Welcome back. Let's take a look at Dine Brands.
You're off about 4% here.
It is the owner, the parent company of IHOP.
They are posting better than expected profit for the second
quarter,
but revenue falling short. Consumers still continuing to pull back
on spending.
I'm pleased to say Dine Brand CEO John Payton joins
us now.
Thank you so much for being us here in person,
live in New York. Appreciate it.
What is the biggest struggle that you hear from consumers
at this moment?
What we're hearing from consumers is that they're they're very
value driven right now.
And so when when we look at our data tailor,
we're seeing a couple of things.
We're seeing that our guests who typically earn about
$75,000 or or less are dining out less this quarter
and last quarter than they did last year.
When they do dine out,
they're looking for the value portion of our menus.
And so for example, at at at Applebee's,
if you combine the Lt.
OS and the everyday value portion,
about a third of our tickets now are those value
items that was only
2223% same time last year.
You know, interestingly, we're also seeing that
the higher income guests, those over
$100,000, we're seeing more of them in the last quarter,
not an even a percentage basis on an absolute basis,
which is telling us that there is some trade into
our category.
And at the lower end where we're losing some of
our lower income guests,
our data tells us that it's because they're eating at
home.
Yeah, rather than switching to other brands or to it's
cheaper.
Yes, it is cheaper to eat at home.
But for the people who are coming in and you're
talking about these value items,
you guys are not the only chains that have implemented
this.
McDonald's White Castle is launching 1.
And so ultimately, if you see more people,
more people or a higher percentage flocking to these items,
in the case of McDonald's,
I actually think Coca-Cola had to contribute to that to
sort of make it work for them.
You're possibly losing money on those items.
So how does that work in the overall big picture?
Yes, you're bringing them in,
but if they're going for the value stuff,
are you making money? So definitely not losing money on
a,
on a promotion. So, so,
you know, a couple of key things to share about
that is that every one of our promotions is,
is profitable, right? And as a as a rule,
we don't do anything as a loss leader.
We have a ad committee for each of the three
brands and we construct promotions together with them.
So it's the franchise and us at the brand that
think this is the right promotion,
right combination of food and price and message at the
right time.
And, and constructing a promotion is really both art and
science,
right? The art is the fun part.
What music do you use in the commercial and things
like that.
But the science is, is a chicken or steak right
now,
which one's a better has a better cost,
right? How many do we need to sell to break
even given the price,
trade off, things like that?
Are you a fan of getting rid of the tax
on tips?
So you're referring to Mr.
Trump's recommendation. So I don't know a whole lot about
it,
right? He's, he's, he's put it out there.
I haven't, I haven't studied it so I,
I can't. You got a lot of tip workers though.
They'd probably like it. We do have tipped workers.
I'm sure they would appreciate it,
but I haven't, I haven't seen what he's proposing quickly
California.
We've talked a lot about the hiking of the minimum
wage and now asking for an extra $4.00 on top
of that.
How much does that pressure you,
if at all? Yeah. So the California minimum wage was
specifically designed for for fast food,
right. And so we're adjacent to that at the moment.
So when we look at our franchisees in California,
their cost of laborers or percent of sales,
it's still about the same as before that rolled out.
So we haven't seen a direct effect at the moment,
but closely monitoring it with our franchisees.
Pop quiz. Oh, go ahead.
I know he's got an answer on this one.
Do you make your pancakes from scratch?
Oh, yeah. Don't dodge me on this one.
You know, that's a really hard question.
Brian. Let me think about it.
Yes, they're made from scratch.
All of our all of our pancakes,
our eggs are hand broken.
Everything is made to order fresh.
I like the sound of that.
Well, my pop quiz is going to say Ihopper Applebee's.
I'm Applebee's. Well, I'm IHOP now.
I'm IHOP and I now even more now that I
know it's all fresh and from scratch.
And there is fuzzy Taco in there as well.
I don't mean to leave out the thank you for
mentioning tacos.
I love all my children equally.
Of course, you have to.
Well, you have to say that unless I'm at one
of their brand conferences.
And I love that child at that all.
Yes. Yeah. Well, John, we so appreciate you being us
here with us especially too on a tough day for
the stock.
You, you're honest and we're grateful.
Thank you. Appreciate it. Good to see you.