Why Restaurant Operator Dine Brands' Shares Are Falling Today

Dine Brands Global, Inc. DIN reported a third-quarter FY23 revenue decline of 13.1% year-on-year to $202.58 million, missing the consensus of $203.23 million.

The decline was primarily due to the refranchising of the 69 company-operated Applebee's units in October 2022 and the negative comparable same-restaurant sales growth at Applebee's.

Adjusted EPS of $1.46 beat the analyst consensus of $1.31.

Adjusted EBITDA for Q3 was $60.6 million compared to $63.6 million Y/Y.

Development activity by Applebee's and IHOP franchisees for the third quarter of 2023 resulted in 14 new restaurant openings and the closure of 19 restaurants.

The company exited the quarter with cash and equivalents worth $159.6 million. 

As of quarter end, the company had leverage ratio of approximately 4.6x compared with approximately 4.5x as of June 30, 2023.

Outlook: The company reiterated that the FY23 domestic development activity target for Applebee's franchisees is between 25 and 35 net fewer restaurants.

Domestic development activity by IHOP franchisees and area licensees is expected to be between 20 and 30 net new openings (versus 45 to 60 net new openings previously) due to ongoing permitting and construction delays.

The company expects adjusted EBITDA of $245 million-$255 million versus the prior outlook of $243 million-$255 million.

The company reiterated gross capital expenditures guidance of $33 million-$38 million.

"Despite the ongoing volatile macroeconomic environment, we are leveraging our strengths in technology, menu innovation and marketing and are well positioned to create long term shareholder value," said CEO John Peyton.

Price Action: DIN shares are trading lower by 5.31% to $46.68 on the last check Wednesday.