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Edited Transcript of DIN earnings conference call or presentation 29-Apr-20 4:00pm GMT

Q1 2020 Dine Brands Global Inc Earnings Call

GLENDALE May 23, 2020 (Thomson StreetEvents) -- Edited Transcript of Dine Brands Global Inc earnings conference call or presentation Wednesday, April 29, 2020 at 4:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Jay D. Johns

Dine Brands Global, Inc. - President of IHOP

* John C. Cywinski

Dine Brands Global, Inc. - President of Applebee’s Business Unit

* Ken Diptee

Dine Brands Global, Inc. - Executive Director of IR

* Richard J. Dahl

Dine Brands Global, Inc. - Independent Chairman

* Stephen P. Joyce

Dine Brands Global, Inc. - CEO & Director

* Thomas H. Song

Dine Brands Global, Inc. - CFO & Principal Accounting Officer

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Conference Call Participants

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* Brett Saul Levy

MKM Partners LLC, Research Division - Executive Director

* Brian M. Vaccaro

Raymond James & Associates, Inc., Research Division - VP

* Jake Rowland Bartlett

SunTrust Robinson Humphrey, Inc., Research Division - Analyst

* Jeffrey Andrew Bernstein

Barclays Bank PLC, Research Division - Director & Senior Equity Research Analyst

* Nerses Setyan

Wedbush Securities Inc., Research Division - Senior VP of Equity Research & Senior Equity Analyst

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Presentation

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Ken Diptee, Dine Brands Global, Inc. - Executive Director of IR [1]

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Good morning, and welcome to Dine Brands First Quarter Conference Call. I'm joined by Richard Dahl, Chairman of the Board; Steve Joyce, CEO; Tom Song, CFO; Jay Johns, President of IHOP; and John Cywinski, President of Applebee's.

Before I turn the call over to Richard for opening remarks, 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's website.

With that, I'll turn the call over to Richard.

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Richard J. Dahl, Dine Brands Global, Inc. - Independent Chairman [2]

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Thank you, Ken. Good morning, everyone. I hope you and your family are doing well. I wish to take a moment in this call to give my thoughts.

Clearly, the primary focus of the company, the management and the Board is the crisis brought on by the coronavirus pandemic. The well-being of our guests, employees, franchisees and investors is of utmost importance and concern. I wish to assure you that the Board and management are working ever so closely to ensure that everyone's expertise is brought to this war. The Board is constantly abreast of the ever-changing situation and is participating in all the major decision-making.

I know you have read our earnings announcement. We have made some very tough decisions, and the Board is completely supportive of these actions. We appreciate and respect the strength and can-do attitude of our team members, our franchisees and our vendors, knowing that together, we will succeed. I'm very proud to be a part of this company and this team. I thank them and all of you for your support.

Now I'll turn the call over to Steve.

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Stephen P. Joyce, Dine Brands Global, Inc. - CEO & Director [3]

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Thank you, Richard. Good morning, and thank you for joining us today. Before we begin, I would like to say that I hope everyone participating on the call is safe and doing well and your families. These are truly unprecedented times. The country and our industry, as we know it, has changed drastically. The physical distancing measures and government mandates requiring restaurants to close diners while only allowing off-premise, to-go and delivery has had a significant impact on our industry as a whole.

During the unceasing challenges we faced this past month, I have been tremendously proud of the resiliency, focus and commitment of our teams, our franchisees and the thousands of restaurant team members across the country in the communities in which we serve, each of who have stepped up to work tirelessly on behalf of our company and brands during these trying times. I've truly seen the best of our people.

Our Board of Directors is actively engaged with me and the management team and is confident that we have the leadership, resources and agility to manage through these various scenarios with a steady hand and a clear path. Our response to the impact of the coronavirus is ongoing. Dine's cross-functional crisis team has been fully engaged with the authorities at all levels to obtain timely information, which has enabled us to maintain business continuity and make informed and crucial decisions related to operations across the organization as well as our company-operated restaurants.

The health and safety of our team members and guests remains our #1 priority. We have been monitoring the virus around the clock, making up-to-the-minute decisions on how best to stay safe in our work and in our restaurants while also keeping critical operations running. To our franchisees, I'm pleased to say that despite mandatory dine-in restrictions and other restrictions that mainly limited business to off-premise only, approximately 82% of our domestic restaurants remained open for to-go and delivery services at the end of the first quarter. In fact, both brands have experienced meaningful growth across these sales channels, particularly in delivery.

After transitioning to the off-premise-only model, we have seen our domestic systemwide off-premise sales grow by 71% between the week ended March 1 and the week ended April 26. Growing our off-premise business at both Applebee's and IHOP has been part of our long-term growth plans over the last 3 years. As a result, our franchisees were able to pivot to a to-go and delivery-only model with minimal operational disruptions. Technology and innovation have played important roles in our off-premise strategy. While before the pandemic, we launched several digital initiatives across both brands, including building new and enhanced ordering capabilities to make it easier for guests to order and to support the expansion of our catering business.

IHOP's off-premise platform was already strong before COVID-19. But with increased demand for takeout, we introduced curbside pickup at IHOP, which is completely new for the brand. We'll continue to leverage technology that we've already developed with guest safety in mind. When dine-in service resumes in our restaurants, we'll rapidly move to offer guests the option to use their personal device to order and pay. I am pleased to say that the performance of our off-premise business has enabled many franchisees to cover their variable costs in this reduced capacity. Tom will provide an overview of franchisee economics shortly. Both John and Jay will also provide more details on their respective brands a little later.

To help minimize the impact to franchisees significantly affected by the mandated restrictions, we have offered financial support by deferring royalty, advertising and other fees, lease payments and remodel obligations on a case-by-case basis. Please remember that these situations are very fluid so that we will continue to work closely with our franchisees on support measures and operational challenges. Additionally, we believe that the new established programs under the CARES Act have provided substantial liquidity support for those franchisees who are able to access the funding.

The crisis has created some uncertainties, and just as other brands and businesses work to manage their operations, we must do the same. To help get through this period, we had to make some incredibly hard decisions to reduce our operating costs, and this included furloughing some of our support team members. We came to this decision as the last only resort after several other efforts to reduce costs and cut nonemployee expenses over the past several weeks. We have deprioritized discretionary spending, have implemented cost savings, including a freeze on new hires and substantial reductions in contractors. We believe these tough decisions will help us get through these difficult times and emerge from this crisis in a positive position to bring back our furloughed team members as conditions improve.

We remain optimistic that dine-in in our 2 strong brands will be able to safely navigate the road ahead and look forward to welcoming our guests back into our restaurants.

With that, I'm now going to turn the call over to Tom to provide an overview of the first quarter results. Tom?

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Thomas H. Song, Dine Brands Global, Inc. - CFO & Principal Accounting Officer [4]

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Thank you, Steve. Good morning, everyone, and thank you for participating today. I hope that you're all doing well.

Our industry is certainly in uncharted territory. I'll begin by discussing how we responded to the pandemic and the steps we've taken to reinforce our financial flexibility. Last month, we drew down a total of $220 million from our revolving financing facility or variable funding note, which was issued as part of the securitization we completed in 2019. While we didn't have an immediate need for additional cash, this action was taken as a precautionary measure given the uncertainty caused by COVID-19. In doing so, we shored up our balance sheet. At the end of the first quarter of 2020, we had $395 million of cash, with $345 million being unrestricted. I'd like to highlight that this includes cash held related to IHOP advertising funds and the company's gift card programs.

Given our solid cash position, minimal CapEx requirements and asset-light business model, we believe we have strong liquidity to manage our brands and operations through the crisis. Regarding our quarterly cash needs, the company estimates its cash, general and administrative expenses to be approximately $35 million per quarter. The company has $16.4 million of quarterly interest payments on our securitization and the VFN drawdown I just mentioned. These projections exclude gross lease exposure of approximately $1.3 million per quarter on franchised restaurants that are currently closed and being monitored. Our cash G&A forecast represents a 1/3 reduction of controllable costs at Dine for the remainder of the year.

In addition, we have reduced our capital expenditures by 1/2 to approximately $6 million for the remainder of the year. Covering our securitization, we are currently paying interest only and the quarterly principal payments would only be mandatory if our leverage ratio goes above 5.25x. These quarterly payments would be $3.25 million if we exceeded that leverage. As of March 31, the leverage ratio was 4.79x.

I'd like to highlight the debt service ratio, which was 3.93x as of March 31.

Now let's turn to assistance for our franchisees. At the Dine level, we've implemented several programs to help ensure the stability of our franchisees at both brands. We're evaluating, as Steve mentioned, on a case-by-case basis, requests for royalty and advertising payment assistance, which includes deferrals of near-term payments. And specifically for IHOP franchisees, we've reviewed requests for rent and financing deferrals and engaged with landlords on behalf of some franchisees regarding rent concessions.

Switching gears briefly to franchisee economics. Our analysis has shown that unit economics under restricted off-premise-only conditions were generally consistent across both brands. Many franchisees have been able to substantially reduce costs and cover variable costs and sometimes rent with the current sales levels under the off-premise-only model, which is comprised of to-go and delivery service. This is why we've been very pleased with the aggregate number of open restaurants, which is a testament to the quality of our franchise operators we have and their impressive ability to tackle these severe conditions.

As Steve mentioned, at the end of the first quarter, 82% of our domestic system across both brands were open for business, the vast majority of which offered off-premise service only due to the state and local government restrictions on dining room service. As of April 27, 84% of our domestic system was open. This increase in openings is due to the meaningful sequential growth in both takeout and delivery sales at Applebee's and IHOP in April compared to the first quarter of 2020. John and Jay will provide more details on our off-premise operations.

Now I'll briefly recap our first quarter financial results. Adjusted EPS for the first quarter of 2020 was $1.45 compared to $1.90 for the first quarter of last year. The decline was due to the lower gross profit as a result of significant decrease in guest traffic as these state and local government restrictions were implemented on dine-in service and mandated stay-at-home orders.

Regarding our G&A, we continue to drive year-over-year improvement in G&A. For the first quarter of 2019, G&A was $37.5 million compared to $42.5 million for the same period of 2019. The decrease was mainly due to lower compensation expenses and a decline in cost of research and professional services.

Turning to our tax rate. Our GAAP effective tax rate was 23.2% for the first quarter of 2020, which was essentially flat to the 23.1% for the same period of 2019. And with respect to our cash flows, for the first quarter of 2020, cash from operations increased to $29.6 million from $28.9 million for the first quarter of last year. We're very pleased with the fact that despite the challenging start to this crisis in March, our adjusted free cash flow was relatively stable at $27.5 million for the first quarter of 2020, compared to the same period of 2019.

Adjusted EBITDA for the first quarter of 2020 was $61.7 million compared to $74.7 million last year. Regarding capital allocation. As disclosed last month, due to the uncertainty caused by COVID-19 and the need to take precautionary measures, the company has terminated all outstanding orders for repurchases of its common stock in the open market for the foreseeable future. Our Board of Directors has also suspended our cash dividends. We will reevaluate our capital allocation strategy as industry conditions improve and normal restaurant operations resume. At this time, we are not updating our guidance beyond my previous comments related to our expected expenses, but we anticipate that we will revisit this as restrictions are lifted.

With that, I'll now turn the call over to John.

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John C. Cywinski, Dine Brands Global, Inc. - President of Applebee’s Business Unit [5]

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Thanks, Tom, and hello, everyone. My objective here today is to share as much detail as possible as to the current state of the Applebee's business.

For context, let's start with Q1 performance before the crisis emerged. As outlined in the release, Applebee's had tremendous momentum prior to various government restrictions placed upon restaurants. Comp sales results through the week ending March 8 were positive 3.2%, growing a positive 1.4% from the same time frame a year ago. In total, Applebee's posted 10 consecutive weeks of positive comp sales to start the year and meaningfully outperformed the casual dining category before the downturn began the week ending March 15. This downturn, along with local dining restrictions, led franchisees to quickly shift to the off-premise business model we have today. And given the uncertainty at the time, franchisees temporarily closed 251 of our 1,657 domestic restaurants in mid-March. Now the good news here is the number of temporarily closed restaurants is getting smaller with each passing day as franchisees reopen their off-premise operations. At present, approximately 175 domestic locations remain closed, and we expect that number to become even smaller over the next 10 days. In total, we have about 1,482 Applebee's restaurants open for off-premise business, and we anticipate all of these restaurants as well as most of our temporarily closed restaurants to reopen their dining rooms once the local municipalities provide the green light.

Now I'd like to share comp sales detail from the point in time the crisis emerged through this past week. After being up 3.2% year-to-date through March 8, we progressed from minus 15.8% the week ending March 15 to minus 76.0% the week ending March 22 to minus 80.6% the week ending March 29, with this representing our lowest point of demand since the crisis began. April comp sales were minus 72.6% -- minus 76.2% the week ending April 5 and minus 76.5% the week ending April 12. But it's important to note here that 838 restaurants were closed on Easter Sunday, making this a very tough week to read. Our comp sales then improved to minus 64.9% the week ending April 19 and minus 64.4% the week ending April 26, representing our best performance yet, as I believe we all benefited from stimulus checks arriving across the country over the same time frame.

For additional geographic context, system sales ranged from minus 70% to minus 80% in California and Texas to minus 50% to minus 60% in the Midwest and Northeast over the past 2 weeks. So in total, Applebee's is currently capturing approximately 35% of last year's average restaurant volume, again, depending upon the geography. From an absolute dollar perspective, Applebee's average weekly off-premise sales have now almost tripled from about $6,500 per restaurant at the start of Q1 to approximately $17,700 this past week, keeping in mind our average restaurant volume of approximately $2.4 million at the end of 2019. Interestingly, Carside To-Go has moved from 70% of mix in mid-March to 76% currently, with delivery representing the balance at 24% of mix. While in this off-premise mode, all restaurants are operating obviously with a very small team, reduced hours and a limited core menu to ensure operational excellence. I'm also pleased that our franchise partners are reporting that they've successfully retained the restaurant management teams, which will help us significantly with the reopening of dining rooms.

Now I'd like to shift gears and frame our actions from a marketing perspective. Effective March 18, we chose to discontinue all Applebee's national media spending, and we've remained on hiatus throughout the crisis. The only modest activity currently taking place is through our own postings on Twitter, Facebook and Instagram as well as our database activation, and of course, local restaurants signage to make our guests aware that we're indeed open for takeout and delivery. In addition, we successfully canceled 100% of our Q2 media commitments, although we certainly have access to media inventory once we decide to reintroduce national marketing.

As I review the past several weeks, it's clear to me that our guests are favoring Carside To-Go over third-party delivery, in part because they trust the Applebee's brand, they can pick it up themselves, and they don't have to worry about additional third-party handling. Plus after a bit of prolonged cabin fever, I believe our guests really enjoy getting out of their homes and hopping in their cars for a little indulge and escape to their neighborhood Applebee's. We're seeing this across the country.

I'm also pleased to report that our first dining room reopenings occurred this week, Monday and Tuesday, in Georgia and Tennessee, in accordance with local regulations and in strict adherence to safety, sanitation and social distancing parameters as well as our new service protocols. As of this call, we're employing best practice learning before we begin a smart, measured and sequenced expansion in Texas, Oklahoma, Iowa, Utah, Alaska, North Dakota, Montana, Missouri. And as of this morning, it appears Nebraska will be opening up as well with other geographies to be determined. It's certainly conceivable, we have more than 200 full-service restaurants open next week, including dining rooms, with a cascade of additional restaurants to follow, contingent, of course, upon guidance from state and local governments. It's my expectation that our off-premise business will remain robust and continue to play a critically important role in the lives of our guests moving forward.

I should also note that our supply chain remains in very good shape and is poised to satisfy demand throughout this rolling cascade of openings.

A quick note on franchisee engagement in this environment. We initiated interactive town hall calls beginning in mid-March for all franchisee leadership as well as the entire Applebee's team. This cascade of communication and connection has proven invaluable as our primary means of real-time engagement, strategy and alignment. In total, we've held 17 of these calls over the past 6 weeks.

Finally, I'd like to take a moment here to thank our franchise partners as well as our very talented Applebee's and Dine teams for the remarkable resilience, perseverance and certainly entrepreneurial spirit throughout this crisis. It's my personal experience that these leaders are often at their best in tough times. We've become even more unified and determined as a result of this adversity, and I'm confident we'll come out stronger than ever and sooner than most folks expect.

With that, I'll turn it to Jay.

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Jay D. Johns, Dine Brands Global, Inc. - President of IHOP [6]

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Thank you, John. Good morning, everyone. I hope you're all doing well and staying safe during these tough times.

IHOP's first quarter performance was significantly impacted by the effects of COVID-19 and mandated restrictions on restaurant operations as other restaurant companies have also disclosed. IHOP's comp sales declined 14.7% in the first quarter as traffic fell sharply in March, due in part to restrictions on dine-in service, state-wide mandates for our guests to stay home and temporary restaurant closures.

Since the beginning of the second quarter, we started to see consistent improvement in April's weekly sales. For the week ending April 5, sales were down 81.5%. By the week ending April 26, sales were down 75.4%, an improvement of 600 basis points. As restrictions on dine-in service and state-wide mandates were implemented, we were able to pivot quickly. I do want to recognize and thank the countless team members, franchisees and the restaurant teams who continue to work tirelessly to adapt to this ever-changing landscape.

The brand remained nimble and shifted to an off-premise-only model over just a few weeks based on state-by-state implementations of stay-at-home protocols. Additionally, to meet the convenience needs of our guests and to support safe distancing practices and ultimately do our part to help flatten the curve, we rapidly developed curbside pickup in over 1,000 domestic restaurants. This new option for guests is performing very well, and we're pleased with the results. In fact, curbside pickup doubled to 6.3% as a percentage of total off-premise sales for the week ending April 5 compared to the prior week. We continue to see the progressive growth increasing to 7.2% of off-premise sales the week of April 12 and 8% for the week ending April 19.

Most of our domestic restaurants remained open and operate under this off-premise-only model. In doing so, we're able to help the communities in which we serve by providing guests with that brief respite from being indoors to come pick up a great meal or having the convenience of that delivery right to their door. In fact, delivery sales for the first quarter of 2020 increased 57% compared to the first quarter of 2019 and now account for 39% of total off-premise sales.

The restrictions on dine-in occasions were partially offset by the continued healthy growth in our off-premise business in the first quarter, which was driven by an even mix of traffic and check. Off-premise accounted for 13% of sales in Q1, an increase of approximately 200 basis points compared to the fourth quarter of 2019. We may have fundamentally reset consumer awareness of not just our to-go and delivery capabilities, but also how portable our food is as the guests are becoming increasingly familiar with our off-premise platform. Approximately 80% of our domestic restaurants remained open at the end of the quarter, primarily for off-premise service only with a few exceptions. As of this week, approximately 79% of our domestic restaurants remained open.

Looking at the road ahead. Our goal is to return to a sense of normalcy and to resume full-service operations when, first and foremost, it is safe to do so. At the onset of the pandemic, the IHOP management team acted swiftly, and we have remained fully engaged working with -- around the clock with our Dine Brands' cross-functional team and IHOP's internal teams, our franchise leadership council, our franchisees and our supplier partners as we've implemented our crisis plans. Our immediate actions remain focused on stabilizing the business, and this is 80% operations focused with 2 main goals, keeping our team and guests safe and making restaurants easier and more cost-effective to run under these unique conditions. In parallel to these immediate operational stabilization efforts, we're also planning on relaunching the brand when current conditions subside.

From an operations standpoint, we understand the restaurant industry will be impacted significantly coming out of this, and the guest experience will be different. We know it will not be business as usual pre-COVID-19. And going forward, more than that it will be top of mind with our guests, and we're taking this into consideration when our restaurants reopen. We believe that personal safety is now up there with value and craveability. At IHOP, this means going beyond standard operating procedures and mandates to include moreover clues of cleanliness. In our view, guests will have a higher level of scrutiny than ever before. Restaurants who'd offer the most reassurance will win when they reopen.

I'm pleased to say that we have alignment with IHOP's franchisees on what an open-for-business strategy is. We want to safely drive traffic back into our restaurants as soon as we can. Operational actions that we've implemented include training in coronavirus protocol to ensure proactive and reactive measures if a team member is suspected of being exposed or confirmed of COVID-19, providing team members with CDC-recommended guidelines for facial coverings and implementation of social distancing standards that follow CDC-recommended guidelines. With nearly 1,400 restaurants -- were opened -- more than 1,400 restaurants were opened primarily for to-go and delivery and as a means to serve our guests, we developed a comprehensive guide for our franchisees to use to prepare their restaurants to welcome guests back to dine-in at their favorite IHOP locations as the states start to shift the stay-at-home mandates. Some of our key relaunch tactics include this development and rollout of curbside pickup to provide a means for guests to have significantly less guest exposure with team members. We're also implementing changes in the dining room, such as not having items on the table until the guests arrive. These changes are being made with the safety of our guests and team members in mind.

To wrap up, while we're currently faced with industry challenges, we have a strategy in place for the path forward. We believe the strength and appeal of IHOP will remain intact as guest demand ramps up once again.

With that, I will turn the call back over to Steve for closing comments. Steve?

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Stephen P. Joyce, Dine Brands Global, Inc. - CEO & Director [7]

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Thanks, Jay. To close, these are difficult times, unprecedented. I strongly believe, though, that Dine's fundamentals remain strong. We will continue to execute against our strategy and manage the business with a long-term view. In doing so, I have full confidence we will get through this together.

Now we'd be pleased to open the call for any questions you may have. Operator?

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Questions and Answers

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Operator [1]

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(Operator Instructions) Our first question is from Jake Bartlett with SunTrust.

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Jake Rowland Bartlett, SunTrust Robinson Humphrey, Inc., Research Division - Analyst [2]

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My first one is on the health of the franchisees, and 2 parts to that. I think it's a -- the more biggest kind of unknowns that investors are facing, I think, a really key concern. So one question is, could you give us any insight as to the level of leverage within the franchise system, any kind of broad indication would be helpful? And then the second part of that question is, you mentioned that franchisees are generally able to cover their variable costs at these levels. But could you give a -- including fixed costs at the restaurant level, what sales level or what sales decrease from normal is breakeven at the unit level, including variable and fixed costs?

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Stephen P. Joyce, Dine Brands Global, Inc. - CEO & Director [3]

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Yes. So obviously, leverage levels are shifting. However, having said that, what I've asked Tom to do is kind of give you some insight into 4-wall profitability and how we look at that at various revenue levels. So Tom, do you want to walk him through that?

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Thomas H. Song, Dine Brands Global, Inc. - CFO & Principal Accounting Officer [4]

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Yes. Normally, across both brands, Jake, our restaurants do about 6,000 to 7,000 of sales per day. Again, there's a lot of variability, but that tends to be kind of the average between the 2 brands. So what we noticed is that in extreme stress level, around $700 per day, we noticed that a lot of restaurants will make it -- it's worthwhile for them to keep their doors open for off-premise with a skeleton crew. But having said that, what we're now seeing is more in the neighborhood of $2,000 to $3,000 of sales per day. And what that starts to do is, on the lower end of that spectrum, it starts to cover variable costs and rent. At the higher end of the spectrum, it starts to cover variable costs and more of your fixed costs. And so that $3,000 per day level equates to about $1.1 million of AUV per year.

And if you listen to kind of our view on franchisee financial health, that is a sustenance level that, on the lower end, supports an open restaurant.

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Jake Rowland Bartlett, SunTrust Robinson Humphrey, Inc., Research Division - Analyst [5]

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Got it. That's really helpful. And then I had a question really about the difference between the performance of IHOP and Applebee's. And IHOP had a fairly robust off-premise business as well kind of going into this, but the performance has been -- sales have fallen more, and then there hasn't been as much of an increase since the kind of the trough. Maybe if you could just discuss some of the reasons for that and whether it's just particularly exposure to breakfasts? Or really anything else that's going on that we should be aware of?

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Stephen P. Joyce, Dine Brands Global, Inc. - CEO & Director [6]

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Yes. So I'm going to ask Jay to fill this in. Obviously, pre-crisis, Applebee's, who started earlier on bringing Carside To-Go back, had a lift up over where IHOP was. IHOP's business, though, has been growing rapidly and has seen really great growth through this crisis. Jay, do you want to talk a little bit in detail?

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Jay D. Johns, Dine Brands Global, Inc. - President of IHOP [7]

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Yes. I think that we have seen great results on growth of this, initially, pattern's very similar to what John saw from a trajectory standpoint. We initially went way down, but then immediately started gaining week after week consistently for weeks as we implemented protocols in all the restaurants. We rolled out curbside without much marketing, really just local marketing and the e-mail clubs and things like that to get people to know about it. And as they experience, obviously, it's -- word of mouth is starting to happen and people are learning about it. So we're growing rapidly, and we're really pleased with the trajectory. I think a couple of things to remember when you compare the 2 brands is Applebee's has a much longer runway of how long they've been doing off-premise and carside for a decade practically. And just in the last 2 or 3 years when we've really started ramping up on the IHOP side. So I think there's a little bit of an advantage from that.

And I do think to your point about breakfast, we feel there probably is a difference in what the guests are using the meals for. They're not working, they're at offices, they're staying at home. So sometimes that stopping on the way to work to get breakfast, et cetera, that meal is now gone. It's a very easy meal for parents that are busy working at home, watching the kids to give them cereal or toaster pastries, et cetera. So it's an easy meal to replace yourself if you're doing your own cooking now. So that probably has a little bit of impact. Home meal replacement, if you're only going to order out one time a day, the places that are doing dinner replacement are -- look like they're winning more than some of the others. So I think there's a little bit of all of that right now that's probably causing a difference between the 2 brands.

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Operator [8]

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(Operator Instructions) Our next question is from Nick Setyan with Wedbush.

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Nerses Setyan, Wedbush Securities Inc., Research Division - Senior VP of Equity Research & Senior Equity Analyst [9]

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One clarification. The comp calculation, does that include the closures? And then the question is, as these stores open up, both IHOP and Applebee's, how are you thinking about the in-dining sort of incremental margins? Do we see maybe cash flows turn a little bit more negative as you staff up again before the sales come up -- come back? What percentage of sales, given the capacity constraints early on, can we think about sort of breakeven within the dining room as opposed to sort of the difference between dining room and then the off-premise-only model? Are we seeing issues kind of hiring labor, given sort of the benefits, versus wage rates that everyone has been talking about in the background? Could you just address some of those things, that would be very much appreciated.

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Stephen P. Joyce, Dine Brands Global, Inc. - CEO & Director [10]

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Yes. So let me lead off, and then why don't you talk a little bit about where we think profitability goes. So first of all, our approach is pretty uniform across both brands and across not only the restaurants we operate but the ones our franchisees operate. And so the way that we're seeing the path forward is one in which we're reopening restaurants. And literally, we opened -- we've got restaurants open for 2 days. And so -- but the interesting thing is people came in and ate in the restaurant and had drinks and ate pancakes. And so -- and we're obviously not going to share numbers because they wouldn't mean anything at this point. But I can tell you, our team members were happy to be back. There was a lot of people that we're glad to be back at work, I think. And so I think, over time, the way we're going to do it, and we're sure that the franchisees are going to do the same thing, is they are going to add staff.

Now there's a certain number that you need to open a restaurant. So that is -- there's a limited fix. But remember, we're going with a lot of managers because we kept a lot of the managers around. So they'll be doing what normally would be considered some hourly work, and so there'll be a combination of that. And the goal is to add staff back as you have the revenues to support it. And so what we don't know, because we've just started, is how many people are interested in coming into restaurants at this point where it's allowed by the municipality and what that number will look like.

Clearly, our hope is that we remain at elevated off-premise levels, and that begins to be added to incrementally with in-restaurant sales, and that those in-restaurant sales are adding profitability to the overall component, so that we're going from a point where on -- and I think for most of our franchisees, this is true, and for us, it's true, is that, look, we were covering fixed costs, and we were covering -- I'm sorry, we were recovering variable costs and we're covering some of our fixed costs at the levels we're at. As we add back restaurant sales, we believe we'll continue to cover variable costs, but then also begin covering more of the fixed costs. And Tom laid out sort of the levels at which we think you can probably start covering your lease. And so what we don't have a lot of visibility into and we're going to try to stay to what we know because I think speculation at this point is not very valuable.

And so what we'll learn over the next month is, at this point in the crisis, how many people are comfortable coming into the restaurant. We are going above and beyond to demonstrate visibly and in reality safety in the restaurants. So we have made a number of changes that you would expect us to make. So gloves and masks everywhere, nothing on the table, everything comes from the kitchen, everything is wiped down in between stays, spacing in the restaurants, all the things that people were mentioning earlier. So I think what we'll learn over the next month is, okay, at this point in the crisis, there is a certain number of the population that wants to come out and eat at restaurants and there's a certain part of the population that want to continue to pick it up. And so -- and then our expectation obviously is that shifts over time. But we do not have any insight into how quickly it shifts and how sentiment changes and how soon we get back to a relatively normalized level in the restaurant, and we're preparing for all of it. Whether it comes back quickly or whether it comes back a little slower, we're going to try to manage our costs, and our franchisees are doing the same to measuredly bring back costs commensurate with revenues being generated as a result of the reopening of the bulk of these restaurants. And so, Tom, do you want to talk a little bit about sort of how we're viewing those incremental sales and the profitability?

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Thomas H. Song, Dine Brands Global, Inc. - CFO & Principal Accounting Officer [11]

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Yes. I will, Steve. Let me -- Nick, good question on closures. If a restaurant was closed for the duration of the week, then obviously it's not included in comps. But another way to think about it is if the restaurant had sales during the week, either in the prior period or this period, it is included in the comp. So in this type of changing environment as you had some closures that happened as we're reporting these comps, I think it's a little bit more conservative the way we did it. We didn't exclude those restaurants. And so hopefully, that answers your question on closures. The second question on the incremental margins, I think Steve went through it pretty thoroughly. But another way to think about it is the point he made that the way these restaurants are staffed currently is a bit heavier on the managers, and so that is a lot of your fixed cost. So when you bring back staff, and again, we're still in the early phases of bringing back staff, but that staff is, for the most part, highly variable; as is food costs.

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John C. Cywinski, Dine Brands Global, Inc. - President of Applebee’s Business Unit [12]

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And Nick, this is John. I just -- very specifically, and keep in mind, as Steve said, 2 days of data here. But from Georgia and Tennessee, we'll call it, a sample size of about 60-ish restaurants, all of our dine-in business during those 2 days versus the week prior is incremental. Said differently, our off-premise business didn't take a hit when we opened up our dining rooms. And our team members, perhaps surprisingly, are very enthusiastic about coming back, having not had any issues whatsoever on that front.

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Stephen P. Joyce, Dine Brands Global, Inc. - CEO & Director [13]

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So one other thought -- your question about bringing employees back. We -- our employees were not laid off. They were furloughed. And so in the case where a lot of these folks, they have -- a lot of our franchisees have long time tenured employees, and in general, we think lower turnover than the industry. And so a lot of these organizations have been around for a long time. Clearly, the programs that are out there to help people will change some of the employment picture. And we will have to see whether or not as business levels build, whether or not we have challenges bringing folks back. Our expectation is -- and it's been obviously a topic of conversation, but our expectation is we think we're going to be able to add people back as we need to based on those revenue levels. And that there's a significant amount of our folks that we think want to come back to work. And so we'll see how that plays out. But actually, I think that clearly is something we're monitoring, but our sense is that we will, over time, gradually build back to a higher -- obviously, a higher level of reemployment, all the folks. And -- but I think our general sense is that we will be able to add those folks as we need them based on revenue levels.

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Operator [14]

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Our next question is from Brian Vaccaro with Raymond James.

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Brian M. Vaccaro, Raymond James & Associates, Inc., Research Division - VP [15]

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I wanted to just circle back to your earlier comments on daily sales volumes, sort of necessary to cover the variable and fixed cost. And my phone was glitching, so I apologize, but I think you said the upper end of the sort of $2,000 to $3,000 a day range. And my question is, does that materially differ between the 2 brands? And I guess I ask it in the context of current sales volumes. I think some quick back of the envelope math would suggest current sales volumes at IHOP are in the low 1s and Applebee's is sort of in the low 2s. And just trying to understand what type of sales improvement you need to see from current levels to stabilize store-level EBITDA at the franchisee?

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Thomas H. Song, Dine Brands Global, Inc. - CFO & Principal Accounting Officer [16]

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Yes. So I was speaking to both brands, Brian. And you just got to keep in mind, you have a huge variability when it comes to sales results. And so it's -- so what I'm trying to speak to is the average in the system. We're seeing some good evidence that, in particular, on the Applebee's side, there are folks that are able to get to the higher end of that range. And as you noted on the IHOP side, they're starting out with lower sales volumes to start with anyway. So -- but we feel pretty good that the best indicator of sustainability is an open restaurant, and we're trying to encourage and help our franchisees, obviously, keep as many restaurants open as possible.

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Brian M. Vaccaro, Raymond James & Associates, Inc., Research Division - VP [17]

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Okay. And I guess, switching gears a little bit to the franchisee relief that the company has provided, and I understand it's a fluid dynamic. But could you drill down a little further on, say, what percentage of franchisees may have received relief, whether it be royalty relief, the ad fund or rent relief on the IHOP side? And maybe as part of that, just to make sure everyone's on the same page, Tom, could you review any differences in booked revenue versus cash collections that occurred in Q1 or what you might expect in the coming months until business conditions normalize?

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Stephen P. Joyce, Dine Brands Global, Inc. - CEO & Director [18]

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Yes. So let me take the first part of that. I think it's fair to say when it's all said and done, and we're still working through this with the franchisees, but when it's all said and done, most of the franchisees are going to get some level of relief from us through deferral of, as Tom mentioned, in a lot of cases, it would be, obviously, royalties and ad fund, but then other fees as well. So -- and I think we have looked at a 60-day deferral and then a payback period to come subsequent to that with a little bit of grace in there. And so we're still working through that with documenting it and pulling it all together as a program. But in general, I think when it's all said and done, most of the franchisees are going to be part of that program, and that's the assistance we've provided them to date. And we'll look at, as that goes through, where franchisees are. And then as we've done in the past, we'll work with individual companies to see what needs -- what, if anything, needs to be done to help assist them reopening their restaurants. It's interesting, we talk to the franchisees, though, and we are doing it daily. There's a fair amount of -- we're going to get through this with the franchisees. They're not -- you're not hearing a lot of gloom and doom from our core group of folks. And they are positioning themselves for reopening. They are preparing to get back to normalized levels at some point, both employment and at revenues. And so -- and they're actually looking forward to things kind of coming back. And so I think there's a lot of obviously uncertainties still remaining as to how long this -- how long it lasts and what's consumer sentiment about dining in restaurants and a lot of the things that need to be experienced over the next month or 2 as we start seeing what patterns emerge. But I think that -- I think for the most part, I think our sense is, you know what, I know people are tired of being at home, so I think people are going to want to start venturing out more and how many people feel good about coming out.

We're doing everything we can so that people view our brands as protecting their safety. And that -- so for example, all the serve containers are gone from the tables at IHOP, right? So that's coming out in individual containers for the foreseeable future, so people know that no one's touched anything that they're touching. And so everything's coming straight from the kitchen, fewer people handling. We're hoping to move rapidly to -- you can even pay on your own device, so you're not pushing other buttons. And so there's a lot of things that we're going to do to try to reinforce the fact that we're doing everything we possibly can to make this a safe and great experience. And as we get the restaurants open, we will want to jump-start some of the restaurant business by starting to go back into doing some advertising and marketing. And we'll work through with franchisees, how to advance spend, but then collect it back. And so we're expecting to be able to sort of begin to tell a new story that opens, one that -- we're obviously doing everything we can to protect your safety, but here's a great offer for you to come into the restaurant. And so we're going to continue to work along those lines. Tom, do you want to...

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Thomas H. Song, Dine Brands Global, Inc. - CFO & Principal Accounting Officer [19]

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Brian, do you want any more details on the franchise relief program we've offered?

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Brian M. Vaccaro, Raymond James & Associates, Inc., Research Division - VP [20]

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I'm sorry, what was that, Tom?

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Thomas H. Song, Dine Brands Global, Inc. - CFO & Principal Accounting Officer [21]

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Do you want more details on the franchise relief program we offered?

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Brian M. Vaccaro, Raymond James & Associates, Inc., Research Division - VP [22]

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Yes. And just were there -- was there any deferral of royalties in the first quarter? I mean, looking at the financials, thinking about booked versus cash collections, and if you could walk us through some of the more meaningful...

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Thomas H. Song, Dine Brands Global, Inc. - CFO & Principal Accounting Officer [23]

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Yes. So really, it started in March because that's when the impact really hit our franchisees. And so the way to think about it is some portion of March between the 2 brands is subject to deferral. April is subject to deferral. And just again, there's differences in payment timings between the 2 brands. And so one start -- one has subject royalties and fees that are offset a little bit by a couple of weeks. And so -- but for the most part, it is March and April. And the deferral period is fairly substantial with the payment spread out over an extended period of time. When we benchmark this, Brian, against other franchisors in the restaurant industry, we found it to be one of the best programs being offered. And so we realized that our -- the impact on our franchisees was greater due to the dine-in restrictions, and so we wanted to get out there with a good program to start with.

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Operator [24]

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Our next question is from Jeffrey Bernstein with Barclays.

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Jeffrey Andrew Bernstein, Barclays Bank PLC, Research Division - Director & Senior Equity Research Analyst [25]

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I had two questions. Just one, as I think about specifically the Applebee's system and the comps we're seeing, and we appreciate the week-to-week color. It looks like the recovery, while it has progressed, it seems like it might be slower than peers. I'm just wondering as you think about Applebee's most recently comping down 65% or so. I know there are some peers that are comping down 40% to 50%, and therefore, perhaps have progressed a little bit more quickly. I'm wondering if there's any differences between brands or differences between initiatives that you guys have pushed versus peers or perhaps you're being more conservative in terms of what you're offering? Just trying to get your feel for the pace of the recovery and whether you think the stimulus or tax refund benefit to comp was significant or was more modest? And then I had one follow-up.

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Stephen P. Joyce, Dine Brands Global, Inc. - CEO & Director [26]

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Sure. So let me start, then I'll ask Jay and John to comment individually. So I think in general, we're looking at our peer groups. I would say that we would highlight the difference between some of their performance and ours based on marketing spend. So they stayed on the airwaves longer than we did. As we looked at whether or not we felt that the spending would justify the incremental revenue, our sense was we're better off waiting and then having strong campaigns as people are coming back and the restaurants open. So that -- so our sense is, yes, we might have some individual competitor brands that are doing somewhat better than us, but we're kind of thinking that's going to be eradicated as we go forward and begin to market again to folks. And I think we're quite pleased with the growth of what we've gotten off-premise, and our hope is that we hold that level of business and add to it on a highly incremental basis, the restaurant business -- in-restaurant business back. So John or Jay, thoughts?

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John C. Cywinski, Dine Brands Global, Inc. - President of Applebee’s Business Unit [27]

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Sure, Steve. I think, Jeff, Steve hit the primary point. The difference in strategy during this hiatus, the 18th, the Applebee's brand went off-air and discontinued all marketing. I think that's the primary point. Number two, a couple of those brands you are referencing public company, predominantly company-owned, start with a higher percentage off-premise mix to begin with. So when you're looking at kind of off-premise sales versus year ago full sales, you'll see a delta there to start with, a larger base, if you will. And then a couple of those brands are very heavily reliant upon delivery and have been aggressively marketing and offering free delivery throughout this crisis. So I think those would be probably the 3 variables that would specifically address the question you're asking.

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Jay D. Johns, Dine Brands Global, Inc. - President of IHOP [28]

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Yes. I think from IHOP's side, very similar to what they both said is, we immediately did 2 weeks -- we pulled our regular campaign when we were doing it. We immediately went to 2 weeks of off-premise campaign, knowing that we were newer to the off-premise game than some of the other people we were competing against. So we wanted to seed that message. So we did that for a couple of weeks, and then we shut down all the rest of the marketing outside to just some basic local marketing to save our money for later for relaunch. So very similar tactic.

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Stephen P. Joyce, Dine Brands Global, Inc. - CEO & Director [29]

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Yes. I think the other thing that -- as we entered into the crisis, the thing that's really disappointing is Applebee's was having an amazing quarter. IHOP was doing just fine, and Applebee's was just blowing and going. And it felt like, oh, great, now we're on the formula like we said we were going to. We're back executing against what we're going to do. And here we go, another 18. And that worked really great right out to about St. Patty's Day. And then the -- kind of the air came out of the tire. So we're actually hoping that when we get back into this and that there -- we're obviously hoping that consumers get comfortable coming into restaurants more quickly than not. And I've seen a dozen prognostications, none of which match anything. So we're not going to get into speculating because that's all it is at this point. But let me tell you something. We were having a hell of a quarter. So it's just a shame that this happened when it did. And I think that gives us confidence going forward that when we reopen, if we just keep doing what we're supposed to be doing, we'll do just fine.

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John C. Cywinski, Dine Brands Global, Inc. - President of Applebee’s Business Unit [30]

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It's very aligned. The Applebee's franchise group right now is very aligned. And look, these calls we have, one of the benefits is the restaurants that just opened in Georgia and Tennessee. We were on a 2-hour call yesterday, and those geographies that open up next, we'll be on a call on Friday going into the weekend. We're sharing best practices and nuanced detail around what to expect from the time a guest pulls out of the lot. And so the collaboration across these 30-or-so franchise groups, and the same can be said for IHOP, is tremendous.

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Jeffrey Andrew Bernstein, Barclays Bank PLC, Research Division - Director & Senior Equity Research Analyst [31]

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And to clarify, Tom, I know you were asked earlier about the stores that are closed. And obviously, comps could be distorted if you're factoring in a large number of stores comping down 100% presumably. But just to clarify, I thought your comment was that if the store is closed for the week, it's excluded from the comp base. Is that right?

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Thomas H. Song, Dine Brands Global, Inc. - CFO & Principal Accounting Officer [32]

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No. So if it's closed for the entire week, it's excluded. But if it did record sales for the week, it is included for those days.

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Stephen P. Joyce, Dine Brands Global, Inc. - CEO & Director [33]

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As an example, that Easter week, just shy of 850 Applebee's restaurants closed on that day. That's in the comp number. And it's a far larger number than was in the comp number a year ago, and that's why that's a tough week.

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Thomas H. Song, Dine Brands Global, Inc. - CFO & Principal Accounting Officer [34]

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It's a good question to ask all the folks that we get a good apples-to-apples comparison of how they're treating their comps.

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Jeffrey Andrew Bernstein, Barclays Bank PLC, Research Division - Director & Senior Equity Research Analyst [35]

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Yes. And my other question was just -- Tom, I was just wondering in terms of sensitivity as we are still early in calendar 2020, can you give a frame of reference in terms of annual benefit to earnings or contribution to earnings from however you look at it, whether it's a point of comp or from a margin perspective? Just trying to -- as we think about modeling out 2020 and 2021, a sensitivity or a framework as your comps do recover over coming months and quarters?

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Thomas H. Song, Dine Brands Global, Inc. - CFO & Principal Accounting Officer [36]

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Yes. I think it's still a little too early to say in general. So for comps, you can still use our prior guidelines. But for -- with respect to guidance, as I mentioned before, we're sticking to cost guidance for now.

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Stephen P. Joyce, Dine Brands Global, Inc. - CEO & Director [37]

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Yes. Because our sense -- I know it's frustrating, but our sense is there's so many variables that could impact the recovery that we're going to have to make so many assumptions to even -- that it becomes sort of a speculative exercise, and I don't think that provides value. I think if you have a view as to how the recovery occurs, I think what you should assume is our guidance would be we would run versus our competition and versus previous based on the variables that you think that's going to happen. If you think that the customers are going to come rushing back, and we're going to have full restaurants in the fall, which would be great, by the way, then our numbers will be very different if you think it's a gradual slow build into '21 before you kind of get back to relatively normalized levels. And I'm sure you have, just as I've seen, I've seen all of those as forecast. So the idea of trying to thread the needle with 15 different assumptions, all of which are too early to really have insight to, we just don't think adds a lot of value.

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Operator [38]

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Our next question is from Brett Levy with MKM Partners.

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Brett Saul Levy, MKM Partners LLC, Research Division - Executive Director [39]

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If I could just ask you a little bit of -- I guess, taking Jake's question from a different perspective, and also just how you're thinking about when it's appropriate to spend at the corporate level and just the incremental costs that the franchisees are seeing. If you think of it this way, you've obviously talked about some deferrals and easing the pressure right now as sales are slowing, but you're also going to get to a point where there could be more off-premise impacting margins. There's going to be more incremental cost. There's a lot -- there's the potential for incremental cost on the labor front for restaurants as they try to marry sales and the algorithm. How are you thinking about additional aid or relief or reduced stress on your franchisees as they start to see these incremental costs hitting their P&L after going through a period where they face challenges? And then I'll ask the question on corporate.

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Stephen P. Joyce, Dine Brands Global, Inc. - CEO & Director [40]

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All right. So on a gross picture, we think we've provided the assistance to the franchisees that's required at this point, and we have no plans to do anything else. Obviously, as we've done in the past, we'll work with individual franchisees if there are specific situations that we can help and that makes sense, then we would obviously continue to do that. Tom, do you want to talk a little bit about the cost picture from a variable...

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Thomas H. Song, Dine Brands Global, Inc. - CFO & Principal Accounting Officer [41]

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Yes. The second part of your question, Brett, was on the corporate side, right? And so we've laid out what our cash -- quarterly cash, G&A, represents -- represented actually quite a reduction. We would like -- right now, we're focused on supporting the franchisees with, for example, technology initiatives related to off-premise. And as we see a better sign of the trajectory of the reopenings, and we're going to continue to bring back not only our furloughed staff as we find that demand, but also we'll be ramping back up some of our corporate investments. But for now, the numbers I cited are the run rate that we plan on.

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Stephen P. Joyce, Dine Brands Global, Inc. - CEO & Director [42]

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But let's be clear, the ramp-up of those costs and bringing back furloughed team members will be commensurate with the revenues that we're generating and collecting. So there is not an expectation that we've got a big upfront spend that we've got to do that will predate the revenues. So our sense is to balance between good cost management and working with what we've got. We've got a strong framework of teammates still on board. They are able to help with a lot of what needs to be done to reopen the restaurants. We'll -- obviously, as we reopen more, we'll bring more staff back, but we're going to do it in a way that we think matches revenue with cost. And so we're not expecting to see a big spike in cost without revenues and collections offsetting that.

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Brett Saul Levy, MKM Partners LLC, Research Division - Executive Director [43]

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Great. And if I could just ask one more question about the franchise community. Have you gotten a sense that there could be some movement within the structure, either franchisees looking to get out of the system or franchisees not being able to stay head above water after this? And how would you think about that, either bringing them back into the fold like you did with the Applebee's system or either consolidation within the system or from outside the system?

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Stephen P. Joyce, Dine Brands Global, Inc. - CEO & Director [44]

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Well -- so clearly, our goal is to retain as many of our restaurants as we possibly can. This obviously is -- has the potential to create some change. We have all of that at our disposal, and we will continue to do that. We have the ability to bring those restaurants in-house. We have the ability to bring in new ownership for those restaurants. And so at this point, we're carefully working with all the franchisees. We're monitoring carefully where they are from liquidity standpoints and in matching with their cost structures and their debt. And so the good news is we've been doing this for quite some time. So we're actually in a good place with our franchisees about working and sharing data back and forth so that we can help. And in some cases, it'll be assistance on an individual basis to certain franchisees. In some cases, it may mean us taking over. In some cases, it may mean us facilitating restaurants going to new ownership.

Obviously, we expect some pickup in that over the next several months. We don't really have at this point the ability to say, oh, yes, we're going to -- we're going to retain 99% of the restaurants, and we're going to be able to add some more. The one thing that's clear is that this could also create some opportunity because there are some things on the positive side that we haven't talked about, and that's the inventory for our categories is going to decline. How much? I've seen lots of guesses, but we'll see. So that'd be less competition. That's a good thing. The ability to pick up on some conversions may pick up. And so we've got -- it's too early for us to see net-net what we end up with in terms of overall inventory if we try to look towards middle of next year. But we'll get more knowledge and more awareness of where we are and what's available and what can be saved and what won't and what does that do to our net restaurant adds for the year. That's all kind of going to play out, I think, over the next 6 months. And we'll see how that -- we'll be able to give you a much better, clearer picture, I think, probably as we get into the fall.

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John C. Cywinski, Dine Brands Global, Inc. - President of Applebee’s Business Unit [45]

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And a couple of points there just to add on, Brett. This is John. The -- our franchisees, this is good news, they acted very quickly, I'm talking right on March 15, to preserve cash. So they took actions. They implemented furloughs. Those that decided to temporarily close, closed almost immediately. As I mentioned, we were at about 250 temp closures. We're at 175 today. That number is rapidly declining. And every time I talk to our franchisees, they intend to reopen, the ones that are temporarily closed, and they're anxious to do so.

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Stephen P. Joyce, Dine Brands Global, Inc. - CEO & Director [46]

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All right. So thank you, again, for your time. Obviously, a just unprecedented set of events that we're facing. However, I will tell you that I've never been proud of the team that -- and the way that they're operating of our franchisees and what they're doing not only to preserve their businesses and their jobs for their team members, but also what they're doing in the communities. The stories are overwhelming sometimes when you hear this. So it's one of these things where -- I've been in this business almost 40 years, we've never seen anything like it. But I've been through a number of things that had some of these characteristics, and we always came out the other end, and that's our expectation. So I hope everybody stays safe, and we'll look forward to talking to you in the future when we've got a lot more insight into where things are going. Thanks.

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Operator [47]

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And with that, ladies and gentlemen, we conclude today's program. Thank you for participating. You may now disconnect.