Dine Brands(DIN)2023-02-28 16:00Revenue and Operations - For the year ended December 31, 2022, approximately 73% of total revenues were generated from the two largest franchise operating segments, Applebee's and IHOP[17]. - As of December 31, 2022, the company operated 3,596 restaurants, with almost all being franchised, indicating a highly franchised business model[16]. - Revenue from international operations comprised less than 2% of total consolidated revenue for the year ended December 31, 2022[17]. - Approximately 90% of franchise segment revenue for the year ended December 31, 2022, consisted of Applebee's, IHOP, and Fuzzy's royalties and advertising revenue[54]. - The company reported approximately 17 million in notes receivable from franchisees[19]. - The company experienced a slight increase in system-wide sales in the first quarter due to gift card redemptions from the previous December holiday season[78]. - Applebee's domestic franchise restaurant sales for 2022 were 4,021.7 million in 2021[211]. - Applebee's total reported retail sales for 2022 were 7,289.3 million in 2021, marking a 6.0% increase[211]. - IHOP's system-wide sales grew by 7.7% in 2022, supported by a 5.8% increase in domestic same-restaurant sales and an increase in franchise restaurants[201]. Franchise and Acquisitions - The company acquired Fuzzy's Taco Shop in December 2022, which included 135 franchised restaurants and three company-operated restaurants at the time of acquisition[24]. - The company plans to continue evaluating the addition of new brands to its restaurant portfolio through acquisitions and strategic investments[21]. - As of December 31, 2022, signed commitments from IHOP franchisees included plans to build 302 IHOP restaurants over the next six years[58]. - The current standard franchise fees for Fuzzy's restaurants include an initial franchise fee of 151 million to stockholders, including 120.5 million in stock repurchases[201]. - The cumulative total stockholder return for Dine Brands Global, Inc. was 156.89 for the S&P 500[187]. - Dine Brands Global reported net income of 4.96 per diluted share, in 2022, a decrease from 5.66 per diluted share, in 2021[201]. - The effective tax rate for 2022 was 29.3%, influenced by state and local income taxes and non-deductible executive compensation[203]. Employee and Corporate Structure - As of December 31, 2022, the company had 637 employees, with 59% male and 41% female[93]. - Approximately 83% of corporate employees are salaried, while 17% are paid hourly[93]. - The company maintains a focus on diversity and inclusion, with 44% of corporate employees being people of color[93]. Risks and Compliance - The company has been impacted by the COVID-19 pandemic, which has disrupted operations and may continue to affect sales and traffic at restaurants[98]. - The company faces risks related to cybersecurity incidents, which could disrupt operations and damage its reputation[113]. - The company is subject to compliance with PCI DSS guidelines, which regulate the security of cardholder data[114]. - The company may incur additional costs to comply with changing privacy and information security laws, such as the California Consumer Privacy Act[115]. - The company is involved in litigation that could divert significant operational resources and impact financial results[119]. - The company and its franchisees are subject to complaints related to food quality and safety, which could lead to liability issues[120]. - The company is subject to various lawsuits and legal proceedings, which may not have a material adverse impact on its operations[176]. Market and Competitive Environment - The restaurant industry is highly competitive, with sales and profitability affected by various external factors, including consumer behavior and economic conditions[159]. - Negative publicity regarding any single restaurant can adversely affect the entire brand, impacting sales and franchise payments[160]. - Changing health and dietary preferences may lead consumers to avoid the company's restaurants, affecting demand and royalty revenues[168]. Operational Challenges - The inability to open new restaurants that achieve acceptable sales volumes may have a material adverse effect on the company's business and financial condition[146]. - The concentration of franchised restaurants in a limited number of franchisees increases the risk of financial difficulties impacting the company's obligations and revenues[152]. - The company's delivery initiatives may not generate expected returns and could introduce new operational risks[125]. - The company may experience shortages or interruptions in the supply of food and other products, which could affect restaurant operations and revenue[163]. - Effective inventory management is crucial, as mismanagement can lead to financial losses or inventory shortages[164]. - The inability to secure suitable locations for new restaurants may adversely affect sales and operational results[162]. Debt and Financial Obligations - As of December 31, 2022, the company had approximately 0.4 billion in operating lease and financing obligations[103]. - The company must maintain a leverage ratio of less than or equal to 5.25x total debt to adjusted EBITDA to avoid mandatory principal payments[108]. - The company's financial performance measures, including debt service coverage ratios, must be met to avoid potential defaults under existing debt arrangements[100]. - The company's ability to refinance debt or obtain additional financing is influenced by factors beyond its control, including market conditions and credit ratings[110]. Future Outlook - The company is investing in technology to enhance customer access to its brands, including online ordering and delivery services[21]. - The company plans to move its corporate offices from Glendale to Pasadena, California, in May 2023, leasing approximately 93,000 square feet[175].