Dine Brands Global, Inc. (DIN) Earnings Call Transcript & Summary

Hello, and welcome to the Annual Meeting of Stockholders of Dine Brands Global, Inc. Please note that today's meeting is being recorded. [Operator Instructions] If you are logged into our virtual meeting as a stockholder, you can submit questions or comments at any time by clicking on the Message icon. It is now my pleasure to turn today's meeting over to Richard Dahl, Chairman of the Board of Directors of Dine Brands Global, Inc. Mr. Dahl, the floor is yours.

Okay. Thank you. Good morning, everyone. I am Richard Dahl, Chairman of the Board of Directors at Dine Brands. I would like to welcome each of our stockholders and invite the guests to our annual meeting and express our appreciation for your attendance. Due to the ongoing COVID-19 pandemic, we are again holding the meeting virtually this year for the safety of our stockholders and invited guests. We hope you are all well and safe. Joining me on the line are John Peyton, our Chief Executive Officer; and Christine Son, our Senior Vice President, General Counsel and Corporate Secretary. Christine will assist me with the formal business to be brought before this meeting, and John will provide closing remarks. Please refer to the agenda, which sets out the order of business for today's meeting. I will introduce the Board of Directors and the executive team. We will then move on to the formalities of the meeting, open the polls for voting and provide preliminary voting results. After the formalities of the annual meeting are done, we will adjourn the formal portion of the meeting, and John will then provide some closing remarks. Our stockholders in attendance may submit questions at any time via the virtual meeting interface. We will conclude the meeting with a brief Q&A session. Now I would like to recognize members of our Board of Directors who are in attendance virtually today. Present are Larry Kay, 34 years of service. Larry is a private investor. Caroline Nahas, 29 years of service. Caroline is the Senior Adviser to Korn Ferry International and also serves as the Chair of the Nominating and Governance Committee. Howard Berk, 12 years of service. Howard is a partner at MSD Capital. Dan Brestle, 12 years of service. Dan is the senior adviser to GF Capital Management and is a retired Chief Executive Officer (sic) [ Chief Operating Officer ] of Estée Lauder. Dan is the Chair of the Compensation Committee. Doug Pasquale, 8 years of service. Doug is the Chief Executive Officer of Capstone Enterprise and Chair of our Audit Committee. Lilian Tomovich, 4 years of service. Lili was recently the Chief Marketing Officer of Grove Collaborative and was formerly the Chief Experience Officer and Chief Marketing Officer for MGM Resorts. Susan Collyns, 2 years of service. Sue is the President and Chief Financial Officer of Beachbody, LLC. And lastly, Michael Hyter, recent 1-year of service, Michael is the President and Chief Executive Officer of the Executive Leadership Council. Although he is not present today, I would like to take a moment to recognize Gil Ray. Gil is retiring from our Board of Directors effective this annual meeting. We thank him for his 16 years of dedicated service. On a personal note, as Chairman of the Board, I appreciated Gil's steady hand, calm demeanor and thoughtful counsel. We will all miss him. Now I would like to introduce members of our executive team who are in attendance: Allison Hall, Interim Chief Financial Officer; Jay Johns, President of the IHOP Business Unit; John Cywinski, President Applebee's Business Unit; Greg Bever, Senior Vice President, Chief People Officer; and John Peyton; and Christine Son, who I introduced early. Clearly, the focus of the company today, the management and the Board, is the crisis brought on by the COVID-19 pandemic. The well-being of our guests, employees, franchisees, investors all remains the utmost important and concern as we remain hopeful to end this crisis. I'm sure you have all read our first quarter earnings announcement. I'm very pleased to say that our 2 strong brands posted meaningful improvements in their first quarter comp sales compared to the fourth quarter of 2020. Our franchisees have again, once again, demonstrated their resilience during this challenging year. They're great partners. I'm proud to be part of this company and this team. I thank them and all of you for your support. Now we will turn to the formality of the meeting. I will act as Chairman and Presiding Officer of the meeting; and Christine will act as Secretary. Mark Cano, a representative of Computershare, who is in attendance today, will act as the Inspector of Election. With that, this meeting is called to order. And I will now turn the meeting over to Christine. Christine?

Thank you, Richard. Good morning. We will now turn to Item 2 of the agenda, the proof of notice of the meeting and the report on quorum. Computershare, the corporation's transfer agent, has presented a certified list of the corporation's stockholders as of March 17, 2021, the record date set for stockholders entitled to vote at this meeting. The list is available for inspection on the virtual meeting website. The certificate of the number of shares of common stock eligible to vote at this meeting has also been presented. Notice of this meeting was given as of March 30, 2021, by mail, along with instructions on how to access the corporation's proxy statement and annual report. Notice was also given via posting on the corporation's website and on the SEC's EDGAR database. Computershare has reported that as of the record date, there were 17,057,786 shares of common stock of the corporation issued outstanding and entitled to vote. The Inspector of Election has confirmed that a majority of the shares eligible to vote are presented at this meeting, and I recognize the presence of a quorum. We now turn to Item 3 on the agenda, the presentation of the annual meeting proposals. Proposal 1 is the election of directors. The Board's nominees are Howard Berk, Daniel Brestle, Susan Collyns, Richard Dahl, Michael Hyter, Larry Kay, Caroline Nahas, Douglas Pasquale, John Peyton and Lilian Tomovich. These nominees are listed in our proxy statement along with a brief summary of their experience. The corporation received no other nominations, so I hereby declare that the Board's nominees have been nominated. Proposal 2 is the ratification of the selection of Ernst & Young as the corporation's independent auditor for the 2021 fiscal year. I'd like to introduce Marc Roberts from Ernst & Young, who is on the call today. Proposal 3 is the approval on an advisory basis of the compensation of the named executive officers of the corporation. I will open the polls for voting on Proposals 1 through 3. If you have already voted, you do not need to vote again. If you would like to vote now or change your vote, please do so by following the instructions provided on the virtual meeting portal. [Voting]

The polls are now closed for Proposals 1 through 3. We have all of the votes. I've been advised that the Inspector of Elections completed the preliminary vote count for Proposals 1 through 3 and that the votes cast at the meeting did not alter the results of the preliminary vote. I am pleased to announce that all directors have been elected, and Proposals 2 and 3 have received at least majority of the votes present or represented by proxy and entitled to vote. The Inspector of Election will make a final report of the precise votes for Proposals 1 through 3, which will be included as part of the record of this meeting and filed with the Securities and Exchange Commission. With that, I'll turn it back over to Richard Dahl. Richard are you on mute? I think we might have a technical difficulty, so please hold for a moment.

Okay. I've got it. Okay. Thank you, Christine. Since the formal business of our meeting is completed, I declare the formal portion of the annual meeting adjourned. Now it is my pleasure to turn the meeting over to John Peyton for closing remarks. John?

Thanks so much, Richard and Christine, and good morning, stockholders. On behalf of Dine's senior leadership team, thanks for joining us this morning. While many CEOs face the learning curve in their first few months, I'm fortunate to work with a seasoned, experienced senior team. They all stepped up under extraordinary circumstances over the past year to help our company meet this challenging moment. I also want to recognize the amazing contributions of our franchisees, our suppliers and our restaurant team members, their dedication and passion for Dine and our brands has been inspiring. Many have asked me why did I decide to join the restaurant industry and why now? I joined Dine because I believe in the power and allure of strong brands. One of the things I learned 20 years ago is that brands win when they are different, better and special. And Dine's brands are truly different, better and special. IHOP, for example, is a pancake-obsessed breakfast innovator that makes the most important meal of the day also the most fun. And Applebee's embodies what it means to be all American and locally relevant. We call that eating good in the neighborhood. Applebee's and IHOP are iconic brands that connect in an emotional way with our guests. And we know restaurants are essential to creating a sense of community and human connection. We here at Dine believe that a restaurant renaissance is underway. Our confidence comes from the combination of historically high consumer savings, strong drive growth, federal spending, over 40% of Americans are fully vaccinated and state and local authorities are easing restrictions on in-person gatherings. So we're confident that we've built a strong foundation that will drive market share gains and deliver profitable growth as consumers return to restaurants. The pandemic changed our customers' expectations. People are dining in less and taking out more, whether through delivery, curbside to-go or pick up. And at Dine, we viewed the crisis as an opportunity to play both defense to protect our company and our financial flexibility as well as offense so that we would emerge from the crisis in a position to grow market share and serve more guests, both inside and outside our restaurants. So as we played offense, we invested in new digital and CRM products that are coming online early this summer. We invested in innovative menu items like IHOPPY Hour and Burritos & Bowls at IHOP and Applebee's virtual brand, Cosmic Wings. And while investing in new technology and menu offerings, our franchisees, importantly, also invested in supporting their local communities by feeding and sheltering frontline workers and those in need. We also know people expect more from corporations today, an obligation that has only increased during a year in which social justice, diversity and inclusion fuel the public conversations. Guests want and expect the brands they support to be a force for good. In this changing environment, what does success mean for us at Dine? It means living our purpose, our mission, our values, while also delivering strong financial returns to our shareholders. That's what this moment of restaurant renaissance demands, and that's exactly what we'll continue to do. Last week, we announced our Q1 results and provided a comprehensive update on the current state of our business. Please visit our website where you can download a recording of that call. It will give you a very detailed view of our latest business performance and insight into our current road to recovery. And to close, just thank you to our shareholders for your continued investment in Dine Brands. I also want to thank our guests for their continued support of our restaurants. And of course, the entire Dine system for all you do every day to serve guests and neighbors and communities around the world. And with that, we'll now open the call for questions.

Given that a $15 minimum wage in California has been positive for shareholders, why is Dine participating with the National Restaurant Association and lobbying against a $15 minimum wage and for maintaining a subminimum wage for tipped workers?

Thank you for the question. This is an important issue, and we continue to discuss the matter internally. We believe that people should be paid fairly. The restaurant industry as a whole is just now emerging from the global pandemic. Most of our franchisees are small business owners who employ their own team members. And we want to make sure that there is a balanced approach that allows our franchisees a chance to adapt. We are members, as the question points out, of various industry trade associations that support the restaurant industry as a whole on a broad number of issues, and we have no plans to withdraw from those organizations. And that concludes the questions that we have today. And so I'd like to thank our shareholders for joining us on the call and wish everybody a good day.

Ladies and gentlemen, this concludes the meeting. You may now disconnect.