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What changed in Dine Brands Global, Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Dine Brands Global, Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+313 added−295 removedSource: 10-K (2025-03-05) vs 10-K (2024-02-28)

Top changes in Dine Brands Global, Inc.'s 2024 10-K

313 paragraphs added · 295 removed · 261 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

57 edited+4 added−8 removed102 unchanged
Biggest changeAdvertising may be disseminated in various media, including television, radio, print, point of sale, www.ihop.com, mobile app, outdoor banners, and billboards, online, digital, social media and other emerging media on a national, regional or local level, though most advertising is national. 7 In 2014, we and franchisees whose restaurants account for a large majority of total annual contributions to the IHOP NAF entered into franchise agreement amendments that increased the advertising contribution percentage of those restaurants' gross sales.
Biggest changeThe IHOP NAF is also used to defray certain expenses associated with our marketing and advertising functions. 7 Advertising may be disseminated in various media, including television, radio, print, point of sale, www.ihop.com, mobile app, outdoor banners, billboards, online, digital, social media and other emerging media on a national, regional or local level, though most advertising is national.
Our current standard domestic Applebee's franchise agreement provides for an initial term of 20 years and provides an option for four successive renewal terms, in five-year increments, for up to an additional 20 years, upon payment of an additional franchise fee.
Our current standard domestic Applebee's franchise agreement provides for an initial term of 20 years and an option for four successive renewal terms, in five-year increments, for up to an additional 20 years, upon payment of an additional franchise fee.
The revenues we receive from a typical domestic franchise development arrangement under the Current IHOP Business Model include (a) a location fee equal to $15,000 for an IHOP restaurant that the franchisee contracts to develop upon execution of a single-restaurant development agreement; (b) a development fee equal to $20,000 for each IHOP restaurant that the franchisee contracts to develop upon execution of a multi-restaurant development agreement; (c) an initial franchise fee equal to (i) $40,000 (against which the $20,000 development fee will be credited) for each restaurant developed under a multi-restaurant development agreement, (ii) $50,000 (against which the $15,000 location fee will be credited) for a restaurant developed under a single-restaurant development agreement or (iii) $50,000 for a restaurant opened pursuant to a single-restaurant franchise agreement, in each case paid upon execution of the franchise agreement; (d) franchise royalties equal to 6 4.5% of weekly gross sales; (e) revenue from the sale of our proprietary pancake and waffle dry-mixes; and (f) franchise advertising fees.
The revenues we receive from a typical domestic franchise development arrangement under the Current IHOP Business Model include (a) a location fee equal to $15,000 for an IHOP restaurant that the franchisee contracts to develop upon execution of a single-restaurant development agreement; (b) a development fee equal to $20,000 for each IHOP restaurant that the franchisee contracts to develop upon execution of a multi-restaurant development agreement; (c) an initial franchise fee equal to (i) $40,000 (against which the $20,000 development fee will be credited) for each restaurant developed under a multi-restaurant development agreement, (ii) $50,000 (against which the $15,000 location fee will be credited) for a restaurant developed under a single-restaurant development agreement or (iii) $50,000 for a restaurant opened pursuant to a single- 6 restaurant franchise agreement, in each case paid upon execution of the franchise agreement; (d) franchise royalties equal to 4.5% of weekly gross sales; (e) revenue from the sale of our proprietary pancake and waffle dry mixes; and (f) franchise advertising fees.
Development agreements obligate the developer to build a mutually agreed on number of restaurants in the development area during the term of the development agreement and typically provide that, subject to certain exceptions, we will not own, operate, or grant anyone else the right to operate a Fuzzy’s restaurant in in the development area during the term of the development agreement.
Development agreements obligate the developer to build a mutually agreed on number of restaurants in the development area during the term of the development agreement and typically provide that, subject to certain exceptions, we will not own, operate, or grant anyone else the right to operate a Fuzzy’s restaurant in the development area during the term of the development agreement.
The 2020 time period was excluded in the five-year average above due to distortions caused by COVID-19 pandemic in that year. Sales at restaurants owned by franchisees are not attributable to the Company.
The 2020 time period was excluded in the five-year average above due to distortions caused by the COVID-19 pandemic in that year. Sales at restaurants owned by franchisees are not attributable to the Company.
We are committed to sustaining an 12 environment that accepts, includes and engages everyone in our workforce and encourages open dialogue, empowerment and a sense of belonging. While the world and our business change rapidly, our management believes that respecting individual differences will continue to be essential to our long-term success.
We are committed to sustaining an environment that accepts, includes and engages everyone in our workforce and encourages open dialogue, empowerment and a 12 sense of belonging. While the world and our business change rapidly, our management believes that respecting individual differences will continue to be essential to our long-term success.
Business Dine Brands Global, Inc. ® , together with its subsidiaries (referred to as the “Company,” “Dine Brands Global,” “we,” “our” and “us”), owns and franchises the Applebee’s Neighborhood Grill + Bar ® (“Applebee’s”) concept in the American full-serve restaurant segment within the casual dining category of the restaurant industry, the International House of Pancakes ® (“IHOP”) concept in the midscale full-service restaurant segment within the family dining category of the restaurant industry, and the Fuzzy’s Taco Shop ® (“Fuzzy’s”) concept in the Mexican limited-service restaurant segment within the fast-casual dining category of the restaurant industry acquired in December 2022.
Business Dine Brands Global, Inc. ® , together with its subsidiaries (referred to as the “Company,” “Dine Brands Global,” “we,” “our” and “us”), owns and franchises the Applebee’s Neighborhood Grill + Bar ® (“Applebee’s”) concept in the American full-service restaurant segment within the casual dining category of the restaurant industry, the International House of Pancakes ® (“IHOP”) concept in the midscale full-service restaurant segment within the family dining category of the restaurant industry, and the Fuzzy’s Taco Shop ® (“Fuzzy’s”) concept in the Mexican limited-service restaurant segment within the fast-casual dining category of the restaurant industry, acquired in December 2022.
We refer to this as our “Current IHOP Business Model.” The first restaurant in what became the Applebee’s chain opened in 1980 in Decatur, Georgia. Applebee's International, Inc, (“AII”) became a public company in 1989, comprised of 100 restaurants.
We refer to this as our “Current IHOP Business Model.” The first restaurant in what became the Applebee’s chain opened in 1980 in Decatur, Georgia. Applebee's International, Inc, (“AII”) became a public company in 1989, then comprised of 100 restaurants.
Under the Current IHOP Business Model, a potential franchisee that is approved first enters into a single-restaurant franchise agreement, a single-restaurant development agreement, or a multi-restaurant development agreement with us and is responsible for the development and financing of one or more new IHOP franchised restaurants.
Under the Current IHOP Business Model, a potential franchisee that is approved enters into a single-restaurant franchise agreement, a single-restaurant development agreement, or a multi-restaurant development agreement with us and is responsible for the development and financing of one or more new IHOP franchised restaurants.
Focused on meeting the needs of today’s guest, IHOP leverages industry analytics and brand-specific insights to help drive visit frequency and average check. IHOP restaurants are open throughout the day and evening hours.
Focused on meeting the needs of today’s guest, IHOP leverages industry analytics and brand-specific insights to help drive visit frequency and increase average check. IHOP restaurants are open throughout the day and evening hours.
A substantial majority of franchisees who entered into amendments agreed to an incremental temporary increase in the national advertising contribution rate to 4.25% through December 31, 2024, with no requirement that franchisees spend on local marketing during that time. IHOP franchisees allocate a percentage of their sales to local advertising cooperatives and a national advertising fund (the “IHOP NAF”).
A substantial majority of franchisees who entered into amendments agreed to an incremental temporary increase in the national advertising contribution rate to 4.25% through December 31, 2025, with no requirement that franchisees spend on local marketing during that time. IHOP franchisees allocate a percentage of their sales to local advertising cooperatives and a national advertising fund (the “IHOP NAF”).
Revenue derived from all international operations comprised less than 3% of total consolidated revenue for the year ended December 31, 2023. At December 31, 2023, there were no long-lived assets located outside of the United States. Our Goal Our goal is to accelerate profitable growth and create significant value for stockholders and franchisees.
Revenue derived from all international operations comprised less than 3% of total consolidated revenue for the year ended December 31, 2024. At December 31, 2024, there were no long-lived assets located outside of the United States. Our Goal Our goal is to accelerate profitable growth and create significant value for stockholders and franchisees.
As a result, a reacquired restaurant may incur operating losses for some period of time. 9 Supply Chain In February 2009, Centralized Supply Chain Services, LLC (“CSCS” or the “Co-op”), an independent cooperative entity, was formed by us and franchisees of Applebee's and IHOP domestic restaurants.
As a result, an acquired restaurant may incur operating losses for some period of time. 9 Supply Chain In February 2009, Centralized Supply Chain Services, LLC (“CSCS” or the “Co-op”), an independent cooperative entity, was formed by us and franchisees of Applebee's and IHOP domestic restaurants.
In addition, we have registered various domain names on the Internet that incorporate certain of our trademarks and service marks and believe these domain name registrations are an integral part of our identity. From time to time, we may take appropriate legal action to defend and protect the use of our intellectual property.
In addition, we have registered various domain names on the Internet that incorporate some of our trademarks and service marks and believe these domain name registrations are an integral part of our identity. From time to time, we may take appropriate legal action to defend and protect the use of our intellectual property.
To further secure customers' payment data, we worked with our franchisees to deploy and implement encryption and tokenization technologies, ensuring credit card data is not stored in our franchisees' and our restaurants systems. This includes installation of equipment to improve authentication and to prevent fraud using EMV (Europay, Mastercard, Visa) technology.
To further secure customers' payment data, we worked with our franchisees to deploy and implement encryption and tokenization technologies, ensuring credit card data is not stored in our franchisees' and our restaurants' systems. This includes installation of equipment to improve authentication and to prevent fraud using EMV (Europay, Mastercard, Visa) technology.
At our company-owned restaurant, we employ both full-time and part-time restaurant employees in order to provide the flexibility necessary during peak periods of restaurant operations and meet the individual needs of our employees. Our employees are not presently represented by any collective bargaining agreements and we have not experienced any significant work stoppages.
At our company restaurants, we employ both full-time and part-time restaurant employees in order to provide the flexibility necessary during peak periods of restaurant operations and meet the individual needs of our employees. Our employees are not presently represented by any collective bargaining agreements and we have not experienced any significant work stoppages.
Our business strategy includes the possible addition of new brands to our restaurant portfolio, which may result in our acquiring additional company-operated restaurants. From time to time, we also may reacquire a small number of restaurants from franchisees for a variety of reasons. Historically, we have been able to refranchise these restaurants to new franchisees.
Our business strategy includes the possible addition of new brands to our restaurant portfolio, which may result in our acquiring additional company-operated restaurants. From time to time, we also may acquire a small number of restaurants from franchisees for a variety of reasons. Historically, we have been able to refranchise these restaurants to new franchisees.
Applebee’s sponsors its Franchise Business Council (“FBC”), which consists of eight elected franchisee representatives and three Applebee's representatives. IHOP sponsors its Franchise Leadership Council (“FLC”), an elected and appointed body of up to 12 IHOP franchisees. Fuzzy’s sponsors its Franchise Advisory Council (“FAC”), an elected body of eight Fuzzy’s franchisees plus a Fuzzy’s representative.
Applebee’s sponsors its Franchise Business Council (“FBC”), which consists of eight elected franchisee representatives and three Applebee's representatives. IHOP sponsors its Franchise Leadership Council (“FLC”), an elected and appointed body of up to 14 IHOP franchisees. Fuzzy’s sponsors its Franchise Advisory Council (“FAC”), an elected body of eight Fuzzy’s franchisees plus a Fuzzy’s representative.
Our current standard franchise fees are an initial franchise fee of $40,000 per restaurant, a royalty fee of 5% of weekly gross sales, and a renewal fee of $5,000 per renewal term. We also earn revenue from franchisees from sale of our proprietary sauces.
Our current standard franchise fees are an initial franchise fee of $40,000 per restaurant, a royalty fee of 5% of weekly gross sales, and a renewal fee of $5,000 per renewal term. We also earn revenue from franchisees from sale of our proprietary products.
CSCS has been appointed as the sole authorized purchasing organization and purchasing agent for goods, equipment and distribution services for Applebee's and IHOP restaurants in the United States. As of December 31, 2023, 100% of Applebee's domestic franchise restaurants and 100% of IHOP domestic franchise restaurants were members of CSCS.
CSCS has been appointed as the sole authorized purchasing organization and purchasing agent for goods, equipment and distribution services for Applebee's and IHOP restaurants in the United States. As of December 31, 2024, 100% of Applebee's domestic franchise restaurants and 100% of IHOP domestic franchise restaurants were members of CSCS.
When reacquired restaurants are not refranchised quickly, we typically operate the reacquired restaurants until they can be refranchised. These restaurants may require investments in remodeling and rehabilitation before they can be refranchised.
When acquired restaurants are not refranchised quickly, we typically operate the acquired restaurants until they can be refranchised. These restaurants may require investments in remodeling and rehabilitation before they can be refranchised.
Most of our revenue is derived from domestic sources within these four reporting segments, with approximately 83% of our total revenues for the year ended December 31, 2023 being generated from our two largest franchise operating segments, Applebee's and IHOP. Internationally, our restaurants are in 18 countries and two United States territories at December 31, 2023.
Most of our revenue is derived from domestic sources within these four reporting segments, with approximately 83% of our total revenues for the year ended December 31, 2024 being generated from our two largest franchise operating segments, Applebee's and IHOP. Internationally, our restaurants are in 19 countries and two United States territories at December 31, 2024.
We also derive revenues from the sale of proprietary products to these area licensees and, in certain instances, to their sub-franchisees. Revenues from our area licensees are included in franchise operations revenues. As of December 31, 2023, the area licensee for the state of Florida and certain counties in Georgia operated or sub-franchised a total of 149 IHOP restaurants.
We also derive revenues from the sale of proprietary products to these area licensees and, in certain instances, to their sub-franchisees. Revenues from our area licensees are included in franchise operations revenues. As of December 31, 2024, the area licensee for the state of Florida and certain counties in Georgia operated or sub-franchised a total of 146 IHOP restaurants.
In terms of average sales over the five-year time period covering 2018 to 2023, excluding the year 2020, 25% of our annual system-wide sales (retail sales reported to us by our franchisees plus sales at our company-operated restaurants) occurred in the first, third and fourth quarters of the fiscal year, with 26% occurring in the second quarter (Note: does not add to 100% due to rounding).
In terms of average sales over the five-year time period covering 2019 to 2024, excluding the year 2020, 25% of our annual system-wide sales (retail sales reported to us by our franchisees plus sales at our company-operated restaurants) occurred in each of the first, third and fourth quarters of the fiscal year, with 26% occurring in the second quarter (Note: does not add to 100% due to rounding).
Additionally, we continue to maintain and enhance our in-restaurant health safety and sanitation operational procedures in order to protect the health and foster the confidence of employees and guests at the restaurants. As of December 31, 2023, 263 franchise groups (235 domestic, 28 international) operated 1,814 IHOP franchise and area license restaurants.
Additionally, we continue to maintain and enhance our in-restaurant health safety and sanitation operational procedures in order to protect the health and foster the confidence of employees and guests at the restaurants. 5 As of December 31, 2024, 263 franchise groups (235 domestic, 28 international) operated 1,824 IHOP franchise and area license restaurants.
We embrace our personal differences - whether it be race, gender, age, religion, culture, ethnicity, sexual orientation, veteran status, national origin or physical ability - and the benefits that an array of backgrounds, cultures and thinking styles bring to our organization.
We value, encourage and appreciate the diversity of our workforce. We embrace our personal differences - whether it be race, gender, age, religion, culture, ethnicity, sexual orientation, veteran status, national origin or physical ability - and the benefits that an array of backgrounds, cultures and thinking styles bring to our organization.
Due to cultural and regulatory differences, we may have different requirements for restaurants opened outside of the United States. We also monitor the financial health of our franchisees through business and financial reviews. Composition of Franchise Systems As of December 31, 2023, 32 Applebee’s franchisees owned a total of 1,536 domestic Applebee's restaurants.
Due to cultural and regulatory differences, we may have different requirements for restaurants opened outside of the United States. We also monitor the financial health of our franchisees through business and financial reviews. Composition of Franchise Systems As of December 31, 2024, 30 Applebee’s franchisees owned a total of 1,454 domestic Applebee's restaurants.
Other Franchise-related Revenues and Fees Approximately 90% of franchise segment revenue for the year ended December 31, 2023 consisted of Applebee's, IHOP and Fuzzy's royalties and advertising revenue. Most of the remaining 10% consisted of sales of proprietary products (primarily IHOP pancake and waffle dry mix), initial franchise and renewal fees, and software maintenance and support fees.
Other Franchise-related Revenues and Fees Approximately 89% of franchise segment revenue for the year ended December 31, 2024 consisted of Applebee's, IHOP and Fuzzy's royalties and advertising revenue. Most of the remaining 11% consisted of sales of proprietary products (primarily IHOP pancake and waffle dry mix), initial franchise and renewal fees, and software maintenance and support fees.
In comparison, approximately 545 IHOP restaurants operated 24 hours a day, seven days a week, with 178 additional restaurants operating 24 hours a day for some portion of the week as of December 31, 2022. We remain committed to giving more people, more reasons to enjoy more IHOP, more often.
In comparison, approximately 621 IHOP restaurants operated 24 hours a day, seven days a week, with approximately 200 additional restaurants operating 24 hours a day for some portion of the week as of December 31, 2023. We remain committed to giving more people, more reasons to enjoy more IHOP, more often.
IHOP is in the midscale full-service restaurant segment in the restaurant industry. The June 2023 issue of Nation's Restaurant News reported that IHOP was the largest restaurant system in the midscale full-service restaurant segment, in terms of United States system-wide sales during 2022.
IHOP is in the midscale full-service restaurant segment in the restaurant industry. The June 2024 issue of Nation's Restaurant News reported that IHOP was the largest restaurant chain in the midscale family-style segment in terms of United States system-wide sales during 2023.
Applebee's is in the American full-service restaurant segment in the restaurant industry. The June 2023 issue of Nation's Restaurant News reported that Applebee's was the largest restaurant system in the American full-service restaurant segment, in terms of United States system-wide sales during 2022.
Applebee's is in the American full-service restaurant segment in the restaurant industry. The June 2024 issue of Nation's Restaurant News reported that Applebee's was one of the largest restaurant chains in the casual dining segment, in terms of United States system-wide sales during 2023.
We maintain six Team Member Resource Groups ("TMRGs") as part of our diversity and inclusion efforts. TMRGs are team member-led, self-directed, voluntary groups, each sponsored by a member of our Executive team. Our TMRGs offer internal networking opportunities, career development, expand our innovation and problem solving and in general, act as a vehicle to enhance diversity and inclusion.
We maintain six Team Member Resource Groups ("TMRGs") as part of our diversity and inclusion efforts that are open to all employees. TMRGs are team member-led, self-directed, voluntary groups, each sponsored by a member of our Executive team. Our TMRGs offer internal networking opportunities, career development, and expand our innovation and problem solving.
As of December 31, 2023, approximately 621 IHOP restaurants operated 24 hours a day, seven days a week, with approximately 200 additional restaurants operating 24 hours a day for some portion of the week.
As of December 31, 2024, approximately 663 IHOP restaurants operated 24 hours a day, seven days a week, with approximately 202 additional restaurants operating 24 hours a day for some portion of the week.
Fuzzy’s offers its guest the flexibility of an online ordering platform and loyalty program. As of December 31, 2023, 44 franchise groups operated 131 restaurants in 18 states within the United States and we had one company-owned restaurant in Texas. See Item 2 - Properties, for the geographic location of all Applebee’s, IHOP, and Fuzzy's restaurants.
Fuzzy’s offers its guests the flexibility of an online ordering platform and loyalty program. As of December 31, 2024, 37 franchise groups operated 116 restaurants in 15 states within the United States and we had one company restaurant in Texas. See Item 2 - Properties, for the geographic location of all Applebee’s, IHOP, and Fuzzy's restaurants.
As of December 31, 2023, 28 franchisees owned a total of 118 international IHOP franchise restaurants. The number of international restaurants held by a single franchisee ranged from one restaurant to 18 restaurants. Our five largest IHOP franchisees owned 29% of the total 1,814 IHOP franchise restaurants.
As of December 31, 2024, 28 franchisees owned a total of 130 international IHOP franchise restaurants. The number of international restaurants held by a single franchisee ranged from one restaurant to 20 restaurants. Our five largest IHOP franchisees owned 31% of the total 1,824 IHOP franchise restaurants.
References herein to Applebee’s ® , IHOP ® and Fuzzy’s ® restaurants are to these three restaurant concepts, whether operated by franchisees, area licensees and their sub-licensees or by us. As of December 31, 2023, all of our 3,588 restaurants, except for one, were franchised.
References herein to Applebee’s ® , IHOP ® and Fuzzy’s ® restaurants are to these three restaurant concepts, whether operated by franchisees, area licensees and their sub-licensees or by us. As of December 31, 2024, the substantial majority of our 3,555 restaurants across all brands were franchised.
As of December 31, 2023, we had signed commitments from IHOP franchisees to build 286 IHOP restaurants over the next seven years, comprised of 14 restaurants under single restaurant or non-traditional development agreements, 117 restaurants under domestic multi-restaurant development agreements and 155 restaurants under international development agreements.
As of December 31, 2024, we had signed commitments from IHOP franchisees to build 285 IHOP restaurants over the next six years, comprised of eight restaurants under single restaurant or non-traditional development agreements, 98 restaurants under domestic multi-restaurant development agreements and 179 restaurants under international development agreements.
This has the potential to directly affect our business, including recently enacted laws and regulations in the United States and internationally requiring notification to individuals and government authorities of security breaches involving certain categories of personal information. We are also subject to laws and regulations, which may vary from jurisdiction to jurisdiction, relating to nutritional content and menu labeling.
This has the potential to directly impact our business, especially due to new laws and regulations in the United States and internationally that require notifying individuals and government authorities about security breaches involving certain types of personal information. We are also subject to laws and regulations, which may vary from jurisdiction to jurisdiction, relating to nutritional content and menu labeling.
Restaurant Concepts Applebee's We franchise Applebee’s restaurants in the American full-service restaurant segment within the casual dining category of the restaurant industry. As one of the world’s largest casual dining brands, Applebee’s Neighborhood Grill + Bar offers guests a dining experience that combines simple American fare with classic drinks and local draft beers.
As one of the world’s largest casual dining brands, Applebee’s Neighborhood Grill + Bar offers guests a dining experience that combines simple American fare with classic drinks and local draft beers.
However, we cannot predict the effect of possible future environmental legislation or regulations. Human Capital We view our team members as one of the three core strategic pillars of our business - People, Brand, and Growth.
However, we cannot predict the effect of possible future environmental legislation or regulations. Human Capital We view our team members as one of the three core strategic pillars of our business - People, Brand, and Growth. We believe that hiring, developing and retaining team members is critical to our operations and that our corporate responsibility begins with our team members.
The number of domestic restaurants held by a single franchisee ranged from one restaurant to 439 restaurants. As of December 31, 2023, 21 franchisees owned a total of 106 international Applebee's restaurants. The number of international restaurants held by a single franchisee ranged from one restaurant to 15 restaurants.
The number of domestic restaurants held by a single franchisee ranged from one restaurant to 460 restaurants. As of December 31, 2024, 27 franchisees owned a total of 113 international Applebee's restaurants. The number of international restaurants held by a single franchisee ranged from one restaurant to 12 restaurants.
Our five largest Applebee’s franchisees owned 55% of the total 1,642 Applebee's franchise restaurants. As of December 31, 2023, 235 franchisees owned a total of 1,696 domestic IHOP restaurants, including 82 franchisees that each owned one restaurant. The largest single IHOP franchisee owned 272 domestic restaurants.
Our five largest Applebee’s franchisees owned 56% of the total 1,567 Applebee's franchise restaurants. As of December 31, 2024, 235 franchisees owned a total of 1,694 domestic IHOP restaurants, including 87 franchisees that each owned one restaurant. The largest single IHOP franchisee owned 263 domestic restaurants.
We also have signed option agreements to build an additional 14 restaurants over the next five years, primarily under domestic multi-restaurant development agreements. As of December 31, 2023, we had signed commitments from Applebee's franchisees to build six domestic restaurants and approximately eight international restaurants over the next five years.
We also have signed option agreements to build an additional 11 restaurants over the next four years, primarily under domestic multi-restaurant development agreements. As of December 31, 2024, we had signed commitments from Fuzzy's franchisees to build 122 Fuzzy's Taco Shop restaurants over the next eight years.
As of December 31, 2023, 44 franchisees owned a total of 131 domestic Fuzzy's Taco Shop restaurants. The largest single Fuzzy's franchisee owned 11 domestic restaurants. Our five largest Fuzzy's franchisees owned 33% of the total 131 Fuzzy's franchise restaurants.
As of December 31, 2024, 37 franchisees owned a total of 116 domestic Fuzzy's Taco Shop restaurants. The largest single Fuzzy's franchisee owned 12 domestic restaurants. Our five largest Fuzzy's franchisees owned 40% of the total 116 Fuzzy's franchise restaurants.
We offer other rewards that focus on recognition, career building, health and wellness, time-off benefits, and other perks that are designed to make our peoples’ experience as Dine Brands team members productive and fun. We value, encourage and appreciate the diversity of our workforce.
We also contribute to programs that provide our team members with financial security, now and in the future. We offer other rewards that focus on recognition, career building, health and wellness, time-off benefits, and other perks that are designed to make our peoples’ experience as Dine Brands team members productive and fun.
We have a consistent and fair compensation program that reflects our pay-for-performance philosophy and rewards our team members for their contributions to our success. We offer comprehensive health and protection benefits that support our team members and their families’ overall well-being. We also contribute to programs that provide our team members with financial security, now and in the future.
Our Total Rewards Program plays a big part in our commitment to creating an environment of well-being. We have a consistent and fair compensation program that reflects our pay-for-performance philosophy and rewards our team members for their contributions to our success. We offer comprehensive health and protection benefits that support our team members and their families’ overall well-being.
As of December 31, 2023, we had 596 employees, the majority of whom were corporate employees at our restaurant support centers or in the field. Of our corporate employees, 59% are male and 41% are female, while 56% are white and 44% are people of color. Approximately 84% of our corporate employees are salaried, with 16% paid hourly.
As of December 31, 2024, we had 992 employees, of whom 396 were employees of our company restaurants and 596 were corporate employees at our restaurant support centers or in the field. Of our corporate employees, 59% are male and 41% are female, while 54% are white and 46% are people of color.
We assess our culture and listen to our workforce through periodic team member engagement surveys. Numerous policy changes have been made or been influenced by the feedback we receive from our team members.
We assess our culture and listen to our workforce through periodic team member engagement surveys. Numerous policy changes have been made or been influenced by the feedback we receive from our team members. A recent example of such a change is our hybrid work schedule, which offers increased flexibility for our restaurant support center team members.
We believe the power to meaningfully impact the people and communities we serve is realized when each team member is personally and professionally fulfilled. One of our primary focuses is to ensure the health and well-being of our team members. Our Total Rewards Program plays a big part in our commitment to creating an environment of well-being.
We are focused on a comprehensive approach to valuing diversity across leadership, team members, franchisees and the community. We believe the power to meaningfully impact the people and communities we serve is realized when each team member is personally and professionally fulfilled. One of our primary focuses is to ensure the health and well-being of our team members.
Royalties, advertising fees and other income from 1,642 Applebee’s franchised restaurants, 1,814 IHOP franchised and area licensed restaurants, and 131 Fuzzy's franchised restaurants; • Rental operations - primarily rental income derived from lease or sublease agreements covering 571 IHOP franchised restaurants and two Applebee’s franchised restaurants; • Financing operations - primarily interest income from approximately $20 million of receivables for equipment leases and franchise fee notes generally associated with IHOP franchised restaurants developed before 2003 and approximately $14 million of notes receivable from franchisees; and • Company restaurant operations - primarily retail sales from three Fuzzy's restaurants that were acquired in December 2022, of which two were subsequently refranchised in the second quarter of 2023.
We generated revenue during the year ended December 31, 2024 from four reporting segments, comprised as follows: • Franchise operations - consist of Applebee’s, IHOP and Fuzzy's, generating royalties, advertising fees and other income from 1,567 Applebee’s franchised restaurants, 1,824 IHOP franchised and area licensed restaurants, and 116 Fuzzy's franchised restaurants; • Rental operations - primarily rental income derived from lease or sublease agreements covering 554 IHOP franchised restaurants and two Applebee’s franchised restaurants; • Financing operations - primarily interest income from approximately $13 million of receivables for equipment leases and franchise fee notes generally associated with IHOP franchised restaurants developed before 2003 and approximately $14 million of notes receivable from franchisees; and • Company restaurant operations - primarily retail sales from 47 company-operated Applebee's restaurants we acquired from franchisees in November 2024 and one company-operated Fuzzy's restaurant.
IHOP restaurants feature full table service and high quality, moderately priced food and beverage offerings in an attractive and comfortable family atmosphere.
IHOP We franchise restaurants in the midscale full-service restaurant segment within the family dining category of the restaurant industry under the names IHOP and International House of Pancakes. IHOP restaurants feature full table service and high quality, moderately priced food and beverage offerings in an attractive and comfortable family atmosphere.
In December 2018, we acquired 69 Applebee’s restaurants from a franchisee and operated them as company owned restaurants through October 2022 when we completed the sale of these restaurants to a different franchisee. The first Fuzzy’s Taco Shop opened in 2003 in Fort Worth, Texas and the first franchised location opened in 2009.
In December 2018, we acquired 69 Applebee’s restaurants from a franchisee and operated them as company restaurants through October 2022 when we completed the sale of these restaurants to a different franchisee. In November 2024, we acquired 56 Applebee's restaurants from franchisees, of which nine were simultaneously refranchised to a different franchisee.
The June 2023 issue of Nation's Restaurant News reported that IHOP was the largest restaurant system in the midscale full-service restaurant segment in terms of United States system-wide sales during 2022.
These restaurants were in 49 states within the United States, in the District of Columbia, in two United States territories and in 14 countries outside of the United States. The June 2024 issue of Nation's Restaurant News reported that IHOP was the largest restaurant chain in the midscale family-style segment in terms of United States system-wide sales during 2023.
As of December 31, 2023, we had signed commitments from Fuzzy's franchisees to build 144 Fuzzy's Taco Shop restaurants over the next 12 years.
As of December 31, 2024, we had signed commitments from Applebee's franchisees to build approximately nine domestic restaurants and approximately 59 international restaurants over the next six years.
Since that time, Fuzzy’s has engaged in the development, franchising, and operation of Fuzzy’s Taco Shops. In December 2022, we completed the acquisition of Fuzzy’s, which consisted of 135 franchised restaurants and three company-operated restaurants at the time of acquisition.
In December 2022, we completed the acquisition of Fuzzy’s, which consisted of 135 franchised restaurants and three company-operated restaurants at the time of acquisition. Restaurant Concepts Applebee's We franchise Applebee’s restaurants in the American full-service restaurant segment within the casual dining category of the restaurant industry.
The June 2023 issue of Nation's Restaurant News reported that Applebee's was the largest restaurant system in the American full-service restaurant segment, in terms of United States system-wide sales during 2022. IHOP We franchise restaurants in the midscale full-service restaurant segment within the family dining category of the restaurant industry under the names IHOP and International House of Pancakes.
As of December 31, 2024, Applebee's restaurants were located in 49 states within the United States, two United States territories and 15 countries outside of the United States. The June 2024 issue of Nation's Restaurant News reported that Applebee's was one of the largest restaurant chains in the casual dining segment, in terms of United States system-wide sales during 2023.
As of December 31, 2023, Applebee's restaurants are 100% franchisee owned and operated with 53 franchise groups (32 domestic and 21 international) operating 1,642 Applebee’s franchise restaurants (1,536 domestic and 106 international). As of December 31, 2023, Applebee's restaurants were located in 49 states within the United States, two United States territories and 12 countries outside of the United States.
As of December 31, 2024, Applebee's restaurants are 97.1% franchisee owned and operated with 57 franchise groups (30 domestic and 27 international) operating 1,567 Applebee’s franchise restaurants (1,454 domestic and 113 international). We operated 47 Applebee's restaurants acquired from franchisees in November 2024.
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We generated revenue during the year ended December 31, 2023 from four reporting segments, comprised as follows: • Franchise operations - consist of Applebee’s, IHOP and Fuzzy's.
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We currently operate 47 Applebee's restaurants as company restaurants. The first Fuzzy’s Taco Shop opened in 2003 in Fort Worth, Texas and the first franchised location opened in 2009. Since that time, Fuzzy’s has engaged in the development, franchising, and operation of Fuzzy’s Taco Shops.
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These restaurants were in all 50 states within the United States, in the District of Columbia, in two United 5 States territories and in 13 countries outside of the United States.
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In 2014, we and franchisees whose restaurants account for a large majority of total annual contributions to the IHOP NAF entered into franchise agreement amendments that increased the advertising contribution percentage of those restaurants' gross sales.
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The IHOP NAF is also used to defray certain expenses associated with our marketing and advertising functions.
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Company Restaurants In November 2024, we acquired 56 Applebee's restaurants across Georgia, Texas, Arkansas, Illinois, Kentucky, Tennessee, Mississippi and Missouri from franchisees, of which nine in Texas were simultaneously refranchised to a different franchisee. We currently operate the remaining 47 Applebee's restaurants as company restaurants.
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Company-Operated Restaurants In December 2018, we acquired 69 Applebee's restaurants in North Carolina and South Carolina from a former Applebee's franchisee. In October 2022, we completed the refranchising and sale of the restaurant assets of these 69 Applebee’s company-operated restaurants to a different franchisee.
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Approximately 84% of our corporate employees are salaried, with 16% paid hourly. Of our company restaurant employees, 44% are male and 56% are female, while 49% are white and 51% are people of color. Nearly 94% of our company restaurant employees are paid on an hourly basis, while certain restaurant and operations management and corporate positions are salaried.
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In 2022, we refranchised all 69 company-operated Applebee’s in North and South Carolina but subsequently acquired three company-operated Fuzzy’s Taco Shops in Texas in connection with our acquisition of Fuzzy's in December 2022, of which two were subsequently refranchised in the second quarter of 2023.
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We believe that hiring, developing and retaining team members is critically important to our operations and that our corporate responsibility begins with our team members. We are focused on a comprehensive approach to diversity and representation across leadership, team members, franchisees and the community.
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Some recent examples of these changes include our new flexible hybrid work schedule, which offers increased flexibility for our restaurant support center team members, and our COVID-19 vaccination policy, which protects the health and safety of our team. We believe in accountability that starts with our leadership and extends to all of our team members.
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Our Chief Executive Officer, John W. Peyton, has taken the CEO Action for Diversity and Inclusion pledge. Substantially all our restaurant support center team members as well as our Board members have undertaken a comprehensive diversity and inclusion training seminar.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeThe success of our brands depends in large part on restaurant locations. As demographic and economic patterns change, current locations may not continue to be attractive or profitable. Potential declines in neighborhoods where restaurants are located or adverse economic conditions in areas surrounding those neighborhoods could result in reduced sales in those locations.
Biggest changeA lack of availability of suitable locations for new restaurants or a decline in the quality of the locations of our current restaurants may adversely affect our sales and results of operations. The success of our brands depends in large part on restaurant locations. As demographic and economic patterns change, current locations may not continue to be attractive or profitable.
Our restaurants’ and our franchisees’ restaurants operating margins are also affected by fluctuations in the price of utilities such as electricity and natural gas, whether as a result of inflation or otherwise, on which the restaurants depend for their energy supply.
Our restaurants' and our franchisees’ restaurants' operating margins are also affected by fluctuations in the price of utilities such as electricity and natural gas, whether as a result of inflation or otherwise, on which the restaurants depend for their energy supply.
In connection with the continued operation or remodeling of certain restaurants, we and our franchisees may be required to expend funds to meet federal, state, local and international regulations. The inability to obtain or maintain such licenses or publicity resulting from actual or alleged violations of such laws could have an adverse effect on our results of operations.
In connection with the continued operation or remodeling of certain restaurants, we and our franchisees may be required to expend funds to meet federal, state, local and 18 international regulations. The inability to obtain or maintain such licenses or publicity resulting from actual or alleged violations of such laws could have an adverse effect on our results of operations.
Many of these factors are outside of our control, and any failure to meet market expectations whether for sales growth, earnings per share or other metrics could cause our share price to decline. Our actual operating and financial results in any given period may differ from guidance we provide to the public, including our most recent public guidance.
Many of these factors are outside of our control, and any failure to meet market expectations whether for sales growth, earnings per share or other metrics could cause our share price to decline. Our actual operating and financial results in any given period may differ from guidance we provide to the public, 20 including our most recent public guidance.
There can be no assurance that delivery vendors will not take actions that could have a material adverse effect on our brands and/or subject us to increased 17 litigation and costs. Our delivery initiatives also introduce new operating procedures to our and our franchisees’ restaurants, which could adversely affect the business, brands, and the experience of our guests.
There can be no assurance that delivery vendors will not take actions that could have a material adverse effect on our brands and/or subject us to increased litigation and costs. Our delivery initiatives also introduce new operating procedures to our and our franchisees’ restaurants, which could adversely affect the business, brands, and the experience of our guests.
We continue to have a 21 substantial number of franchise agreements set to expire for our brands. We cannot ensure that renewal or successor franchise agreements or extensions will be entered into once the current term expires. This may result in reduced royalties and other payments due to a decrease in the number of restaurants operating under our brands.
We continue to have a substantial number of franchise agreements set to expire for our brands. We cannot ensure that renewal or successor franchise agreements or extensions will be entered into once the current term expires. This may result in reduced royalties and other payments due to a decrease in the number of restaurants operating under our brands.
Any such sanctions or actions could reduce restaurant revenues and corresponding franchise payments to us. Our business strategy may not achieve anticipated results. We expect to continue to apply a business strategy that includes operation of a significantly franchised restaurant system across multiple brands and brand-specific business strategies 23 suited to each brand.
Any such sanctions or actions could reduce restaurant revenues and corresponding franchise payments to us. Our business strategy may not achieve anticipated results. We expect to continue to apply a business strategy that includes operation of a significantly franchised restaurant system across multiple brands and brand-specific business strategies suited to each brand.
Even where such food-related incidents occur solely at restaurants of our competitors or within the industry, our business could be adversely affected by negative publicity about the restaurant industry generally. Our company-owned restaurants and our franchisees may produce or receive through the supply chain sub-standard or non-compliant food or beverage products.
Even where such food-related incidents occur solely at restaurants of our competitors or within the industry, our business could be adversely affected by negative publicity about the restaurant industry generally. Our company restaurants and our franchisees may produce or receive through the supply chain sub-standard or non-compliant food or beverage products.
We, through the operation of our company-owned restaurants, and our franchisees, through the operation of franchised restaurants, are also subject to "dram shop" laws in some states pursuant to which we and our franchisees may be subject to liability in connection with personal injuries or property damages incurred in connection with wrongfully serving alcoholic beverages to an intoxicated person.
We, through the operation of our company restaurants, and our franchisees, through the operation of franchised restaurants, are also subject to "dram shop" laws in some states pursuant to which we and our franchisees may be subject to liability in connection with personal injuries or property damages incurred in connection with wrongfully serving alcoholic beverages to an intoxicated person.
Any inability or failure to execute on a comprehensive business continuity plan following a major natural disaster such as an earthquake, tornado, flood or a man-made disaster, including terrorism, civil unrest or a cyber incident, at or affecting our corporate facilities could materially adversely impact our business.
Any inability or failure to execute on a comprehensive business continuity plan following a major natural disaster such as an earthquake, wildfire, tornado, flood or a man-made disaster, including terrorism, civil unrest or a cyber incident, at or affecting our corporate facilities could materially adversely impact our business.
We have disaster recovery procedures and business continuity plans in place to address most events of a crisis nature, including earthquakes, tornadoes, floods and other natural or man-made disasters, and back up and off-site locations for recovery of electronic and other forms of data and information.
We have disaster recovery procedures and business continuity plans in place to address most events of a crisis nature, including earthquakes, wildfires, tornadoes, floods and other natural or man-made disasters, and back up and off-site locations for recovery of electronic and other forms of data and information.
From time to time, we have experienced, and we may continue to experience, poor franchise relations caused by the efforts of one or more of our larger franchisees or an organized franchise association. Concentration of Applebee's franchised restaurants in a limited number of franchisees subjects us to greater risk.
From time to time, we have experienced, and we may continue to experience, poor franchise relations caused by the efforts of one or more of our larger franchisees or an organized franchise association. 22 Concentration of Applebee's franchised restaurants in a limited number of franchisees subjects us to greater risk.
We may not be able to adequately adapt Applebee's, IHOP or Fuzzy's restaurants' menu offerings 25 to keep pace with developments in consumer preferences, which may result in reduced royalty revenues from a decline in demand for our food and fewer guests visiting our restaurants.
We may not be able to adequately adapt Applebee's, IHOP or Fuzzy's restaurants' menu offerings to keep pace with developments in consumer preferences, which may result in reduced royalty revenues from a decline in demand for our food and fewer guests visiting our restaurants.
Accordingly, in cases in which a franchisee experiences increased insurance premiums or must pay out-of-pocket claims, the franchisee may not have the funds necessary to make franchise and other payments to us, and franchisees may be unable to perform other obligations under their franchise agreements.
Accordingly, in cases in which a franchisee experiences increased insurance premiums or must pay out-of-pocket claims, the franchisee may not have the funds necessary to make 23 franchise and other payments to us, and franchisees may be unable to perform other obligations under their franchise agreements.
Factors outside our control may harm our brands' reputations. The success of our business is largely dependent upon brand recognition and the strength of our franchise systems. Our and our franchisees’ continued success is directly dependent upon maintaining a favorable public view of the Applebee's, IHOP and Fuzzy's brands.
Factors outside our control may harm our brands' reputations. The success of our business is largely dependent upon brand recognition and the strength of our franchise systems. Our and our franchisees’ continued success is directly dependent 24 upon maintaining a favorable public view of the Applebee's, IHOP and Fuzzy's brands.
We are also impacted by the outcome of tax 19 audits, which could have a material effect on our results of operations and cash flows in the period or periods for which that determination is made.
We are also impacted by the outcome of tax audits, which could have a material effect on our results of operations and cash flows in the period or periods for which that determination is made.
If our ESG practices fail to meet investor, customer, consumer, employee or other stakeholders’ evolving expectations and standards for responsible corporate citizenship in areas including environmental stewardship (such as greenhouse gas emissions) and animal health and welfare, Board of Directors and employee diversity, human capital management, corporate governance and transparency, our reputation, brand, appeal to investors and employee retention may be negatively impacted, which could have a material adverse effect on our business or financial condition.
If our business responsibility practices fail to meet investor, customer, consumer, employee or other stakeholders’ evolving expectations and standards for responsible corporate citizenship in areas including environmental stewardship (such as greenhouse gas emissions), animal health and welfare, Board of Directors and employee diversity, human capital management, corporate governance and transparency, our reputation, brand, appeal to investors and employee retention may be negatively impacted, which could have a material adverse effect on our business or financial condition.
Our financial results are significantly contingent upon the performance of our franchised restaurants because we derive a substantial portion of our revenues from royalties that are based on a percentage of gross sales at franchised restaurants.
Our financial results are 21 significantly contingent upon the performance of our franchised restaurants because we derive a substantial portion of our revenues from royalties that are based on a percentage of gross sales at franchised restaurants.
These factors include: • changes in consumer behavior driven by macro-level shifts in retail, technology, media, e-commerce, global safety and demography which may impact where, when, whether and how often customers visit full-service restaurants; • declines in comparable restaurant sales growth rates due to: (i) failure to meet or adequately adapt to changing customer expectations for food type, quality and taste, or to innovate and develop new menu items to retain existing customers and attract new customers; (ii) competitive intrusions in our markets, including competitive pricing initiatives and day-part expansion by competitors; (iii) opening new restaurants that cannibalize the sales of existing restaurants; (iv) failure of national or local marketing to be effective; and (v) natural or man-made disasters or adverse weather conditions; • negative trends in operating expenses such as: (i) increases in food and other commodity costs or related distribution costs; (ii) increases in labor costs due to minimum wage and other employment laws or regulations, immigration reform, the potential impact of union organizing efforts and tight labor market conditions; and (iii) increases in other operating costs including advertising, utilities, lease-related expenses and credit card processing fees; • the highly competitive nature of the restaurant and related industries with respect to, among other things: (i) price, service, location, personnel and the type and quality of food; (ii) the trend toward convergence in grocery, deli, retail and restaurant services, as well as the continued expansion of restaurants into the breakfast day-part; (iii) the entry of major market players in non-competing industries into the food services market; (iv) the decline in the price of groceries which may increase the attractiveness of dining at home versus dining out; and (v) the emergence of new or improved technologies, including the use of artificial intelligence, and changes in consumer behavior facilitated by such technology; • difficulty in increasing menu pricing to offset increased operating expenses; and • failure to effectively manage further penetration into mature markets.
These factors include: • changes in consumer behavior driven by macro-level shifts in retail, technology, media, e-commerce, global safety and demography which may impact where, when, whether and how often customers visit full-service restaurants; • declines in comparable restaurant sales growth rates due to: (i) failure to meet or adequately adapt to changing customer expectations for food type, quality and taste, or to innovate and develop new menu items to retain existing customers and attract new customers; (ii) competitive intrusions in our markets, including competitive pricing initiatives and day-part expansion by competitors; (iii) opening new restaurants that cannibalize the sales of existing restaurants; (iv) failure of national or local marketing to be effective; and (v) natural or man-made disasters or adverse weather conditions; • negative trends in operating expenses such as: (i) increases in food and other commodity costs or related distribution costs; (ii) increases in labor costs due to minimum wage and other employment laws or regulations, immigration reform, the potential impact of union organizing efforts and tight labor market conditions; and (iii) increases in other operating costs including advertising, utilities, lease-related expenses and credit card processing fees; • the highly competitive nature of the restaurant and related industries with respect to, among other things: (i) price, service, location, personnel and the type and quality of food; (ii) the trend toward convergence in grocery, deli, retail and restaurant services, as well as the continued expansion of restaurants into the breakfast day-part; (iii) the entry of major market players in non-competing industries into the food services market; and (iv) the decline in the price of groceries which may increase the attractiveness of dining at home versus dining out; • difficulty in increasing menu pricing to offset increased operating expenses; and • failure to effectively manage further penetration into mature markets.
As of December 31, 2023, certain of our indirect, wholly-owned subsidiaries had approximately $1.2 billion of long-term debt. In addition, we had approximately $0.4 billion in operating lease, finance lease and other financing obligations as of December 31, 2023. We may incur substantial additional indebtedness in the future.
As of December 31, 2024, certain of our indirect, wholly-owned subsidiaries had approximately $1.2 billion of long-term debt. In addition, we had approximately $0.4 billion in operating lease, finance lease and other financing obligations as of December 31, 2024. We may incur substantial additional indebtedness in the future.
Our franchisees have experienced and continue to experience inflationary conditions with respect to most or all of these costs during fiscal 2023. Increases in minimum wage, health care and other benefit costs may have a material adverse effect on our and our franchisees' labor costs.
Our franchisees have experienced and continue to experience inflationary conditions with respect to most or all of these costs during fiscal 2024. Increases in minimum wage, health care and other benefit costs may have a material adverse effect on our and our franchisees' labor costs.
If our customers' disposable income available for discretionary spending is reduced (because of circumstances such as job losses, credit constraints, higher housing costs, inflation, changes to tax regulations, energy costs, interest rates or other costs) or if the perceived wealth of customers decreases (because of circumstances such as inflation, lower residential real estate values, increased foreclosure rates, changes to tax regulations or other economic disruptions), our business could experience a decline in sales and/or customer traffic as potential customers choose lower-cost alternatives (such as quick-service restaurants) or other alternatives to dining out.
If our customers' disposable income available for discretionary spending is reduced (because of circumstances such as job losses, credit constraints, higher housing costs, inflation, changes to tax regulations, energy costs, interest rates or other costs) or if the perceived wealth of customers decreases (because of circumstances such as inflation, lower residential real estate values, increased foreclosure rates, changes to tax regulations, the imposition of tariffs or other trade barriers, or other economic disruptions), our business could experience a decline in sales and/or customer traffic as potential customers choose lower-cost alternatives (such as quick-service restaurants) or other alternatives to dining out.
Increases in minimum wage and market pressure may also result in increases in the wage rates paid for non-minimum wage positions. Many states and localities are also passing laws regulating employment practices and working conditions which could have a material adverse effect on our and our franchisees’labor costs in those areas.
Increases in minimum wage and market pressure may also result in increases in the wage rates paid for non-minimum wage positions. Many states and localities are also passing laws regulating employment practices and working conditions which could have a material adverse effect on our and our franchisees’ labor costs in those areas.
All IHOP and Applebee's and almost all Fuzzy’s restaurants are owned and operated by our franchisees. Our dependence on our franchisees could adversely affect us, our brands, and our business, financial condition and results of operations.
Substantially all IHOP, Applebee's and Fuzzy’s restaurants are owned and operated by our franchisees. Our dependence on our franchisees could adversely affect us, our brands, and our business, financial condition and results of operations.
The extent to which the COVID-19 pandemic and other epidemics, disease outbreaks or public health emergencies will impact our business, liquidity, financial condition, and results of operations, will depend on numerous evolving factors that we may not be able to accurately predict or assess, including the duration and scope of the pandemic; the negative impact on the economy; the short and longer-term impacts on the demand for restaurant services and levels of consumer confidence; the ability of us and our franchisees to successfully navigate the impacts; government action, including restrictions on restaurant operations; increased unemployment; and reductions in consumer discretionary 20 spending.
The extent to which future potential epidemics, disease outbreaks or public health emergencies will impact our business, liquidity, financial condition, and results of operations, will depend on numerous evolving factors that we may not be able to accurately predict or assess, including the duration and scope of the pandemic; the negative impact on the economy; the short and longer-term impacts on the demand for restaurant services and levels of consumer confidence; the ability of us and our franchisees to successfully navigate the impacts; government action, including restrictions on restaurant operations; increased unemployment; and reductions in consumer discretionary spending.
In 2020, we recognized several significant impairment charges and could incur similar charges in the future. As of December 31, 2023, our total stockholders' deficit was $251.0 million. Any significant impairment write-down of goodwill, intangible assets or long-lived assets in the future could increase the stockholders' deficit. Repurchases of our common stock will also increase the stockholders' deficit.
In 2020 and 2024, we recognized several significant impairment charges and could incur similar charges in the future. As of December 31, 2024, our total stockholders' deficit was $216.0 million. Any significant impairment write-down of goodwill, intangible assets or long-lived assets in the future could increase the stockholders' deficit. Repurchases of our common stock will also increase the stockholders' deficit.
Of the 1,696 IHOP domestic franchise and area license restaurants as of December 31, 2023, approximately 571 restaurants have property lease/sublease agreements and/or notes and equipment contract obligations outstanding. We and our franchisees are subject to potential losses that may not be covered by insurance.
Of the 1,694 IHOP domestic franchise and area license restaurants as of December 31, 2024, approximately 554 restaurants have property lease/sublease agreements and/or notes and equipment contract obligations outstanding. We and our franchisees are subject to potential losses that may not be covered by insurance.
From time to time, our franchisees have failed to fulfill their commitments to build new restaurants in the numbers and within the timeframes required by their development agreements, and we expect that this will continue to varying degrees in the future.
We rely on franchisees to develop Applebee's, IHOP and Fuzzy's restaurants. From time to time, our franchisees have failed to fulfill their commitments to build new restaurants in the numbers and within the timeframes required by their development agreements, and we expect that this will continue to varying degrees in the future.
If any of these existing franchisees experience financial difficulties, future development of Applebee's restaurants may be materially adversely affected. 22 An insolvency or bankruptcy proceeding involving a franchisee could prevent or delay the collection of payments or the exercise of rights under the related franchise agreement.
Development rights for Applebee's restaurants are also concentrated among a limited number of existing franchisees. If any of these existing franchisees experience financial difficulties, future development of Applebee's restaurants may be materially adversely affected. An insolvency or bankruptcy proceeding involving a franchisee could prevent or delay the collection of payments or the exercise of rights under the related franchise agreement.
Internal controls over financial reporting is a process to provide reasonable assurance regarding the reliability of financial reporting for external purposes in accordance with accounting principles generally accepted in the United States.
Our management is responsible for establishing and maintaining effective internal controls over financial reporting. Internal controls over financial reporting is a process to provide reasonable assurance regarding the reliability of financial reporting for external purposes in accordance with accounting principles generally accepted in the United States.
Fair values of goodwill and intangible assets are primarily estimated using discounted cash flows based on five-year forecasts of financial results that incorporate assumptions including, among other things, same-restaurant sales trends, future development plans, brand-enhancing initiatives, restaurant closures and an appropriate discount rate.
Fair values of goodwill and intangible assets are primarily estimated using discounted cash flows based on ten-year forecasts of financial results that incorporate assumptions including, among other things, restaurant sales trends, future development plans, restaurant closures, cost of revenues, operating expenses, and an appropriate discount rate.
The COVID-19 pandemic has impacted and may continue to impact sales and traffic at our and our franchisees’ restaurants, may make it more difficult to staff restaurants and, in more severe cases, may damage our reputation, cause an inability to obtain supplies, increase commodity costs or continue to cause partial or total closures of impacted restaurants.
As experienced through the recent COVID-19 pandemic, epidemics, disease outbreaks or public health emergencies may impact sales and traffic at our and our franchisees’ restaurants, may make it more difficult to staff restaurants and, in more severe cases, may damage our reputation, cause an inability to obtain supplies, increase commodity costs or continue to cause partial or total closures of impacted restaurants.
The success of our franchisees (and our success with company-owned restaurants) depend significantly on the ability to anticipate and react to changes in the price and availability of food, ingredients, labor, health care, utilities, fuel and other related costs.
The success of our franchisees (and our success with company restaurants) depend significantly on the ability to anticipate and react to changes in the price and availability of food (such as the cost and supply of eggs, which may be impacted by avian flu), ingredients, labor, health care, utilities, fuel and other related costs.
Even if a virus or other disease does not spread significantly, the perceived risk of infection or health risk may damage our reputation and adversely affect our business, liquidity, financial condition and results of operations. The COVID-19 pandemic has heightened many of the other risks described in this Item 1A - Risk Factors .
Even if a virus or other disease does not spread significantly, the perceived risk of infection or health risk may damage our reputation and adversely affect our business, liquidity, financial condition and results of operations.
To the extent that our actual financial results do not meet or exceed our guidance, the trading prices of our securities may be materially adversely affected. The novel coronavirus (COVID-19) pandemic has disrupted and may further disrupt our business, which could further materially affect our operations, and business and financial results.
To the extent that our actual financial results do not meet or exceed our guidance, the trading prices of our securities may be materially adversely affected. Epidemics, disease outbreaks or public health emergencies may disrupt our business, which could materially affect our operations, and business and financial results.
There could be significant expenses associated with the defense of any infringement, misappropriation, or other third-party claims. Our delivery initiatives and use of third-party delivery vendors subjects us and our franchisees to a variety of risks related to the delivery of our products by third parties and may not generate expected returns .
Our delivery initiatives and use of third-party delivery vendors subjects us and our franchisees to a variety of risks related to the delivery of our products by third parties and may not generate expected returns .
Although we maintain liability insurance, and each franchisee is required to maintain liability insurance pursuant to its franchise agreements, a liability claim could injure the reputation of all Applebee's, IHOP or Fuzzy's restaurants, whether or not it is ultimately successful. 24 A lack of availability of suitable locations for new restaurants or a decline in the quality of the locations of our current restaurants may adversely affect our sales and results of operations.
Although we maintain liability insurance, and each franchisee is required to maintain liability insurance pursuant to its franchise agreements, a liability claim could injure the reputation of all Applebee's, IHOP or Fuzzy's restaurants, whether or not it is ultimately successful.
As of December 31, 2023, Applebee's franchisees operated 1,536 Applebee's restaurants in the United States. Of those restaurants, the ten largest Applebee's franchisees owned 1,210 restaurants, representing 79% of all franchised Applebee's restaurants in the United States. The largest Applebee's franchisee owned 439 restaurants, representing 29% of all franchised Applebee's restaurants in the United States.
As of December 31, 2024, Applebee's franchisees operated 1,454 Applebee's restaurants in the United States. Of those restaurants, the ten largest Applebee's franchisees owned 1,173 restaurants, representing 81% of all franchised Applebee's restaurants in the United States. The largest Applebee's franchisee owned 460 restaurants, representing 32% of all franchised Applebee's restaurants in the United States.
The current inflationary period could negatively impact consumers’ discretionary income and reduce the amount of income previously used for dining outside the home. Additionally, negative trends in the availability of credit and in expenses such as interest rates and the cost of construction materials could affect our and our franchisees' ability to maintain and remodel existing restaurants.
Additionally, negative trends in the availability of credit and in expenses such as interest rates and the cost of construction materials could affect our and our franchisees' ability to maintain and remodel existing restaurants.
Our business expansion into virtual brands, dual-branded restaurants, and non-traditional restaurant formats, including restaurants with a smaller footprint, restaurants located in non-traditional locations and restaurants that operate on a delivery-only and/or ghost kitchen basis, could create new risks to our brands and reputation.
Our business expansion into virtual brands, dual-branded restaurants, and non-traditional restaurant formats, including restaurants with a smaller footprint, restaurants located in non-traditional locations and restaurants that operate on a delivery-only and/or ghost kitchen basis, could create new risks to our brands and reputation. 19 Failure of our internal controls over financial reporting and future changes in accounting standards may cause adverse unexpected operating results, affect our reported results of operations or otherwise harm our business and financial results.
A failure to sufficiently innovate, develop guest relationship initiatives, or maintain adequate and effective advertising could inhibit our ability to maintain brand relevance and drive increased sales. As part of our marketing efforts, we rely on search engine marketing and social media platforms to attract and retain guests.
A failure to sufficiently innovate, develop guest relationship initiatives, or maintain adequate and effective advertising could inhibit our ability to maintain brand relevance and drive increased sales.
Failure to meet investor and stakeholder expectations regarding environmental, social and corporate governance ( “ ESG ” ) matters may damage our reputation. There is an increasing focus from certain investors, customers, consumers, employees and other stakeholders concerning ESG matters. Additionally, public interest and legislative pressure related to public companies’ ESG practices continue to grow.
Failure to meet investor and stakeholder expectations regarding certain business responsibility matters may damage our reputation. There is a focus from certain investors, customers, consumers, employees and other stakeholders, both for and against certain environmental, sustainability, social and corporate governance matters.
Such shortages could adversely affect our and our franchisees’ ability to operate our restaurants and, in turn, affect our and our franchisees’ revenue and profits.
For example, the current outbreak of avian flu may impact the cost and availability of obtaining eggs. Such shortages could adversely affect our and our franchisees’ ability to operate our restaurants and, in turn, affect our and our franchisees’ revenue and profits.
These efforts may not be successful, resulting in expenses incurred without the benefit of higher revenues or increased employee engagement.
As part of our marketing efforts, we rely on search engine marketing and social media platforms to attract and retain guests. 25 These efforts may not be successful, resulting in expenses incurred without the benefit of higher revenues or increased employee engagement.
In addition, desirable locations for new restaurant openings or for the relocation of existing restaurants may not be available at an acceptable cost when we identify a particular opportunity for a new restaurant or relocation. Additionally, restaurant revitalization initiatives may not be completed as and when projected and may not produce the results we expect.
Potential declines in neighborhoods where restaurants are located or adverse economic conditions in areas surrounding those neighborhoods could result in reduced sales in those locations. In addition, desirable locations for new restaurant openings or for the relocation of existing restaurants may not be available at an acceptable cost when we identify a particular opportunity for a new restaurant or relocation.
Our and our franchised restaurants are dependent on frequent deliveries of fresh produce, food, beverages and other products.
We may experience shortages or interruptions in the supply or delivery of food and other products from third parties or in the availability of utilities. Our and our franchised restaurants are dependent on frequent deliveries of fresh produce, food, beverages and other products.
We also may be unable to operate effectively in new and/or highly competitive geographic regions or local markets in which our franchisees have limited operating experience. We may experience shortages or interruptions in the supply or delivery of food and other products from third parties or in the availability of utilities.
Additionally, restaurant revitalization initiatives may not be completed as and when projected and may not produce the results we expect. We also may be unable to operate effectively in new and/or highly competitive geographic regions or local markets in which our franchisees have limited operating experience.
Finally, regulatory changes or actions under current or future U.S. political administrations may impact the laws or regulations described above.
Finally, regulatory changes or actions under current or future U.S. political administrations may impact the laws or regulations described above. We cannot predict whether or when any of these potential changes in law might become effective in any jurisdiction nor the impact, if any, of these changes to our business.
Risks Related to Our Franchised Business Model Restaurant development plans under development agreements may not be implemented effectively and developed restaurants may not achieve desired results. We rely on franchisees to develop Applebee's, IHOP and Fuzzy's restaurants.
A future potential epidemic, disease outbreak or public health emergency may also heighten many of the other risks described in this Item 1A - Risk Factors . Risks Related to Our Franchised Business Model Restaurant development plans under development agreements may not be implemented effectively and developed restaurants may not achieve desired results.
We cannot predict whether or when any of these potential changes in law might become effective in any jurisdiction nor the impact, if any, of these changes to our business. 18 We are subject to risks associated with self-insurance for medical, dental and vision benefits. We self-insure all of our employee medical, dental and vision benefits.
Changes to immigration laws could result in unknown impacts to the labor market, particularly in industries that rely on immigrant workers, which could lead to increased labor costs and operational disruptions. We are subject to risks associated with self-insurance for medical, dental and vision benefits. We self-insure all of our employee medical, dental and vision benefits.
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Failure of our internal controls over financial reporting and future changes in accounting standards may cause adverse unexpected operating results, affect our reported results of operations or otherwise harm our business and financial results. Our management is responsible for establishing and maintaining effective internal controls over financial reporting.
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The inflationary period experienced over recent years, which has been over 20% cumulatively since 2020, and potential future inflationary periods, could negatively impact consumers’ discretionary income and reduce the amount of income previously used for dining outside the home.
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In addition, any other epidemic, disease outbreak or public health emergency may result in similar adverse effects.
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There could be significant expenses associated with the defense of any infringement, misappropriation, or other third-party claims. We cannot predict the risks associated with the implementation and use of artificial intelligence and related technologies. We may, now and in the future, use artificial intelligence, generative artificial intelligence, or related technologies (collectively, “Artificial Intelligence”).
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Development rights for Applebee's restaurants are also concentrated among a limited number of existing franchisees.
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However, the implementation and use of Artificial Intelligence technologies could present various risks and uncertainties to our business and there is no assurance that using such technologies will produce the 17 desired results.
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The risks and uncertainties related to the use of Artificial Intelligence include, but are not limited to, concerns around privacy, security, intellectual property, and ethics, and if the Artificial Intelligence technologies that we use (or create) turn out to be controversial or otherwise flawed, we could face competitive, brand, or reputational harm, legal liability, regulatory action, or other adverse impacts on our business.
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As the regulatory framework surrounding Artificial Intelligence evolves, it is possible that new laws or regulations will be adopted both within the United States and in non-U.S. jurisdictions, or that existing laws and regulations may be interpreted in ways that could affect the ways in which we use Artificial Intelligence.
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Since these technologies are rapidly and constantly evolving and extremely complex, we cannot predict all of the business and legal risks that may arise from our use of such technologies, any of which could adversely affect our business, financial condition, and results of operations.
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Changes in U.S. government regulations and trade policies, including the imposition of tariffs and other trade barriers, could materially impact our business. Changes to U.S. government regulations could impact our business operations, financial condition, and results of operations.
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Regulatory changes, including without limitation to labor laws, environmental standards, healthcare, and consumer protections, could increase our compliance costs, operational complexities, and potential liabilities. Changes in trade policies, including the imposition of new tariffs or modifications to existing trade agreements, could disrupt our supply chain and increase the cost of imported goods.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeThe Board of Directors recognizes the importance of cybersecurity in safeguarding the Company’s sensitive data. The Board of Directors is responsible for overseeing overall risk management for the Company. The Audit Committee receives reports from the CISO regarding the cybersecurity program.
Biggest changeThe Board of Directors is responsible for overseeing overall risk management for the Company. The Audit Committee receives reports from the CISO regarding the cybersecurity program. The presented topics include, but are not limited to, the status of ongoing cybersecurity initiatives, incident reports and compliance with industry standards.
Our security incident response plan provides guidelines and requirements for reasonable and consistent responses to security incidents to limit damage while preserving the confidentiality, integrity and availability of Company systems and information, and reducing recovery time and cost, including but not limited to, escalation of security incidents to appropriate team members for investigation and response and documenting the required steps for investigation and remediation taken 26 during the security incident response.
Our security incident response plan provides guidelines and requirements for reasonable and consistent responses to security incidents to limit damage while preserving the confidentiality, integrity and availability of Company systems and information, and reducing recovery time and cost, including but not limited to, escalation of security incidents to appropriate team members for investigation and response and documenting the required steps for investigation and remediation taken during the security incident response.
We engage with a range of third-party cybersecurity service providers, assessors and auditors to evaluate and enhance the effectiveness of our cybersecurity program. Services provided by these third parties include 24/7 security logging, network and endpoint monitoring, vulnerability scanning, penetration testing, security incident response tabletop exercises and security and compliance posture assessments.
We engage with a range of third-party cybersecurity service providers, assessors and auditors to evaluate and enhance the effectiveness of our cybersecurity program. Services provided by these third parties include 24/7 security logging, network and 26 endpoint monitoring, vulnerability scanning, penetration testing, security incident response tabletop exercises and security and compliance posture assessments.
As of the date of this report, we are not aware of any risks from cybersecurity threats, including as a result of any previous cybersecurity incidents that have materially affected or are reasonably likely to materially affect the Company, including our business strategy, results of operations, or financial condition.
As of the date of this report, we are not aware of any actively exploited security risks from cybersecurity threats, including as a result of any previous cybersecurity incidents that have materially affected or are reasonably likely to materially affect the Company, including our business strategy, results of operations, or financial condition.
Our cybersecurity risk assessment is performed regularly throughout the year, and may include: • Regular cybersecurity program, risk and incidents reporting to the Board of Directors; • Quarterly cybersecurity risk reporting to the Enterprise Risk Committee, which includes the Company's Chief Executive Officer, Chief Financial Officer, Senior Vice President, Legal, General Counsel & Secretary, Internal Audit, Chief Information Officer and CISO; and • Monthly Security Steering Committee meetings with members from the Company's cybersecurity, ERM, IT, internal audit and legal teams.
Our cybersecurity risk assessment is performed regularly throughout the year, and may include: • Regular cybersecurity program, risk and incidents reporting to the Board of Directors; • Regular cybersecurity risk reporting to the Enterprise Risk Committee, which includes the Company's Chief Executive Officer, Chief Financial Officer, Senior Vice President, Legal, General Counsel & Secretary, Internal Audit, Chief Information Officer and Chief Information Security Officer ("CISO"); and • Routine Security Steering Committee meetings with members from the Company's cybersecurity, ERM, Information Technology (“IT”), internal audit and legal teams.
Our Chief Information Security Officer (“CISO”) leads our cybersecurity team and is generally responsible for management of cybersecurity risk and the protection and defense of our networks and systems. Our CISO has 25 years of experience serving in various roles related to cybersecurity and information security.
Our CISO leads our cybersecurity team and is generally responsible for management of cybersecurity risk and the protection and defense of our networks and systems. Our CISO has 30 years of experience serving in various roles related to cybersecurity and information security.
Our cybersecurity risk management program is based on legal and regulatory requirements and considerations. Cybersecurity risks are included as an integral part of our broader Enterprise Risk Management (“ERM”) program and reviewed quarterly by internal stakeholders comprised of cross-functional team to assess the risk level and strength of our mitigation strategies.
Governance Our cybersecurity risk management program is informed by legal and regulatory requirements and considerations. Cybersecurity risks are included as an integral part of our broader Enterprise Risk Management (“ERM”) program and reviewed regularly by internal stakeholders comprised of a cross-functional team to assess the risk level and strength of our mitigation strategies.
Our program framework and foundation are based on common security standards and frameworks, including ISO/IEC 27001/2:2022 and NIST Cyber Resiliency Framework and Model, in alignment with PCI DSS, privacy laws and regulatory requirements.
See Governance below for additional detail. Our program framework and foundation are based on common security standards and frameworks, including ISO/IEC 27001/2:2022 and NIST Cyber Resiliency Framework and Model, in alignment with PCI DSS, privacy laws and regulatory requirements.
Our cybersecurity program uses layered security defenses, cyber resiliency and automation capabilities for our security functions and operations. Our cybersecurity roadmap outlines and defines the security initiatives, projects and tasks. All security efforts and projects are discussed by the SSC.
Our cybersecurity program uses layered security defenses, cyber resiliency and automation capabilities for our security functions and operations. Our cybersecurity roadmap outlines and defines the security initiatives, projects and tasks. Security investments and projects are discussed by the Security Steering Committee (“SSC”).
Our Security Steering Committee (“SSC”), chaired by our CISO, is comprised of executive level representatives from our Information Technology (“IT"), legal, enterprise risk management and internal audit teams and is responsible for oversight, evaluation and coordination of activities related to safeguards, security risk, controls, remediation activities, policy governance and other factors.
The SSC, chaired by our CISO, is comprised of executive level representatives from our IT, legal, enterprise risk management and internal audit teams and is responsible for oversight, evaluation and coordination of activities related to safeguards, security risk, controls, remediation activities, policy governance and other related security program activities.
The presented topics include, but are not limited to, the status of ongoing cybersecurity initiatives, incident reports and compliance with industry standards. Members of the Board of Directors also engage in ad hoc conversations with management on cybersecurity-related news events and discuss any updates to our cybersecurity risk management and strategy programs. 27
Members of the Board of Directors also engage in ad hoc conversations with management on cybersecurity-related news events and discuss any updates to our cybersecurity risk management and strategy programs. 27
Our cybersecurity plan, strategies, policies, standards, and processes are aligned with common security risk management frameworks and practices including detailed tasks, plans and initiatives. Our program also incorporates incident response plans and notification protocols, to assess and manage incidents and threats, including their materiality.
Our information and cybersecurity policy, standards, strategy, roadmap and processes are aligned with industry-recognized security risk management framework and practices, including detailed tasks, plans and initiatives, which are reviewed and updated periodically, and at least annually. Our program also incorporates incident response plans and notification protocols, to assess and manage security incidents and threats, including their materiality.
We perform an annual tabletop exercise led by third-party security experts with participation from executive management and technical internal teams.
We perform an annual tabletop exercise led by third-party security experts with participation from executive management and technical internal teams. Our employees and vendor partners are also trained to report any security events to the cybersecurity team, who will escalate and notify the legal team, senior executives, and Board of Directors as needed.
Our cybersecurity program is risk-based with an underlying threat modeling framework to enable us to track and measure our progress based on five pillars: strategy and foundation, teach and communicate, build and enhance, risk reduction and maturity, and security compliance.
Our cybersecurity program approach is risk-based, using continuous threat modeling to help us identify, track and measure our progress to reduce security risk based on three pillars: • Prevention, through planning and designing solutions to implement security controls.
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Item 1C. Cybersecurity. Our cybersecurity plan, strategy, policy, standards, and processes are aligned with common security risk management framework and practices, including detailed tasks, plans and initiatives, which are reviewed and updated annually and periodically.
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Item 1C. Cybersecurity. Risk Management and Strategy The primary objective of our security program is to prevent, detect and respond to security risks and threats to protect the confidentiality, integrity and availability of our information systems and our sensitive data.
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Security events are identified via multiple channels, including without limitation security detection mechanisms, near real-time system alerts, out-of-bound channels and dark web monitoring. Our employees and vendor partners are also trained to report any security events to the cybersecurity team, who will escalate and notify the legal team, senior executives, and Board of Directors as needed.
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The security functions that support prevention efforts are aligned with security architecture, strategy and risk management activities; • Detection and response activities, which enable us to discover and respond to cybersecurity events in a timely manner.
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When a potentially damaging or threatening cybersecurity event is detected, our security operations team, focused on delivering detection and response services, executes the appropriate cybersecurity incident response plan; and • Governance and compliance, through cross-functional engagement, good operational hygiene and consistent discipline.
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Ongoing stakeholder collaboration, communications and training within a well-defined policy framework aligned with industry standards is foundational for strong governance and effective compliance. As part of the policy framework, operating procedures are kept up-to-date to reflect the current state of execution and to drive investment and iterative improvements in the highest priority areas of the security program.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeThe table below shows the location and ownership type of Applebee's, IHOP, and Fuzzy's restaurants as of December 31, 2023: Applebee's (a) IHOP (a)(b) Fuzzy's (a) Total Restaurants Franchise Franchise Area License Franchise Company United States Alabama 30 15 — — — 45 Alaska 1 4 — — — 5 Arizona 21 43 — 2 — 66 Arkansas 7 17 — 1 — 25 California 107 226 — — — 333 Colorado 22 37 — 17 — 76 Connecticut 5 11 — — — 16 Delaware 12 8 — — — 20 District of Columbia — 2 — — — 2 Florida 88 — 146 8 — 242 Georgia 58 80 3 1 — 142 Hawaii — 6 — — — 6 Idaho 12 7 — — — 19 Illinois 35 43 — — — 78 Indiana 56 27 — — — 83 Iowa 25 11 — 1 — 37 Kansas 27 31 — 8 — 66 Kentucky 26 12 — — — 38 Louisiana 12 30 — 1 — 43 Maine 12 4 — — — 16 Maryland 18 54 — — — 72 Massachusetts 24 22 — — — 46 Michigan 83 28 — — — 111 Minnesota 45 8 — 1 — 54 Mississippi 20 13 — 1 — 34 Missouri 45 31 — 4 — 80 Montana 7 4 — — — 11 Nebraska 15 7 — — — 22 Nevada 12 24 — — — 36 New Hampshire 13 6 — — — 19 New Jersey 55 50 — — — 105 New Mexico 18 15 — — — 33 New York 95 60 — — — 155 North Carolina 37 52 — — — 89 North Dakota 11 2 — — — 13 Ohio 76 37 — 1 — 114 Oklahoma 11 36 — 9 — 56 Oregon 17 13 — — — 30 Pennsylvania 75 27 — — — 102 Rhode Island 7 5 — — — 12 South Carolina 27 31 — 1 — 59 South Dakota 6 2 — — — 8 Tennessee 28 35 — — — 63 Texas 91 220 — 72 1 384 Utah 9 21 — — — 30 Vermont 3 1 — — — 4 Virginia 48 67 — 1 — 116 Washington 40 34 — — — 74 West Virginia 14 9 — — — 23 Wisconsin 26 18 — 1 — 45 Wyoming 4 1 — 1 — 6 Total Domestic 1,536 1,547 149 131 1 3,364 28 Applebee's (a) IHOP (a)(b) Fuzzy's (a) Total Restaurants Franchise Franchise Area License Franchise Company International Bahamas — 1 — — — 1 Bahrain 1 — — — — 1 Brazil 10 — — — — 10 Canada 12 20 8 — — 40 Dominican Republic 2 — — — — 2 Ecuador — 7 — — — 7 Egypt — 1 — — — 1 Guam 1 1 — — — 2 Guatemala 4 — — — — 4 India — 2 — — — 2 Kuwait 7 5 — — — 12 Mexico 36 54 — — — 90 Oman 1 — — — — 1 Pakistan — 2 — — — 2 Panama 3 3 — — — 6 Peru — 2 — — — 2 Puerto Rico 8 7 — — — 15 Qatar 8 2 — — — 10 Saudi Arabia 11 1 — — — 12 United Arab Emirates 2 2 — — — 4 Total International 106 110 8 — — 224 Totals 1,642 1,657 157 131 1 3,588 _________________________________ (a) The properties identified in this table generate revenue in our franchise, rental, financing and company restaurant operating segments.
Biggest changeThe table below shows the location and ownership type of Applebee's, IHOP, and Fuzzy's restaurants as of December 31, 2024: Applebee's (a) IHOP (a)(b) Fuzzy's (a) Total Restaurants Franchise Company Franchise Area License Franchise Company United States Alabama 30 — 15 — 1 — 46 Alaska 1 — 4 — — — 5 Arizona 20 — 42 — 1 — 63 Arkansas 5 1 17 — 1 — 24 California 103 — 225 — — — 328 Colorado 22 — 36 — 16 — 74 Connecticut 5 — 11 — — — 16 Delaware 12 — 8 — — — 20 District of Columbia — — 2 — — — 2 Florida 87 — — 143 6 — 236 Georgia 24 32 83 3 — — 142 Hawaii — — 7 — — — 7 Idaho 12 — 7 — — — 19 Illinois 30 2 43 — — — 75 Indiana 56 — 27 — — — 83 Iowa 25 — 12 — 1 — 38 Kansas 26 — 30 — 6 — 62 Kentucky 24 2 12 — — — 38 Louisiana 12 — 29 — 1 — 42 Maine 12 — 5 — — — 17 Maryland 17 — 54 — — — 71 Massachusetts 24 — 21 — — — 45 Michigan 81 — 28 — — — 109 Minnesota 45 — 8 — 1 — 54 Mississippi 17 2 13 — 1 — 33 Missouri 41 3 32 — 4 — 80 Montana 7 — 4 — — — 11 Nebraska 14 — 7 — — — 21 Nevada 11 — 23 — — — 34 New Hampshire 13 — 4 — — — 17 New Jersey 55 — 49 — — — 104 New Mexico 18 — 15 — — — 33 New York 94 — 61 — — — 155 North Carolina 37 — 52 — — — 89 North Dakota 11 — 3 — — — 14 Ohio 75 — 39 — 1 — 115 Oklahoma 11 — 35 — 9 — 55 Oregon 17 — 14 — — — 31 Pennsylvania 75 — 28 — — — 103 Rhode Island 6 — 5 — — — 11 South Carolina 26 — 30 — — — 56 South Dakota 6 — 2 — — — 8 Tennessee 22 5 35 — — — 62 Texas 86 — 218 — 66 1 371 Utah 9 — 20 — — — 29 Vermont 3 — — — — — 3 Virginia 46 — 67 — — — 113 Washington 40 — 37 — — — 77 West Virginia 14 — 10 — — — 24 Wisconsin 24 — 18 — — — 42 Wyoming 3 — 1 — 1 — 5 Total Domestic 1,454 47 1,548 146 116 1 3,312 28 Applebee's (a) IHOP (a)(b) Fuzzy's (a) Total Restaurants Franchise Company Franchise Area License Franchise Company International Bahamas 1 — 1 — — — 2 Bahrain 1 — — — — — 1 Brazil 10 — — — — — 10 Canada 11 — 22 8 — — 41 Dominican Republic 3 — — — — — 3 Ecuador — — 7 — — — 7 Egypt — — 1 — — — 1 Guam 1 — 1 — — — 2 Guatemala 4 — — — — — 4 Honduras 1 — 1 — — — 2 India — — 2 — — — 2 Kuwait 7 — 7 — — — 14 Mexico 37 — 55 — — — 92 Oman 1 — — — — 1 Pakistan — — 2 — — — 2 Panama 4 — 4 — — — 8 Peru 1 — 2 — — — 3 Puerto Rico 8 — 8 — — — 16 Qatar 8 — 3 — — — 11 Saudi Arabia 12 — 3 — — — 15 United Arab Emirates 3 — 3 — — — 6 Total International 113 — 122 8 — — 243 Total 1,567 47 1,670 154 116 1 3,555 _________________________________ (a) The properties identified in this table generate revenue in our franchise, rental, financing and company restaurant operating segments.
All of the IHOP restaurants operated by area licensees, 1,640 of the franchisee-operated Applebee's restaurants and all the franchisee-operated Fuzzy's restaurants were located on sites owned or leased by the area licensees or the franchisees.
All of the IHOP restaurants operated by area licensees, 1,565 of the franchisee-operated Applebee's restaurants and all the franchisee-operated Fuzzy's restaurants were located on sites owned or leased by the area licensees or the franchisees.
(b) There are nine IHOP restaurants in the U.S. state of Florida and five IHOP restaurants in Canada that have been sub-licensed by the area licensee.
(b) There are six IHOP restaurants in the U.S. state of Florida and five IHOP restaurants in Canada that have been sub-licensed by the area licensee in Florida and Canada, respectively.
Of the 1,657 IHOP restaurants operated by franchisees, 52 were located on sites owned by us, 519 were located on sites leased by us from third parties and 1,086 were located on sites owned or leased by franchisees.
Of the 1,670 IHOP restaurants operated by franchisees, 52 were located on sites owned by us, 502 were located on sites leased by us from third parties and 1,116 were located on sites owned or leased by franchisees.
Leases of Applebee's restaurants generally have an initial term of 10 to 20 years, with renewal terms of five to 20 years. In addition, a substantial number of the leases for both IHOP and Applebee's restaurants include provisions calling for the periodic escalation of rents during the initial term and/or during renewal terms.
In addition, a substantial number of the leases for both IHOP and Applebee's restaurants include provisions calling for the periodic escalation of rents during the initial term and/or during renewal terms.
We currently occupy approximately 93,000 square feet for our principal corporate offices and restaurant support center located in Pasadena, California, under a lease expiring in August 2035.
We currently occupy approximately 93,000 square feet for our principal corporate offices and restaurant support center located in Pasadena, California, under a lease expiring in August 2035. We also lease approximately 8,000 square feet of office space in Irving, Texas under a lease expiring in February 2026. 29
We owned one site on which a franchisee-operated Applebee's restaurant was located and one franchisee-operated Applebee's restaurant was located on site leased by us from third parties. Leases of IHOP restaurants generally provide for an initial term of 20 to 25 years, with most having one or more five-year renewal options.
Leases of IHOP restaurants generally provide for an initial term of 20 to 25 years, with most having one or more five-year renewal options. Leases of Applebee's restaurants generally have an initial term of 10 to 20 years, with renewal terms of five to 20 years.
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We also lease approximately 20,000 square feet of office space in Leawood, Kansas under a lease expiring in October 2031 and lease approximately 8,000 square feet of office space in Irving, Texas under a lease expiring in February 2026. 29
Added
We owned one site on which a franchisee-operated Applebee's restaurant was located and one franchisee-operated Applebee's restaurant was located on site leased by us from third parties. The 47 Applebee's restaurants we operated as of December 31, 2024 were located on sites leased by us from third parties.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeIssuer Purchases of Equity Securities Purchases of Equity Securities by the Company Month Period Total number of shares purchased to satisfy tax withholding obligations (a) Average price paid per share Total number of shares purchased as part of publicly announced plan or programs Approximate dollar value of shares that may yet be purchased under the plans or programs October 2, 2023 – October 29, 2023 41,336 $ 49.25 40,560 $ 149,266,000 October 30, 2023 – November 26, 2023 44,797 $ 45.28 44,172 $ 147,266,000 November 27, 2023 – December 31, 2023 46,171 $ 46.60 43,101 $ 145,266,000 Total 132,304 $ 46.98 127,833 $ 145,266,000 _________________________________ (a) These amounts represent shares owned and tendered by employees to satisfy tax withholding obligations arising upon the vesting of restricted stock awards.
Biggest changeIssuer Purchases of Equity Securities Purchases of Equity Securities by the Company Month Period Total number of shares (a) Average price paid per share Total number of shares purchased as part of publicly announced plan or programs Approximate dollar value of shares that may yet be purchased under the plans or programs September 30, 2024 – October 27, 2024 421 $ 31.87 — $ 133,266,000 October 28, 2024 – November 24, 2024 401 $ 35.30 — $ 133,266,000 November 25, 2024 – December 29, 2024 2,085 $ 32.24 — $ 133,266,000 Total 2,907 $ 32.61 — $ 133,266,000 _________________________________ (a) These amounts represent shares owned and tendered by employees to satisfy tax withholding obligations arising upon the vesting of restricted stock awards.
Shares so surrendered by the participants are repurchased by us pursuant to the terms of the plan under which the shares were issued and the applicable individual award agreements and not pursuant to publicly announced repurchase authorizations. 30 Stock Performance Graph The graph below shows a comparison of the cumulative total stockholder return on our common stock with the cumulative total return on the Standard & Poor's 500 Composite Index ("S&P 500") and the Standard & Poor's Composite 1500 Restaurants Index (“Restaurants Index”) over the five-year period ended December 31, 2023.
Shares so surrendered by the participants are repurchased by us pursuant to the terms of the plan under which the shares were issued and the applicable individual award agreements and not pursuant to publicly announced repurchase authorizations. 30 Stock Performance Graph The graph below shows a comparison of the cumulative total stockholder return on our common stock with the cumulative total return on the Standard & Poor's 500 Composite Index ("S&P 500") and the Standard & Poor's Composite 1500 Restaurants Index (“Restaurants Index”) over the five-year period ended December 31, 2024.
This number does not include beneficial owners whose shares are held in street name by brokers and other nominees. Dividends on Common Stock Refer to Note 12 - Stockholders' Deficit, of the Notes to the Consolidated Financial Statements for information on dividends declared and paid in the fiscal years ended December 31, 2023, 2022 and 2021.
This number does not include beneficial owners whose shares are held in street name by brokers and other nominees. Dividends on Common Stock Refer to Note 12 - Stockholders' Deficit, of the Notes to the Consolidated Financial Statements for information on dividends declared and paid in the fiscal years ended December 31, 2024, 2023 and 2022.
The graph and table assume $100 was invested at the close of trading on the last day of trading in 2018 in our common stock and in each of the market indices, with reinvestment of all dividends. Stockholder returns over the indicated periods should not be considered indicative of future stock prices or stockholder returns.
The graph and table assume $100 was invested at the close of trading on the last day of trading in 2019 in our common stock and in each of the market indices, with reinvestment of all dividends. Stockholder returns over the indicated periods should not be considered indicative of future stock prices or stockholder returns.
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Market Information Our common stock is traded on the NYSE under the symbol “DIN”. Holders As of February 20, 2024, there were 131 holders of our common stock.
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Market Information Our common stock is traded on the NYSE under the symbol “DIN”. Holders As of February 24, 2025, there were 185 holders of our common stock.
Comparison of Five-Year Cumulative Total Stockholder Return Dine Brands Global, Inc., S&P 500 and the Restaurants Index (Performance Results through December 31, 2023) 2018 2019 2020 2021 2022 2023 Dine Brands Global, Inc. $ 100.00 $ 128.23 $ 92.86 $ 122.03 $ 107.01 $ 85.27 Standard & Poor's 500 100.00 131.49 155.68 200.37 164.08 207.21 S&P Composite 1500 Restaurants (1) 100.00 122.86 146.90 179.28 163.44 189.14 _________________________________ (1) The S&P Composite 1500 Restaurants Index is a comprehensive restaurant industry index.
Comparison of Five-Year Cumulative Total Stockholder Return Dine Brands Global, Inc., S&P 500 and the Restaurants Index (Performance Results through December 31, 2024) 2019 2020 2021 2022 2023 2024 Dine Brands Global, Inc. $ 100.00 $ 72.42 $ 95.16 $ 83.45 $ 66.50 $ 42.71 Standard & Poor's 500 100.00 118.40 152.39 124.79 157.59 197.02 S&P Composite 1500 Restaurants (1) 100.00 119.57 145.93 133.03 153.95 164.08 _________________________________ (1) The S&P Composite 1500 Restaurants Index is a comprehensive restaurant industry index.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeThe following tables present Applebee's and IHOP net restaurant development activity over the past three years: Year Ended December 31, 2023 2022 2021 Applebee's Restaurant Development Activity Summary - beginning of period: Franchise 1,678 1,611 1,640 Company restaurants — 69 69 Total Applebee's restaurants, beginning of period 1,678 1,680 1,709 Domestic 1,569 1,578 1,598 International 109 102 111 Franchise restaurants opened: Domestic 3 4 5 International 7 12 1 Total franchise restaurants opened 10 16 6 Franchise restaurants closed: Domestic (36) (13) (25) International (10) (5) (10) Total franchise restaurants closed (46) (18) (35) Net franchise restaurant reduction (36) (2) (29) Refranchised from Company restaurants — 69 — Net franchise restaurant additions/(reductions) (36) 67 (29) Summary - end of period: Franchise 1,642 1,678 1,611 Company restaurants — — 69 Total Applebee's restaurants, end of period 1,642 1,678 1,680 Domestic 1,536 1,569 1,578 International 106 109 102 % Decrease in total Applebee's restaurants from prior year (2.1) % (0.1) % (1.7) % 37 Year Ended December 31, 2023 2022 2021 IHOP Restaurant Development Activity Summary - beginning of period: Franchise 1,625 1,595 1,611 Area license 156 156 158 Company — — 3 Total IHOP restaurants, beginning of period 1,781 1,751 1,772 Domestic 1,677 1,657 1,670 International 104 94 102 Franchise/area license restaurants opened: Domestic franchise 43 34 35 Domestic area license 3 3 2 International franchise 16 14 3 Total franchise/area license restaurants opened 62 51 40 Franchise/area license restaurants closed: Domestic franchise (25) (14) (47) Domestic area license (2) (3) (3) International franchise (2) (4) (10) International area license — — (1) Total franchise/area license restaurants closed (29) (21) (61) Net franchise/area license restaurant development (reduction) 33 30 (21) Refranchised from Company restaurants — — 4 Franchise restaurants reacquired by the Company — — (1) Net franchise/area license restaurant additions (reductions) 33 30 (18) Summary - end of period: Franchise 1,657 1,625 1,595 Area license 157 156 156 Company — — — Total IHOP restaurants, end of period 1,814 1,781 1,751 Domestic 1,696 1,677 1,657 International 118 104 94 % Increase (decrease) in total IHOP restaurants from prior year 1.9 % 1.7 % (1.2) % As of December 31, 2023, 44 franchise groups operated 131 Fuzzy's restaurants in 18 states within the United States and we had one company-owned restaurant in Texas, totaling 132 restaurants.
Biggest changeThe international development activity is included in the total activity for each brand cited above. 38 The following tables present Applebee's, IHOP and Fuzzy's net restaurant development activity over the past three years: Year Ended December 31, 2024 2023 2022 Applebee's Restaurant Development Activity Summary - beginning of period: Franchise 1,642 1,678 1,611 Company — — 69 Total Applebee's restaurants, beginning of period 1,642 1,678 1,680 Domestic 1,536 1,569 1,578 International 106 109 102 Franchise restaurants opened: Domestic — 3 4 International 17 7 12 Total franchise restaurants opened 17 10 16 Franchise restaurants permanently closed: Domestic (35) (36) (13) International (10) (10) (5) Total franchise restaurants permanently closed (45) (46) (18) Net franchise restaurant reduction (28) (36) (2) Refranchised from company restaurants 9 — 69 Net franchise restaurant (reduction)/addition (19) (36) 67 Franchise restaurants acquired by the Company (56) — — Net franchise restaurant (reductions)/additions (75) (36) 67 Summary - end of period: Franchise 1,567 1,642 1,678 Company restaurants (a) 47 — — Total Applebee's restaurants, end of period 1,614 1,642 1,678 Domestic 1,501 1,536 1,569 International 113 106 109 % Decrease in total Applebee's restaurants from prior year (1.7) % (2.1) % (0.1) % Year Ended December 31, 2024 2023 2022 IHOP Restaurant Development Activity Summary - beginning of period: Franchise 1,657 1,625 1,595 Area license 157 156 156 Company — — — Total IHOP restaurants, beginning of period 1,814 1,781 1,751 Domestic 1,696 1,677 1,657 International 118 104 94 Franchise/area license restaurants opened: Domestic franchise 29 43 34 39 Year Ended December 31, 2024 2023 2022 Domestic area license 1 3 3 International franchise 18 16 14 Total franchise/area license restaurants opened 48 62 51 Franchise/area license restaurants permanently closed: Domestic franchise (28) (25) (14) Domestic area license (4) (2) (3) International franchise (6) (2) (4) Total franchise/area license restaurants permanently closed (38) (29) (21) Net franchise/area license restaurant addition 10 33 30 Summary - end of period: Franchise 1,670 1,657 1,625 Area license 154 157 156 Company — — — Total IHOP restaurants, end of period 1,824 1,814 1,781 Domestic 1,694 1,696 1,677 International 130 118 104 % Increase in total IHOP restaurants from prior year 0.6 % 1.9 % 1.7 % Fuzzy's Restaurant Development Activity (b) Summary - beginning of period: Franchise 131 134 n/a Company 1 3 n/a Total Fuzzy's restaurants, beginning of period 132 137 n/a Franchise restaurants opened: Domestic 3 4 n/a Franchise restaurants permanently closed: Domestic (18) (9) n/a Net franchise restaurant reduction (15) (5) n/a Refranchised from Company restaurants — 2 n/a Net franchise restaurant reduction (15) (3) n/a Summary - end of period: Franchise 116 131 134 Company 1 1 3 Total Fuzzy's restaurants, end of period 117 132 137 Domestic 117 132 137 International — — — % Decrease in total Fuzzy's restaurants from prior year (11.4) % (3.6) % n/a (a) In November 2024, the Company acquired 56 Applebee's restaurants from franchisees and simultaneously refranchised nine to a different franchisee.
It is anticipated that any principal and interest on 46 the Credit Facility outstanding will be repaid in full on or prior to the quarterly payment date in June 2027, subject to two additional one-year extensions at the option of the Company upon the satisfaction of certain conditions. The letters of credit are used primarily to satisfy insurance-related collateral requirements.
It is anticipated that any principal and interest on the Credit Facility outstanding will be repaid in full on or prior to the quarterly payment date in June 2027, subject to two additional one-year extensions at the option of the Company upon the satisfaction of certain conditions. The letters of credit are used primarily to satisfy insurance-related collateral requirements.
The applicable interest rate for swingline advances and unreimbursed draws on outstanding letters of credit is a per annum base rate equal to the sum of (a) the greatest of (i) the prime rate in effect from time to time; (ii) the federal funds rate in effect from time to time plus 0.50%; and (iii) SOFR for a one-month tenor in effect at such time plus 0.50% plus (b) 2.00%.
The applicable interest rate for swingline advances and unreimbursed draws on outstanding letters of credit is a per annum base rate equal to the sum of (a) the greatest of (i) the prime rate in effect from time 48 to time; (ii) the federal funds rate in effect from time to time plus 0.50%; and (iii) SOFR for a one-month tenor in effect at such time plus 0.50% plus (b) 2.00%.
Changes in both domestic same-restaurant sales and in the number of Applebee's and IHOP restaurants will impact our reported retail sales that drive franchise royalty revenues and, where applicable, rental payments under leases that partially may be based on a percentage of their sales.
Changes in both domestic same-restaurant sales and in the number of Applebee's, IHOP and Fuzzy's restaurants will impact our reported retail sales that drive franchise royalty revenues and, where applicable, rental payments under leases that partially may be based on a percentage of their sales.
Domestic Same-Restaurant Sales Restaurant Data - System-wide Sales and Domestic Same-Restaurant Sales The following table sets forth for each of the past three years the number of Global Effective Restaurants in the Applebee’s and IHOP systems and information regarding the percentage change in sales at those restaurants compared to the same periods in the prior two years.
Domestic Same-Restaurant Sales Restaurant Data - System-wide Sales and Domestic Same-Restaurant Sales The following table sets forth for each of the past three years the number of Global Effective Restaurants in the Applebee’s, IHOP and Fuzzy's systems and information regarding the percentage change in sales at those restaurants compared to the same periods in the prior two years.
Future trends in system-wide sales are dependent to a significant extent on national, regional and local economic conditions, and, to a lesser extent, on global economic conditions, particularly those conditions affecting the demographics of the guests that frequently patronize our restaurants.
Future trends in system-wide sales are dependent to a significant extent on national, regional and local economic conditions, and, to a lesser extent, on global economic conditions, particularly those conditions affecting the demographics of the guests that frequently patronize our 51 restaurants.
We review our tax positions quarterly and adjust the balances as new information becomes available. We recognize deferred tax assets and liabilities using the enacted tax rates for the effect of temporary differences between the financial reporting basis and the tax basis of recorded assets and liabilities.
We review our tax positions quarterly and adjust the balances as new information becomes available. 52 We recognize deferred tax assets and liabilities using the enacted tax rates for the effect of temporary differences between the financial reporting basis and the tax basis of recorded assets and liabilities.
Our significant accounting policies are comprehensively described in Note 2 - Basis of Presentation and Significant Accounting Policies, of the Notes to the Consolidated Financial Statements contained in Part II, Item 8 of this 48 10-K.
Our significant accounting policies are comprehensively described in Note 2 - Basis of Presentation and Significant Accounting Policies, of the Notes to the Consolidated Financial Statements contained in Part II, Item 8 of this 10-K.
It is our accounting policy to recognize any deficiency in advertising fee revenue compared to advertising expenditure, or recovery of a previously recognized deficiency in advertising fee revenue compared to advertising expenditures, in the fourth quarter of our fiscal year.
It is our accounting policy to recognize any deficiency in advertising fee revenue compared to advertising expenditure, or 43 recovery of a previously recognized deficiency in advertising fee revenue compared to advertising expenditures, in the fourth quarter of our fiscal year.
See Part II, Item 5 - Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities for detail on this stock repurchase activity during the twelve months ended December 31, 2023. Critical Accounting Estimates We prepare our consolidated financial statements in accordance with United States generally accepted accounting principles (“U.S. GAAP”).
See Part II, Item 5 - Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities for detail on this stock repurchase activity during the twelve months ended December 31, 2024. Critical Accounting Estimates We prepare our consolidated financial statements in accordance with United States generally accepted accounting principles (“U.S. GAAP”).
For a detailed discussion of year-to-year comparisons between fiscal 2022 and fiscal 2021 as well as between fiscal 2021 and fiscal 2020, please refer to the applicable portion of “ Management's Discussion and Analysis of Financial Condition and Results of Operations ” contained in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, which is hereby incorporated by reference.
For a detailed discussion of year-to-year comparisons between fiscal 2023 and fiscal 2022 as well as between fiscal 2022 and fiscal 2021, please refer to the applicable portion of “ Management's Discussion and Analysis of Financial Condition and Results of Operations ” contained in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, which is hereby incorporated by reference.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations. General The following discussion provides analyses of our results of operations and reasons for material changes for 2023 as compared to 2022 and should be read together with the financial statements included in this Annual Report on Form 10-K.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations. General The following discussion provides analyses of our results of operations and reasons for material changes for 2024 as compared to 2023 and should be read together with the financial statements included in this Annual Report on Form 10-K.
The mandatory make-whole premium requirements are considered embedded derivatives that must be bifurcated for separate valuation. We estimated the fair value of these derivatives to be immaterial as of December 31, 2023, based on the probability-weighted discounted cash flows associated with either event.
The mandatory make-whole premium requirements are considered embedded derivatives that must be bifurcated for separate valuation. We estimated the fair value of these derivatives to be immaterial as of December 31, 2024, based on the probability-weighted discounted cash flows associated with either event.
Capital Allocation Dividends During the fiscal years ended December 31, 2023, 2022 and 2021, we declared and paid dividends on common stock as shown in Note 12 - Stockholders' Deficit , of the Notes to the Consolidated Financial Statements included in this report.
Capital Allocation Dividends During the fiscal years ended December 31, 2024, 2023 and 2022, we declared and paid dividends on common stock as shown in Note 12 - Stockholders' Deficit , of the Notes to the Consolidated Financial Statements included in this report.
Long-Term Debt Key provisions of our long-term debt potentially impacting liquidity are summarized below. See Note 8 - Long-term Debt, of the Notes to the Consolidated Financial Statements, for additional detail on long-term debt, including the balances outstanding at December 31, 2023 and 2022.
Long-Term Debt Key provisions of our long-term debt potentially impacting liquidity are summarized below. See Note 8 - Long-Term Debt, of the Notes to the Consolidated Financial Statements, for additional detail on long-term debt, including the balances outstanding at December 31, 2024 and 2023.
The increase for the year ended December 31, 2023 was primarily due to an increase in average check resulting from the successful promotional food and beverage offerings and menu price increases by franchisees, offset by a decrease in traffic.
The decrease for the year ended December 31, 2024 was primarily due to a decrease in traffic, offset by an increase in average check resulting from the successful promotional food and beverage offerings and menu price increases by franchisees.
Accounting Standards Adopted in the Current Fiscal Year See Note 2 - Basis of Presentation and Summary of Significant Accounting Policies, of the Notes to the Consolidated Financial Statements included in this report for a description of accounting standards we adopted in fiscal 2023.
Accounting Standards Adopted in the Current Fiscal Year See Note 2 - Basis of Presentation and Summary of Significant Accounting Policies, of the Notes to the Consolidated Financial Statements included in this report for a description of accounting standards we adopted in fiscal 2024.
Significant assumptions used to determine fair value under the relief of royalty method include future trends in sales, a royalty rate, an estimated income tax rate and a discount rate to be applied to the forecast revenue stream. There is an inherent degree of uncertainty in preparing any forecast of future results.
Significant assumptions used to determine fair value under the relief of royalty method include future trends in sales, a royalty rate, and a discount rate to be applied to the forecast revenue stream. There is an inherent degree of uncertainty in preparing any forecast of future results.
Impairment Charges The Company evaluates its goodwill and the indefinite-lived Applebee's tradename for impairment annually in the fourth quarter of each year or on an interim basis if events or changes in circumstances between annual tests indicate a potential impairment.
Impairment Charges The Company evaluates its goodwill and the indefinite-lived assets for impairment annually in the fourth quarter of each year or on an interim basis if events or changes in circumstances between annual tests indicate a potential impairment.
Based on data from Black Box, IHOP underperformed the family dining segment of the restaurant industry (excluding IHOP) for the three and twelve months ended December 31, 2023, as compared with the same respective periods of 2022.
Based on data from Black Box, IHOP same-restaurant sales underperformed the family dining segment of the restaurant industry (excluding IHOP) for the three and twelve months ended December 31, 2024, as compared with the same respective periods of 2023.
The payment of principal on the Class A-2 Notes may be suspended when the leverage ratio for the Company and its subsidiaries is less than or equal to 5.25x. As of December 31, 2023, our leverage ratio was approximately 4.2x. Therefore, quarterly principal payments are not required.
The payment of principal on the Class A-2 Notes may be suspended when the leverage ratio for the Company and its subsidiaries is less than or equal to 5.25x. As of December 31, 2024, our leverage ratio was approximately 4.1x. Therefore, quarterly principal payments are not required.
Failure to maintain a prescribed DSCR can trigger the following events: • DSCR less than 1.75x - Cash Flow Sweeping Event • DSCR less than 1.20x - Rapid Amortization Event • Interest-only DSCR less than 1.20x - Manager Termination Event • Interest-only DSCR less than 1.10x - Default Event Our DSCR for the reporting period ended December 31, 2023 was approximately 3.6x.
Failure to maintain a prescribed DSCR can trigger the following events: • DSCR less than 1.75x - Cash Flow Sweeping Event • DSCR less than 1.20x - Rapid Amortization Event • Interest-only DSCR less than 1.20x - Manager Termination Event • Interest-only DSCR less than 1.10x - Default Event Our DSCR for the reporting period ended December 31, 2024 was approximately 3.4x.
Based on data from Black Box Intelligence, a restaurant sales reporting firm (“Black Box”), Applebee's same-restaurant sales during the three and twelve months ended December 31, 2023 underperformed the casual dining segment of the restaurant industry (excluding Applebee's) as compared with the same respective periods of 2022.
Based on data from Black Box Intelligence, a restaurant sales reporting firm (“Black Box”), Applebee's same-restaurant sales for the three and twelve months ended December 31, 2024 underperformed the casual dining segment of the restaurant industry (excluding Applebee's) as compared with the same respective periods of 2023.
Sales at restaurants that are owned by franchisees and area licensees are not attributable to the Company and, as such, the percentage changes in sales presented below are based on non-GAAP internal sales data.
Sales at restaurants that are owned by franchisees and area licensees are not attributable to the Company and, as such, the percentage changes in sales at Effective Restaurants presented below are based on internal sales data.
For a detailed discussion of year-to-year comparisons between fiscal 2022 and fiscal 2021, please refer to the applicable portion of “ Management's Discussion and Analysis of Financial Condition and Results of Operations ” contained in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, filed with the SEC on March 1, 2023, which is hereby incorporated by reference.
For a detailed discussion of year-to-year comparisons between fiscal 2023 and fiscal 2022, please refer to the applicable portion of “ Management's Discussion and Analysis of Financial Condition and Results of Operations ” contained in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, filed with the SEC on February 28, 2024, which is hereby incorporated by reference.
On a regular basis, we assess whether events or changes in circumstances have occurred that potentially indicate the carrying value of intangible assets with finite lives, primarily assets related to Applebee's franchise rights.
On a regular basis, we assess whether events or changes in circumstances have occurred that potentially indicate the carrying value of intangible assets with finite lives, primarily assets related to Applebee's franchise rights, may not be recoverable.
As of December 31, 2023, the make-whole premium associated with voluntary prepayment of the Class A-2 Notes was approximately $43.5 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.
As of December 31, 2024, the make-whole premium associated with voluntary prepayment of the 2023 Class A-2 Notes was approximately $28.0 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.
Financing expenses are the cost of taxes related to IHOP equipment leases. Financing revenues decreased $1.0 million in 2023 compared to 2022. The decrease was primarily attributable to the continued amortization of the IHOP franchise fees and equipment lease portfolios.
Financing expenses are the cost of taxes related to IHOP equipment leases. Financing revenues decreased $0.8 million in 2024 compared to 2023. The decrease was primarily attributable to the continued amortization of the IHOP franchise fees and equipment lease portfolios.
Internationally, IHOP restaurants are in two United States territories and 13 countries, while Applebee's restaurants are in two United States territories and 12 countries. With over 3,500 franchised restaurants combined, we believe we are one of the largest full-service restaurant companies in the world.
Internationally, IHOP restaurants are in two United States territories and 14 countries, while Applebee's restaurants are in two United States territories and 15 countries. With over 3,500 restaurants combined, we believe we are one of the largest full-service restaurant companies in the world.
Maturity The final maturity of the 2019 Class A-2-II Notes is in June 2049, but it is anticipated that, unless repaid earlier, the 2019 Class A-2-II Notes will be repaid in June 2026. 45 The final maturity of the 2023 Class A-2 Notes is in March 2053, but it is anticipated that, unless repaid earlier, to the extent permitted under the Indenture, the 2023 Class A-2 Notes will be repaid in June 2029.
The final maturity of the 2023 Class A-2 Notes is in March 2053, but it is anticipated that, unless repaid earlier, to the extent permitted under the Indenture, the 2023 Class A-2 Notes will be repaid in June 2029.
(2) Change in the weighted average number of franchise, area license and company-operated restaurants open during the year ended December 31, 2023, compared to the weighted average number of those open during the prior year referenced.
(2) Change in the weighted average number of franchise, area license and company-operated restaurants open during the year ended December 31, 2024, compared to the weighted average number of those open during the same period of 2023.
On February 26, 2024, our Board of Directors declared a first quarter 2024 cash dividend of $0.51 per share of common stock, payable on April 5, 2024 to the stockholders of record as of the close of business on March 20, 2024.
On February 20, 2025, our Board of Directors declared a first quarter 2025 cash dividend of $0.51 per share of common stock, payable on April 4, 2025 to the stockholders of record as of the close of business on March 17, 2025.
There were 52 calendar weeks in our 2023, 2022, and 2021 fiscal year that ended December 31, 2023, January 1, 2023, and January 2, 2022, respectively.
There were 52 calendar weeks in our 2024, 2023, and 2022 fiscal year that ended December 29, 2024, December 31, 2023, and January 1, 2023, respectively.
The increase in IHOP advertising expenses was less than the increase in advertising revenue due to recognition of a smaller deficit in the international advertising fund compared to prior year.
The increase in IHOP advertising expenses was greater than the increase in advertising revenue due to a prior year recognition of a deficit in the international advertising fund.
Income Taxes Favorable (Unfavorable) Favorable (Unfavorable) 2023 2022 2021 (In millions) Income tax provision $ 14.5 $ 19.2 $ 33.7 $ (9.6) $ 24.1 Effective tax rate 13.0 % 16.3 % 29.3 % (9.6) % 19.7 % The income tax provision will vary from period to period for two primary reasons: a change in pretax book income and a change in the effective tax rate.
Income Tax Provision Favorable (Unfavorable) Favorable (Unfavorable) 2024 2023 2022 (In millions) Income tax provision $ 24.7 $ (10.2) $ 14.5 $ 19.2 $ 33.7 Effective tax rate 27.5 % (14.5) % 13.0 % 16.3 % 29.3 % The income tax provision will vary from period to period for two primary reasons: a change in pretax book income and a change in the effective tax rate.
The weighted average interest rate on Credit Facility borrowings for the period outstanding during the year ended December 31, 2023 was 7.68%.
The weighted average interest rate on Credit Facility borrowings for the period outstanding during the year ended December 31, 2024 was 7.78%.
In August 2022, the Company borrowed $100 million against the Credit Facility, all of which was outstanding at December 31, 2023. The amount of $3.4 million was pledged against the Credit Facility for outstanding letters of credit, leaving $221.6 million of the Credit Facility available for borrowing at December 31, 2023.
In August 2022, the Company borrowed $100 million against the Credit Facility, all of which was outstanding at December 31, 2024. The amount of $0.6 million was pledged against the Credit Facility for outstanding letters of credit, leaving $224.4 million of the Credit Facility available for borrowing at December 31, 2024.
The fair values of goodwill and indefinite-lived intangible assets exceeded their respective carrying values as of the testing dates. 49 Long-Lived Assets On a regular basis, we assess whether events or changes in circumstances have occurred that potentially indicate the carrying value of long-lived tangible assets (primarily assets related to properties and equipment leased or subleased to franchisees, including operating lease right-of-use assets recorded upon adoption of ASC 842) may not be recoverable.
Long-Lived Assets On a regular basis, we assess whether events or changes in circumstances have occurred that potentially indicate the carrying value of long-lived tangible assets (primarily assets related to properties and equipment leased or subleased to franchisees, including operating lease right-of-use assets recorded upon adoption of ASC 842) may not be recoverable.
Rental Operations Favorable (Unfavorable) Favorable (Unfavorable) 2023 2022 2021 (In millions) Rental revenues $ 120.0 $ 3.5 $ 116.5 $ 2.5 $ 114.0 Rental expenses 87.5 0.5 88.0 (0.1) 87.9 Rental operations segment profit $ 32.5 $ 4.0 $ 28.5 $ 2.4 $ 26.1 Gross profit as % of revenue (1) 27.1 % 24.5 % 22.9 % ___________________________________________________ (1) Percentages calculated on actual amounts, not rounded amounts shown above.
Rental Operations Favorable (Unfavorable) Favorable (Unfavorable) 2024 2023 2022 (In millions) Rental revenues $ 115.3 $ (4.7) $ 120.0 $ 3.5 $ 116.5 Rental expenses 86.9 0.6 87.5 0.5 88.0 Rental operations segment profit $ 28.4 $ (4.1) $ 32.5 $ 4.0 $ 28.5 Gross profit as % of revenue (1) 24.6 % 27.1 % 24.5 % ___________________________________________________ (1) Percentages calculated on actual amounts, not rounded amounts shown above.
Share Repurchases On February 17, 2022, our Board of Directors authorized a new share repurchase program, effective April 1, 2022, of up to $250 million (the "2022 Repurchase Program"). In connection with the approval of the 2022 Repurchase Program, the 2019 Share Repurchase Program terminated effective April 1, 2022.
Share Repurchases On February 17, 2022, our Board of Directors authorized a new share repurchase program, effective April 1, 2022, of up to $250 million (the "2022 Repurchase Program").
IHOP Off-premise Sales Data Three Months Ended December 31, Twelve Months Ended December 31, 2023 2022 2021 2023 2022 2021 Off-premise sales (in millions) (1) $ 155.9 $ 160.9 $ 169.8 $ 616.5 $ 627.4 $ 690.0 % sales mix 20.4 % 21.7 % 23.3 % 20.6 % 22.0 % 26.1 % (1) Primarily to-go, delivery and catering sales.
IHOP Off-Premise Sales Data Three Months Ended December 31, Twelve Months Ended December 31, 2024 2023 2022 2024 2023 2022 Off-premise sales (in millions) (1) $ 154.3 $ 155.9 $ 160.9 $ 600.5 $ 616.5 $ 627.4 % sales mix 20.4 % 20.4 % 21.7 % 20.2 % 20.6 % 22.0 % (1) Primarily to-go, delivery and catering sales.
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 December 31, 2023, the make-whole premium associated with voluntary prepayment of the Class A-2-II Notes was zero and will remain as such.
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 December 31, 2024, there was no make-whole premium associated with voluntary prepayment of the 2019 Class A-2-II Notes.
The following table represents the timing of principal receipts from the Company's long-term receivables for equipment, real estate leases receivable, and other notes receivable from franchisees as of December 31, 2023: Principal Receipts Due By Period 2024 2025 2026 2027 2028 Thereafter Total (In millions) Equipment leases (1) $ 6.7 $ 5.5 $ 4.1 $ 2.3 $ 0.8 $ 0.3 $ 19.7 Real estate leases receivable (2) 2.0 1.3 1.3 1.4 1.5 10.9 18.4 Other notes (3) 3.8 2.1 2.0 2.2 0.7 3.7 14.5 Total $ 12.5 $ 8.9 $ 7.4 $ 5.9 $ 3.0 $ 14.9 $ 52.6 __________________________________________ (1) Equipment leases receivable extend through the year 2029.
The Company increased spending in information technology and other projects in fiscal year 2023. 49 The following table represents the timing of principal receipts from the Company's long-term receivables for equipment, real estate leases receivable, and other notes receivable from franchisees as of December 31, 2024: Principal Receipts Due By Period 2025 2026 2027 2028 2029 Thereafter Total (In millions) Equipment leases (1) $ 5.6 $ 4.2 $ 2.3 $ 0.8 $ 0.4 $ — $ 13.2 Real estate leases receivable (2) 1.4 1.5 1.6 1.7 1.7 10.4 18.3 Other notes (3) 1.8 1.6 1.5 1.5 1.4 6.2 14.0 Total $ 8.8 $ 7.3 $ 5.4 $ 4.0 $ 3.5 $ 16.6 $ 45.5 __________________________________________ (1) Equipment leases receivable extend through the year 2029.
A summary of our financial summary for the years ended December 31, 2023 and 2022 is as follows: Financial Summary Favorable (Unfavorable) 2023 2022 (In thousands, except per share amounts) Income before income taxes $ 111,703 $ (3,082) $ 114,785 Income tax provision (14,527) 19,147 (33,674) Net income $ 97,176 $ 16,065 $ 81,111 Effective tax rate 13.0 % 16.3 % 29.3 % Net income per diluted share $ 6.22 $ 1.26 $ 4.96 Weighted average diluted shares (in millions) 15.2 (0.7) 15.9 The primary reasons for the variances in income before income taxes are summarized as follows: 2023 vs. 2022 (In millions) Increase (decrease) in gross profit: Franchise operations $ 21.4 Company operations (5.2) Rental and Financing operations 3.1 Total gross profit increase 19.3 Increase in closure and impairment charges (0.5) Increase in General & Administrative (“G&A”) expenses (7.3) Change in (gain) loss on disposition of assets (4.9) Increase in interest expense (9.1) All other (0.6) Decrease in income before income taxes $ (3.1) The decrease in income before income taxes in fiscal 2023 compared to fiscal 2022 was due to higher interest and G&A expenses and a loss on disposition of assets, partially offset by the increase in gross profit.
A summary of our financial summary for the years ended December 31, 2024 and 2023 is as follows: Financial Summary Favorable (Unfavorable) 2024 2023 (In thousands, except per share amounts) Income before income taxes $ 89,543 $ (22,160) $ 111,703 Income tax provision (24,653) (10,126) (14,527) Net income $ 64,890 $ (32,286) $ 97,176 Effective tax rate 27.5 % (14.5) % 13.0 % Net income per diluted share $ 4.22 $ (2.00) $ 6.22 Weighted average diluted shares (in millions) 14.9 (0.3) 15.2 The primary reasons for the variances in income before income taxes are summarized as follows: 2024 vs. 2023 (In millions) Decrease in gross profit: Franchise operations $ (15.9) Company restaurant operations (0.7) Rental and financing operations (4.9) Total gross profit decrease (21.5) Increase in closure and impairment charges (5.6) Decrease in General & Administrative (“G&A”) expenses 1.4 Change in (gain) loss on disposition of assets 5.5 Increase in interest expense, net (2.1) All other 0.1 Decrease in income before income taxes $ (22.2) 33 The decrease in income before income taxes in fiscal 2024 compared to fiscal 2023 was due to the decrease in gross profit, the increase in closure and impairment charges and higher net interest expense, partially offset by a favorable change in gain/loss on disposition of assets and lower G&A expenses.
In recognition of this risk, there is a valuation allowance of $4.4 million as of December 31, 2023. 44 Liquidity and Capital Resources of the Company Our total cash balances, net of revolving credit facility borrowings, at December 31, 2023, 2022 and 2021 were as follows: December 31, 2023 December 31, 2022 December 31, 2021 (In millions) Cash and cash equivalents $ 146.0 $ 269.7 $ 361.4 Restricted cash, current 35.1 38.9 47.5 Restricted cash, non-current 19.5 16.4 16.4 Total cash, restricted cash and cash equivalents 200.6 325.0 425.3 Less: Revolving credit facility borrowing (100.0) (100.0) — Total cash, restricted cash and cash equivalents, net $ 100.6 $ 225.0 $ 425.3 At December 31, 2023, we had contractual obligations to repay debt, make payments under operating leases, finance leases and financing obligations, and to purchase certain goods and services.
Liquidity and Capital Resources of the Company Our total cash balances, net of revolving credit facility borrowings, at December 31, 2024, 2023 and 2022 were as follows: December 31, 2024 December 31, 2023 December 31, 2022 (In millions) Cash and cash equivalents $ 186.7 $ 146.0 $ 269.7 Restricted cash, current 42.4 35.1 38.9 Restricted cash, non-current 19.5 19.5 16.4 Total cash, restricted cash and cash equivalents 248.6 200.6 325.0 Less: Revolving credit facility borrowing (100.0) (100.0) (100.0) Total cash, restricted cash and cash equivalents, net $ 148.6 $ 100.6 $ 225.0 At December 31, 2024, we had contractual obligations to repay debt, make payments under operating leases, finance leases and financing obligations, and to purchase certain goods and services.
Net franchise restaurant development/reduction also impacts franchise revenues in the form of initial franchise fees and, in the case of IHOP restaurants, sales of proprietary pancake and waffle dry mix.
Net franchise restaurant development/reduction also impacts franchise revenues in the form of initial franchise fees and, in the case of IHOP and Fuzzy's restaurants, sales of proprietary products.
IHOP's increase in bad debt expense resulted from the recognition of bad debt expense in 2023 compared to a bad debt recovery in 2022. 40 Advertising revenue and expense by brand for fiscal 2023, 2022 and 2021 were as follows: Favorable (Unfavorable) Favorable (Unfavorable) 2023 2022 2021 (In millions) Advertising Revenues Applebee's $ 180.0 $ 2.6 $ 177.4 $ 7.8 $ 169.6 IHOP 117.0 5.3 111.7 6.5 105.2 Fuzzy's 3.8 3.6 0.2 0.2 — Total advertising revenues $ 300.8 $ 11.5 $ 289.3 $ 14.5 $ 274.8 Advertising Expenses Applebee’s $ 180.1 $ (5.5) $ 174.6 $ (7.7) $ 166.9 IHOP 117.1 (4.8) 112.3 (6.9) 105.4 Fuzzy's 3.8 (3.6) 0.2 (0.2) — Total advertising expenses $ 301.0 $ (13.9) $ 287.1 $ (14.8) $ 272.3 Applebee's advertising revenue for 2023 increased 1.5% compared to 2022, primarily due to an increase in the number of effective franchise restaurants (note that advertising contributions to the NAF by company-operated restaurants are not reflected in this financial statement line item) and the increase of 0.6% in domestic franchise same-restaurant sales, partially offset by a $2.6 million decrease due to unfavorable collectability.
Advertising revenue and expense by brand for fiscal 2024, 2023 and 2022 were as follows: Favorable (Unfavorable) Favorable (Unfavorable) 2024 2023 2022 (In millions) Advertising Revenues Applebee's $ 171.2 $ (8.8) $ 180.0 $ 2.6 $ 177.4 IHOP 115.6 (1.4) 117.0 5.3 111.7 Fuzzy's 3.6 (0.2) 3.8 3.6 0.2 Total advertising revenues $ 290.4 $ (10.4) $ 300.8 $ 11.5 $ 289.3 Advertising Expenses Applebee’s $ 176.0 $ 4.1 $ 180.1 $ (5.5) $ 174.6 IHOP 115.6 1.5 117.1 (4.8) 112.3 Fuzzy's 3.7 0.1 3.8 (3.6) 0.2 Total advertising expenses $ 295.3 $ 5.7 $ 301.0 $ (13.9) $ 287.1 Applebee's advertising revenue for 2024 decreased 4.9% compared to 2023, primarily due to a decrease of 4.1% in domestic franchise same-restaurant sales and a decrease in the number of effective franchise restaurants (note that advertising contributions to the NAF by company-operated restaurants are not reflected in this financial statement line item), partially offset by a $1.6 million increase due to favorable collectability.
Recoverability of the Company's assets is measured by comparing the assets' carrying value to the undiscounted cash flows expected to be generated over the assets' remaining useful life or remaining lease term, whichever is less.
The analysis is performed at the individual restaurant level for indicators of impairment. Recoverability of the Company's assets is measured by comparing the assets' carrying value to the undiscounted cash flows expected to be generated over the assets' remaining useful life or remaining lease term, whichever is less.
The closures presented in the tables above represent permanent closures of restaurants. Temporary closures, which can occur for a variety of reasons, are not reflected as reductions in these tables and temporarily closed restaurants are included in the summary counts at the beginning and end of each period shown.
Temporary closures, which can occur for a variety of reasons, are not reflected as reductions in these tables and temporarily closed restaurants are included in the summary counts at the beginning and end of each period shown. However, temporary closures are reflected in the weighted calculation of Global Effective Restaurants presented in the preceding Restaurant Data tables.
Investing Activities Investing activities used net cash of $30.1 million for the year ended December 31, 2023 compared to using net cash of $80.9 million for the year ended December 31, 2022, a favorable change of $50.8 million.
Investing Activities Investing activities used net cash of $8.5 million for the year ended December 31, 2024 compared to using net cash of $30.1 million for the year ended December 31, 2023, a favorable change of $21.6 million.
Significant assumptions made by management in estimating fair value under the discounted cash flow model include future trends in sales, operating expenses, overhead expenses, depreciation, capital expenditures, changes in working capital and an estimated income tax rate, along with an appropriate discount rate based on our estimated cost of equity capital and after-tax cost of debt.
Significant assumptions made by management in estimating fair value under the discounted cash flow model include restaurant sales trends, future development plans, restaurant closures, cost of revenues, operating expenses, and an appropriate discount rate. based on our estimated cost of equity capital and after-tax cost of debt.
For additional details, please refer to Note 7, Long-Term Debt, in the Notes to the Consolidated Financial Statements. 43 The Company repaid the entire outstanding balance of approximately $585.1 million of its 2019 Class A-2-I Notes during the year ended December 31, 2023 and recognized a $1.7 million loss on extinguishment of debt from the write-off of the related remaining issuance costs.
The Company repaid the entire outstanding balance of approximately $585.1 million of its 2019 Class A-2-I Notes during the year ended December 31, 2023 and recognized a $1.7 million loss on extinguishment of debt from the write-off of the related remaining issuance costs.
Reconciliation of the cash provided by operating activities to adjusted free cash flow is as follows: Favorable (Unfavorable) 2023 2022 (In millions) Cash flows provided by operating activities $ 131.1 $ 41.8 $ 89.3 Net receipts from notes and equipment receivables 9.3 (1.3) 10.6 Additions to property and equipment (37.2) (1.9) (35.3) Adjusted free cash flow $ 103.3 $ 38.6 $ 64.6 The increase in adjusted free cash flow in 2023 compared to 2022 was primarily due to the increase in cash provided by operating activities which was discussed in preceding section of this MD&A.
Reconciliation of the cash provided by operating activities to adjusted free cash flow is as follows: Favorable (Unfavorable) 2024 2023 (In millions) Cash flows provided by operating activities $ 108.2 $ (22.9) $ 131.1 Net receipts from notes and equipment receivables 12.3 3.0 9.3 Additions to property and equipment (14.1) 23.1 (37.2) Adjusted free cash flow $ 106.4 $ 3.2 $ 103.3 The increase in adjusted free cash flow in 2024 compared to 2023 was primarily due to the decrease in additions to property and equipment and the decrease in cash provided by operating activities which was discussed in preceding section of this MD&A.
Definite-lived intangible assets and long-lived tangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable based on estimated undiscounted future cash flows.
Definite-lived intangible assets and long-lived tangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable based on estimated undiscounted future cash flows. The Company performed a quantitative assessment of the Fuzzy’s goodwill and tradename as of December 31, 2024, the annual testing date.
The total number of Fuzzy's restaurants (domestic only) open at December 31, 2023 declined 3.8% from the number open at December 31, 2022, as franchisees opened 4 new restaurants and closed 9 restaurants. Internationally, the number of Applebee's and IHOP restaurants increased 6.2% from the number open at December 31, 2022.
The total number of Fuzzy's restaurants (domestic only) open at December 31, 2024 declined 11.4% from the number open at December 31, 2023, as franchisees opened three new restaurants but closed 18 restaurants. Internationally, the number of Applebee's and IHOP restaurants increased 8.5% from the number open at December 31, 2023.
Cash Flows In summary, our cash flows for the years ended December 31, 2023 and 2022 were as follows: Year Ended December 31, 2023 2022 Variance (In millions) Net cash provided by operating activities $ 131.1 $ 89.3 $ 41.8 Net cash used in investing activities (30.1) (80.9) 50.8 Net cash used in financing activities (225.4) (108.8) (116.6) Net decrease in cash, cash equivalents and restricted cash $ (124.4) $ (100.4) $ (24.0) Operating Activities Cash provided by operating activities is primarily driven by revenues earned and collected from our franchisees, and profit from our rental operations, financing operations and our company-owned restaurants.
Cash Flows In summary, our cash flows for the years ended December 31, 2024 and 2023 were as follows: Year Ended December 31, 2024 2023 Variance (In millions) Net cash provided by operating activities $ 108.2 $ 131.1 $ (23.0) Net cash used in investing activities (8.5) (30.1) 21.6 Net cash used in financing activities (51.7) (225.4) 173.7 Net increase (decrease) in cash, cash equivalents and restricted cash $ 48.0 $ (124.4) $ 172.4 Operating Activities Cash provided by operating activities is primarily driven by revenues earned and collected from our franchisees, and profit from our rental operations, financing operations and our company restaurants.
Because of new restaurant openings and restaurant closures, the domestic restaurants open throughout the fiscal years being compared may be different from year to year. (e) Applebee's franchise sales percentage change for 2022 was impacted by the refranchising of 69 company-operated restaurants in October 2022 now reported as franchised.
Because of new restaurant openings and restaurant closures, the domestic restaurants open throughout both fiscal periods being compared may be different from period to period. (e) The franchise sales percentage change for 2024 was impacted by the acquisition of 47 franchise restaurants in November 2024 now reported as company-operated.
The decrease for the three months ended December 31, 2023 was primarily due to a decrease in traffic, offset by an increase in average check.
The decrease for the three months ended December 31, 2024 was primarily due to a decrease in traffic, offset by an increase in average check. The decrease for the year ended December 31, 2024 was primarily due to a decrease in traffic, offset by an increase in average check resulting from menu price increases by franchisees.
(2) Real estate leases receivable extend through the year 2042. (3) Other notes receivable extend through the year 2028. Financing Activities Financing activities used net cash of $225.4 million for the year ended December 31, 2023.
(2) Real estate leases receivable extend through the year 2045. (3) Other notes receivable extend through the year 2031. Financing Activities Financing activities used net cash of $51.7 million for the year ended December 31, 2024.
(b) “System-wide sales” are retail sales at Applebee’s domestic restaurants operated by franchisees and IHOP restaurants operated by franchisees and area licensees, as reported to the Company, in addition to retail sales at company-operated restaurants. Sales at restaurants that are owned by franchisees and area licensees are not attributable to the Company.
(b) “System-wide sales” are retail sales at Applebee’s and Fuzzy's restaurants operated by franchisees and IHOP restaurants operated by franchisees and area licensees, as reported to the Company, in addition to retail sales at company-operated Applebee's and Fuzzy's restaurants. System-wide sales do not include retail sales of ghost kitchens.
The closure charges of $1.7 million for the year ended December 31, 2022 comprised of $1.3 million for revisions to existing closure reserves, including accretion for approximately 40 IHOP restaurants closed prior to 2022 and $0.4 million related to three IHOP restaurants closed in 2022.
The closure charges of $1.6 million for the year ended December 31, 2023 primarily comprised of revisions to existing closure reserves, including accretion, for approximately 40 IHOP restaurants closed prior to 2022.
Cash provided by operating activities increased $41.8 million during the year ended December 31, 2023 compared to the same period of the prior year.
Cash provided by operating activities decreased $23.0 million during the year ended December 31, 2024 compared to the same period of the prior year.
Applebee's Year Ended December 31, Global Effective Restaurants: (a) 2023 2022 2021 Franchise 1,659 1,617 1,621 Company — 56 69 Total 1,659 1,673 1,690 System-wide: (b) Domestic sales percentage change (c) (0.1) % 4.7 % 34.4 % Domestic same-restaurant sales percentage change (d) 0.6 % 5.1 % 38.2 % Franchise: (b) Domestic sales percentage change (c)(e) 2.9 % 5.3 % 34.4 % Domestic same-restaurant sales percentage change (d) 0.6 % 5.1 % 38.2 % Domestic average weekly unit sales (in thousands) $ 54.0 $ 53.7 $ 50.9 IHOP Year Ended December 31, Global Effective Restaurants: (a) 2023 2022 2021 Franchise 1,629 1,597 1,571 Area license 156 156 156 Total 1,785 1,753 1,727 System-wide: (b) Sales percentage change (c) 6.0 % 7.7 % 38.5 % Domestic same-restaurant sales percentage change (d) 3.5 % 5.8 % 40.2 % Franchise: (b) Sales percentage change (c) 6.1 % 7.7 % 38.1 % Domestic same-restaurant sales percentage change (d) 3.6 % 5.7 % 39.7 % Average weekly unit sales (in thousands) $ 38.5 $ 37.0 $ 34.9 Area License: (b) IHOP sales percentage change (c) 4.3 % 7.9 % 42.4 % 34 _________________________________ (a) “Global Effective Restaurants” are the weighted average number of restaurants open in a given fiscal period, adjusted to account for restaurants open for only a portion of the period.
Applebee's Restaurant Data Year Ended December 31, Global Effective Restaurants: (a) 2024 2023 2022 Franchise 1,616 1,659 1,617 Company 6 — 56 Total 1,622 1,659 1,673 System-wide: (b) Domestic sales percentage change (c) (5.5) % (0.1) % 4.7 % Domestic same-restaurant sales percentage change (d) (4.2) % 0.6 % 5.1 % Franchise: (b) Domestic sales percentage change (c)(e) (5.7) % 2.9 % 5.3 % Domestic same-restaurant sales percentage change (d) (4.1) % 0.6 % 5.1 % Domestic average weekly unit sales (in thousands) $ 52.3 $ 54.0 $ 53.7 34 IHOP Restaurant Data Year Ended December 31, Global Effective Restaurants: (a) 2024 2023 2022 Franchise 1,646 1,629 1,597 Area license 155 156 156 Total 1,801 1,785 1,753 System-wide: (b) Sales percentage change (c) (1.1) % 6.0 % 7.7 % Domestic same-restaurant sales percentage change, including area license restaurants (d) (2.0) % 3.5 % 5.8 % Franchise: (b) Sales percentage change (c) (0.9) % 6.1 % 7.7 % Domestic same-restaurant sales percentage change (d) (1.9) % 3.6 % 5.7 % Average weekly unit sales (in thousands) $ 37.7 $ 38.5 $ 37.0 Area License: (b) IHOP sales percentage change (c) (2.8) % 4.3 % 7.9 % Fuzzy's Restaurant Data Global Effective Restaurants: (a), (f) Franchise 122 135 n/a Company 1 1 n/a Total 123 136 n/a System-wide: (b) Sales percentage change (c) (14.7) % (2.4) % n/a Domestic same-restaurant sales percentage change (d) (9.3) % (4.2) % n/a Franchise: (b) Sales percentage change (c) (14.4) % (1.5) % n/a Domestic same-restaurant sales percentage change (d) (9.2) % (4.2) % n/a Domestic average weekly unit sales (in thousands) $ 29.1 $ 30.6 n/a _________________________________ (a) “Effective Restaurants” are the weighted average number of restaurants open in each fiscal period, adjusted to account for restaurants open for only a portion of the period.
Rental operations gross profit increased primarily due to a $3.5 million increase in rental income. 39 Franchise Operations Favorable (Unfavorable) Favorable (Unfavorable) 2023 2022 2021 (In millions, except number of restaurants) Global Effective Franchise Restaurants: (1) Applebee’s 1,659 42 1,617 (4) 1,621 IHOP 1,785 32 1,753 26 1,727 Franchise Revenue: Applebee's $ 173.5 $ 0.3 $ 173.2 $ 5.6 $ 167.6 IHOP 218.5 19.2 199.3 9.8 189.5 Advertising 300.8 11.5 289.3 14.5 274.8 Fuzzy's 13.6 13.0 0.6 0.6 — Total franchise revenue 706.4 44.0 662.4 30.5 631.9 Franchise Expenses: Applebee’s 4.7 (0.4) 4.3 (1.4) 2.9 IHOP 37.6 (7.1) 30.5 (9.8) 20.7 Advertising 301.0 (13.9) 287.1 (14.8) 272.3 Fuzzy's 1.1 (1.1) 0.0 0.0 — Total franchise expenses 344.4 (22.5) 321.9 (26.0) 295.9 Franchise Gross Profit: Applebee’s 168.8 (0.1) 168.9 4.2 164.7 IHOP 180.9 12.1 168.8 — 168.8 Advertising (0.2) (2.4) 2.2 (0.3) 2.5 Fuzzy's 12.5 11.9 0.6 0.6 — Total franchise segment profit $ 362.0 $ 21.5 $ 340.5 $ 4.5 $ 336.0 Gross profit as % of total revenue 51.3 % 51.4 % 53.2 % Gross profit as % of franchise fees (2) 89.3 % 90.7 % 93.4 % _________________________________ (1) Effective Franchise Restaurants are the weighted average number of franchise and area license restaurants open in a given fiscal period, adjusted to account for franchise and area license restaurants open for only a portion of the period.
Franchise Operations Favorable (Unfavorable) Favorable (Unfavorable) 2024 2023 2022 (In millions, except number of restaurants) Global Effective Franchise Restaurants: (1) Applebee’s 1,616 (43) 1,659 42 1,617 IHOP 1,801 16 1,785 32 1,753 Fuzzy's 1 — 1 n/a n/a Franchise Revenue: Applebee's $ 166.3 $ (7.3) $ 173.5 $ 0.3 $ 173.2 IHOP 217.2 (1.3) 218.5 19.2 199.3 Advertising 290.4 (10.4) 300.8 11.5 289.3 Fuzzy's 12.0 (1.5) 13.6 13.0 0.6 Total franchise revenue 686.0 (20.4) 706.4 44.0 662.4 Franchise Expenses: Applebee’s 4.4 0.3 4.7 (0.4) 4.3 IHOP 36.3 1.3 37.6 (7.1) 30.5 Advertising 295.3 5.7 301.0 (13.9) 287.1 Fuzzy's 3.9 (2.8) 1.1 (1.1) 0.0 Total franchise expenses 339.9 4.5 344.4 (22.5) 321.9 Franchise Gross Profit: Applebee’s 161.9 (6.9) 168.8 (0.1) 168.9 IHOP 180.9 — 180.9 12.1 168.8 Advertising (4.8) (4.6) (0.2) (2.4) 2.2 Fuzzy's 8.1 (4.4) 12.5 11.9 0.6 Total franchise segment profit $ 346.1 $ (15.9) $ 362.0 $ 21.5 $ 340.5 Gross profit as % of total revenue 50.5 % 51.3 % 51.4 % Gross profit as % of franchise fees (2)(3) 88.7 % 89.3 % 90.7 % _________________________________ (1) Effective Franchise Restaurants are the weighted average number of franchise and area license restaurants open in a given fiscal period, adjusted to account for franchise and area license restaurants open for only a portion of the period. 42 (2) Total franchise revenue excluding advertising.
The total number of IHOP restaurants (domestic and international) open at December 31, 2023 increased 1.9% from the number open at December 31, 2022, as IHOP franchisees and area licensees opened 62 restaurants and closed 29 restaurants, resulting in net development of 33 restaurants.
The total number of IHOP restaurants (domestic and international) open at December 31, 2024 increased 0.6% from the number open at December 31, 2023, as IHOP franchisees and area licensees opened 48 restaurants and closed 38 restaurants, resulting in net development of 10 restaurants.
Closures generally fall into one of two categories: restaurants in older locations whose retail, residential and traffic demographics have changed unfavorably over time, and restaurants with non-viable unit economics.
Restaurant Development Restaurant closures can occur for a variety of reasons that may differ for each restaurant and for each franchisee. Closures generally fall into one of two categories: restaurants in older locations whose retail, residential and traffic demographics have changed unfavorably over time, and restaurants with non-viable unit economics.
In December 2022, we acquired the Fuzzy's Taco Shop ® (“Fuzzy's”) concept in the Mexican limited-service restaurant segment within the fast-casual dining category of the restaurant industry and as such, Fuzzy's did not have a comparative period to report.
In December 2022, we acquired the Fuzzy's Taco Shop ® (“Fuzzy's”) concept in the Mexican limited-service restaurant segment within the fast-casual dining category of the restaurant industry.
The June 2023 issue of Nation's Restaurant News reported that IHOP was the largest restaurant system in the midscale full-service restaurant segment and Applebee's was the largest restaurant system in the American full-service restaurant segment, in terms of United States system-wide sales during 2022.
The June 2024 issue of Nation's Restaurant News reported that IHOP was the largest restaurant chain in the midscale family-style segment and Applebee's was one of the largest restaurant chains in the casual dining segment, in terms of United States system-wide sales during 2023.
A summary of shares repurchased under the 2022 Repurchase Program, during the year ended December 31, 2023 and cumulatively, is as follows: Shares Cost of shares (In millions) 2022 Repurchase Program Repurchased during the year ended December 31, 2023 446,189 $ 26.1 Cumulative (life-of-program) repurchases 1,595,778 $ 104.8 Remaining dollar value of shares that may be repurchased n/a $ 145.2 See Note 12 - Stockholders' Deficit, of the Notes to the Consolidated Financial Statements included in this report for shares repurchased in fiscal 2023, 2022 and 2021.
In connection with the approval of the 2022 Repurchase Program, the 2019 Share Repurchase Program terminated effective April 1, 2022. 50 A summary of shares repurchased under the 2022 Repurchase Program, during the year ended December 31, 2024 and cumulatively, is as follows: Shares Cost of shares (In millions) 2022 Repurchase Program Repurchased during the year ended December 31, 2024 269,621 $ 12.0 Cumulative (life-of-program) repurchases 1,865,399 $ 116.8 Remaining dollar value of shares that may be repurchased n/a $ 133.2 See Note 12 - Stockholders' Deficit, of the Notes to the Consolidated Financial Statements included in this report for shares repurchased in fiscal 2024, 2023 and 2022.
Amortization of Intangible Assets Amortization of intangible assets primarily relates to franchising rights arising from the November 2007 acquisition of Applebee's, reacquired franchise rights arising from the December 2018 acquisition of 69 Applebee's restaurants from a former franchisee, and franchising rights arising from the December 2022 acquisition of Fuzzy's.
Amortization of Intangible Assets Amortization of intangible assets primarily relates to franchising rights arising from the November 2007 acquisition of Applebee's, acquired franchise rights arising from the December 2018 acquisition of 69 Applebee's restaurants from a former franchisee, franchising rights arising from the December 2022 acquisition of Fuzzy's, and acquired franchise rights arising from the November 2024 acquisition of 47 Applebee's restaurants from franchisees as discussed under Events Impacting Comparability of Financial Information .
Our key performance indicators for the year ended December 31, 2023 were as follows: Applebee's IHOP System-wide sales percentage increase (0.1) % 6.0 % Domestic system-wide same-restaurant sales percentage increase 0.6 % 3.5 % Net (decrease) increase in franchise restaurant development (1) (36) 33 Net (decrease) increase in global effective restaurants (2) (14) 32 _________________________________ (1) Franchise and area license restaurant openings, net of closings.
Our key performance indicators for the year ended December 31, 2024 were as follows: Applebee's IHOP Fuzzy's Sales percentage decrease in reported system-wide sales - 2024 vs 2023 (5.5) % (1.1) % (14.7) % % Decrease in domestic system-wide same-restaurant sales (4.2) % (2.0) % (9.3) % Net franchise restaurant (reduction)/addition (1) (28) 10 (15) Net (decrease) increase in global effective restaurants (2) (37) 16 (13) _________________________________ (1) Franchise and area license restaurant closings, net of openings during the year ended December 31, 2024.
Domestic Same-Restaurant Sales Trends Applebee’s system-wide domestic same-restaurant sales decreased 0.5% for the three months ended December 31, 2023 and increased 0.6% for the year ended December 31, 2023, as compared to the same respective periods of 2022.
Domestic Same-Restaurant Sales - Fuzzy's Fuzzy's system-wide domestic same-restaurant sales decreased 10.3% for the three months ended December 31, 2024 and decreased 9.3% for the year ended December 31, 2024, as compared to the same respective periods of 2023.
Material cash requirements to satisfy these obligations were as follows: Obligation Due in Fiscal 2024 Due Thereafter Total Reference (1) (in millions) Long-term debt (principal) $ 100.0 $ 1,094.0 $ 1,194.0 Note 8 - Long-term Debt Long-term debt (interest) 72.8 218.1 290.9 Note 8 - Long-term Debt Operating leases 80.9 321.7 402.6 Note 10 - Leases Finance leases 8.4 45.0 53.4 Note 10 - Leases Financing obligations 4.6 36.5 41.1 Note 9 - Financing Obligations Purchase commitments 117.6 0.0 117.6 Note 11 - Commitments and Contingencies Total $ 384.3 $ 1,715.3 $ 2,099.6 _________________________________ (1) See referenced note of Notes to the Consolidated Financial Statements for additional information about the obligation.
Material cash requirements to satisfy these obligations were as follows: Obligation Due in Fiscal 2025 Due Thereafter Total Reference (1) (in millions) Long-term debt (principal) $ 100.0 $ 1,094.0 $ 1,194.0 Note 8 - Long-term Debt Long-term debt (interest) 71.5 150.9 222.4 Note 8 - Long-term Debt Operating leases 87.2 387.5 474.7 Note 10 - Leases Finance leases 7.6 44.8 52.4 Note 10 - Leases Financing obligations 4.1 29.3 33.4 Note 9 - Financing Obligations Purchase commitments 94.7 34.6 129.3 Note 11 - Commitments and Contingencies Total $ 365.1 $ 1,741.1 $ 2,106.2 _________________________________ (1) See referenced note of Notes to the Consolidated Financial Statements for additional information about the obligation.
Applebee's off-premise sales dollars and percentage of sales mix for the three and twelve months ended December 31, 2023 decreased as compared with the same respective periods of 2022, primarily due to changing guest behavior.
IHOP's off-premise sales dollars for the three and twelve months ended December 31, 2024 decreased as compared to the same respective periods of 2023.
For each reporting period, management applies a consistent methodology to measure and adjust all uncertain tax positions based on the available information. 50 Business Acquisitions We allocate the purchase price of acquired companies to the assets acquired and liabilities assumed based on estimated fair values at the acquisition date, with the excess of purchase price over the estimated fair value of the identifiable net assets acquired recorded as goodwill.
Business Acquisitions We allocate the purchase price of acquired companies to the assets acquired and liabilities assumed based on estimated fair values at the acquisition date, with the excess of purchase price over the estimated fair value of the identifiable net assets acquired recorded as goodwill.
Financial Review Favorable (Unfavorable) Favorable (Unfavorable) Revenue 2023 2022 2021 (In millions) Franchise operations $ 706.4 $ 44.0 $ 662.4 $ 30.5 $ 631.9 Company restaurant operations 2.1 (124.8) 126.9 (19.1) 146.0 Rental operations 120.0 3.5 116.5 2.5 114.0 Financing operations 2.6 (1.0) 3.6 (0.7) 4.3 Total revenue $ 831.1 $ (78.3) $ 909.4 $ 13.2 $ 896.2 % Increase (8.6) % 1.5 % Our 2023 total revenue decreased $78.3 million compared to 2022, primarily due to the decrease in company restaurant operations revenue, partially offset by the increase in franchise operations revenue.
Refer to additional discussion of these impairments under the heading "Financial Review - Impairment of Goodwill and Intangible Assets." Financial Review Favorable (Unfavorable) Favorable (Unfavorable) Revenue 2024 2023 2022 (In millions) Franchise operations $ 686.0 $ (20.4) $ 706.4 $ 44.0 $ 662.4 Company restaurant operations 9.3 7.2 2.1 (124.8) 126.9 Rental operations 115.3 (4.7) 120.0 3.5 116.5 Financing operations 1.8 (0.8) 2.6 (1.0) 3.6 Total revenue $ 812.3 $ (18.8) $ 831.1 $ (78.3) $ 909.4 % Increase (2.3) % (8.6) % Our 2024 total revenue decreased $18.8 million compared to 2023, primarily due to the decrease in franchise and rental operations revenue, partially offset by an increase in company restaurant operations revenue.
Closure and Impairment Charges Favorable (Unfavorable) Favorable (Unfavorable) 2023 2022 2021 (In millions) Closure charges $ 1.6 $ 0.1 $ 1.7 $ 2.0 $ 3.7 Long-lived asset impairment 2.0 (0.6) 1.4 0.3 1.7 Total $ 3.6 $ (0.5) $ 3.1 $ 2.3 $ 5.4 Closure Charges The closure charges of $1.6 million for the year ended December 31, 2023 primarily comprised of revisions to existing closure reserves, including accretion for approximately 40 IHOP restaurants closed prior to 2023.
Closure and Impairment Charges Favorable (Unfavorable) Favorable (Unfavorable) 2024 2023 2022 (In millions) Closure charges $ 2.2 $ (0.6) $ 1.6 $ 0.1 $ 1.7 Goodwill impairment 7.1 (7.1) — — — Long-lived asset impairment 0.0 2.0 2.0 (0.6) 1.4 Total $ 9.2 $ (5.7) $ 3.6 $ (0.5) $ 3.1 Closure Charges The closure charges of $2.2 million for the year ended December 31, 2024 comprised of $1.5 million for revisions to existing closure reserves, including accretion, for approximately 21 IHOP restaurants closed prior to 2023, and $0.6 million related to the conversion of approximately 20,000 square feet of office space in the Leawood, Kansas restaurant support center to a remote work model in February 2024.
References herein to Applebee's ® and IHOP ® restaurants are to these two concepts, whether operated by franchisees, area licensees or us. Domestically, IHOP restaurants are in all 50 states and the District of Columbia, while Applebee's restaurants are located in every state except Hawaii and Fuzzy's restaurants are located in 18 states.
References herein to Applebee's ® , IHOP ® and Fuzzy's Taco Shop ® restaurants are to these three restaurant concepts, whether operated by franchisees, by area licensees and their sub-licensees (collectively, "area licensees") or by us. Domestically, IHOP and Applebee's restaurants are located in 49 states and the District of Columbia, while Fuzzy's restaurants are located in 15 states.
Changes in our pretax book income between 2023 and 2022 and are addressed in the preceding sections of “ Consolidated Results of Operations - Fiscal 2023, 2022 and 2021. ” The fiscal year 2023 effective tax rate of 13.0% applied to pretax book income was different than the statutory Federal income tax rate of 21% primarily due to the conclusion of a state income tax audit settlement, resulting in an income tax benefit of $15.1 million.
Changes in our pretax book income between 2024 and 2023 are addressed in the preceding sections of “ Consolidated Results of Operations - Fiscal 2024, 2023 and 2022. ” The fiscal year 2024 effective tax rate of 27.5% applied to pretax book income was different than the statutory Federal income tax rate of 21% primarily due to state and local taxes and a lower tax deduction related to stock-based compensation.
Any decreases in customer traffic or average customer check also could reduce the profitability of our company-operated restaurants. Significant increases in either the estimated income tax rate or the discount rate also could adversely impact estimated fair values used in quantitative tests for impairment.
Any decreases in customer traffic or average customer check also could reduce the profitability of our company-operated restaurants. Significant increases in the discount rate also could adversely impact estimated fair values used in quantitative tests for impairment. During the year ended December 31, 2024, we performed a quantitative test on Fuzzy's goodwill using the approach described above.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

10 edited+1 added−1 removed3 unchanged
Biggest changeWe believe the larger scale created by combining the supply chain requirements of both brands under one organization can provide cost savings and efficiency in the purchasing function. As of December 31, 2023, 100% of Applebee's domestic franchise restaurants and 100% of IHOP domestic franchise restaurants are members of CSCS.
Biggest changeThe Company and owners of Applebee's and IHOP franchise restaurants are members of CSCS, a Co-op that manages procurement activities for the Applebee's and IHOP restaurants that belong to the Co-op. We believe the larger scale created by combining the supply chain requirements of both brands under one organization can provide cost savings and efficiency in the purchasing function.
Many of the food products purchased by our franchisees and area licensees are affected by commodity pricing and are therefore subject to unpredictable price volatility. Extreme increases in commodity prices and/or long-term changes could affect our franchisees, area licensees and company-operated restaurants adversely.
Commodity Prices Many of the food products purchased by our franchisees and area licensees are affected by commodity pricing and are therefore subject to unpredictable price volatility. Extreme increases in commodity prices and/or long-term changes could affect our franchisees, area licensees and company-operated restaurants adversely.
Revenue derived from all international country operations comprised less than 3% of total consolidated revenue for the year ended December 31, 2023, such that a hypothetical concurrent 10% adverse change in the currency of every international country in which our franchisees operate restaurants would have a negative impact of less than 0.3% of our consolidated revenue.
Revenue derived from all international country operations comprised less than 3% of total consolidated revenue for the year ended December 31, 2024, such that a hypothetical concurrent 10% adverse change in the currency of every international country in which our franchisees operate restaurants would have a negative impact of less than 0.3% of our consolidated revenue.
Fixed rate securities may have their fair market value adversely impacted due to a rise in interest rates. We currently do not hold any fixed rate investments. Based on our interest-earning cash, cash equivalents and restricted cash balances as of December 31, 2023, a 1% change in interest rates would change our annual interest income by approximately $2.0 million.
Fixed rate securities may have their fair market value adversely impacted due to a rise in interest rates. We currently do not hold any fixed rate investments. Based on our interest-earning cash, cash equivalents and restricted cash balances as of December 31, 2024, a 1% change in interest rates would change our annual interest income by approximately $2.5 million.
We had no material amounts of derivative instruments at December 31, 2023 and did not hold any material amount of derivative instruments during the year ended December 31, 2023. Investments in instruments earning a fixed rate of interest carry a degree of interest rate risk.
We had no material amounts of derivative instruments at December 31, 2024 and did not hold any material amount of derivative instruments during the year ended December 31, 2024. 53 Investments in instruments earning a fixed rate of interest carry a degree of interest rate risk.
We do not hold a material amount of cash and cash equivalents in currencies other than the U.S. Dollar. 52
We do not hold a material amount of cash and cash equivalents in currencies other than the U.S. Dollar. 54
At December 31, 2023, our outstanding guarantees for food product purchases were $1.0 million. International Currency Exchange Rate Risk We have minimal exposure to international currency exchange rate fluctuations.
At December 31, 2024, our outstanding guarantees for food product purchases were $2.8 million. International Currency Exchange Rate Risk We have minimal exposure to international currency exchange rate fluctuations.
A 1% increase or decrease in interest rates would not have a material impact on any fees associated with the Credit Facility. We do not engage in speculative transactions nor do we hold or issue financial instruments for trading purposes.
In August 2022, we borrowed $100 million against the Credit Facility, all of which was outstanding at December 31, 2024. A 1% increase or decrease in interest rates would not have a material impact on any fees associated with the Credit Facility. We do not engage in speculative transactions nor do we hold or issue financial instruments for trading purposes.
Since the significant majority of our restaurants are franchised, we believe that any changes in commodity pricing that cannot be adjusted for by changes in menu pricing or other strategies would not be material to our financial condition, results of operations or cash flows. 51 The Company and owners of Applebee's and IHOP franchise restaurants are members of CSCS, a Co-op that manages procurement activities for the Applebee's and IHOP restaurants that belong to the Co-op.
Since the significant majority of our restaurants are franchised, we believe that any changes in commodity pricing that cannot be adjusted for by changes in menu pricing or other strategies would not be material to our financial condition, results of operations or cash flows.
Interest Rate Risk The significant majority of our long-term debt outstanding at December 31, 2023 was issued at fixed interest rates (see Note 8 - Long-Term Debt, of the Notes to Consolidated Financial Statements).
Interest Rate Risk The significant majority of our long-term debt outstanding at December 31, 2024 was issued at fixed interest rates (see Note 8 - Long-Term Debt, of the Notes to Consolidated Financial Statements). We are only exposed to interest rate risk on borrowings we make under our Credit Facility, borrowings from which are subject to variable interest rates.
Removed
We are only exposed to interest rate risk on borrowings we make under our 2022-I Variable Funding Senior Secured Notes, Class A-1, a revolving credit facility, borrowings from which are subject to variable interest rates. In August 2022, we borrowed $100 million against the Credit Facility, all of which was outstanding at December 31, 2023.
Added
As of December 31, 2024, 100% of Applebee's domestic franchise restaurants and 100% of IHOP domestic franchise restaurants are members of CSCS.

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