U.S. markets close in 5 hours 47 minutes
  • S&P 500

    4,132.73
    +4.74 (+0.11%)
     
  • Dow 30

    33,624.02
    -121.38 (-0.36%)
     
  • Nasdaq

    13,944.82
    +94.82 (+0.68%)
     
  • Russell 2000

    2,221.45
    -12.34 (-0.55%)
     
  • Crude Oil

    60.38
    +0.68 (+1.14%)
     
  • Gold

    1,746.90
    +14.20 (+0.82%)
     
  • Silver

    25.43
    +0.57 (+2.28%)
     
  • EUR/USD

    1.1943
    +0.0026 (+0.21%)
     
  • 10-Yr Bond

    1.6530
    -0.0220 (-1.31%)
     
  • GBP/USD

    1.3747
    +0.0005 (+0.04%)
     
  • USD/JPY

    109.2000
    -0.1760 (-0.16%)
     
  • BTC-USD

    62,771.59
    +2,221.11 (+3.67%)
     
  • CMC Crypto 200

    1,338.68
    +44.69 (+3.45%)
     
  • FTSE 100

    6,882.33
    -6.79 (-0.10%)
     
  • Nikkei 225

    29,751.61
    +212.88 (+0.72%)
     

Edited Transcript of DIN.N earnings conference call or presentation 2-Mar-21 5:00pm GMT

·50 min read

Q4 2020 Dine Brands Global Inc Earnings Call GLENDALE Mar 2, 2021 (Thomson StreetEvents) -- Edited Transcript of Dine Brands Global Inc earnings conference call or presentation Tuesday, March 2, 2021 at 5:00:00pm GMT TEXT version of Transcript ================================================================================ Corporate Participants ================================================================================ * Allison Hall Dine Brands Global, Inc. - Interim CFO * Jay D. Johns Dine Brands Global, Inc. - President of IHOP * John C. Cywinski Dine Brands Global, Inc. - President of Applebee’s Business Unit * John W. Peyton Dine Brands Global, Inc. - CEO * Ken Diptee Dine Brands Global, Inc. - Executive Director of IR ================================================================================ Conference Call Participants ================================================================================ * Brett Saul Levy MKM Partners LLC, Research Division - Executive Director * Brian Michael Vaccaro Raymond James & Associates, Inc., Research Division - VP * Jake Rowland Bartlett Truist Securities, Inc., Research Division - Analyst * Nerses Setyan Wedbush Securities Inc., Research Division - Senior VP of Equity Research & Senior Equity Analyst * Todd Morrison Brooks CL King & Associates, Inc., Research Division - Senior VP & Senior Research Analyst ================================================================================ Presentation -------------------------------------------------------------------------------- Operator [1] -------------------------------------------------------------------------------- Hello, and welcome to the Fourth Quarter 2020 Dine Brands Global Earnings Conference Call. My name is Grace, and I will be your operator for today's call. (Operator Instructions) Please note that this conference call is being recorded. I will now turn the call over to Ken Diptee, Executive Director of Investor Relations. Sir, you may begin. -------------------------------------------------------------------------------- Ken Diptee, Dine Brands Global, Inc. - Executive Director of IR [2] -------------------------------------------------------------------------------- Good morning, and welcome to Dine Brands Fourth Quarter and Fiscal 2020 Conference Call. I'm joined by John Peyton, CEO; Allison Hall, Interim CFO and Controller; Jay Johns, President of IHOP; and John Cywinski, President of Applebee's. Before I 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-K filings. The forward-looking statements are as of today and assumes no obligation to supplement -- 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. With that, I'll turn the call over to John. -------------------------------------------------------------------------------- John W. Peyton, Dine Brands Global, Inc. - CEO [3] -------------------------------------------------------------------------------- Thanks, Ken. Good morning, everyone, and thanks for joining us. I'll start by saying it's an honor for me to join Dine brands. I believe in Dine Brands because I believe in restaurants. Restaurants are essential to strong communities and human connection, and people appreciate that now more than ever before. I believe we're on the cusp of a restaurant renaissance. And as we enter what we expect to be the beginning of the end of the pandemic, all restaurants face a common challenge, and that's that eating out in America has changed. Those who will win in the new era of restaurants are those who remain resilient and those who invested in new menu and service innovations and new technology during 2020. And that's the story of Dine Brands. We have solid fundamentals 2 category media iconic brands and certainly the most talented team members and franchisees in the industry. Let me pause and tell you a bit about my story. As a teen, I worked in my parent's restaurant, it was called the [7 Omelet Station] in West Philadelphia, and I was certainly humbled and stunned by the almost 24/7 demand required of my parents. After college I went on to work as a consultant for PwC. I then moved to Starwood Hotels and most recently at Realogy. I joined Dine because I believe in the power and the lure of strong brands. 20 years ago, a mentor of mine, who was a marketing wizard, taught me that brands win when they're different, better and special. And our brands are truly different, better and special. IHOP, for example, is a pancake-obsessed breakfast innovator that makes the most important meal of the day, also the most fun. And Applebee's embodies what it means to be all American and locally relevant. We call that eating good in the neighborhood. In other words, Applebee's and IHOP are iconic brands that connect in an emotional way with our guests. And that's important because we know restaurants are essential to this fabric of community and human connections. I also like our business model. We're 98% franchised and asset light. We are a significant generator of cash. Our franchise model helps buffer us from fluctuations in the market and our model generally requires less significant investments of capital. And it allows those who are best operating restaurants, our franchisee owners to do so with our support. My 20-plus years at Starwood and Realogy taught me that successful franchising requires true partnership and that we work hard every day to ensure that our independent franchisees build valuable businesses that create generational wealth. So over the last 2 months, I've been on the move. I've conducted a deep dive across the company, learning more and more about our brands and Dine's dynamic corporate culture. So far I've spoken with 40 franchisees in the U.S. and around the world, and they represent 50% of the Applebee's system and more than 1/3 of our IHOP restaurants. I've also connected with our suppliers and our bankers and our team members. I visited our restaurants and our test kitchens, and I can report that our network is aligned in its desire to grow and to invest and to win. Now despite the impact of the pandemic, Dine's fundamentals remain solid. You may recall that in March of 2020, S&P placed the company's whole business securitization notes on CreditWatch negative as it did with 2 other whole business securitizations in our industry at that time. Six months later, S&P removed our notes from CreditWatch and reaffirmed our BBB rating. Dine was the only issuer of the 3 to not have its notes downgraded or remain on CreditWatch due to the pandemic. S&P's decision last fall was a great achievement for Dine and illustrates that our fundamentals remain strong. And because we emerged in 2020 on sound financial footing, we plan to repay in full the $220 million drawn from our revolver last months -- last March. We expect to complete the repayment this month, resulting in interest expense savings of approximately $5 million. In addition to strong fundamentals, we have passionate franchisees who remain in very good standing. Our collection rate for royalty and marketing fees stands at approximately 99%, and the fees we deferred during Q2 of last year are being paid back according to schedule. And in addition to our fabulous franchisees, importantly, both brands are led by veteran executive teams with exceptional experience and industry knowledge. You'll hear from Jay and John shortly, and it's their expertise and collective wisdom that truly paid off via their extraordinary stewardship of the brands and our franchisees throughout the challenge of 2020. So looking ahead, we're anticipating a rebound in the second half of the year, driven primarily by increases in vaccination rates. Overall, weekly sales trends for both brands have also improved since the week ending January 3, 2021. Applebee's is improving by approximately 8 percentage points and IHOP posting gains of about 6 points. We're also encouraged by our off-premise business. Both brands maintained off-premise sales of approximately 1/3 of total sales during the fourth quarter, and we view off-premise dining as a new consumer behavior that will live beyond the pandemic. We're continuing to invest in technology to support our growing off-premise business. And we're certainly optimistic about the -- for Applebee's and IHOP because during times of crisis guests, just like me and just like you, look to brands we trust. And as restaurant guests returned to indoor dining, guests will trust that our franchisees and restaurant teams and IHOP and Applebee's are committed to their health and safety. So taken collectively, these fundamentals uniquely position Dine Brands to endure the challenges brought on by the pandemic and position us for long-term sustainable growth. Our team is focused on 3 objectives over the next 12 to 24 months. The first is to navigate what we believe is the beginning and the end of the crisis. The second is to win the recovery and win the new normal that follows; and the third is to evaluate long-term growth vehicles. So allow me to share a bit of my thinking about each of those. First is to navigate the beginning of the end of the crisis. Of course, we'll continue to monitor and protect cash, and we'll also focus on continuous improvement in operational, health and safety standards in our restaurants. We're preparing compelling marketing campaigns and new products to drive as the recovery grows, and we are working intently to ensure the financial health of our franchisees. Second, we'll win the recovery and win the new normal by leveraging our recent investments in business and consumer insights, CRM and digital to reactivate our guests via one-to-one and highly targeted marketing. And we'll realign our menus to reflect learnings in the past 12 months, and we'll reset the channel mix to reflect those learnings as well. And third, we'll continue to evaluate long-term growth vehicles, both traditional and nontraditional development, which includes everything from new prototypes for both brands, virtual brands and ghost kitchens, both of which we have efforts underway. And we'll take a look at international expansion opportunities in key markets, and possibly explore incorporating a third brand at the right time. So as I wrap up, I want to emphasize the Dine views the crisis as both a threat and an opportunity. And while we knew it was important to play defense to protect our liquidity and our flexibility, we also played offense so that we would emerge from the crisis in a position to serve more guests, both inside and outside of our restaurants. Because we played offense in 2020, we continued to invest in new digital and CRM products that are coming online early this summer as well as innovative menu items like IHOPPY Hour and Burritos & Bowls at IHOP and Applebee's new virtual brand Cosmic Wings. And while we were investing in new technology and menu offerings, our franchisees invested in supporting their local communities by feeding and sheltering frontline workers and those in need. And so with all of these investments combined that will pay off as our guests return to indoor dining. So with that, I'll turn the call over to Allison to provide an overview of our financial results. -------------------------------------------------------------------------------- Allison Hall, Dine Brands Global, Inc. - Interim CFO [4] -------------------------------------------------------------------------------- Thank you, John. Good morning, everyone. I'll begin with a business update and then review our results for the fourth quarter and the full year. Lastly, I'll discuss our financial performance guidance for 2021. During a very challenging year, we took steps to maintain our financial flexibility, including drawing down $220 million in March 2020 from our revolving credit facility, all of which remain outstanding as of December 31. As John just mentioned, we plan to repay the $220 million during the month of March. Due to this proactive measure, we continue to have very strong liquidity. We ended 2020 with total cash and cash equivalents of $456 million, which includes restricted cash of $72.7 million. Excluding the $220 million drawn from our revolver, cash on the balance sheet was $64 million higher at the end of 2020 compared to year-end 2019. The increase was primarily due to the temporary suspension of both our quarterly cash dividends and our share repurchase program. These steps were taken in response to COVID-19 pandemic and the need to maintain financial flexibility. Additionally, we maintained tight G&A management during a year of austerity, and we're able to lower compensation costs following the difficult decision to furlough approximately 1/3 of our purpose staff for several months during 2020. Turning to our financial results. I'll begin with the notable changes on our income statement. For the fourth quarter, adjusted EPS was $0.39 compared to $1.78 for the same quarter of 2019. For 2020, adjusted EPS was $1.79 compared to $6.95 in 2019. The year-over-year decrease was due to a significant decline in customer traffic resulting from governmental capacity restrictions on dining operations. This led to declines in domestic comp sales at both Brands and a decrease in a number of Applebee's and IHOP effective restaurants and lower gross profit. The impact of the pandemic on franchise operations resulted in an increase in bad debt. For 2020, our bad debt was approximately $12.8 million as compared to virtually no bad debt for 2019. Switching gears to G&A. Given our asset-light business model, G&A remains an important lever for us. In 2020, it constituted 30% of our total revenues, excluding advertising revenues. G&A for the fourth quarter of 2020 improved to $39.4 million from $41.7 million for the same quarter last year. The decline was primarily due to lower travel and compensation costs. G&A for the fourth quarter was lower than our guidance of approximately $45 million, primarily due to our ability to tighten G&A controls in response to the resurgence of coronavirus cases. G&A for 2020 was $144.8 million, including $4.3 million related to the company restaurant segment. This compares to $162.8 million in 2019. The decline was primarily due to G&A's higher management around that, which included a decrease in compensation and travel-related costs. Now turning to the cash flow statement. Cash from operations for 2020 was $96.5 million compared to $155.2 million in 2019. The change was primarily due to a decrease in total revenues resulting from a decline in guest traffic at our restaurants, as previously discussed. Our highly franchised model continues to generate strong adjusted free cash flow of $106.6 million in 2020 compared to $148.8 million in the prior year. The decline was primarily due to the decrease in cash from operations just discussed, primarily offset by lower CapEx compared to 2019. We believe that our cash on hand, cash from operations and the steps we've taken to mitigate the effects of the pandemic will allow us to continue to remain strong liquidity throughout the year as our business continues to improve. Now regarding capital allocation, we continue to reevaluate our capital allocation strategy as industry conditions continue to improve and normal restaurant operations resume. As previously discussed, we plan to repay the $220 million drawn last March. Additionally, we'll review reinstating our quarterly cash dividends and resumption of our share repurchase program. We will also reevaluate investments in our existing brands to enable both -- platforms for both organic and nonorganic growth. Now for an update on our franchisee assistance program. Dine Brands provided approximately $55.7 million in royalty, advertising fees and rent payment deferrals to our franchisees and continues to provide assistance on a case-by-case basis. In total, we provided approximately $61 million deferrals to 223 franchisees across both brands, of which 61 have repaid their deferred balances in full. Overall, a total of approximately $32 million of the original subsequent deferrals have been repaid and repayments are on track. Regarding adjusted EBITDA, our consolidated adjusted EBITDA for 2020 was $158.7 million compared to $273.5 million for 2019. The decrease was primarily due to a significant decline in customer traffic, resulting from the governmental mandated dine-in capacity restrictions discussed earlier. This led to decreases in both revenues and gross profit in 2020 compared to 2019. Because of our asset-light model and low CapEx requirements, we continue to have very high-quality adjusted EBITDA as CapEx represented only 7% of 2020 adjusted EBITDA. Lastly, I'll review our financial performance guidance for fiscal 2021, which reflects the projected impact of the pandemic on our guidance as of today. Due to ongoing uncertainty created by COVID-19, we currently cannot provide a complete business outlook for the year. As our business conditions continue to improve and dining capacity restrictions are lowered, we will evaluate providing additional performance guidance as necessary. We're not offering guidance around development comp sales because of the uncertainty of the recovery this year. However, I can tell you, G&A is expected to range to be between approximately $160 million and $170 million, including noncash stock-based compensation expense and depreciation of approximately $45 million. Please note that this range includes approximately $5 million of G&A related to the company restaurant segment. And capital expenditures are expected to be approximately $14 million, inclusive of approximately $5 million related to the company restaurant segment. To wrap up, Dine Brands has significant cash on the balance sheet and has maintained strong financial flexibility despite the adverse conditions in 2020. Comp sales of both brands have improved significantly since the onset of the pandemic. Although there's a lot of work still ahead of us, we believe accomplishments this year have laid a solid foundation for growth. With that, I now turn the call over to John Cywinski. -------------------------------------------------------------------------------- John C. Cywinski, Dine Brands Global, Inc. - President of Applebee’s Business Unit [5] -------------------------------------------------------------------------------- Thanks, Allison, and good morning, good afternoon, everyone. I'm very proud of what this Applebee's team accomplished in 2020 and remain extremely optimistic about our business prospects here in '21. In partnership with our franchisees, we fundamentally altered our business model to adapt to this new environment. Applebee's comp sales progressed from minus 49.4% in Q2 to minus 13.3% in Q3 to minus 1.9% in the month of October when we last spoke. Almost immediately thereafter, the country experienced a rather abrupt resurgence of COVID, directly impacting our Q4 trajectory. As a result, November comp sales were minus 15.0%, while December came in at minus 30.1%. Now the good news is that business is now improving as comp sales for January and the first 3 weeks of February combined were minus 18.1% rolling over a very strong 3.3% increase from the same time frame last year. Additionally, given COVID-related restrictions, we scaled back our media spending in December, January and February. It's also important to note that not all casual dining brands are impacted equally by these restrictions given each brand's geographic distribution. Applebee's has a disproportionately heavy penetration of its restaurants in the Northeast and Midwest, 2 geographies, obviously, hardest hit by dining restrictions. While reflected in these recent results, this will ultimately and disproportionately benefit us as restrictions are eased over the coming months. For context, at the end of December, 412 of our dining rooms were closed due to government-imposed mandates. Thankfully, the landscape has changed dramatically over the past month and virtually all of our 1,600 dining rooms are now open for business. In many respects, our current operating environment feels very similar to late summer of last year, if you recall, when we saw Applebee's sales momentum accelerate as restrictions were eased, including our first positive sales week at the end of September. In barring unforeseen circumstances, I anticipate a similar dynamic to unfold very soon here in '21. Now for the month of February, Applebee's sales mix consisted of 63% dine-in, 22% Carside To-Go and 15% delivery. On the off-premise front, we continue to enhance Carside To-Go with the upcoming introduction of a third-party app called Flybuy that notifies restaurant teams through geofencing, the moment our guest arrives on the lot. Also, our franchise partner in Arkansas recently opened Applebee's first drive-through window. In addition to being very well received by team members and guests, this dedicated drive through lane eliminates weather challenges, improves throughput, and importantly, extends our late-night To Go operating hours. From a delivery perspective, our tamper-evident packaging is now fully deployed throughout the brand as another visible point of guest reassurance. Without question, our off-premise investments over the past year have broadened Applebee's reach and relevance across this important convenience-driven occasion. Now with respect to Applebee's on-premise business, I anticipate our 63% sales mix to naturally elevate this year as indoor dining gradually returns. And I firmly believe dining room service will be an unmistakable core strength for Applebee's as guests look for that long overdue escape from home, where they can once again connect with one another over a good meal and perhaps a drink. Most importantly, these guests will naturally gravitate to brands that have earned their trust and loyalty throughout the pandemic. On this front, we're confident Applebee's is exceptionally well positioned. This optimism is supported by our very strong brand affinity and visit intent metrics, which have proven to be reliable leading indicators of brand performance. And as the year progresses, we'll continue to deploy guest-facing digital technology, such as our pay-and-go initiative designed to provide easy mobile payment options without the need for a server. Now I'd like to take a moment to discuss our virtual brand evolution. As you may know, we just launched Cosmic Wings nationally on February 17, introducing a fully differentiated virtual brand, targeting a younger audience around the wings meal occasion. At the moment, Cosmic Wings remains an online delivery-only concept available via Uber Eats and fulfilled through approximately 1,250 Applebee's kitchens. In addition to craveable wings, tenders, waffle fries and onion rings, the team has developed a proprietary menu of CHEETOS' original wings, CHEETOS' flaming hot wings, as well as CHEETOS' cheese bites. This innovation work is exclusive to Applebee's and the culmination of our ongoing partnership between our culinary and marketing teams, franchisees, PepsiCo and Frito-Lay. While it's far too early to draw any conclusions, Cosmic Wings averaged $510 of incremental sales per restaurant last week in its first full week of operation, showing a steady build from day-to-day. We're very pleased with these initial results, and we'll certainly be in a better position to quantify the ultimate financial impact of Cosmic Wings on our next call. We've also been active in piloting our first ghost kitchens in partnership with our franchisees, with 2 in Philadelphia, 1 in Los Angeles and another soon to open in Miami. To clarify, these are low capital investments, small footprint kitchens without a street front presence, designed to satisfy online delivery demand for Applebee's, where we currently don't have restaurant penetration. The business model here appears attractive in the right geographies where a brick-and-mortar presence may not be feasible. Now as I reflect upon this past year, I know our guests genuinely trust Applebee's, perhaps now more than ever. Whether it's in their family rooms or in our dining rooms, there's no more relevant brand positioning for this environment than eating good in the neighborhood, as John referenced. And thanks to the resilience and fortitude of our franchise partners, the Applebee's ad fund is in great shape, allowing us to reestablish our national media presence as we engage America with compelling messaging. To this point, last week, we launched our latest national event, 5 Boneless Wings for $1 with the purchase of any burger, which is resonating extraordinarily well. In fact, last week, Applebee's achieved our single highest sales volume week since the pandemic outbreak in mid-March of last year, that's 50 weeks ago. It's also worth noting that we are strategically and tactically aligned with our franchisees around our full year marketing and innovation plan along with contingencies, given the obvious need for agility in this environment. In closing, I believe Applebee's is near an inflection point. And that Americas pent-up demand for dining out is indeed very real. We saw this trajectory last year up until the resurgence of the virus, and I'm confident we'll see it again this year very soon. And when this does occur, our franchise partners are very well positioned to not only return to sustained growth but to thrive in a post pandemic environment as they unlock the full potential of the Applebee's brand. With that, I'll turn it to Jay. -------------------------------------------------------------------------------- Jay D. Johns, Dine Brands Global, Inc. - President of IHOP [6] -------------------------------------------------------------------------------- Thank you, John. Good morning, everyone. We are very optimistic about the road ahead for IHOP for several reasons. First, our quarterly comp sales have improved meaningfully from a decline of 59.1% for the second quarter to a decline of 30.1% for the fourth quarter, reflecting a net increase of 29 percentage points since the pandemic began. Second, the brand is well positioned to benefit from pent-up demand when restrictions on dining room capacity are eased, and we have a strategy in place to capture it. Lastly, our development pipeline remains strong and new opportunities are being pursued. As we closed out the fourth quarter, IHOP's comp sales declined 30.1%, which is on par with the family dining category. Our performance, especially the final 6 weeks, was adversely impacted by the resurgence in coronavirus cases. We were particularly impacted in California and Texas, which collectively comprised approximately 25% of our domestic restaurants. Our results for January 2021 improved to minus 26.8% representing a gain of 10 percentage points from December. February's comp sales through week ending February 21 were down 27.6%. For the same period, our sales mix consisted of 66% dine-in, 16.9% To Go and 17.1% delivery. As we continue to navigate the ever-changing environment, we have 4 strategies to help the brand drive growth: number one, focusing on our p.m. daypart; number two, value; number three, maintaining our gains in on-premise sales; and number four, development growth. To address our first and second strategies of p.m., daypart and value, we launched IHOPPY Hour on September 28, which offers our guests a wide array of value options during the afternoon and evening hours or later, depending on the location. We believe this new value platform will not only play an important part in strengthening and expanding our p.m. business, but also drive off-premise sales in locations where it's available. IHOPPY Hour is driving incremental sales in the mid- to high teens and approximately 20% incremental traffic compared to the rest of the day. This equates to a low to mid-single-digit lift in both sales and traffic for the whole week. IHOPPY Hour is consistently 4x more effective at driving traffic than any window we've had during that time. Our third strategy was drawing our strong off-premise business. As consumer sentiment is shifting and off-premise is becoming more accepted around the country, our mix has remained strong. For the fourth quarter, off-premise was 33.3% of total sales compared to 32.4% for the third quarter. To provide more color, To Go accounted for approximately 17% of sales mix and delivery accounted for approximately 16%. Off-premise comp sales for the fourth quarter grew by 130% driven primarily by traffic. We believe that we can retain a significant amount if this growth, even as dining room capacity restrictions are eased over time. Conducive to this is the high portability if IHOP's menu and our proprietary off-premise packaging, which keeps our food warm approximately 40 minutes after leaving the restaurant. Additionally we're implementing curb side To Go quickly at the onset of the pandemic and continue investment in our IHOP n' Go platform. IHOP's latest menu innovation is our all-new signature Burritos & Bowls which is introduced this past January. The 6 new Burritos & Bowls were designed with creative flavor combinations and easy portability in mind for guests to enjoy wherever they please and appeal to guests across all dayparts. The results since the launch are very encouraging, with Burritos & Bowls capturing approximately 8% of ticket order incidents based on our soft launch without a full media and marketing campaign. Switching gears to our fourth strategy development. As we look at growth heading into 2021 and beyond, we will grow our IHOP brand with 4 different platforms. First, traditional development, of which we have a stable pipeline as a result of franchisee obligations that were deferred as part of our assistance during the pandemic. Second, nontraditional development, which is led by our largest agreement in our 62-year history with travel centers of America for 94 restaurants over 5 years. Third, the resumption of work on our Flip'd by IHOP concept, which we expect to open our first locations this year. And fourth and finally, we've developed a new small prototype that we intend to test this year. We expect it to provide new opportunities for franchisee growth with a higher return on investment, allowing us to go into areas we might not have been able to penetrate previously. For 2021, we expect to continue to reinvigorate our growth that was hindered by the pandemic. Now for an update on our domestic restaurants open for business, as of December 31, 1,174 restaurants or 70% of our domestic system was open for in-restaurant dining with restrictions. This compares to 1,425 restaurants or 85% as of September 30. The decline in locations opened for in-restaurant service was primarily due to the spike in coronavirus cases discussed earlier. Turning to the unit guidance for restaurant closures we provided in October. As a reminder, given the impact of the pandemic on individual restaurant level economics, we evaluated only greatly underperforming restaurants that we determined had a greater chance of not being viable coming out of the pandemic. These restaurants were generally some of the lowest-performing units in the system based on sales and franchisee profitability. This program concluded with 41 closures over the last 6 months, which is well below our initial projection of up to 100 restaurants. We remain confident that we'll eventually replace these severely underperforming locations and grow our footprint with better performing restaurants that have volumes closer to our pre-COVID AUV of approximately $1.9 million. To close, we're executing against our 4 strategies to drive our growth, which includes p.m. daypart expansion, value, maintaining our gains in off-premise sales and development growth. We've done the heavy lifting to position the brand for long-term success and build an insurmountable lead in family dining. I'm pleased with what our franchisees and team members have accomplished during a very challenging year, and I'm very optimistic about the road ahead. With that, I'll now turn the call back over to John Peyton for his closing comments. John? -------------------------------------------------------------------------------- John W. Peyton, Dine Brands Global, Inc. - CEO [7] -------------------------------------------------------------------------------- Thanks, Jay. We have a tremendous team. And I want to thank Allison and John and Jay. It's truly because of their leadership, particularly during the pandemic that Dine and its brands are poised to enjoy significant upside potential in 2021 and beyond. Understandingly, though, a meaningful change in performance trajectory will not happen immediately, but I'm confident in our ability to source sustainable same upfront sales momentum in the second half of 2021 as more people are vaccinated and guests who are eager to dine out return to our restaurants. I have absolutely faith that our franchisees and our talented team members will lead us into a new restaurant renaissance. Our strong fundamentals remain intact. We're positioning Dine for long-term growth and continuing to evolve as a guest-centric data-driven organization. And so with that, we're pleased to take your questions. Thanks. ================================================================================ Questions and Answers -------------------------------------------------------------------------------- Operator [1] -------------------------------------------------------------------------------- (Operator Instructions) The first question comes from the line of Jake Bartlett from Truist Securities. -------------------------------------------------------------------------------- Jake Rowland Bartlett, Truist Securities, Inc., Research Division - Analyst [2] -------------------------------------------------------------------------------- My first is really on the regional performance. And I understand there's a lot going on with weather and restrictions being tightened. But could you give us a sense of how stores performed in the markets that have had the least restrictions? And I'm thinking of markets like Florida, in terms of how their sales -- how the indoor dining has been recovering? And then what's been happening with the off-premise mix in markets like that? -------------------------------------------------------------------------------- John C. Cywinski, Dine Brands Global, Inc. - President of Applebee’s Business Unit [3] -------------------------------------------------------------------------------- Jake, this is John Cywinski. The -- it's a good question. I won't quantify what we see, but suffice it to say, those geographies with very few restrictions perform well. You see a not surprisingly a larger percentage mix than the national average for dine-in. And you may, in fact, see the inverse of what we saw in our most restricted geographies where 2/3 of our business was off-premise and 1/3 on-premise. In those least restricted geographies, we see the inverse of that. And we like the revenue results that we see, and we're anxious to get the fall national brand back to that point. We have significant variability, as you know, across the country geographically. And some of those geographies that you reference are benchmarked geographies for us. They paint a picture as to what's possible, and it's very favorable. -------------------------------------------------------------------------------- Jay D. Johns, Dine Brands Global, Inc. - President of IHOP [4] -------------------------------------------------------------------------------- Jake, this is Jay Johns at IHOP. I would say ditto to most everything that John said. The only other thing that I might add is that you asked about the To-Go business and how that holds up as well. And I think there's an absolute direct correlation between opening up and not having restrictions and the performance of those restaurants. it's logical, it's factual. But I do think the To-Go business has held up really well, even as restaurants have opened up. We're maintaining a lot of that To-Go business -- most of that To-Go business as we move forward. So clearly, one of the keys for us is just as these areas open up, we're going to do a better job. -------------------------------------------------------------------------------- Jake Rowland Bartlett, Truist Securities, Inc., Research Division - Analyst [5] -------------------------------------------------------------------------------- Great. That's really helpful. And a question, John, on the Applebee's. You made the comment that last week's average weekly sales were the strongest since the COVID crisis began. Is that to imply that same-store sales were actually were positive for Applebee's last week? -------------------------------------------------------------------------------- John C. Cywinski, Dine Brands Global, Inc. - President of Applebee’s Business Unit [6] -------------------------------------------------------------------------------- Jake, I won't -- again, I'll resist quantifying that, but I'll make 2 points. Number one, the last week data that I referenced is not in the data that was disclosed in our release, which is only through the first 3 weeks of February. Suffice it to say, it was a significant trajectory shift in a very favorable fashion from what we saw earlier in February. Makes sense? -------------------------------------------------------------------------------- Jake Rowland Bartlett, Truist Securities, Inc., Research Division - Analyst [7] -------------------------------------------------------------------------------- That does. And then my last question here, really, on the closures at IHOP, I just wanted to clarify, when you mentioned the 100 stores that were possible that you were looking at. Was that just a comment on the domestic side? I noticed that there's fair amount of international closures this quarter, but less than I expected on the domestic side, which is great. But one, just to clarify that. And then two, just to clarify that the closures on the kind of -- the majority of the closures you think are ended. I think you used the word concluded in terms of kind of assessing those stores. So should we expect elevated closures bleeding in to 2021? Or has this system essentially kind of been cleaned up already? And now we're kind of set for some actual net growth? -------------------------------------------------------------------------------- Jay D. Johns, Dine Brands Global, Inc. - President of IHOP [8] -------------------------------------------------------------------------------- Well, I think to begin with your question about what was the 100 referring to? That was referring to potentially domestically up to 100. And what I mean by that program, that was a special program that we had done this research on these restaurants and work with franchisees on those particular locations. And that program has come to a close. Now as a regular course of business, there's always going to be other closures, et cetera. But as far as that particular program, that's over at 41. -------------------------------------------------------------------------------- Jake Rowland Bartlett, Truist Securities, Inc., Research Division - Analyst [9] -------------------------------------------------------------------------------- Okay. And was that program involving kind of lifting any penalties for closing? And was there kind of a promotion of trying to kind of clean up the system? -------------------------------------------------------------------------------- Jay D. Johns, Dine Brands Global, Inc. - President of IHOP [10] -------------------------------------------------------------------------------- Well, obviously, we work with the franchisees to together on this to -- in a way to help their position for the rest of their portfolios in many cases. So we work directly with the franchisees on that and on how we work those out of the system. But like I said, that program was a unique thing that we put together. I'm not going to share specific details on what fees were, et cetera. But that program is over. We're back to kind of running the business with our normal review of any kind of request franchisees have at this point. -------------------------------------------------------------------------------- Operator [11] -------------------------------------------------------------------------------- And your next question comes from the line of Nick Setyan from Wedbush Securities. -------------------------------------------------------------------------------- Nerses Setyan, Wedbush Securities Inc., Research Division - Senior VP of Equity Research & Senior Equity Analyst [12] -------------------------------------------------------------------------------- Is the marketing now back? And then also the -- on the virtual brands, is there a like a target weekly sales number in terms of that you guys or at least just directionally, you guys are willing to share, especially since there is a peer benchmark out there? -------------------------------------------------------------------------------- John C. Cywinski, Dine Brands Global, Inc. - President of Applebee’s Business Unit [13] -------------------------------------------------------------------------------- Nick, this is John Cywinski. On the marketing front, we love our position. We'll be -- as you look at the year, we're a bit light in Q1, quite candidly, as I mentioned, we did pull back on media spending in January and February, which means Q2, 3 and 4 are going to look pretty favorable when you assess the full year. Virtual brand, your question on, is there a threshold? In any new investment, and keep in mind, this is very capital light. It's a fairly easy investment. Our operators execute well. We do expect a minimum threshold of incremental sales performance. You could call that directionally a percentage point, but we believe there's significant upside beyond that. But it's just too early, Nick, to begin to frame that. We only have 10-plus days in market and what I will tell you is we see steady improvement sequentially from 1 day to the next. -------------------------------------------------------------------------------- Nerses Setyan, Wedbush Securities Inc., Research Division - Senior VP of Equity Research & Senior Equity Analyst [14] -------------------------------------------------------------------------------- Got it. And then a question on margins. The Applebee's gross margin, I think, it's 102.6% for the quarter. Is that just a reflection of the recovery of some of the deferrals? And then on the IHOP, 67.3%, any kind of an outlook there sort of for 2021, at least directionally? And what's really going on there with the gross margin at IHOP? -------------------------------------------------------------------------------- Allison Hall, Dine Brands Global, Inc. - Interim CFO [15] -------------------------------------------------------------------------------- So this is Allison. The gross profit margin on Applebee's, you'll see there's an increase in debit year-over-year, but we're not giving any guidance related to 2020 other than G&A -- I'm sorry, 2021 other than G&A and CapEx. -------------------------------------------------------------------------------- Operator [16] -------------------------------------------------------------------------------- Next up, we have questions from Brian Vaccaro from Raymond James. -------------------------------------------------------------------------------- Brian Michael Vaccaro, Raymond James & Associates, Inc., Research Division - VP [17] -------------------------------------------------------------------------------- I had a couple of questions on the quarter-to-date trends you mentioned for each brand. And I appreciate the comments on average weekly sales and the improvement you're seeing there. I think you said Applebee's is up 8%, IHOP up 6%. And I wasn't sure if that's compared to kind of the reported AWS in the fourth quarter? Or were you considering that to December? So could you just -- so we're on the same page, could you disclose kind of average weekly sales for each brand in that quarter-to-date period? -------------------------------------------------------------------------------- Jay D. Johns, Dine Brands Global, Inc. - President of IHOP [18] -------------------------------------------------------------------------------- This is Jay at IHOP. Are you talking about -- in the fourth quarter, are you talking about what we talked about... -------------------------------------------------------------------------------- Brian Michael Vaccaro, Raymond James & Associates, Inc., Research Division - VP [19] -------------------------------------------------------------------------------- No. In the quarter-to-date period. So you said you've improved 6%. But what does that mean? Is that versus December? Is that versus the around 27% you did in the fourth quarter? Just trying to get sort of a current average weekly sales check, basically, for both brands. -------------------------------------------------------------------------------- Jay D. Johns, Dine Brands Global, Inc. - President of IHOP [20] -------------------------------------------------------------------------------- Well, for IHOP, we have actually -- I think my comment was we had improved 10 percentage points from December into January. So clearly, when things were really shut down, it was the last 6 weeks of Q4, we were struggling. We have come back nicely in January, February. And if you look at the trends on our sales going all the way back to last year, we were making great progress and the trends were going great until these last 6 weeks of the year where we took a little bit of a dive, and then we're coming back slowly out of that. And the correlation that I see is directly related to the closures is as cities are starting to open up now, I'm seeing that, that's going to trend in the right direction. But I don't want to give any real specific numbers on that in quarter right now. -------------------------------------------------------------------------------- John C. Cywinski, Dine Brands Global, Inc. - President of Applebee’s Business Unit [21] -------------------------------------------------------------------------------- Brian, this is John C. The -- on the Applebee's front, as I've referenced, we were down 30%, 30.1%, I believe, for December and then about a 12 percentage point favorable move. Down 18% in the first 7 weeks of the quarter, very similar January and the early part of February. Keep in mind, some pretty meaningful weather impact in a couple of those February weeks. And then we are just now, as I referenced, beginning to reengage with meaningful national marketing, which we believe has -- will have a significant impact. -------------------------------------------------------------------------------- John W. Peyton, Dine Brands Global, Inc. - CEO [22] -------------------------------------------------------------------------------- Brian, it's John Peyton. Just to make sure I understood the question, and we're answering it accurately. So for those first 7 weeks of January and February, we're comparing, number one, to same week prior year. And then each of the weeks in January and February is improving relative to the last. Does that make sense? -------------------------------------------------------------------------------- Brian Michael Vaccaro, Raymond James & Associates, Inc., Research Division - VP [23] -------------------------------------------------------------------------------- Yes. No, that's helpful. I appreciate that. And also, I just wanted to ask in terms of given how important having dining rooms open is to the overall sales and I appreciate -- I think it was 80% of Applebee's and 70% at the end of December, but what does that look like today in terms of the number of units? I guess you said 99% at Applebee's. But what does that look like on IHOP today? Percent dining rooms that are open? -------------------------------------------------------------------------------- Jay D. Johns, Dine Brands Global, Inc. - President of IHOP [24] -------------------------------------------------------------------------------- We've only got about 33 restaurants that are not open for some form of business right now. And we've got about 200 that may still be doing mostly To-Go or patios only right now. We've got a heavy presence in California, obviously. So there's a lot of our restaurants that still are impacted. -------------------------------------------------------------------------------- John C. Cywinski, Dine Brands Global, Inc. - President of Applebee’s Business Unit [25] -------------------------------------------------------------------------------- And Brian, on the Applebee's front, we've got about 10 dining rooms currently closed. Half of those in California, half in Oregon. Expect them to be opened very soon, which is great news. -------------------------------------------------------------------------------- Brian Michael Vaccaro, Raymond James & Associates, Inc., Research Division - VP [26] -------------------------------------------------------------------------------- Yes, that's great. That's great. And I appreciate you mentioning -- shifting gears a little bit to the development side. I appreciate the update on the IHOP side. I guess assuming no major setbacks in the broader COVID recovery narrative. Would you expect to return to net unit growth at IHOP in '21? Or perhaps that could take into '22? And then, what's a reasonable expectation on closures at Applebee's this year? -------------------------------------------------------------------------------- Jay D. Johns, Dine Brands Global, Inc. - President of IHOP [27] -------------------------------------------------------------------------------- Yes. On the IHOP side -- this is Jay. On the IHOP side, we're just not giving any guidance yet on exactly how this is going to play out. We clearly have franchisees that are interested in developing, but they're still in the middle of COVID right now. They're still in the -- so the rate at which that comes back, we're just going to have to wait and see how that plays out. -------------------------------------------------------------------------------- John C. Cywinski, Dine Brands Global, Inc. - President of Applebee’s Business Unit [28] -------------------------------------------------------------------------------- And Brian, on your question regarding Applebee's, we certainly haven't forecasted. It's difficult in this environment. Other than to say, as John referenced, franchisee collections on royalty and advertising are superior. And we're very optimistic about this 1,600-unit portfolio. As you know, we did -- we've cleaned up much of this kind of the nonviable assets over time over the last 3 to 4 years, but we'll resist framing any expectation or a number at this point in time. -------------------------------------------------------------------------------- Brian Michael Vaccaro, Raymond James & Associates, Inc., Research Division - VP [29] -------------------------------------------------------------------------------- All right. Fair enough. And then just last one for me. I wanted to ask on Cosmic Wings. Could you highlight some of the key differences on Cosmic Wings versus neighborhood wings? Or perhaps comment on your approach to marketing the concept or other differences that are worth mentioning there? And sorry if I missed this, but is there an expected time line on when it might be offered from all 1,600 domestic locations? -------------------------------------------------------------------------------- John C. Cywinski, Dine Brands Global, Inc. - President of Applebee’s Business Unit [30] -------------------------------------------------------------------------------- Brian, the -- I'm glad we piloted Neighborhood Wings last year. As you know, we did so in several hundred restaurants. What we learned was very clear. The brand itself, the virtual brand, needs to be differentiated and separated in some respects in terms of positioning from Applebee's. The menu itself needs to be proprietary and perhaps buzzworthy. Our teams need to be able to execute that brand well and the naming was important. We, along with the targeting, we had a very specific demographic here, a bit more youthful, a bit of a male SKU, CHEETOS lovers, delivery lovers, wings lovers. And given that demographic profile, the naming and the positioning felt quite naturally to us, but you'll notice we did not incorporate the word or the name Applebee's in that. So Cosmic Wings, we validated that with consumers with that demo, in particular. It resonated exceptionally well. And your question on time frame, again, Brian, what was that question? -------------------------------------------------------------------------------- Brian Michael Vaccaro, Raymond James & Associates, Inc., Research Division - VP [31] -------------------------------------------------------------------------------- Yes. Just thinking -- I think you said Cosmic Wings is currently offered from about -- I think it was 1,250 Applebee's units. I'm just wondering when it will be -- if and when it will be available across the system domestically. -------------------------------------------------------------------------------- John C. Cywinski, Dine Brands Global, Inc. - President of Applebee’s Business Unit [32] -------------------------------------------------------------------------------- Yes. I would expect -- so 1,250 is with our partnership with Uber Eats and -- where they have a strong presence, obviously, we will have a strong presence. Could this brand be expanded in terms of the distribution channels? Yes, and I'll resist how that may unfold, but you can draw your own conclusions, Brian. It's been very well received. And so I would anticipate exploring all options moving forward after the first couple of months. -------------------------------------------------------------------------------- Operator [33] -------------------------------------------------------------------------------- And your next question comes from the line of Todd Brooks from CL King & Associates. -------------------------------------------------------------------------------- Todd Morrison Brooks, CL King & Associates, Inc., Research Division - Senior VP & Senior Research Analyst [34] -------------------------------------------------------------------------------- First, if we can talk maybe weather and storm impact, we had that couple of tough weeks and actually still some tough weeks for Texas and a couple of the other states down south. But especially looking at the weekly IHOP sales, they've been remarkably consistent across the first 7 weeks. And it's just a bit of a surprise to me, given it looks like almost 1/4 of the stores are in that kind of Texas, Georgia, Virginia, North Carolina belt. So if we could talk maybe about the IHOP performance and lost store days at both brands due to the winter weather that we've had down South? -------------------------------------------------------------------------------- Jay D. Johns, Dine Brands Global, Inc. - President of IHOP [35] -------------------------------------------------------------------------------- Well, I think on the IHOP side, there's interesting drivers on our side of what -- as we talked about before, capacity is probably the absolute most important thing. Obviously, when you get weather like that, you close the restaurants down. We had about 200 restaurants across our system that were closed for multiple days because of weather impact as it's spread across the country. So clearly, we had some impact on it. I don't think we've teased out all of the information as far as the total impact that we could say is only related to that. Holidays are a big impact for us as well. So when you look at the first quarter so far, there's been a lot of different holidays, a lot of different weeks that are a little odd compared to just a regular run rate week. As soon as we started to get some momentum going in one direction, then the weather hit. This past week, we were rolling over National Pancake Day from last year, which we canceled this year and have moved it to -- spread out through April events. So there's a lot of things that just don't sync up for a while. So you may be seeing some odd numbers just because there's a lot going on in this data that is somewhat inconsistent when you look at it. I think the general trend, I would say, though, is if you look at -- take a step back and look at it in the big picture, we are trending in the right direction. We keep having these little hiccups that happen on given weeks. But I feel that this is about ready to make a nice move forward for us as the capacity restrictions are lifted. -------------------------------------------------------------------------------- John C. Cywinski, Dine Brands Global, Inc. - President of Applebee’s Business Unit [36] -------------------------------------------------------------------------------- And Todd, on the Applebee's front, had it not been for weather, we would have seen sequential improvement from January to the first 3 weeks of February. I won't quantify it. It's a little less than 100 basis points of impact. -------------------------------------------------------------------------------- Todd Morrison Brooks, CL King & Associates, Inc., Research Division - Senior VP & Senior Research Analyst [37] -------------------------------------------------------------------------------- Okay. Great. That's helpful. And then can we talk -- going back, national advertising-wise, John, I think you said Applebee's back on in the past week or so. And Jay, I don't think you commented if IHOP's back on yet or not. But this has been such a positive driver for the same-store sales recovery in fiscal '20 in the second half of the year, can we talk about maybe share of voice that's out there now that you're going back into national advertising? And then anticipated or hope for lifts as you start to leg into, especially those bigger weights when you get into Q2 through Q4? -------------------------------------------------------------------------------- Jay D. Johns, Dine Brands Global, Inc. - President of IHOP [38] -------------------------------------------------------------------------------- Todd, this is Jay. On the marketing front, we never went completely dark. We were always doing some kind of marketing, be it digital or one-to-one. We cut back some on the -- what you would see as the big larger national TV campaigns, et cetera. So just like Applebee's, we have spread our budget a little differently this year just based on capacities, et cetera. And we are very confident. We have a great plan for the year. Both with innovation and marketing and how we're going to come to market with things. So I feel very comfortable. We've got a really good plan. We should have plenty of money. As long as the bottom doesn't fall out of this thing again, which -- with some kind of a COVID resurgence, it's really bad. I think we're going to have a nice portfolio of things to promote, and we're going to have a lot of money to do that when we get into the second, third, fourth quarters. -------------------------------------------------------------------------------- John C. Cywinski, Dine Brands Global, Inc. - President of Applebee’s Business Unit [39] -------------------------------------------------------------------------------- And Todd, on the Applebee's side, you referenced it. We have something this year that we didn't have last year. We know how the brand has performed as restrictions ease and guests are more willing to dine out. So that trajectory you referenced last year, May through September, we moved from minus 50% to our first positive week of sales. And we really have an exceptional team, and they understand how to message both rationally and emotionally and -- that pacing and sequencing of messaging with our guests as we evolve out of this pandemic is something where they really do have a finger on the pulse, so to speak. And you're seeing the start of that right now. And I anticipate it will unfold and perhaps that trajectory will look similar, if not better than what we saw over a 5-month time frame last year. -------------------------------------------------------------------------------- Operator [40] -------------------------------------------------------------------------------- Your next question comes from the line of Brett Levy from MKM Partners. -------------------------------------------------------------------------------- Brett Saul Levy, MKM Partners LLC, Research Division - Executive Director [41] -------------------------------------------------------------------------------- If you could talk a little bit more on how you're thinking about the capital allocation plans. Obviously, debt paydown is going to be the biggest and the most immediate. But when you look at -- not just to the shareholders, but what else can you do in terms of investing in the infrastructure and also franchisee support? And then John Peyton, I have a question for you. -------------------------------------------------------------------------------- Allison Hall, Dine Brands Global, Inc. - Interim CFO [42] -------------------------------------------------------------------------------- So in terms of the capital allocation strategy, obviously, we wanted to pay down the VFN, the $220 million that we borrowed in March, which we're going to do this month. We really -- we can't say at this point because the industry conditions are very variable at this time. We definitely want to continue to look at our dividend, our repurchase of shares, investments both organically and non-organically. But it's really difficult to really put anything down at this point just due to the industry conditions. -------------------------------------------------------------------------------- Brett Saul Levy, MKM Partners LLC, Research Division - Executive Director [43] -------------------------------------------------------------------------------- On the M&A front, obviously, not looking for names, but what kind of criteria make your wish list, if you were to go outside of your own system? -------------------------------------------------------------------------------- John W. Peyton, Dine Brands Global, Inc. - CEO [44] -------------------------------------------------------------------------------- Sure, Brett. It's John. I'll take that. And I'll just tack a little bit onto the last thing that Allison mentioned as well. When it comes to capital, there's -- obviously, there's thinking about dividends and shareholder return and buyback. But we're also looking at investments in technology, in virtual brands based upon our learnings from Cosmic Wings possibly exploring the acquisition of a third brand. So we're looking at all of that as we look toward 2022 and beyond. When it comes to M&A, we're -- when we do think about it, we'll be looking at a tuck-in acquisition, certainly substantial enough that it's accretive, but with the potential to grow to the size of our current brands or close to it. We're certainly interested in a high-growth category that is complementary to the 2 segments that we're in and not competitive with our existing brands. -------------------------------------------------------------------------------- Brett Saul Levy, MKM Partners LLC, Research Division - Executive Director [45] -------------------------------------------------------------------------------- And then, John, just -- you talked about all the things that you viewed as positive as you join into the Dine story. And now excluding capacity and restrictions, because those are obviously challenges outside of your concerns. Where do you see the greatest opportunities for low-hanging fruit? And what do you still see as the largest challenges and impediments to not just the recovery, but to meaningfully take share from your peers? -------------------------------------------------------------------------------- John W. Peyton, Dine Brands Global, Inc. - CEO [46] -------------------------------------------------------------------------------- Sure. Thank you. So in the short term, the biggest opportunity is vaccines, vaccines, vaccines. And we are optimistic that people, all of us, are anxious to get out, see other people, hug other people and reestablish a sense of connection and community, and restaurants is the place to do that. Over the long term, we are focused on, and we've been investing throughout 2020 in the digital technology that's necessary to facilitate off-premise dining. We think that the growth in off-premise is incremental for us. We don't think -- we think it's going to settle somewhere above where we were pre-pandemic. We think it's introduced new consumers to our brands. And we think we're now in the consideration set for takeout and delivery in a way that we weren't before because we've demonstrated our ability to deliver. So one of the bets for the future is certainly off-premise dining, facilitated by our investment in digital and things like that. -------------------------------------------------------------------------------- Operator [47] -------------------------------------------------------------------------------- And that is the time that we have for questions today. I would now like to turn the conference back to Mr. John Peyton for any closing remarks. -------------------------------------------------------------------------------- John W. Peyton, Dine Brands Global, Inc. - CEO [48] -------------------------------------------------------------------------------- Just want to say thank you to all of you for your questions for Allison and me. This is our first time speaking with all of you, and we enjoyed it and are looking forward to conversations throughout the day. And to our veterans, John and Jay, thanks as well for telling the story of your brands and answering the questions so well. We appreciate all of your interest and investment in our company and look forward to talking to you throughout the day. Thanks very much. -------------------------------------------------------------------------------- Operator [49] -------------------------------------------------------------------------------- Thank you. Ladies and gentlemen, this concludes today's conference. Thank you all for joining. You may now all disconnect.