Good day. Thank you for standing by. Welcome to the Dine Brands Global third quarter 2022 conference call. At this time, all participants are in a listen only mode. After the speaker's presentation, there will be a question- and- answer session. To ask a question during the session, you will need to press star one one on your telephone. Please be advised that today's conference is being recorded. I would like to hand the call over now to Brett Levy, and we apologize for all technical difficulties. Thank you. Good morning and welcome to Dine Brands third quarter conference call. I'm Brett Levy, Vice President of Investor Relations and Treasury for Dine Brands Global. I am joined this morning by John Peyton, CEO, Vance Chang, CFO, John Cywinski, President of Applebee's, and Jay Johns, President of IHOP. Before we turn the call over to John, please remember our safe harbor regarding forward-looking information. During the call, management may discuss information that is forward-looking and involves known and unknown risks, uncertainties, and other factors which may cause the actual results to be different than those expressed or implied. Please evaluate the forward-looking information in the context of these factors, which are detailed in today's press release and 10-Q filing. The forward-looking statements are as of today and assumes no obligation to update or supplement these statements. We may also refer to certain non-GAAP financial measures, which are described in our press release and also available on Dine Brands' investor relations website. While we may provide color on intra-quarter trends related to volatility and uncertainty, we have returned to our traditional quarterly reporting schedule. Please note our third quarter's results are inclusive of the company-operated Applebee's units, as the transaction had not closed during the quarter. With that, I'll turn the call over to John. Thanks, Brett, and good morning, everyone. Thanks for joining us today. We delivered another solid quarter thanks to the strength of our brands, our operational and marketing agility, and most importantly, our seasoned team of franchisees, our Applebee's, IHOP, and Dine leaders, and our team members. As you know, and as you've heard from others, economic headwinds persist, particularly inflation and consumer sentiment. Despite this macro environment, our brands remained resilient. Applebee's and IHOP achieved positive comp sales of 3.8% and 1.9%, respectively. Q3 was Applebee's seventh consecutive quarter of comp sales growth and the sixth for IHOP. In addition, our dine-in results continue to improve as Applebee's is ahead of 2019 and IHOP is continuing to gain ground. Our off-premise sales remained more than two times pre-pandemic levels. In Q3, Dine delivered adjusted EBITDA of over $63 million by focusing on what's in our control. Notably, G&A was $46 million, reflecting our prudent approach to spending. Through the first three quarters of 2022, we returned $145 million to our shareholders via dividends and buybacks. Importantly, during the quarter, we saw an easing in the inflation rate in the cost of food and supplies to the restaurants. Applebee's cost of goods inflation fell from 23% during the first six months of 2022 to a run rate that looks like 13% for the back half of the year. IHOP is experiencing a more modest decline from 21%-19%. IHOP's costs remain inflated due to the stubborn cost of eggs and the impact of the Ukraine war on grain prices and ultimately pancake mix. I've talked before about the importance of strong brands during uncertain times. During moments like these, consumers stick with brands they know and trust and love. The value proposition at both our brands is well known. Right now we're amplifying our value message to reflect our guests mindset and financial situation. Now I'll walk you through the progress we made across our strategic priorities. This includes investments in technology, development, and new sources of revenue. Our world-class tech team is delivering products on time, and we've more than doubled our annual tech spend since 2019. We're enhancing both the in-restaurant and out-of-restaurant guest experience, as well as new back of house and front of house technology. Some examples of recently completed tech include our new learning management system, new IHOP websites and app, with Applebee's scheduled for next year, Flybuy and Pay and Go technology that streamlines the guest interaction, and we continue the rollout of IHOP's new point of sale. Next is development. Our IHOP portfolio continues to expand. The combination of traditional and new restaurant formats is driving our confidence in our long-term unit growth. Applebee's continues its path toward net openings. Our third priority is new sources of revenue. IHOP now offers its virtual brands in over 1,100 locations, and we have 55 ghost kitchens across Applebee's and IHOP. IHOP's virtual brands are incremental to sales and target dinner and late-night hours. Both are opportunities for the brand. We're building our virtual brand pipeline and believe there's an attractive long-term opportunity for virtual brands within our portfolio. While we expect challenges over the next few quarters, Dine is positioned well for challenging times. We're confident in our ability to navigate the near term headwinds and deliver on our longer term goals. We're confident in the resilience of our iconic brands. We're confident that our scale allows us to mitigate to some degree, supply and price disruptions, and we're confident because Dine is financially sound, as are our franchisees. With that, I'll turn the call over to Vance to review our financial performance and outlook in more detail. Good morning, Vance. Thank you, John. As you mentioned, the third quarter continued the momentum that we built over the last year and a half, and our plan is moving us in the right direction. Our third quarter total revenues were $233.2 million, as franchise revenues grew 2% year-over-year due to positive comp sales growth at both brands. Company restaurant sales increased over 8% to $38.2 million compared to the same period of last year. We completed the refranchising of our company restaurants last week. Rental segment margins for the third quarter of 2022 improved by 6% to $7.2 million over last year. The favorable variance was mostly the result of franchisees' higher retail sales, which drove higher percent rental income for the quarter. G&A for the third quarter of 2022 was $46.3 million compared to $43.7 million for the same quarter of last year as we continue our strategic growth investments in support of our brands. We generated consolidated adjusted EBITDA of $63.6 million in this quarter, slightly ahead of last year's $63.3 million quarterly results. Finally, adjusted EPS for the third quarter was $1.66, outpacing last year's $1.55. The variance was primarily due to lower weighted shares outstanding. Turning to our cash flow statement and balance sheet. Over the first nine months of 2022, we generated cash flow from operations of $63.5 million. This compares to cash flow from operations of $145.6 million over the comparable period last year. The variance in year-to-date cash flow from operations was due to the change in working capital that we saw in Q1 and discussed in the prior two quarters. This quarter also marked a continued improvement from our mid-year results, as we saw our working capital position and cash conversion rates gradually returning to normalized levels. We also ended the third quarter with total unrestricted cash of $355.3 million. This compares to unrestricted cash of $263.5 million at the end of the second quarter. In mid-August, we announced the upsizing of our borrowing capacity available under our VFN, and we subsequently drew down $100 million, which provides us with greater financial flexibility. Our leverage ratio moved to 3.9 times, which was below the 4.27 times last quarter. As we discussed previously, we have the option to refinance our Class A-2-I bonds right now, but our anticipated repayment date for the bonds isn't until June 2024. In the meantime, we will continue to evaluate our best course of action and take advantage of the refinancing window if it makes sense for our shareholders in the long term. Dine remains committed to returning cash to shareholders. During the third quarter, we paid a cash dividend of $0.51 per share on September 30. We repurchased over 1.6 million shares as of Q3 year- to- date, or approximately 9% of our share count has been retired since the start of the year. The combination of paying dividends and repurchase of our shares remain a key component of our long-term capital allocation plan and support our focus on driving total shareholder value. Next, I would like to update our financial guidance for the year. First, let me touch on development. Our IHOP development plans are now between 35-45 net openings for 2022, compared to our prior guidance of 50-65 net openings. The change is primarily due to some of our planned openings moving to 2023, given current permitting and construction delays. Applebee's development plans remain unchanged at 5-15 net closures for the year. Second, we're lowering our expected G&A range for the year based on our latest investment progress. Our new 2022 G&A forecast guidance is $185 -190 million compared to our prior guidance of $188 -198 million. Some of our planned G&A investments this year will be extended into 2023, given the disruptions caused by the pandemic. We will provide more guidance around 2023 on our next earnings call. Third, we're narrowing our expected adjusted EBITDA guidance range to between $243 -248 million compared to our prior guidance range of $235 -250 million. This new guidance reflects our Q3 performance, our continued strategic G&A investments in Q4, along with impact from refranchising our company-owned restaurants. Lastly, we're maintaining our CapEx spending range of $33 -38 million. In summary, we're pleased with the consistent performance across our operations. Our value-focused approach again yielded solid results at both brands. We remain confident in our ability to generate significant cash flows, invest in growth, and return capital to shareholders over the long term. Next, we'll hear from John Cywinski with color on the Applebee's brand. John? Thanks, Vance, and good morning, everyone. 2021 and 2022 have been terrific years for the Applebee's brand, and Q3 continued this momentum with a 3.8% comp sales increase on top of last year's 12.5% increase versus Q3 of 2019. On a post-COVID basis, I believe visibility to a three-year sales comp provides an important gauge as to the true health of the brand. Our three-year comp sales calculation for Q3 2022 versus Q3 2019 reflects a remarkable 16.9% growth, illustrating Applebee's vibrant and sustained performance. This also marks the best three-year sales performance throughout the history of Dine Brands. I attribute this success to a combination of drivers. First were the tactical marketing decisions we made in response to this inflationary environment. Second is the restaurant excellence we continue to see from our outstanding franchise partners. Finally, Applebee's performance reflects the benefits associated with the completion of our multiyear portfolio rationalization. Now as I break down the quarter, Q3 average weekly sales remain quite strong at $53,000 per restaurant. 76% of this volume was on-premise, while 24% was off-premise, equally split between curbside to-go and delivery. From an absolute dollar perspective, weekly off-premise sales were $12,800 in Q3. This off-premise business is essential to our success and continues to flourish with more than $1 billion in annual system sales. In addition, we just opened our 10th drive through pickup window as we begin a comprehensive cost benefit analysis of this very promising new initiative. From a brand attribute perspective, Applebee's continues to lead the casual dining category on key metrics such as convenience, affordability, variety, family-friendly, and brand awareness. In fact, Applebee's unaided brand awareness attained an all-time high in Q3 as we introduced compelling value propositions under our iconic Eatin' Good in the Neighborhood umbrella. On the development front, we'll open approximately nine new restaurants this year, featuring a combination of traditional and ghost kitchen locations. We also expect to close 15 restaurants this year, representing the fewest Applebee's closures in a decade. We then plan to return to net new unit growth in either 2023 or 2024. Again, a combination of traditional restaurants and ghost kitchens. Looking forward, we anticipate eventually returning to an annual closure rate of approximately 1% for the Applebee's brand. I'm also pleased to report that existing franchisee Thrive Restaurant Group has acquired our 69 company-owned restaurants in the Carolinas. Thrive is led by Jon Rolph, a deeply respected second-generation franchise partner and chairman of our franchise business council. Jon is now our second largest franchise partner with 148 restaurants, and second to only Greg Flynn with 439 Applebee's. With this transaction, Applebee's returns to a 100% franchised business model, with 31 partners owning all 1,571 restaurants in the U.S. Now, as we do annually, we recently gathered the entire Applebee's system to align around our 2023 business plan and to recognize our best performers. I was honored to celebrate Mark Schostak as Applebee's franchisee of the year at this event. Mark is a role model operator and partner with 62 restaurants in the state of Michigan. In closing, perhaps nothing speaks more to the health and relevance of the Applebee's brand than the escalation of our average unit volume from $2.2 million when this team was first assembled in 2017 to where we are today in Q3 at $2.75 million. Per Black Box, this 25% increase is more than double the casual dining category's 10% increase, excluding Applebee's, over the same five-year timeframe. Even in this challenged environment, we remain aligned with our franchise partners as to how extraordinarily well-positioned the Applebee's brand is for sustained growth as we look forward to 2023. I'd now like to turn the call over to Jay for an overview of the IHOP business. Thanks, John, and good morning. Our brand continues to become more relevant for more occasions with our menu and marketing, as well as on the innovation and technology fronts. We posted a 1.9% comparable store sales gain in Q3, marking our sixth consecutive positive quarterly result. Our restaurants generated average weekly sales of $36,800, compared with last year's $36,200. Off-premise per restaurant weekly sales of approximately $7,700 were modestly below the $8,300 and $8,900 over the prior two quarters. Our to-go business is still over 20% of sales, with delivery accounting for nearly 13% and traditional takeout generating approximately 8% of sales. The off-premise business is also supported by our two virtual brands, with over 1,100 restaurants offering TenderFix and Super Mega Dilla. We opened nine new restaurants in the quarter, and our franchisees continue to work toward getting all of their restaurants back to full standard operating hours as the portfolio increased, restaurants operating either 24/7 or 24/2. In Q3, an additional 4% of our restaurants have been offering overnight hours. Our marketing and menu initiatives are resonating with guests. Last quarter, we successfully partnered with the Minions on a well-received promotion that drove results. We offered a value proposition through a widely accepted $5 2x2x2 platform. Most recently, we're excited about the launch of our new Thick and Fluffy French Toast offerings. We're also enthusiastic about our strategic and technological efforts. We've introduced our Pay and Go options for our guests to close out checks through their own devices. Our point-of-sale platform rollout continues to expand, now in approximately 240 restaurants. The growth of our International Bank of Pancakes loyalty program has exceeded our full- year target already. We ended the quarter and its first six months with 3.3 million sign-ups. Checking briefly on development. We remain bullish on the brand's long-term prospects, despite having to deal with near-term supply chain and permit approval timing challenges. We expect to add 50+ gross new restaurants in 2022. That represents one of the strongest years in our brand's history. The change in our current year outlook is more of a timing issue, which weighs on our development prospects. We expect to see several of our franchisees planned Q4 openings move into 2023. To wrap up, IHOP brings joy to people's lives, which is fundamental to who we are and what we do. We remain excited about the progress we've made and the foundation we've laid for our continued growth and future prospects. I'll now turn the call back over to John Peyton. Hey, thanks, Jay, and thanks to those of you on the line for your patience with our late start this morning. Thanks to Vance Chang, John Peyton, and Jay Johns and their teams for all their hard work and great results in Q3. A big thank you to our franchisees, their restaurant teams for their tremendous efforts and focus on our guests. We know that there is uncertainty right now, and that's why we're working hard to be there for our guests, providing great food and experiences when they want and need us most. With that, Lisa, please open up the call for questions. Thank you. One moment while we pull up the Q&A roster. Our first question will be coming from Eric Gonzalez of KeyBanc. Your line is open. Hey, thanks for the question and good morning. My question is about the balance sheet. You have a big chunk of your securitization coming due in about 18 months or so. Can you talk about your ability to refinance that maturity and where you think you might be able to get a deal done today in terms of the current industry? And then given the potential increase in interest expense, can you still continue to buy back stock? And more importantly, do you think it's the right move for shareholders to continue the current level of buybacks versus perhaps paying down the debt such that it might limit the amount that you have to borrow? Thanks. Thanks, Eric. Vance will take that. Good morning, Eric. We actually don't have any current maturities due, and there's no need to refinance right now. I mean, you know, the hard call window that we have was opened up earlier this summer, but we really only need to take advantage of it if it makes sense. We're monitoring the market, and currently the market is pretty volatile, right? We're taking into account interest rate movements and capital markets environment. The goal is always to maintain that financial flexibility and the liquidity that our current capital structure provides. You know, we may refinance when the market conditions improve, but right now it's pretty choppy. On buybacks, you know, capital return has always been one of our top priorities in terms of capital allocation. I mean, it's evidenced by the fact that we've done over $100 million of buybacks this year. We'll continue to be opportunistic with repurchases, but we need to balance it with net leverage levels, right? Especially given today's environment. Okay, fair enough. Maybe if I can ask one about unit growth. You know, you have some targets out there with regards to growth, you know, over the next four to five years, which if I remember correctly, it stacks out to about 15 or 150 to 200 units per year. My question is, are you still confident in this outlook given the higher rate environment? How are your franchisees, particularly in the IHOP system, reacting to the higher rates, given they're still dealing with the high teens inflation? You know, related to that, you lowered the unit growth outlook for IHOP this year due to permitting delays. Does that mean in 2023 you'll see outsized growth as project timelines normalize? Do you think this pushes out the pipeline such that we see the typical 50 or so IHOPs next year? Yeah. This is Jay. Yeah. I'll probably take that one since most of it was an IHOP related question. Yeah, our growth this year has been strong. I mean, we're gonna open over 50 new restaurants this year, which is very good growth for us. We did have quite a few issues, especially a lot of our pipeline was backloaded this year, and we started getting into some permitting issues that seem to be persisting post-COVID in different municipalities, equipment issues. That's caused some of our pipeline that was gonna open in Q4 to slide into next year. That will, well, we'll help that as we move forward. You know, the environment obviously is a little bit difficult, but so far the franchisees, you know, we've got a lot of excitement. We just had our global conference and had a tremendous amount of franchisees talking to us about new restaurant openings. I think they're still bullish on opening a lot of restaurants at the IHOP brand, but the economics have changed. We're seeing a tremendous amount of our openings now being conversions. There's other restaurants that have closed down, and it's actually providing an opportunity for people to be able to go out and take advantage of that at this particular time. I think the pipeline is still looking very good. Like I said, a lot of those will move into next year, which will help us out in future years. John, why don't you address Applebee's? Hey, Eric. We're confident in our strategic plan for Applebee's. As you know, we're rebuilding our pipeline, and this is great news, returning to net new unit growth, combination of traditional and ghost in either 2023 or 2024, very optimistic and not concerned about any of the kind of near term challenges that may be, you know, delaying that timeline a little bit. Fair enough. Thanks. Thank you. One moment while we prepare for our next question. Our next question is coming from Jake Bartlett of Truist. Your line is open. Great. Thanks for taking the question. You know, my first one was on the implied guidance in the fourth quarter for EBITDA. You know, it's a lower, you know, step down versus the other quarters of the year. I just wanted to kind of, you know, understand better the reasons for that or the drivers for that. I see that G&A is guided to be up in the quarter, so that's one aspect. You mentioned in the release, you know, an impact from the refranchising. You know, maybe as part of that, the answer, if you could talk about what the near-term, you know, impact of refranchising the stores is and maybe what the impact would be in 2023, whether it's accretive, you know, including some reductions in G&A related to those stores. Thank you. Vance, will you take that? Of course. Hey, Jake. You know, we guided on full- year for 2022, but for this quarter, effectively we're guiding on Q4. It does reflect our current performance, our G&A spending trends, and along with impact from the refranchising of our company-owned restaurants as you said. You know, most of the trend that you're seeing in Q4 is driven by G&A. A reminder is that our Q4 G&A is usually a little higher than other quarters, but this Q4 particularly also includes catch-up investments from earlier in the year that we just couldn't do, you know, with open positions and projects, et cetera. Having said that, though, I think Q4 G&A does not represent runway. Right? You know, and then we will continue to make certain investments in people, research, technology, product development in 2023, but we'll have more details on 2023 guidance in the next quarter. You know, our investments, as we said in the past, they're really designed to drive and support long-term growth. We're really pleased with the progress that we're seeing so far. The impact of the refranchising, it was mentioned in the release that could be, you know, impacting EBITDA. You know, I look at your company margins, I would think that there would be almost a one for one to a royalty rate. But if you could just help us understand the impact of, you know, on the financials in the fourth quarter and 2023 from selling those stores. Then also, you know, what kind of G&A, you know, is related? I think in the past, maybe you've talked about $5-6 million related to company-owned stores. Is that right? Should we expect, you know, G&A to go down by that amount? Any help there would be helpful. Our 2022 G&A and EBITDA guidance reflects the refranchising transaction that was disclosed, that was closed last week. On 2023, we'll provide more color on 2023 next year. I'm just reminding everyone that the 69 restaurants represents roughly 2% of our portfolio. We don't really anticipate a material change to our business fundamentals. Historically, we haven't really discussed company-owned restaurants' specific EBITDA or G&A. Is there a G&A? Yes Can you say whether it's accretive or dilutive to refranchise those stores? There is G&A that will be cut, and we will have more discussion on 2023 guidance when we're done with our budgeting process for next year, and we'll provide more color in the next quarter. Okay. There is G&A that will be taken out. Okay. Then, you know, there was no comment, I believe, you know, about the current trends. You know, we've seen you know, on same store sales in the fourth quarter, and we've seen an improvement, you know, on a three-year basis, you know, throughout the year here. Is there any reason to think that wouldn't continue just in terms of the underlying momentum of the business? Any comments there would be helpful. Yeah. Why don't we have Jay and John comment on that? Yeah, Jake, this is John. We love our plan with our franchisees. We're very confident in not only the plan that we've aligned upon, but our flexibility to change as needed. We have very strong momentum as a brand, and our confidence, quite candidly, couldn't be any higher than it's been over the past five years. No, I think on the IHOP side also, you know, we feel very good about our progress we've made. Coming back after the pandemic, we've 6 straight quarters now being up in sales, and we seem to be hitting our stride right now. We have a great pipeline that's, you know, of initiatives that we have planned out all the way through next year. We're feeling very good about where we're at and what we're doing with our menu, our marketing, our loyalty program. We've got a lot of things going for us right now that we don't see any reason why that would change. Great. I appreciate it. Thank you. Thank you. One moment while we prepare for our next question. We have our next question coming from Jeffrey Bernstein of Barclays. Your line is open. Great. Thank you very much. Two questions. The first one just following up on the consumer environment. It doesn't sound like you've seen any slowdown in trend, either through the third quarter or into the fourth quarter. Just wanna make sure that that's accurate. Just wondering what initiatives you might implement if trends were to slow on your end, or whether perhaps you're already seeing increased marketing or promotion or any competitors getting more aggressive, just trying to size up the landscape in terms of your potential response as well as the competition. I had one follow-up. Sure. Both questions for John and Jay again. Hey, Jeff, this is John. You know, on the Applebee's front, we're very thoughtful in this environment. It's a challenging environment. We're thankful for the momentum that we have. You know, one of the things that's happened here over the past year or so post-COVID is we've returned to having at least 12, perhaps even 18 months lead time in our marketing plans and our tactical initiatives with contingencies and flexibility built in. We have a portfolio of propositions that we can market and deploy as needed. Should the environment become tougher, we've got those programs sitting on the shelf. Again, we only have 31 franchise partners. We meet frequently, and our ability to change course on short notice in reaction or response to the marketplace is pretty easy for us. Great momentum. Very thoughtful in a challenging environment as well. Hey, Jeff, this is Jay at IHOP. You know, we feel really good about our ability to make adjustments as we need to. You know, the restaurant business historically is when things get tough, your competitors start to do more discounting, et cetera. We try really hard not to react to what everybody else does. We have a plan we're trying to follow, and we try to make value part of our strategy all the time. There's always a need for value for some of your guests, and we need to have the ability for guests to access that. We've got our IHOPPY Hour program. We'll use limited time offers. We just did a $5 2x2x2 promotion. We also just rolled out our new Thick and Fluffy French Toast, which is a full price proposition that is a much better improved quality compared to what we had previously on the menu. We truly believe there's two sides to what people crave, right? There's the indulgent, sweet side. There's also the more savory side. We rolled out new dinner entrees. We rolled out new better for you items. We're really executing our plan, and we're confident as we're doing that plan, we're gonna be in great shape, and there's value incorporated in that plan as well. Understood. My follow-up, just 'cause it's amazing we've gone halfway through this call without much talk about menu pricing or inflation. I was hoping to just touch on, well, you mentioned the commodity basket seemingly easing a little bit in the back half of the year. I'm wondering if you could maybe talk, you know, directionally where you think commodities and labor are headed. I know you're not giving formal guidance for next year, but how you think about it from a franchisee's perspective, and maybe counter that with menu pricing, how much pricing was in the menu for each of the brands in the third quarter, and what are your suggestions to franchisees in coming quarters if, you know, sales really hold up and inflation were to ease? Just trying to get a sense of the potential margin outlook on the franchisee side. Thank you. Jay and John, you wanna take that again? Sure. Jeff, on the Applebee's. This is John. On the Applebee's front, you know, I continue to be impressed with our franchisees. They are thoughtful, strategic, savvy. They're quite a sophisticated group. They understand this delicate balance between covering their margins to the extent possible and maintaining affordability leadership. Applebee's does lead the category in affordability, so it's important to us. They've been conservative, relatively speaking, and strategic in their pricing. They've been, from our discussions with them, taking a long-term view as to market share opportunity in a tough environment, and I applaud them for that. With that said, they will do what's necessary to protect their margins in a tough environment. They've been conservative to date, and I expect that to continue. Yeah, I think on the IHOP side, you know, no difference really. They're dealing with the same kind of pressures. Inflation has been a little stubborn this year. We do think that as we get into next year, potentially that the inflation rates are going to start to decline. That doesn't mean prices are gonna drop, but I think the deceleration of inflation is going to take place at some point here. You see that a little bit this year. You know, back half year is still pretty high. Now, our menus are already priced for the rest of the year. We don't have another menu planned until next year, so I don't see them changing anything right at the moment until we get into the spring. I think they've done whatever they're going to do as far as their decisions on price. Food costs will probably normalize. Labor probably never comes back down to the levels it was previously, but you know, they have incorporated price to help overcome some of that. That's a little bit more of a regional issue. You know, there's certain areas where the softening of the economy has actually opened up you know, staffing possibilities and the inflation rate on labor has slowed down as well. There's other markets where it's still tough out there. If you've got an unemployment rate of 2% in your city, it gets tougher. That becomes a little more localized. The franchisee is very smart about how to take price as needed, but do it in such a way where you don't run off your guest base because they can't afford to come anymore. They're being very careful about it and trying to be as strategic as possible on how they take price, where they take price. I think as inflation rates come down, price increases will probably decelerate as well. I think that when inflation goes back to a more normalized rate, I think your price taking, the franchisees will do likewise. Yeah. Is there any qualification on that price for the third or fourth quarter for either brand? Jeffrey, on the Applebee's front, you know, think of it as 7% quarter-over-quarter, 2022 over 2021. I think we've shared kind of color in previous quarters as well. I look at that as conservative in this environment. To Jay's point, I do expect should the commodity cost inflationary environment improve, which we do expect it to do over time, that our franchisees will revert back to, at some point, more normalized 2%-3% annual price increase. That's what historically has proven to be the case. Yeah, I think IHOP is more like it's close to 11% is the price they've taken year-over-year, Q3 to Q3. Now, again, some of those roll off as you print new menus and your quarters change. When we just look at Q3 versus Q3, it's about 11, a little over 11%. Hey, Jeff. It's John Peyton. Just, you know, some context there. You know, the 7% and 11% in price increases for the two brands, you know, is less than half of the increase in cost of goods into the restaurants. It does reflect the franchisees really balancing their margins with, you know, what they think their guests can tolerate. What's also interesting is that guests push back on price increases has been surprisingly limited. While they're managing, you know, the total cost of their check, you can see from our same store sales growth that, you know, consumers are tolerating the price increases and have come really to expect it given the economy overall. Thank you. Thank you. One moment while we prepare for the next question. Our next question is coming from Nick Setyan of Wedbush. Go ahead, please. Thank you. I just wanted to ask about value in this environment. Do you really feel like you know an aggressive value stance is necessary, particularly as you know gas prices have come down from early Q3 peaks? In general, I guess, you know, how has the perception of value evolved just given you know the inflationary headwinds out there? Jay and John, you wanna take that? Yeah, John. This is John C., Nick. Good to chat with you. Your question is, do I think value is necessary? You know, Applebee's is fundamentally a value brand. We lead on affordability. We'll obviously see our franchisees protecting their margins. I do think value remains important. We're at the lower end of the average check spectrum in casual dining. That's important. Our guests are challenged, quite obviously in this environment in terms of discretionary income. There are lots of ways to convey value. We're big believers in restaurant excellence, and our franchisees have truly been exceptional at earning the trust of not only their guests, but their team members throughout COVID. I think that's evident in our results. There are lots of ways to deliver value. There's added value, there's co-branding, there's, you know, the use of borrowed equity. We like conveying through our advertising emotional connection with our guests. I believe Eating Good in the Neighborhood is perhaps more relevant than it's ever been in this environment. Yes, I believe value is important, but there are a multitude of ways tactically to deliver upon that value proposition. Hey, Nick, this is Jay Johns at IHOP. You know, I think that to an extent, value is always necessary. It's a little bit part of our overall strategy that there are certain guests you have to get more occasions from them. Value is always important. You wanna have value on your menu. You know, some people call it the barbell strategy, and you have more expensive items. You have items that are more approachable and affordable for guests. But not all guests are the same. We have guests that are, you know, higher income scale, that they're less price sensitive. They just come in and order their favorite item. They don't care what it costs. There are other people, though, that they can't do that. They have to manage their pocketbook. When gas prices go up and things get more expensive, they watch their dollars a little more closely. I think there's a need for value all the time. As John said very well, there's different kinds of value. There's abundant value. That doesn't necessarily mean it's a cheap price. You can get a lot of food for your money. There's price-pointed value. There's limited-time offer values. Our loyalty program opens up the possibility for one-to-one personal value on what they care about and how to motivate extra visits from those individuals. Yeah, the economy makes it front and center. I think value is always there. It's just how you pull the levers when and where and how to keep the flow of guests coming in. Hey, Nick, this is John C. My final point on this one, and I firmly believe this, as we think about the past couple of years, brands with meaningful scale, which we have, and brands that have strong culture within their franchise communities and entities, and brands that have earned the trust of their guests are gonna thrive and perhaps navigate, you know, this inflationary environment better than others who don't have scale and don't have strong culture. We love our position. Is there a way to maybe quantify like value mix as a percentage of overall, you know, menu or sales, and, you know, now versus say, you know, pre-COVID for both brands? Well, Nick, this is John C. I would not equate value with tactical discounting. I think my view on that is, you know, sometimes lazy or desperate brands resort to tactical discounting out of necessity. We've always had kind of a core value proposition embedded in what we do and how we market, and that'll continue moving forward. Okay. Thank you very much. Thank you. Thank you. One moment while we prepare for the next question. Our next question is coming from Brian Mullan of Deutsche Bank. Please go ahead. Your line is open. Just a question on IHOP specific to the loyalty program. You know, I know from the prepared remarks, signups are going well, but can you speak to one or two elements that maybe have you most encouraged thus far from a consumer response perspective, any early learnings there? Just kind of related to that, it seems like the dining room traffic at IHOP is still down quite a bit relative to pre-COVID. As you seek to recapture that from here, can you maybe put the loyalty program into context in terms of how important of a tool it is as compared to maybe other items like operating hour restoration or older guests getting more comfortable around dining out or just anything you'd wanna cite around those dining room traffic trends? Thank you. Yeah. This is Jay. Look, I think the dining room traffic keeps coming back. We see it improving, increasing, and obviously, that's something we're trying to do. Part of that is hours of operation. That keeps improving for us as well. As you heard in my prepared remarks, we had about 4% more of our restaurants go to overnight hours. As franchisees see their way to that being a profitable business venture for them, more and more are going to do that. For in some locations that's staffing and having access to people to be able to staff it overnight. In some, it may be the cost of doing business overnight, depending on cost of that staff and inflation of food, et cetera. Our virtual brands are really helping that because a lot of those sales happen in the late night hours. That gives a little extra incentive to get your IHOP back open again as well. Some of this is hours of operation. Some of this is a lot of people still maybe not quite as comfortable coming out. It's a little bit of everything. I can't quantify and say exactly what is what, but we see the dining room business coming back. It's still a critically important piece of our business. It's the core of the number one sales driver we have. Obviously we're working on that. I think that, you know, this relevancy of the food that I've talked about before also becomes important in that, is how do you have better items for people that wanna eat healthier? How do you have items that are more relevant to people for dinner instead of just eating breakfast? We're addressing all of those things to help our brand become more relevant for more occasions throughout the entire day, as we look at that. Refresh me, what was the very first part of your question before you got there? You asked about one other thing. Sorry, that was kind of a two-parter. Loyalty program, right? Yep. The signups are going well, but how about early learnings on consumer response? Yeah. The signups are going fantastic, and I think that is the first indicator of people their engagement. They love the brand. They want to join. The signups are going way faster than what we even thought they would do. You know, we thought for the entire year, our goal was 2.5 million people, and we're at 3.3 million by the end of Q3 with a whole another quarter to go. That's going really well. You know, we're not gonna get into a loyalty discussion on all the different metrics every quarter. It will probably do something maybe on an annual basis. When we get to the end of the year, we'll give you some more details about some other statistics and data on that. We'll keep you informed on that as we move forward. We're very happy with where we're at right now and how it's progressing. It's just too early to start sharing those details yet. We'd like to have a little more history behind us. Thank you. Thank you. While we prepare for our next question. Our next question is coming from Brian Vaccaro of Raymond James. Your line is open. Good morning, and thanks for taking my questions. John C., I wanted to start on the Applebee's sales strength, and I think I heard you say 7% pricing year-over-year. I think that's pretty similar to Q2, suggesting the sequential improvement you're seeing is traffic related. I guess the first, can you just confirm that that's correct? The question would also be, could you elaborate on what's driving this sequential acceleration? Any data points you could share suggesting that you're benefiting from trade down or a way to ballpark the benefit of this shift to value and anything worth noting from day part, or weekday versus weekend perspective? Well, sure, Brian. That's a lot embedded in that question. Good to hear from you. You know, let's tackle kind of the health of the business and what I attribute that to. First and foremost, restaurant excellence. We, you know, general manager retention and restaurant level excellence one guest at a time has been the hallmark of this brand throughout the pandemic and throughout this recessionary environment. In addition to that, I mentioned it in my remarks. You know, we concluded a while ago our portfolio rationalization and ended up closing over five years, you know, just about 300 restaurants. That's complete. Our portfolio, both restaurants and franchisees, is rock solid right now, and that's evident in the results. Quite frankly, you would have seen that earlier had it not been for the pandemic. I take a combination of off-premise execution, great marketing, a reference to Eatin' Good in the Neighborhood. We like to connect emotionally. We love music, and we like to make our guests smile and make them hungry. You know, we're a brand that's not only affordable. We win on four attributes, and this is what I would attribute our success, but why we're so confident moving forward. We win on affordability. We win on convenience. We win on variety, therefore no veto vote, and we're absolutely dominating on brand awareness. You add those four up, and you have sustained growth for a very relevant brand, a brand that's better positioned than it has been, I would argue, and this is my second stint with Applebee's in its entire history. I won't quantify or attempt to quantify anything for you other than to say those are the reasons driving the results that you see and that you've seen over the past few years for the brand. All right. Thank you. On the commodity front, what was at Applebee's, what was year-on-year inflation in the third quarter? Could you level set sort of where you see the fourth quarter shaking out? I'm just trying to get a sense of. I know you gave some statistics on first half versus second half, but trying to get a better understanding of the degree to which you're seeing improvement. I know, you know, things can turn on a dime these days, hour by hour. But everything you know today, is there a reasonable range that you would expect on food inflation that you could offer into 2023? Mid-single digits, et cetera? Something in the ballpark. Hey, Brian, I could let you know. In Q3, for Applebee's inflation that we experienced was about 17%. For IHOP, it's about 21%. If you think about first half versus second half inflation, first half was, I think for both brands were in the low 20s. Then the second half, that inflation for Applebee's is probably in the low teens. For IHOP, it's close to 20% just because they have different commodity baskets. Sure. You know, as John mentioned, as both Johns mentioned, earlier, I think if you index that to July, for the next 18 months, we're seeing that cost starting to go down. Even though it is still year-over-year growth inflation, it's not as steep as we saw in the first half. That trend will likely continue in 2023. All right. Thank you for that. I also had a question on IHOP for Jay. Could you just give some perspective on the cadence you saw through the quarter? Trying to get a sense as to what degree the LTO, the two by two by two in September might have driven outperformance in the month. Just curious if there's anything worth noting from a day part, weekend versus weekday, et cetera. Anything worth noting there? Hey, Brian, it's Jay. No, as far as the quarter, you know, right about back-to-school time, we get a little bit of softness. Then for the whole quarter, though, it kind of evens itself out, and it's pretty typical for us. We were real pleased with the promotion overall. I think it did what we want to do. We keep talking about value and does value work, and value does work. It does drive traffic. It needs to be profitable traffic for our franchisees, though. That's always the thing we're looking to do, is you don't just want to get traffic coming in that doesn't help our franchisees. The nice thing is when you do a value promotion like that, though, frankly, most people don't buy just that promotion. It gets people in the door and what they do is they decide when they get there, one person has that promotion item, but the other three people they bring with them do not. They do their regular behavior and it ends up being good for us overall doing that. Overall, we're very pleased with the quarter and you know, as long as gas prices stay more moderated and things don't get much worse in the economy, I think we're in very good shape. Okay. Last one for me. In the third quarter, I noticed there was this other EBITDA add back of around $2.5 million. Could you provide just more color on what that was? I know there's usually add backs that you identify, but there was this other bucket. Any color there would be great. Thank you. Yeah, it was around professional services for work that we're doing that's not related to the run rate of the business. Okay. That was embedded in G&A then, I would assume. That's right. Great. I'll pass it on. Thank you. Thanks, Brian. Thank you. For our final question, that will be coming from Andrew Wolf of C.L. King. Thank you. Your line is open. Oh, great. Thank you. I wanted to ask a follow-up on the, you know, the lower commodity costs that you are expecting and somewhat experiencing now at Applebee's. Just, you know, the company's sort of financial and economic model, as I understand it, the direct exposure for the company is only through or mainly through the mixes that are sold out of IHOP. But is there anything else? Is there any exposure through the co-op or any other way that commodity inflation directly impacts the company's P&L? Hey, Andrew, it's John. Thanks for joining the call. We're glad you're with us, and Vance can take that. Hey, Andrew, good to talk to you. So it's primarily through the dry mix cost, as you mentioned. Now, when we had the company-owned restaurants, it would flow through our P&L as well, but now that the refranchising has closed, it won't really impact us directly. Now, having said that, John and Jay both talked about how it impacts our franchisees. It does. We do care about it, and it's something that we monitor very closely because we care about the financial health of our franchisees. Great. Just wanted to double-check that. Just on the G&A spend, maybe I can ask sort of a basic question. Could you kinda quantify how much of the planned spend kinda slid out of either the first three quarters or out of the third quarter into the fourth quarter? Just help us understand, you know, the step down in EBITDA and also, I guess to some extent, the step up in the third quarter. It's hard to quantify how much got slipped because it's kind of a theoretical question, you know. But you know, I think I'll reiterate what I said before, which is, you know, if you look back to our quarterly G&A numbers for the past, you know, four or five years, Q4 is traditionally a little higher than other quarters. There was some true up of accruals that we do just as normal operating procedures. This quarter, it does include new hires that we wanted to hire earlier in the year that we couldn't do and research projects and development projects that we wanted to do earlier in the year but got pushed back because of Omicron and you know, some of those macro impacts. It's hard to quantify how much of that was pushed back into Q4. Our guidance reflects that, though. Does that help, Andrew? Have we lost Andrew? Operator? It seems like Andrew has gone back. Yeah, he has dropped off the call. Okay. I think that concludes the queue. Is that right, Lisa? Yes, there's no more participants in the queue. I would like to turn the call back over to John Peyton for closing remarks. Great. Well, since we're 12 minutes over, we appreciate you all sticking with us. I'll just say thank you. We're proud of our results this. Thank you all for participating in the call. This concludes today's conference. You may all disconnect.