Verdict Food Service

Daily Newsletter

07 August 2023

Daily Newsletter

Dine Brands Global records a fall in Q2 profit and revenues

The fall in revenues was largely driven by the refranchising of company-operated Applebee’s units in October 2022.

California-based restaurant operator Dine Brands Global has posted a 23.5% decrease in its second-quarter (Q2) net income.

This decrease is due to a loss in the disposition of assets and higher general and administrative (G&A) expenses.

Net income available to shareholders for the three months to June 2023 was $17.8m, or $1.16 per share, compared with $23.3m, or $1.45 a share, in Q2 2022.

The parent to Applebee’s Neighborhood Grill & Bar, IHOP and Fuzzy’s Taco Shop restaurants also recorded a fall in its total revenues, which slipped 12.4% to $208.4m from $237.8m.

This was largely driven by the refranchising of 69 company-operated Applebee’s units in October 2022 and a fall in same-store sales at Applebee’s.

It outweighed IHOP's 2.1% growth in domestic same-store sales.

Consolidated adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA) at Dine Brands Global rose to $67.3m in Q2 2023 from $66.1m in the prior year. G&A expenses increased to $47.8m from $44.1m.

Looking ahead to 2023, the group forecasts a consolidated adjusted EBITDA of $243-255m, $200-$210m of G&A expenses and between $33m and $38m in gross capital expenditures.

Dine Brands Global CEO John Peyton said: “Dine Brands is well-positioned to invest in our brands, drive growth and maximise returns. Despite some market volatility, our business model’s resiliency is evident through consistent financial results, enabling us to pursue long-term growth opportunities, debt reduction and returning capital to shareholders.

“Looking ahead, we will continue to maintain our disciplined approach to creating value for stakeholders and demand from our guests.”

Generative AI remains an untapped potential across the consumer industry

GlobalData estimates the total AI market will be worth $909 billion in 2030, growing at a CAGR of 35.2% between 2022 and 2030. The consumer goods, foodservice, and packaging sectors are undergoing digital transformation, accelerated by the COVID-19 pandemic and changing consumer preferences. AI can help companies operating in these sectors by significantly reducing costs and production times. In Nestlé's 2022 full-year results, the company announced a renewed focus on digitalization to drive growth. Financial and reputational pressures associated with supply chain disruptions and sustainability concerns are also driving interest in the digitalization of supply chains. Data science and ML are strong investments across all areas. However, the sectors cannot stop at AI-powered data analytics applications. They must also explore computer vision (CV), smart robots, AI sensors that automate manufacturing and distribution logistics, and generative AI tools that increase efficiency across corporate departments and customer service operations and enable innovation in product design. For the most part, the consumer goods, foodservice, and packaging sectors will not play a significant role in creating and developing AI hardware or platforms. Instead, these sectors will help scale up the adoption of AI technologies, such as CV, conversational platforms, and smart robots. This adoption will be driven by the financial benefits and potential cost savings AI automation delivers across global supply chains.