Dine Brands Global Inc.

08/05/2026 | Press release | Distributed by Public on 08/05/2026 05:31

Quarterly Report for Quarter Ending June 28, 2026 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations.
Management's Discussion and Analysis of our results of operations and financial condition should be read in conjunction with the Condensed Consolidated Financial Statements included in this Form 10-Q. This Item 2 is organized as follows:
•Consolidated Results
•Key Performance Indicators
•Segment Results
•Non-Segment Results
•Liquidity and Capital Resources of the Company
•Critical Accounting Estimates
Consolidated Results
Three Months Ended Change Six Months Ended Change
June 28, 2026 June 29, 2025 June 28, 2026 June 29, 2025
(In millions)
Revenues:
Franchise revenues $ 166.9 $ 174.7 $ (7.8) $ 331.9 $ 340.9 $ (9.0)
Company-owned restaurant revenues 47.3 28.2 19.1 80.7 49.8 30.9
Rental revenues 26.7 27.9 (1.2) 53.5 54.8 (1.3)
Total revenues 240.9 230.8 10.1 466.1 445.5 20.6
Cost of revenues:
Franchise expenses (80.7) (86.4) 5.7 (163.1) (167.6) 4.5
Company-owned restaurant expenses (49.1) (30.9) (18.2) (84.0) (52.9) (31.1)
Rental expenses (19.9) (21.2) 1.3 (40.5) (42.5) 2.0
Total cost of revenues (149.7) (138.6) (11.1) (287.6) (263.0) (24.6)
Gross profit 91.2 92.2 (1.0) 178.5 182.5 (4.0)
General and administrative expenses (55.6) (50.8) (4.8) (108.7) (102.1) (6.6)
Interest expense, net (22.0) (17.8) (4.2) (43.8) (35.5) (8.3)
Closure and impairment charges (4.0) (1.2) (2.8) (4.8) (7.0) 2.2
Amortization of intangible assets (3.9) (2.7) (1.2) (7.6) (5.4) (2.2)
Loss on extinguishment of debt - (0.9) 0.9 - (0.9) 0.9
Gain on disposition of assets 0.3 - 0.3 2.5 0.1 2.4
Income before income taxes $ 6.0 $ 18.9 $ (12.9) $ 16.1 $ 31.7 $ (15.6)
Total revenues for the three months ended June 28, 2026 increased $10.1 million compared to the prior year quarter. The increase was driven by a $19.1 million increase in company-owned restaurant revenues from restaurants acquired and opened since the second quarter of 2025. This increase was partially offset by a $7.8 million decrease in franchise revenue from lower proprietary product sales, international franchise performance, less franchise termination fees recognized in the current period, and a decrease in Applebee's same restaurant sales change. In addition, franchise revenues decreased as a result of closures and the acquisition of 12 Applebee's restaurants in February 2026 and 48 Applebee's restaurants in June 2026. Total cost of revenues increased $11.1 million primarily due to the increase in company-owned restaurants, partially offset by lower bad debt expense as compared to the prior year quarter.
Income before income taxes in the three months ended June 28, 2026, was lower due to a decrease in gross profit, increase in general and administrative expenses, increase in interest expense and an increase in closure and impairment charges. The increase in general and administrative expenses is primarily due to our investment in company-owned and dual-branded restaurant initiatives, increased reorganization costs, and higher professional service fees from the acquisition of additional company-owned restaurants. The increase in interest expense is primarily the result of the refinancing of our 2025 Class A-2
Notes completed in June 2025 which resulted in increased principal and a higher interest rate. Closure and impairment charges increased primarily due to the impairment of trademarks.
Total revenues for the six months ended June 28, 2026 increased $20.6 million compared to the prior year period, driven by a $30.9 million increase in company-owned restaurant revenues from restaurants acquired and opened since the second quarter of 2025. This increase was partially offset by a $9.0 million decrease in franchise revenues from lower franchisee termination fees, lower proprietary product sales due to a decrease in the types of product offerings, and a reduction in the number of franchised restaurants. The reduction in the number of franchised restaurants was primarily driven by acquisitions completed since the second quarter of 2025 and closures. Total cost of revenues increased $24.6 million primarily due to an increase in company-owned restaurants, partially offset by a decrease in bad debt expense compared to the prior year period.
Income before income taxes in the six months ended June 28, 2026, was lower due to a decrease in gross profit, increase in interest expense and an increase in general and administrative expenses, partially offset by a gain on disposition of assets. The increase in interest expense is primarily the result of the refinancing of our 2025 Class A-2 Notes completed in June 2025 which resulted in increased principal and a higher interest rate. The increase in general and administrative expenses is primarily due to our investment in company-owned and dual-branded restaurant initiatives and higher year to date incentive compensation due to an increase in the number of employees and higher expectations for the remainder of the year as compared to the prior year period. Gain on disposition of assets was primarily related to the sale of land and building of two IHOP restaurants.
Key Performance Indicators
In addition to revenues, cost of revenues, and gross profit in evaluating the performance of each of our brands, management also considers the following key performance indicators in evaluating our business:
"System sales" are retail sales at IHOP, Applebee's and Fuzzy's restaurants operated by franchisees reported to the Company and revenues generated at company-owned restaurants. Sales at restaurants that are operated by franchisees are not revenues attributable to the Company. An increase in system sales of franchised restaurants will result in a corresponding increase in our royalty revenues, while a decrease will result in a corresponding decrease in our royalty revenues.
"Domestic same-restaurant sales change" reflects the percentage change in sales of domestic restaurants in any given fiscal period that operated during the comparable prior year period and have been open for at least 18 months. Due to new restaurant openings and restaurant closures, the restaurants open throughout both fiscal periods being compared may be different from period to period.
"Same-restaurant sales change" reflects the percentage change in sales of domestic and international restaurants in any given fiscal period that operated during the comparable prior year period and have been open for at least 18 months. Due to new restaurant openings and restaurant closures, the restaurants open throughout both fiscal periods being compared may be different from period to period.
"Domestic average weekly unit sales" represents the average sales generated per restaurant per operating week during the reporting period. This is calculated by dividing total restaurant sales by the number of operating weeks for all restaurants open during the period. For restaurants that were open for only part of the period, adjustments are made to the number of operating weeks to correspond to the period there were restaurant sales.
"Net development" refers to the overall change in the number of restaurants during a period, calculated as total openings less total closures.
IHOP
Applebee's
Fuzzy's
Three Months Ended Three Months Ended Three Months Ended
June 28, 2026 June 29, 2025 June 28, 2026 June 29, 2025 June 28, 2026 June 29, 2025
System Sales (in millions)
Franchise
$ 887.6 $ 872.4 $ 1,055.2 $ 1,105.0 $ 40.7 $ 43.1
Company
5.0 4.0 42.0 24.0 0.3 0.2
Total
$ 892.6 $ 876.4 $ 1,097.2 $ 1,129.0 $ 41.0 $ 43.3
System:
Domestic same-restaurant sales change
1.5 % (2.3) % (1.8) % 4.9 % 4.6 % (11.8) %
Same-restaurant sales change 1.3 % (2.3) % (1.8) % 4.7 % n/a n/a
Franchise(a):
Domestic same-restaurant sales change 1.5 % (2.2) % (1.5) % 5.0 % 4.6 % (11.8) %
Same-restaurant sales change 1.3 % (2.3) % (1.5) % 4.8 % n/a n/a
Domestic average weekly unit sales (in thousands)
$ 39.7 $ 39.0 $ 57.7 $ 58.0 $ 32.5 $ 30.2
Company:
Domestic average weekly unit sales (in thousands) $ 27.5 $ 30.8 $ 39.0 $ 36.2 $ 18.9 $ 17.6
Development
Franchise(b)
Beginning
1,804 1,804 1,498 1,547 101 113
Opened
5 7 5 - - 2
Closed
(13) (25) (64) (33) (5) (3)
Ending 1,796 1,786 1,439 1,514 96 112
Company(b)
Beginning
14 10 71 47 1 1
Opened
3 - 48 12 - -
Closed
- - (1) - - -
Ending 17 10 118 59 1 1
Total Development 1,813 1,796 1,557 1,573 97 113
Domestic
- (15) (11) (21) (5) (1)
International
(5) (3) (1) - n/a n/a
Net Development
(5) (18) (12) (21) (5) (1)
IHOP
Applebee's
Fuzzy's
Six Months Ended Six Months Ended Six Months Ended
June 28, 2026 June 29, 2025 June 28, 2026 June 29, 2025 June 28, 2026 June 29, 2025
System Sales (in millions)
Franchise
$ 1,744.5 $ 1,726.5 $ 2,108.9 $ 2,160.1 $ 77.3 $ 82.4
Company
9.6 5.3 70.7 44.1 0.5 0.4
Total
$ 1,754.1 $ 1,731.8 $ 2,179.6 $ 2,204.2 $ 77.8 $ 82.8
System:
Domestic same-restaurant sales change
0.8 % (2.5) % - % 1.3 % 3.6 % (12.0) %
Same-restaurant sales change 0.6 % (2.5) % (0.1) % 1.1 % n/a n/a
Franchise(a):
Domestic same-restaurant sales change 0.8 % (2.4) % 0.2 % 1.5 % 3.6 % (12.0) %
Same-restaurant sales change 0.6 % (2.5) % (0.1) % 1.3 % n/a n/a
Domestic average weekly unit sales (in thousands)
$ 39.0 $ 38.4 $ 57.0 $ 56.3 $ 30.2 $ 28.3
Company:
Domestic average weekly unit sales (in thousands) $ 28.2 $ 33.8 $ 38.3 $ 34.1 $ 18.3 $ 18.1
Development
Franchise(b)
Beginning
1,812 1,824 1,520 1,567 105 116
Opened
17 15 15 1 - 3
Closed
(33) (53) (96) (54) (9) (7)
Ending 1,796 1,786 1,439 1,514 96 112
Company(b)
Beginning
12 - 59 47 1 1
Opened
5 10 60 12 - -
Closed
- - (1) - - -
Ending 17 10 118 59 1 1
Total Development 1,813 1,796 1,557 1,573 97 113
Domestic
(7) (27) (22) (33) (9) (4)
International
(4) (1) - (8) n/a n/a
Net Development
(11) (28) (22) (41) (9) (4)
_________________________________________
(a) The calculation of franchise sales percentage change and average weekly unit sales excludes restaurants that were closed or acquired by the Company.
 (b) For the six months ended June 29, 2025, IHOP franchise closures and company-owned openings included 10 restaurants acquired in March 2025. Applebee's franchise closures and company-owned openings included 12 restaurants acquired in May 2025 for the three and six months ended June 29, 2025; 12 acquired in February 2026 for the six months ended June 28, 2026; and 48 acquired in June 2026 for the three and six months ended June 28, 2026.
Dual-branded restaurants are defined as restaurants that operate our IHOP and Applebee's restaurant concepts under two separate franchise agreements but within one restaurant location. Because of this, each dual-branded restaurant is counted in both IHOP and Applebee's restaurant count and activity.
As of June 28, 2026, we had 44 dual-branded domestic IHOP and Applebee's restaurant locations. During the three months ended June 28, 2026, we had three existing company-owned Applebee's restaurants which added the IHOP brand, three existing Applebee's franchised restaurants which added the IHOP brand, two existing IHOP franchised restaurants which added the Applebee's brand, and one new franchised restaurant which added to both brands. This totaled 10 dual-branded domestic openings.
During the six months ended June 28, 2026, we had five existing company-owned Applebee's restaurants which added the IHOP brand, six existing Applebee's franchised restaurants which added the IHOP brand, three existing IHOP franchised restaurants which added the Applebee's brand, and three new franchised restaurants which added to both brands. This totaled 20 dual-branded domestic openings.
During the three and six months ended June 29, 2025, we had one existing IHOP franchised restaurant which added the Applebee's brand for a total of one dual-branded opening.
As of June 28, 2026, we had 37 dual-branded international IHOP and Applebee's restaurant locations. During the three months ended June 28, 2026, we had one dual-branded international opening and two dual-branded international closures.
During the six months ended June 28, 2026, we had five new franchised restaurants which added both brands, and one dual-brand international closure. This totaled 10 dual-branded international openings and one dual-branded international closure.
As of June 29, 2025, we had 20 dual-branded international IHOP and Applebee's restaurant locations. During the three months ended June 29, 2025, we had one existing Applebee's franchised restaurant which added the IHOP brand for a total of one dual-branded international opening.
During the six months ended June 29, 2025, we had two existing Applebee's franchised restaurants which added the IHOP brand for a total of two dual-branded international openings.
The following table shows the effects of the domestic and international restaurant count methodology described above as of June 28, 2026 and June 29, 2025:
IHOP Applebee's Dual-Branded Total
June 28, 2026 June 29, 2025 June 28, 2026 June 29, 2025 June 28, 2026 June 29, 2025 June 28, 2026 June 29, 2025
Franchise 1,796 1,786 1,439 1,514 - - 3,235 3,300
Company 17 10 118 59 - - 135 69
Total Development 1,813 1,796 1,557 1,573 - - 3,370 3,369
Domestic Dual-Branded
Franchise (37) (1) (37) (1) 37 1 (37) (1)
Company (7) - (7) - 7 - (7) -
International Dual-Branded
Franchise (37) (20) (37) (20) 37 20 (37) (20)
Total Locations 1,732 1,775 1,476 1,552 81 21 3,289 3,348
As our dual-branded business expands, we may reevaluate how these restaurants are counted in future disclosures.
IHOP's system domestic same-restaurant sales increased 1.5% for the three months ended June 28, 2026 as compared to the prior year period, due to an increase in average check partially offset by a decrease in traffic. IHOP's system domestic same-restaurant sales increased 0.8% for the six months ended June 28, 2026 as compared to the respective prior year period, due to an increase in average check partially offset by a decrease in traffic.
Based on data from Black Box Intelligence, a restaurant sales reporting firm ("Black Box"), IHOP domestic same-restaurant sales outperformed for the three and six months ended June 28, 2026 in the family dining category (excluding IHOP). According to Black Box, for the three and six months ended June 28, 2026 the family dining category experienced a decrease in same-restaurant sales resulting from a decrease in customer traffic, partially offset by an increase in average customer check.
IHOP Off-Premise Sales Data
Three Months Ended Six Months Ended
June 28, 2026 June 29, 2025 June 28, 2026 June 29, 2025
Off-premise sales (in millions) (1)
$ 152.5 $ 148.7 $ 308.2 $ 301.1
% sales mix 20.2 % 20.0 % 20.8 % 20.5 %
(1) Primarily to-go, delivery and catering sales.
IHOP's off-premise sales for the three and six months ended June 28, 2026 increased by $3.8 million and $7.1 million, respectively, as compared to the respective prior year periods primarily due to the brand's focus on delivery promotions.
Applebee's system domestic same-restaurant sales decreased 1.8% for the three months ended June 28, 2026 as compared to the prior year quarter due to a decrease in traffic partially offset by an increase in average check. Applebee's system domestic same-restaurant sales remained flat for the six months ended June 28, 2026 as compared to the respective prior year period. This was the result of an increase in average check offset by a decrease in traffic.
Based on data from Black Box, Applebee's domestic same-restaurant sales for the three and six months ended June 28, 2026 underperformed the casual dining category (excluding Applebee's). Black Box reported the casual dining category experienced a same-restaurant sales increase for the three and six months ended June 28, 2026 driven by an increase in average check, partially offset by a decrease in customer traffic.
Applebee's Off-Premise Sales Data Three Months Ended Six Months Ended
June 28, 2026 June 29, 2025 June 28, 2026 June 29, 2025
Off-premise sales (in millions) (1)
$ 238.8 $ 237.3 $ 486.5 $ 479.2
% sales mix 22.8 % 22.0 % 23.3 % 22.7 %
(1) Primarily to-go, delivery and catering sales.
Applebee's off-premise sales for the three and six months ended June 28, 2026 increased $1.5 million and $7.3 million, respectively, as compared to the respective prior year periods primarily due to delivery and digital promotions.
Quarterly Domestic Same-Restaurant Sales - Fuzzy's
Fuzzy's system domestic same-restaurant sales increased 4.6% and 3.6% for the three and six months ended June 28, 2026, respectively, as compared to the respective prior year periods. The increase was primarily due to growth in average check resulting from menu price increases, partially offset by a decrease in traffic.
Segment Results
Franchise Segment Three Months Ended Six Months Ended
June 28, 2026 June 29, 2025
Change
June 28, 2026 June 29, 2025 Change
(In millions)
Franchise Revenues
IHOP
$ 51.7 $ 52.6 $ (0.9) $ 102.5 $ 105.1 $ (2.6)
Applebee's
41.0 45.7 (4.7) 81.9 86.7 (4.8)
Fuzzy's
2.3 2.9 (0.6) 4.5 5.2 (0.7)
Advertising
71.9 73.5 (1.6) 143.0 144.0 (1.0)
Total franchise revenues
166.9 174.7 (7.8) 331.9 340.9 (9.0)
Franchise Expenses
IHOP (7.8) (8.5) 0.7 (17.3) (17.1) (0.2)
Applebee's
(0.8) (4.1) 3.3 (2.2) (6.0) 3.8
Fuzzy's (0.2) (0.3) 0.1 (0.6) (0.6) -
Advertising
(71.9) (73.5) 1.6 (143.0) (144.0) 1.0
Total franchise expenses
(80.7) (86.4) 5.7 (163.1) (167.7) 4.6
Franchise Segment Profit
$ 86.2 $ 88.3 $ (2.1) $ 168.8 $ 173.2 $ (4.4)
For the three months ended June 28, 2026 our total franchise segment profit decreased $2.1 million as compared to the prior year quarter.
Franchise revenues decreased as a result of the following:
•IHOP franchise revenue decreased $0.9 million primarily due to a decrease in fees related to franchisee terminations and a decrease in proprietary product sales, partially offset by a 1.5% increase in franchise domestic same-restaurant sales. The decrease in franchise termination fees was primarily due to fewer franchisee restaurant closures as compared to the prior year quarter. The decrease in proprietary product sales was primarily due to changes to product offerings.
•Applebee's franchise revenue decreased $4.7 million primarily due to a decrease in franchise termination fees, a decrease in the number of franchise restaurants, and a decrease in same restaurant sales change. The decrease in franchise termination fees was due to fewer closures in the current year quarter. The decrease in the number of franchise restaurants was the result of the acquisition of 12 Applebee's restaurants in February 2026, 48 Applebee's restaurants in June 2026, and closures.
•Fuzzy's franchise revenue decreased $0.6 million primarily due to a decrease in royalty revenues as a result of a decrease in the number of franchise restaurants and a decrease in forfeited development fees.
•Advertising revenue decreased $1.6 million due to a 1.8% decrease in Applebee's domestic same-restaurant sales and a decrease in the number of Applebee's and Fuzzy's franchise restaurants, partially offset by a 1.5% increase in IHOP domestic same-restaurant sales.
Franchise expenses decreased as a result of the following:
•IHOP franchise expenses decreased $0.7 million primarily due to a decrease in the cost of proprietary product sales and a decrease in bad debt expense as compared to the respective prior year quarter.
•Applebee's franchise expenses decreased $3.3 million primarily due to expenses incurred in the prior year quarter related to transaction costs of refranchising restaurants and bad debt expense.
•Advertising expenses decreased $1.6 million given the decrease in advertising revenue.
For the six months ended June 28, 2026 our total franchise segment profit decreased $4.4 million as compared to the prior year period of 2025.
Franchise revenues decreased as a result of the following:
•IHOP franchise revenue decreased $2.6 million primarily due to a decrease in franchisee termination fees and proprietary product sales, partially offset by an increase in the number of franchise restaurants. The decrease in franchise termination fees was the result of fewer franchisee restaurant closures as compared to the prior year period. The decrease in proprietary product sales was primarily due to changes to product offerings.
•Applebee's franchise revenue decreased $4.8 million primarily due to a decrease in the number of franchise restaurants and a decrease in franchisee terminations fees. The decrease in the number of franchise restaurants was primarily due to the acquisition of 12 Applebee's restaurants in May 2025, 12 Applebee's restaurants in February 2026 and 48 Applebee's restaurants in June 2026. The decrease in franchise termination fees was primarily due to fewer franchisee restaurant closures as compared to the prior year period.
•Fuzzy's franchise revenue decreased $0.7 million primarily due to a decrease in royalty revenues and proprietary product sales as a result of a decrease in the number of franchise restaurants, partially offset by a 3.6% increase in Fuzzy's domestic same-restaurant sales.
•Advertising revenue decreased $1.0 million due to a decrease in the number of Applebee's and Fuzzy's franchise restaurants, partially offset by an increase in the number of IHOP franchise restaurants and a 0.8% increase in IHOP domestic same-restaurant sales.
Franchise expenses decreased as a result of the following:
•IHOP franchise expenses increased $0.2 million primarily due to an increase in bad debt expense, partially offset by a decrease in the cost of proprietary product sales.
•Applebee's franchise expenses decreased $3.8 million primarily due to a decrease in bad debt expense as compared to the prior year period.
•Advertising expenses decreased $1.0 million given the decrease in advertising revenue.
Company-Owned Restaurant Segment Three Months Ended Six Months Ended
June 28, 2026 June 29, 2025 Change June 28, 2026 June 29, 2025 Change
(In millions)
Company-owned restaurant revenues $ 47.3 $ 28.2 $ 19.1 $ 80.7 $ 49.8 $ 30.9
Company-owned restaurant expenses (49.1) (30.9) (18.2) (84.0) (52.9) (31.1)
Company-owned restaurant segment loss $ (1.8) $ (2.7) $ 0.9 $ (3.3) $ (3.1) $ (0.2)
The Company acquired 12 Applebee's restaurants from a franchisee in February 2026 and 48 Applebee's restaurants from a franchisee in June 2026. As of June 28, 2026, the Company owned 136 restaurants, which includes seven dual-branded restaurants, compared to 70 restaurants as of June 29, 2025. The change in company-owned restaurant revenue and expenses for the three and six months ended June 28, 2026 is primarily driven by the increase in the number and timing of restaurants acquired since the second quarter of 2025. Company-owned restaurant segment loss for the three and six months ended June 28, 2026 was primarily due to costs of transitioning the restaurants, including closures from remodeling activities.
Rental Segment
Three Months Ended Six Months Ended
June 28, 2026 June 29, 2025
Change
June 28, 2026 June 29, 2025 Change
(In millions)
Rental revenues
$ 26.7 $ 27.9 $ (1.2) $ 53.5 $ 54.8 $ (1.3)
Rental expenses
(19.9) (21.3) 1.4 (40.5) (42.5) 2.0
Rental Segment Profit
$ 6.8 $ 6.6 $ 0.2 $ 13.0 $ 12.3 $ 0.7
Rental revenues for the three and six months ended June 28, 2026 decreased as compared to the prior year periods, primarily due to closures. Rental expenses for the three and six months ended June 28, 2026 decreased as compared with the same prior year period primarily due to lease terminations.
Non-Segment Items
General and Administrative Expenses Three Months Ended Six Months Ended
June 28, 2026 June 29, 2025 Change June 28, 2026 June 29, 2025 Change
(In millions)
General and administrative expenses $ (55.6) $ (50.8) $ (4.8) $ (108.7) $ (102.1) $ (6.6)
Total general and administrative expenses for the three months ended June 28, 2026 increased $4.8 million, primarily due to higher employee-related costs associated with the expansion of company-owned restaurants and dual-brand operations, increased reorganization costs, and higher professional services from the acquisition of 48 Applebee's restaurants in June 2026.
Total general and administrative expenses for the six months ended June 28, 2026 increased $6.6 million, primarily due to higher employee-related costs associated with the expansion of company-owned restaurants and dual-brand operations, increased year to date incentive compensation due to an increase in the number of employees and higher expectations for the remainder of the year as compared to the prior year, and higher long-term incentive compensation expense driven by an increase in the Company's share price.
Interest Expense, Net Three Months Ended Six Months Ended
June 28, 2026 June 29, 2025 Change June 28, 2026 June 29, 2025 Change
(In millions)
Interest expense, net $ (22.0) $ (17.8) $ (4.2) $ (43.8) $ (35.5) $ (8.3)
Interest expense, net, increased $4.2 million and $8.3 million for the three and six months ended June 28, 2026, respectively, primarily due to the refinancing of our 2025 Class A-2 Notes at a higher interest rate and an increased principal in June 2025, and a decrease of interest income resulting from reduced cash balances.
Closure and Impairment Charges Three Months Ended Six Months Ended
June 28, 2026 June 29, 2025 Change June 28, 2026 June 29, 2025 Change
(In millions)
Closure charges $ (0.8) $ (1.0) $ 0.2 $ (1.6) $ (3.8) $ 2.2
Other asset impairment charges (3.2) (0.2) (3.0) (3.2) (3.2) -
Total $ (4.0) $ (1.2) $ (2.8) $ (4.8) $ (7.0) $ 2.2
For the three and six months ended June 28, 2026 and June 29, 2025, we recorded closure charges primarily related to properties for which we are the lessee but have ceased using in prior periods.
For the three and six months ended June 28, 2026, we recorded a $3.2 million trademark impairment charge related to the strategic realignment of the international market. For the six months ended June 29, 2025, other asset impairment charges were primarily related to the impairment of an asset upon closure of certain IHOP restaurants in March 2025.
Amortization of Intangible Assets Three Months Ended Six Months Ended
June 28, 2026 June 29, 2025 Change June 28, 2026 June 29, 2025 Change
(In millions)
Amortization of intangible assets $ (3.9) $ (2.7) $ (1.2) $ (7.6) $ (5.4) $ (2.2)
Amortization of intangible assets primarily relates to Applebee's and Fuzzy's franchise rights and the Fuzzy's tradename. Amortization increased $1.2 million and $2.2 million for the three and six months ended June 28, 2026, respectively, compared to the prior periods due to the reclassification of certain indefinite-lived intangible assets to finite-lived in the fourth quarter of fiscal 2025. In addition, in the current year, the useful lives of certain finite-lived intangible assets were reduced.
Gain on Disposition of Assets Three Months Ended Six Months Ended
June 28, 2026 June 29, 2025 Change June 28, 2026 June 29, 2025 Change
(In millions)
Gain on disposition of assets $ 0.3 $ - $ 0.3 $ 2.5 $ 0.1 $ 2.4
The gain on disposition of assets for the three months ended June 28, 2026 is related to the gain on lease terminations. The gain on disposition of assets for the six months ended June 28, 2026 primarily relates to the sale of land and building on which two IHOP properties were located.
Income Tax Provision Three Months Ended Six Months Ended
June 28, 2026 June 29, 2025 Change June 28, 2026 June 29, 2025 Change
(In millions)
Income tax provision $ (1.7) $ (5.1) $ 3.4 $ (4.4) $ (9.7) $ 5.3
Effective tax rate 28.3 % 27.0 % 1.3 % 27.7 % 30.6 % (2.9) %
The effective tax rate for the three months ended June 28, 2026 was higher than the rate of the prior year quarter primarily due to higher non-deductible executive compensation partially offset by increased income tax credits.
The effective tax rate for the six months ended June 28, 2026 was lower than the rate of the prior year period primarily due to a higher tax deduction related to stock-based compensation resulting from an increase in our share price.
Liquidity and Capital Resources of the Company
Our total cash balances including restricted cash, net of revolving credit facility borrowings, at June 28, 2026 and December 28, 2025 were as follows:
June 28, 2026 December 28, 2025
(In millions)
Cash and cash equivalents $ 97.5 $ 128.2
Restricted cash, current 52.8 51.5
Restricted cash, non-current 22.5 22.0
Total cash, restricted cash and cash equivalents 172.8 201.7
Less: Revolving credit facility borrowing (100.0) (100.0)
Total cash, restricted cash and cash equivalents, net $ 72.8 $ 101.7
Cash Flows
In summary, our cash flows for the six months ended June 28, 2026 and June 29, 2025 were as follows:
Six Months Ended
June 28, 2026 June 29, 2025 Change
(In millions)
Net cash provided by operating activities $ 19.9 $ 53.1 $ (33.2)
Net cash used in investing activities (9.0) (5.1) (3.9)
Net cash used in financing activities (39.8) (33.3) (6.5)
Net (decrease) increase in cash, cash equivalents and restricted cash $ (28.9) $ 14.7 $ (43.6)
Operating Activities
Net cash provided by operating activities decreased $33.2 million during the six months ended June 28, 2026 compared to the same period of the prior year. The decrease was primarily driven by timing of marketing spend, higher payments related to performance-based compensation and interest, in addition to lower segment profit.
Investing Activities
Net cash used in investing activities was $9.0 million for the six months ended June 28, 2026 compared to net cash used of $5.1 million during the comparable prior period. The increase in cash used was primarily attributable to capital expenditures for the remodeling of company-owned restaurants, partially offset by the net cash acquired from the acquisition of restaurants from franchisees, principal collections on notes and equipment receivables and proceeds from the sale of two properties.
Financing Activities
Net cash used in financing activities increased $6.5 million for the six months ended June 28, 2026. The increase in cash used in financing activities was primarily due to $29.3 million in common stock repurchases, partially offset by a decrease in dividends paid and the debt issuance cost.
Long-Term Debt
In addition to the below, see Note 7 - Long-Term Debt, of the Notes to Condensed Consolidated Financial Statements, for additional detail on long-term debt, including key provisions potentially impacting liquidity.
On February 16, 2023, our Company's Board of Directors authorized a debt repurchase program of up to $100 million. Repurchases of the Company's debt, if any, are expected to reduce future cash interest payments, as well as future amounts due at maturity or upon redemption. Under the authorization, the Company may make repurchases of the Company's debt from time to time in the open market or in privately negotiated transactions upon such terms and at such prices as management may determine.
Make-whole Premiums
We may voluntarily repay the Class A-2 Notes at any time; however, if repaid prior to certain dates we would be required to pay make-whole premiums. As of June 28, 2026, the make-whole premium associated with voluntary prepayment of the 2023 Class A-2 Notes was approximately $7.1 million and for the 2025 Class A-2 Notes was approximately $22.8 million. We also would be subject to a make-whole premium in the event of a mandatory prepayment required following certain rapid amortization events or certain asset dispositions.
Capital Allocation
Dividends
During the six months ended June 28, 2026 and June 29, 2025, we declared and paid dividends on common stock as shown in Note 8 - Stockholders' Deficit, of the Notes to the Condensed Consolidated Financial Statements. On May 14, 2026, our Board of Directors declared a second quarter 2026 cash dividend of $0.19 per share of common stock, payable on July 10, 2026 to the stockholders of record as of the close of business on June 24, 2026.
Share Repurchases
On May 14, 2026, the Company's Board of Directors authorized a share repurchase program of up to $100 million (the "2026 Repurchase Program") in addition to the Corporation's existing share repurchase program, approved in February 2022 (together with the 2026 Repurchase Program, the "Repurchase Programs"). A summary of shares repurchased under the Repurchase Programs, during the six months ended June 28, 2026 and cumulatively, is as follows:
Shares Cost of shares
Repurchase Programs (In millions)
Total authorized under the Repurchase Programs n/a $ 350.0
Repurchases through December 28, 2025
4,218,035 176.9
Repurchased during the six months ended June 28, 2026
901,436 29.3
Cumulative (life-of-program) repurchases 5,119,471 206.2
Remaining dollar value of shares that may be repurchased n/a $ 143.8
From time to time, we also repurchase shares owned and tendered by employees to satisfy tax withholding obligations on the vesting of restricted stock awards. Shares are deemed purchased at the closing price of our common stock on the vesting date. See Part II, Item 2 of this Form 10-Q for detail of this stock repurchase activity during the six months ended June 28, 2026.
Adjusted Free Cash Flow
We define "adjusted free cash flow" for a given period as cash provided by operating activities, plus receipts from notes and equipment contract receivables, less additions to property and equipment. Management uses this liquidity measure in its periodic assessments of, among other things, the amount of cash dividends per share of common stock and the amount of repurchases of common stock. We believe it is important for investors to have the same measure used by management for that purpose. Adjusted free cash flow does not represent residual cash flow available for discretionary purposes.
Adjusted free cash flow is a non-GAAP measure. This non-GAAP measure is not defined in the same manner by all companies and may not be comparable to other similarly titled measures of other companies. Non-GAAP measures should be considered in addition to, and not as a substitute for, the U.S. GAAP information contained within our financial statements. Reconciliation of the cash provided by operating activities to adjusted free cash flow is as follows:
Six Months Ended
June 28, 2026 June 29, 2025 Change
(In millions)
Cash flows provided by operating activities $ 19.9 $ 53.1 $ (33.2)
Net receipts from notes and equipment receivables 7.0 4.9 2.1
Additions to property and equipment (23.2) (9.3) (13.9)
Adjusted free cash flow $ 3.7 $ 48.7 $ (45.0)
The decrease in adjusted free cash flow for the six months ended June 28, 2026 compared to the same period of 2025 was primarily due to the increase in additions to property and equipment and the decrease in cash provided by operating activities as discussed above. Additionally, we continue to provide remodel and development incentives to our franchisees which also had a negative impact on adjusted free cash flow for the period.
Contractual Obligations and Commitments
There were no material changes to the contractual obligations as disclosed in our Annual Report on Form 10-K for the year ended December 28, 2025.
Critical Accounting Estimates
A discussion of our critical accounting policies and estimates and the related assumptions used in their application is included in Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations contained in our Annual Report on Form 10-K for the year ended December 28, 2025.
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