Dine Brands Global (DIN -6.33%), the company behind the Applebee's, IHOP, and Fuzzy's Taco Shop restaurant brands, released results for the second quarter of fiscal 2025 on August 6, 2025. The most notable headline was GAAP revenue of $230.8 million in Q2 2025, surpassing analyst expectations of $223.4 million. However, adjusted earnings per share (non-GAAP) were $1.17, significantly missing the $1.45 estimate. The period showed clear momentum in revenue and Applebee’s sales, but weakness in IHOP and Fuzzy’s, higher expenses, and continued net restaurant closures pulled profit margins lower, resulting in a disappointing bottom line. Overall, the period highlights both promise and persistent headwinds for the business.
| Metric | Q2 2025 | Q2 2025 Estimate | Q2 2024 | Y/Y Change |
|---|---|---|---|---|
| EPS (Non-GAAP) | $1.17 | $1.45 | $1.71 | (31.6%) |
| Revenue (GAAP) | $230.8 million | $223.4 million | $206.3 million | 11.9% |
| Adjusted EBITDA | $56.2 million | $67.0 million | (16.1%) | |
| Applebee’s Domestic Same-Restaurant Sales Change | 4.9% | (1.8%) | 6.7 pp | |
| IHOP Domestic Same-Restaurant Sales Change | (2.3%) | (1.4%) | (0.9 pp) |
Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.
Understanding Dine Brands Global’s Business and Recent Focus
Dine Brands Global is primarily a restaurant franchisor, with most of its restaurants operating under the Applebee's, IHOP (International House of Pancakes), and Fuzzy’s Taco Shop brands. It earns most of its income from franchise fees, royalties, and advertising charges collected from independent operators.
The company's business model relies on expanding its presence with minimal capital outlay. Recently, Dine Brands has focused on innovating its core brands through value menus, digital ordering, technology upgrades, and brand reinvention. Success for the company depends on strong franchisee economics, effective marketing and menu innovation, growth in international and dual-branded restaurants, and maintaining competitiveness in both casual and family dining.
Quarter in Review: Notable Developments and Brand Performance
During Q2 2025, Dine Brands reported stronger-than-expected GAAP revenue growth, primarily due to the acquisition of Applebee’s and IHOP restaurants prior to the quarter. Applebee’s domestic same-restaurant sales grew by 4.9% in Q2 FY2025, a significant improvement over the prior year's 1.8% decline. Promotional activity such as the “Two for $25” menu, limited-time menu innovations, and loyalty program efforts under “Club Applebee’s” helped restore sales momentum and boost average weekly sales per location from $53,900 in Q2 2024 to $58,000 in Q2 2025. Despite these gains, the overall Applebee’s system franchise sales held steady as net closures erased some of the progress. Twenty-one Applebee's locations closed domestically versus just one new opening in the period, with the count dropping to 1,573 from 1,625 units year over year.
Same-restaurant sales at IHOP dropped 2.3% in Q2 2025, a steeper decline than the 1.4% decrease in the prior year. Traffic at IHOP showed some underlying improvement thanks to the “House Faves” value menu and technology-assisted operations, but average weekly unit sales remained nearly flat at $37,800 in Q2 2025. Franchise sales declined, and the total store count fell to 1,796 as of Q2 2025, reflecting ongoing net unit closures.
Fuzzy’s Taco Shop, Dine Brands’ fast-casual Mexican chain, remained a weak spot. Comparable sales for Fuzzy’s Taco Shop domestic same-restaurant locations fell 11.8% in Q2 2025, with the total restaurant count ending at 113 units. The company pointed to ongoing turnaround initiatives like online ordering and system-wide “happy hour” programs, but these have yet to produce meaningful results.
On the financial side, margin pressure was evident. General and administrative expenses (GAAP) rose to $50.8 million in Q2 2025, up 8.3% from Q2 2024. Adjusted EBITDA dropped 16.1% in Q2 2025. The main contributors were higher compensation, increased spending on professional fees, dual-brand and remodel initiatives, and G&A expenses related to company-operated restaurant operations.
Net restaurant closures continued to weigh on the franchise system. Across all brands, there were 16 openings versus 85 closures in the first half of 2025, resulting in 69 fewer restaurants year to date. This persistence of closures—46 restaurant closures by Applebee’s and IHOP franchisees in Q2 2025—demonstrates that underlying franchisee health and local market conditions are still creating headwinds, despite innovation efforts.
Dine Brands continued to invest in its brands. Applebee’s pursued value-driven promotions and menu innovation, while IHOP expanded its “House Faves” menu and rolled out new digital and loyalty program features. Dual-branded concepts—combining Applebee’s and IHOP under one roof—have performed well, with the first domestic location reportedly generating about three times the sales of its single-concept predecessor. These dual-branded units are seen as a potential growth driver, especially internationally, but represent a small portion of the existing business.
The company’s cash and liquidity position remained solid, with $263.2 million in total cash and restricted cash, and $224 million in borrowing capacity as of Q2 2025. A refinancing in Q2 2025 replaced $594 million of existing debt with $600 million at a higher interest rate. The company returned capital to shareholders through $8.0 million in dividends and $6.0 million in share buybacks during Q2 2025.
Looking Ahead: Outlook and What to Watch
Management updated its guidance for fiscal 2025. Applebee’s domestic system-wide comparable same-restaurant sales guidance for FY2025 improved to a 1% to 3% increase, up from the prior forecast of negative 2% to positive 1%. IHOP’s domestic system-wide comparable same-restaurant sales outlook for FY2025 was updated to a range of negative 1% to positive 1%, compared to the previous range of negative 1% to positive 2%. Adjusted EBITDA guidance was reduced to $220 million to $230 million (from $235 million to $245 million) for FY2025, reflecting continued margin pressure and elevated operating costs. The company also raised its full-year G&A expense target to $205 million to $210 million and increased capital expenditure plans to $30 million to $40 million for FY2025.
These guidance changes for FY2025 suggest Dine Brands expects Applebee’s momentum and the dual-brand strategy to build sales, but rising costs, continued net closures, and investments in innovation and technology are likely to weigh on near-term profitability. Management reaffirmed its commitment to investing in its restaurant portfolio, remodeling, and digital enhancements, while returning capital to shareholders through dividends and buybacks.
Investors and observers should watch trends in net restaurant openings and closures, progress in international development, the success of dual-branded concepts, and further improvements in digital ordering and loyalty. The evolution of off-premise dining, as well as any shift in consumer preferences for value-oriented promotions, will continue to influence results in upcoming quarters.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
