year. However, we believe that G&A/Revenues will be up in 2022 vs. 2021.

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7:00 AM

DIN (Post-Call): Fancy Like Asset Light, Although Higher G&A Looms

Earlier today, Dine Brands reported adjusted Q3 EPS of $1.55. This was higher than our $1.40 forecast and sell-side consensus (according to Consensus Metrix) of $1.38. Adjusted EBITDA came to $63.3 million in Q3, above consensus of $59.1 million. We attribute the EPS beat to slightly better-than-expected same-store sales, as well as Q3 G&A/Revenues of 19.1% (more favorable than our 20.8% projection).

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1:07 PM

DIN: Updating Our Same-Store Sales and EPS Projections (re: IHOP)

Although family dining segment same-store sales seem to be lagging those of most other U.S. restaurant sectors on a two-year basis, they have still come in somewhat better than we have been anticipating. As such, we raise our full-Q2E same-store sales forecast for IHOP to +128.0% (from +100.0%). This implies a two-year projection of about -7%. As of this writing, sell-side consensus — according to Consensus Metrix — for the Q2E one-year number is at +113.6%.

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4:51 PM

DIN: Updating Our Same-Store Sales and EPS Projections (re: Applebee’s)

Based on continued strength in the casual dining segment over April, May, and early June, coupled with what we believe has been a fair amount of national advertising done by Applebee’s as of late, we raise our full-Q2E same-store sales forecast for Applebee’s to +117.4% (from +90.0%). This implies a two-year projection of +10.0%. As of this writing, sell-side consensus — according to Consensus Metrix — for the Q2E one-year number is at +103.5%.

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4:23 PM

DIN (Post-Call): Sales Recovering Despite IHOP Turning Adam Sandler Away

Earlier today, Dine Brands reported adjusted Q1 EPS of $1.75, well above our $0.80 forecast and sell-side consensus (according to Consensus Metrix) of $0.87. We attribute the EPS outperformance relative to our forecast to: (1) a much more favorable tax rate than projection (-6.6% actual vs. 25.0% projected); this helped Q1 EPS by about +46 cents, (2) better-than-expected Cost of Franchise and Restaurant Revenues as a percentage of Franchise and Restaurant Revenues (47.9% actual vs. 51.8% estimated), (3) more favorable than anticipated G&A/Revenue (19.5% actual vs. 20.6% forecasted), and (4) same-store sales than beat expectations for both Applebee’s U.S. and IHOP U.S.

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1:22 PM

DIN: Updating our EPS and Same-Store Sales Forecasts for IHOP

With this report, we increase our Q1E U.S. same-store sales forecast for IHOP by +600 basis points, to -5.0%. As of this writing, sell-side consensus (according to Consensus Metrix) is at -9.9%. Our increased forecast represents (inter-related) factors including: (1) general improvement in one-year and two-year family dining sector sales trends, (2) benefits from stimulus-related consumer spending in March, and (3) “spring fever” perhaps finding itself a little more in bloom than usual amongst consumers this time of the year, given all that has been battled over the last 12+ months.

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4:02 PM

DIN: Updating our EPS and Same-Store Sales Forecasts

With this report, we increase our Q1E U.S. same-store sales forecast for Applebee’s by +450 basis points, to +1.0%. As of this writing, sell-side consensus (according to Consensus Metrix) is at -3.5%. Our increased forecast represents factors including: (1) general improvement in one-year and two-year casual dining sector trends, (2) Applebee’s resumption of national advertising in early March (which it did not have in January and February), coupled with (3) our belief that the Applebee’s guest in general may be more motivated to act by national advertising than the casual-dining guest in general. Keep in mind that about 48% of Applebee’s guests are under the age of 35, and also Applebee’s relative shift embracing more marketing on social-media platforms — to which guests 35 and under seem to respond relatively better than folks above the age of 35.

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4:16 PM

DIN: Updating Our Forecasts Ahead of March 2nd Earnings Release

Dine Brands plans to release its Q4 2020 earnings before the market open on Tuesday, March 2nd. As regards Q4E, we retain our IHOP U.S. same-store sales forecast of -30.0%, but we reduce our Applebee’s U.S. same-store sales projection by -200 basis points, to -7.5%. Dine Brands has previously announced that for the first four weeks of Q4E, IHOP’s same-store sales declined by -24.0%, while Applebee’s same-store sales decreased by -1.9%. Our updated Q4E projections incorporate implicit same-store sales assumptions for the remaining weeks of that quarter of -10% (or so) for Applebee’s and -33% (or so) for IHOP. As a result of all this, our Q4E EPS projection goes down by -2 cents, to $0.68. Our full-year 2020E EPS estimate also goes down by -2 cents (to $2.06).

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4:41 PM

Family Dining Market Share Opportunities for IHOP, Denny’s, and CBRL (Updated)

About six months ago, we published a report examining market-share opportunities within the family dining sector. In this report, we update our numbers. One of the important changes is that we now look for 10%-25% of the family dining restaurants in the U.S. that were in operation as of the start of 2020 to be closed permanently by the end of March 2021. (Previously, we were looking for 5%-10% of family dining restaurants to be closed permanently by the end of December 2020.) Keep in mind that we expect these closures to be heavily weighted toward independents/momand-pops and, to a somewhat lesser degree, smaller (privately-held in nearly all cases) restaurant chains.

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12:00 AM

Casual Dining Market Share Opportunities for Large Concepts

About six months ago, we published a report examining market-share opportunities within the casual dining sector. In this report, we update our numbers. One of the important changes is that we now look for 8%-20% of the casual dining restaurants in the U.S. that were in operation as of the start of 2020 to be closed permanently by the end of March 2021. (Previously, we were looking for 3%-15% of casual dining restaurants to be closed permanently by the end of December 2020.) Keep in mind that we expect these closures to be heavily weighted toward independents/momand-pops and, to a somewhat lesser degree, smaller (privately-held in nearly all cases) restaurant chains.

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12:00 AM

Updating our Q4E Kalinowski Family Dining Same-Store Sales Index

With this report, we update our data-driven Kalinowski Family Dining Index for Q4E to -23.2%. This figure is based on our latest proprietary checks/data as regards samestore sales performance for this segment during October and November. Our implied numbers for this October, November, and December are approximately -20%, -23%, and -27%, respectively.

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12:00 AM

Updating our Q4E Kalinowski Casual Dining Same-Store Sales Index

With this report, we update our data-driven Kalinowski Casual Dining Index for Q4E to -18.4%. This figure is based on our latest proprietary checks/data as regards samestore sales performance for this segment during October and November. Our implied numbers for these October, November, and December are approximately -14%, -19%, and -22%, respectively.

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12:00 AM

Large Restaurant Concepts Closing a Lot Less Units than Independent

Looking at unit closures announced and planned by large restaurant chains, and comparing these to unit closures from mom-and-pops/independents, goes to show just how large a market-share shift is going on in the U.S. restaurant industry. We look for most, if not all, of this market-share shift in favor of large concepts to persist in the years after 2020.

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12:00 AM

Restaurants Full-Service Same-Store Sales Decelerating So Far in November

Based on our data-driven checks, we believe that same-store sales for U.S. chain restaurants in the casual dining, family dining, and fine dining segments are all showing sequential deceleration for the first half of November relative to fullOctober. This new trend follows 5-6 consecutive months of either sequentially improving full-service same-store sales (or at least not meaningfully deteriorating sequential same-store sales).

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12:00 AM

DIN (Post-Call) Applebee’s Comeback Impressive But G&A Costs Rising

Earlier today, Dine Brands — parent company of the Applebee’s and IHOP restaurant concepts — reported adjusted Q3 EPS of $0.80, coming in well ahead of our $0.22 forecast and sell-side consensus (according to Consensus Metrix) of $0.37. A lowerthan-expected Q3 tax rate helped EPS by roughly +20 cents; we look for the tax rate to be at (or near) 26% in 2021E, but for Q4E we now project a tax rate of 41%. (Management does not quantify what to expect for the Q4 2020 tax rate, but does say to “expect it to be significantly higher than the normal statutory rate… a very high effective tax rate. It is possible that even our updated 41.0% forecast might be too low.)

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12:00 AM

Updating our Q3E Kalinowski Casual Dining Same-Store Sales Index

With this report, we update our data-driven Kalinowski Casual Dining Index for Q3E to -19.6%. This figure is based on our latest proprietary checks/data as regards same-store sales performance for this segment during July, August, and September. Our implied numbers for these three months are about -24%, -19%, and -16%, respectively.

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12:00 AM

Updating our Q3E Kalinowski Family Dining Same-Store Sales Index

With this report, we update our data-driven Kalinowski Family Dining Index for Q3E to -29.0%. This figure is based on our latest proprietary checks/data as regards samestore sales performance for this segment during July 2020 and August 2020, as well as our best guess for what September 2020 is bringing us. The approximate monthly figures we use are -35% for July 2020, -29% for August 2020, and -25% for September 2020.

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12:00 AM

DIN Highlights from Our Conference Call Featuring Dine Brands

Yesterday, we hosted the latest in our “Ask the Experts” series of conference calls, this time around with featured speakers from Dine Brands: CFO Thomas Song, and Executive Director Investor Relations Ken Diptee. We thank them for their participation and insights.

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12:00 AM

DIN “Ask the Experts” Call Series Dine Brands

Kalinowski Equity Research invites you to participate in our latest “Ask the Experts” conference call, to take place tomorrow — Wednesday, September 9th — starting at Noon Eastern time. The featured speakers will be Dine Brands’ CFO, Thomas Song; and Executive Director, Investor Relations, Ken Diptee. If you are interested in joining the call, please e-mail caroline@analysthub.com or your sales contact.

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12:00 AM

DIN A Closer Look at Neighborhood Wings by Applebees

Given the potential for the “Neighborhood Wings by Applebee’s” brand (and potentially other virtual brands to be launched in the future by Applebee’s parent company Dine Brands?), we raise our full-year 2021E EPS estimate by +20 cents, to $5.00. This places us above current sell-side consensus (according to Consensus Metrix) of $4.83.

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12:00 AM

DIN A Closer Look at IHOP’s Development Agreement w TravelCenters of America

In October 2019, IHOP — owned by Dine Brands (DIN; Buy, $55.37) — announced a franchise development agreement with TravelCenters of America (TA; Not Rated) to open up to 94 IHOP restaurants in TA and Petro locations across the U.S. This is the largest franchise deal in IHOP’s history. That announcement can be viewed at:
https://www.ihop.com/en/news/2019/ihop-and-travelcenters-of-americaannounce-plans-to-open-nearly-100-restaurants

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12:00 AM

DIN The Bull and Bear Cases on Dine Brands

In this report we examine the bull and bear cases regarding Dine Brands (DIN; Buy, $53.56). While we maintain our Buy rating on DIN — in fact, we believe there is even more reason to be bullish on DIN following its Q2 earnings release and related conference call — it is good for investors interested in DIN to be aware of the bull and bear cases surrounding the stock, no matter what our rating on the shares is.

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12:00 AM

DIN “Ask the Experts” Call Series Dine Brands Sept 9

Kalinowski Equity Research invites you to participate in our latest “Ask the Experts” conference call, to take place on Wednesday, September 9th starting at Noon Eastern time. The featured speakers will be Dine Brands’ CFO, Thomas Song; and Executive Director, Investor Relations, Ken Diptee. If you are interested in joining the call, please e-mail caroline@analysthub.com or your sales contact.

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12:00 AM

DIN (Post-Call) Welcome Back, Indeed

Earlier today, Dine Brands (DIN; Buy, $46.69) reported Adjusted Q2 EPS of -$0.87, which was better than our forecast of -$1.00 and sell-side consensus (according to Consensus Metrix) of -$0.94.

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12:00 AM

Comparing Casual Dining & Family Dining Concepts Same-Store Sales Trends

A number of full-service restaurant companies have been generous as of late in terms of providing weekly same-store sales data. In this report, we compile and compare the recent same-store sales trends of various casual dining and family dining concepts. We also look at some segment trends, and see what this may imply for recent same-store trends of these concepts that have not yet provided samestore sales results for the last few weeks.

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12:00 AM

BlackBox Implications for Restaurant Industry Same-Store Sales

This is the final report in our series of reports showing the correlation between the widely-watched BlackBox Index — which aggregates same-store sales from 175+ restaurant concepts representing $75 billion in domestic systemwide sales — with various publicly-traded restaurant concepts’ same-store sales.

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12:00 AM

DIN Examining the Risk Reward on DIN Shares

With this report, we upgrade the shares of Dine Brands (DIN) to Buy (from Neutral), as we believe the risk/reward has shifted in favor of longs with the shares having fallen from $94.35 as of June 27th to $68.65 (-27%) as of yesterday’s (October 9th’s) closing price.

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12:00 AM

DIN Introducing Some EPS Estimates

With this report, we introduce our quarterly adjusted EPS estimates for 2020E for Dine Brands (DIN; Buy). They are as follows: (1) Q1E $2.05, (2) Q2E $1.95, (3) Q3E $1.85, and (4) Q4E $2.30. These quarterlies sum to our unchanged full-year 2020E adjusted EPS projection of $8.15. Please keep in mind that 2020 is a 53-week fiscal year for Dine Brands.

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12:00 AM

DIN Adios to Our Prior Q3E Forecasts

Given weaker-than-expected same-store sales trends in the family-dining and casualdining sector quarter-to-date, we lower our Q3E same-store sales forecasts for IHOP and Applebee’s (both owned by Dine Brands [DIN; Neutral]). For IHOP, our Q3E samestore sales estimate is reduced by -140 basis points, to +0.8%, which becomes the new “low on the sell-side” forecast, according to Consensus Metrix data. For Applebee’s, we take down our Q3E projection by -150 basis points, to -1.5%, as compared to current sell-side consensus of -1.2%.

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12:00 AM

DIN (Post-Call) Questions Arise as $1 Mai Tais Arrive

Earlier today, Dine Brands (DIN; Neutral) — the owner of the IHOP family-dining concept and the Applebee’s casual-dining concept — reported adjusted Q2 EPS of $1.71. While this came in slightly ahead of our recently-lowered $1.70 forecast, it fell short of the $1.81 sell-side consensus.

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12:00 AM

DIN Updated EPS Estimates Lead to Ratings Change on Dine Brands

Based on what we believe is our newly-improved quarter-by-quarter understanding of the Dine Brands (DIN) model, and in the context of the stock’s +40.1% year-todate rise through the market’s close on June 27th, we reduce our rating on DIN to Neutral (from Buy), and adjust our quarterly EPS estimates for Q2E-Q4E as follows:

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12:00 AM

DIN 2019 Franchise Disclosure Document Review for IHOP

Not too long ago, IHOP (owned and franchised by Dine Brands [DIN; Buy]) filed its 500+ page Franchise Disclosure Document (FDD) for 2019. In this report, we cite some of the highlights from that document following our review of it, including our review of it in comparison to last year’s Franchise Disclosure Document. For example, the footnote to the National Advertising Fee — currently 3.5% of total Gross Sales — indicates that “Commencing on January 1, 2023, the National Advertising Fee will be the greater of: (i) 2.25% of total Gross Sales or (ii) the National Advertising Fee set forth in at least 88% of IHOP franchise agreements, as amended, in effect as of January 1, 2023 (“2023 Franchise Agreements”). Commencing on January 1, 2023, the Local Advertising Fee will be (i) .75% of total Gross Sales or (ii) if the National Advertising Fee is at least 3.5%, the Local Advertising Fee set forth in at least 88% of the 2023 Franchise Agreements. These fees will be electronically debited from your account if we request that you participate in our electronic funds transfer program authorizing us to receive payments from you by pre-authorized bank draft, wire transfer, automated clearinghouse transfer or otherwise.” The 2019 FDD indicates that “There is currently no required local advertising fee.” We maintain our Buy rating on DIN and note the following:

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12:00 AM
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