- Total Revenues: Increased 4.4% to $240.9 million in Q2 2026, up from $230.8 million in the prior year.
- Adjusted EBITDA: Decreased to $54.2 million in Q2 2026 from $56.2 million in Q2 2025.
- Adjusted Diluted EPS: $1.16 for Q2 2026, compared to $1.17 in Q2 2025.
- Applebee's Domestic Same-Restaurant Sales: Decreased 1.8% year over year.
- IHOP Domestic Same-Restaurant Sales: Increased 1.5% year over year.
- Fuzzy's Comp Sales: Positive for the second consecutive quarter.
- Applebee's Average Weekly Franchise Sales: $57,700 per restaurant, with off-premise contributing $13,200 (22.8% of total sales).
- IHOP Average Weekly Franchise Sales: $39,700 per restaurant, with off-premise contributing $8,000 (20.2% of total sales).
- Applebee's Off-Premise Comp Sales: Positive 1.5% lift in Q2 2026.
- IHOP Off-Premise Comp Sales: Positive 3.5% lift in Q2 2026.
- Applebee's Liquor Comps: Up 10.5% during the Poolio with Don Julio promotional period.
- IHOP Catering Comp Sales: Accelerated 22% in Q2, up from 16% in Q1.
- G&A Expenses: $55.6 million in Q2 2026, up from $50.8 million in the prior year.
- Adjusted Free Cash Flow: $3.7 million for the first six months of 2026, compared to $48.7 million in the prior year period.
- Capital Expenditures: $23.2 million through Q2 2026, compared to $9.3 million in the prior year period.
- Unrestricted Cash: $97.5 million at the end of Q2, compared to $104.2 million at the end of Q1.
- Share Repurchases: $29 million year-to-date, approximately 7% of total shares outstanding at the beginning of the year.
- Commodity Costs: Increased 8.2% at Applebee's and 1.6% at IHOP versus the prior year.
- Company-Owned Restaurants: 136 restaurants at the end of Q2, including seven dual-branded locations.
- Dual-Brand Locations: 45 domestic locations open, with 12 additional under construction.
- Applebee's Remodels: 66 completed year-to-date, with over 100 planned for 2026.
Release Date: August 05, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- IHOP delivered its third consecutive quarter of industry outperformance versus Black Box on both traffic and sales, with positive 1.5% comp sales.
- Applebee's off-premise sustained positive momentum with comp sales of 1.5% and a fifth consecutive quarter of double-digit delivery comp sales growth.
- The dual-brand initiative is expanding rapidly, with 45 locations open and 12 under construction, and new locations are performing at approximately 2 times single-brand sales levels.
- IHOP's catering business saw a significant acceleration, with comp sales up 22% in Q2, up from 16% in Q1.
- The company returned $9 million to shareholders in Q2, including $7 million in share repurchases, and the Board authorized an additional $100 million buyback program.
- Applebee's new Loaded Potato Waves became its strongest appetizer launch since the pandemic, and IHOP's Dubai Chocolate Pancakes are over-indexing in sales versus forecast.
Negative Points
- Applebee's comp sales decreased 1.8% year over year, impacted by a difficult April comparison period.
- Adjusted EBITDA decreased to $54.2 million from $56.2 million in the same quarter last year.
- Adjusted free cash flow dropped significantly to $3.7 million for the first six months of 2026, down from $48.7 million in the prior year period.
- Commodity costs increased, with Applebee's up 8.2% and IHOP up 1.6%, driven by higher beef prices.
- G&A expenses rose to $55.6 million from $50.8 million, due to higher employee-related costs, severance charges, and transaction expenses.
- The company-owned restaurant portfolio continues to impact profitability, with closures for construction and lower AUVs (low 2s) compared to the system average (closer to 3).
Q & A Highlights
Q: Given the acceleration in casual dining trends through June and into Q3, can you provide more color on the trends you're seeing at Dine Brands?
A: John Peyton, CEO, confirmed that Dine Brands is also seeing positive trends in Q3, particularly in July. He attributed this to successful menu innovation, such as Applebee's Cheeseburger Wonton Taco on the 2 for $25 platform and the Dollarita campaign, as well as IHOP's Dubai Chocolate Pancakes LTO, which is performing better than expectations. While he couldn't quantify the quarter's results, he expressed confidence in the current momentum.
Q: Can you provide more detail on the performance and profitability of the dual-brand conversions, which are a key part of the growth thesis?
A: John Peyton, CEO, stated that the dual-brand program is on track, with 45 locations open and a goal of 80 by year-end. The incremental revenue from adding a second brand is approximately 2 times single-brand sales, and conversion costs are stabilizing at around $1 million. The company is now focused on optimizing operations, including cost models and menu mix, to improve profitability on the incremental revenue.
Q: Regarding the company-owned store portfolio, can you provide insight into when these units will achieve profitability and the timeline for refranchising?
A: Vance Chang, CFO, explained that the company is on track with its three-year timeline for the portfolio. The strategy is to remodel and reinvest in these restaurants before refranchising them. He noted that the bulk of construction work for the year is complete and that there is already inbound interest from franchisees to refranchise these locations, which will be considered on a case-by-case basis.
Q: Can you break down the comp sales components, specifically traffic and check, for both Applebee's and IHOP?
A: Vance Chang, CFO, provided the breakdown: Applebee's menu pricing was up 3.4% and IHOP was up 3.5%, with average check growing both sequentially and year-over-year at both brands. IHOP's traffic was close to flat, slightly down, while Applebee's traffic was down, which explains the overall comp sales of -1.8% for Applebee's and +1.5% for IHOP.
Q: Can you help frame the expected EBIT loss and G&A impact from the company-owned portfolio for the year?
A: Vance Chang, CFO, directed investors to Note 13 in the financial statements for segment reporting. He reiterated the target of getting the company restaurant portfolio to close to breakeven EBITDA. He provided a rule of thumb that incremental G&A for the portfolio is roughly 6% to 7% of company restaurant top-line sales. He also noted that the portfolio's average unit volumes are currently in the low $2 million range, versus a system average closer to $3 million, and closing that gap would be beneficial to four-wall economics.
Q: How have the value initiatives, like All You Can Eat at Applebee's and the $6 value menu at IHOP, resonated with customers, and what is the impact on mix?
A: John Peyton, CEO, and Lawrence Kim, President of IHOP, explained that value remains a key focus. At Applebee's, the All You Can Eat campaign was a major driver of performance in late Q2, balanced with premium items like Loaded Potato Waves. At IHOP, the $6 everyday value menu, updated with the BLT and fries, has kept the value mix steady at around 22% of checks. Both brands are using a "barbell strategy" to balance value offerings with premium, high-margin items to protect check while driving traffic.
Q: Can you provide more color on the Q2 G&A increase and the shape of G&A guidance for the full year?
A: Vance Chang, CFO, explained that the Q2 G&A increase was due to one-time expenses, including severance costs and transaction expenses related to the acquisition of 48 Applebee's restaurants. These are not expected to recur. He confirmed the company is maintaining its full-year guidance, potentially towards the lower end of the range, with the noise in EBITDA coming from the turnaround of the company restaurant portfolio, which is expected to moderate as the portfolio stabilizes.
Q: What is the outlook for commodity costs and the company's mitigation strategies?
A: Vance Chang, CFO, reported that Applebee's commodity costs increased 8.2% and IHOP's increased 1.6% in Q2, driven primarily by higher beef prices. The co-op supplier, CSCS, expects mid-single-digit commodity inflation for Applebee's and low single-digit for IHOP for the full year 2026. To date, the company has implemented projects resulting in over $12 million in annualized savings across both systems.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This stock alert was generated using automated technology and GuruFocus financial data to provide readers with timely and accurate market reporting. This content was reviewed by GuruFocus editorial team prior to publication. Please send any questions or comments about this story to [email protected].
