Dine Brands Global, Inc. (DIN) is the parent company of the iconic Applebee's Neighborhood Grill & Bar and IHOP restaurant chains, as well as the fast-casual Fuzzy's Taco Shop brand. With a history dating back to 1958 when the first IHOP restaurant opened in Toluca Lake, California, Dine Brands has evolved over the decades to become one of the largest full-service restaurant companies in the world, operating a total of 3,560 restaurants across its three brands as of the end of fiscal 2024.
Company History
Dine Brands Global, Inc. was originally incorporated under the laws of the State of Delaware in 1976 as IHOP Corp. The company's journey began with the development and franchising of additional IHOP restaurants following the success of its first location. A significant milestone in the company's history occurred in November 2007 when it acquired Applebee's International, Inc., which became a wholly-owned subsidiary. This acquisition led to a name change, with the company becoming DineEquity, Inc. on June 2, 2008. A decade later, on February 20, 2018, the company rebranded once again to its current name, Dine Brands Global, Inc.
Throughout its history, Dine Brands has faced various challenges, including the need to refranchise company-operated restaurants and navigate volatile economic conditions that have impacted consumer spending and restaurant performance. Despite these obstacles, the company has maintained a highly franchised business model, which has helped reduce the volatility of its financial performance and enabled it to weather difficult market conditions.
Business Model
The company's highly franchised business model, with over 97% of its restaurants operated by franchisees, has enabled Dine Brands to maintain financial stability and resilience even amidst the challenging operating environment in recent years. This asset-light approach has allowed the company to generate robust cash flows, with Dine Brands reporting $106.4 million in adjusted free cash flow for fiscal 2024, up from $103.3 million the prior year.
Financials
Despite the macroeconomic headwinds that impacted consumer spending in 2024, particularly among lower-income households, a key demographic for Dine Brands' brands, the company was able to maintain a healthy balance sheet and return $43 million to shareholders through dividends and share repurchases. Adjusted EBITDA for the full year 2024 was $239.8 million, down from $256.4 million in 2023 but still indicative of the company's ability to navigate difficult market conditions.
For fiscal year 2024, Dine Brands reported annual revenue of $812.3 million, a 2.3% decrease from the previous year. Annual net income was $64.9 million, or $4.22 per diluted share, compared to $97.2 million, or $6.22 per diluted share, in 2023. The company generated annual operating cash flow of $108.2 million and annual free cash flow of $106.4 million.
In the most recent quarter (Q4 2024), revenue was $204.8 million, a 0.7% decrease compared to Q4 2023. Net income for the quarter was $5.2 million, a 63.3% decrease from the same period last year. The decrease in revenue was primarily due to an $8.7 million decrease in franchise revenues, partially offset by an increase in company restaurant sales. The decrease in net income was primarily due to a decline in gross profit.
Geographically, the majority of Dine Brands' revenue is derived from domestic sources, with approximately 83% of total revenues generated from the Applebee's and IHOP franchise operations segments. Internationally, the company's restaurants are present in 19 countries and two United States territories, generating less than 3% of total consolidated revenue.
Segment Performance
Dine Brands operates in four reporting segments: franchise operations, company restaurant operations, rental operations, and financing operations.
Franchise Operations Segment
The franchise operations segment is the primary driver of Dine Brands' revenue, accounting for 83% of total revenue in 2024. This segment includes royalties, franchise fees, and other income from the Applebee's, IHOP, and Fuzzy's restaurant concepts. As of the end of 2024, Applebee's had 1,570 franchised restaurants, IHOP had 1,820 franchised and area licensed restaurants, and Fuzzy's had 116 franchised restaurants. Franchise revenue decreased 2.9% year-over-year in 2024 due to decreases in domestic same-restaurant sales and the number of effective Applebee's and Fuzzy's restaurants, partially offset by increases in the number of effective IHOP restaurants and proprietary product sales.
Company Restaurant Operations Segment
The company restaurant operations segment represented 1.1% of total revenue in 2024. This segment includes the retail sales and operating expenses of the 47 Applebee's and 1 Fuzzy's company-operated restaurants. Company restaurant sales increased to $9.3 million in 2024 compared to $2.1 million in 2023, due to the acquisition of 56 Applebee's restaurants in November 2024, of which 47 were retained and operated by the company.
Rental Operations Segment
The rental operations segment accounted for 14.2% of Dine Brands' total revenue in 2024. This segment includes rental income and expenses derived from leasing or subleasing restaurant properties, primarily to IHOP franchisees. Rental revenue decreased 3.9% year-over-year to $115.3 million in 2024, primarily due to prior year lease buyouts and operating lease terminations.
Financing Operations Segment
The financing operations segment contributed 0.2% of Dine Brands' total revenue in 2024. This segment generates interest income from the financing of IHOP equipment leases and franchise fees, as well as from notes receivable from franchisees. Financing revenue decreased 30.8% year-over-year to $1.8 million in 2024, primarily due to the continued amortization of the IHOP franchise fees and equipment lease portfolios.
Liquidity
As of December 31, 2024, Dine Brands had a debt-to-equity ratio of -2.39. The company's cash and cash equivalents stood at $186.7 million. Dine Brands has a $325 million revolving credit facility, of which $224.4 million was available as of December 31, 2024. The company's current ratio and quick ratio were both 0.87 as of the same date.
Strategy and Outlook
Looking ahead to fiscal 2025, Dine Brands is focused on a three-pronged strategy to drive improved performance across its brands: elevating the guest experience through better operations and enhanced menu and value offerings, reinvesting in growth initiatives like its dual-brand concept, and reinforcing its brands' unique value propositions through more dynamic marketing.
Applebee's Initiatives
On the Applebee's front, the company is prioritizing marketing optimization, the introduction of a new everyday value platform, menu innovation, and an extensive remodel program dubbed "Lookin' Good" to refresh the brand's appearance and better facilitate off-premise operations.
IHOP Initiatives
IHOP, meanwhile, is doubling down on its core breakfast offerings, refining value menus, and streamlining operations to improve speed of service and franchisee profitability.
Dual-Brand Expansion
Dine Brands is also making progress on its strategic initiative to expand its dual-branded Applebee's/IHOP concept, both domestically and internationally. The company opened its first U.S. dual-brand location in Seguin, Texas in February 2025, which achieved sales of nearly three times the prior standalone IHOP restaurant in its opening week. Buoyed by this success, Dine Brands is now evaluating ways to accelerate the rollout of this promising format.
Guidance for Fiscal Year 2025
For fiscal year 2025, Dine Brands has provided the following guidance:
- Domestic system-wide same-restaurant sales for Applebee's are expected to range between -2% to +1%. - Domestic system-wide same-restaurant sales for IHOP are expected to range between -1% to +2%. - G&A expenses are expected to be in the range of $200 million to $205 million. - Adjusted EBITDA is expected to be in the range of $235 million to $245 million. - Capital expenditures are expected to be in the range of $20 million to $30 million.
In terms of development, Applebee's is expecting 20 to 35 net fewer domestic restaurants, while IHOP is expecting between 10 net fewer domestic restaurants to 10 net domestic openings.
Industry Trends
The restaurant industry in which Dine Brands operates is highly competitive, with trends affected by changes in consumer preferences, demographics, and economic conditions. The industry has seen a compound annual growth rate (CAGR) of 3-4% over the past 5 years, indicating steady but moderate growth.
Conclusion
Despite the challenges faced in 2024, Dine Brands remains well-positioned to capitalize on the strengths of its iconic restaurant brands, resilient franchised business model, and strategic growth initiatives. The company's focus on enhancing the guest experience, driving value, and expanding its dual-brand concept points to a promising path forward as it navigates the evolving restaurant landscape. While the company faces headwinds in terms of decreased revenue and net income, its strong cash flow generation and strategic initiatives provide a foundation for potential future growth and improved performance.