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

Thanks, everyone, for joining us. We're here with the full team from Dine Brands. We've got Lawrence, Kim, we got Vance, we got Matt, John. So welcome, everybody. Maybe we'll just start off, discuss the key drivers as we look out into 2026. What do you see as the key drivers for both brands, Applebee's and IHOP? And how do you believe your brands are positioned from a competitive standpoint?

Eric, I'll talk generally and a little bit about Applebee's and then Lawrence will fill in for IHOP. In terms of the big picture, the macro and sort of what the guest is thinking and what our guests in particular is thinking who is in that sweet spot of $50,000 to $75,000 a year in household income is that value still matters. It's mattered now for 1.5 years, and we expect in 2026 that our guest is going to be looking for value. But the definition of value has changed over the last couple of quarters. It started about 1.5 years ago when inflation really kicked in where guests wanted to know the full cost of the meal. And that's when you started to see all of the burger, fries and a soda for $10, $11, $12 -- but what we're seeing now in addition to that, as we do our guest intercepts and all of our research is they're equally focused on what they're calling the vibe, and that's literally a word that they're using over and over again and what they say to us. And their point of view is when I make a decision to leave my house to eat, which is a big decision these days given how they're feeling about the economy and their own personal situation, I not only want great value in terms of good food and abundant fortune at a great price, I want to be served and entertained and taken care of in a fresh, clean, fun restaurant. And so that's the big picture. At Applebee's specifically, our reflection of that is the 2 for $25 value platform that we have. It's 2 entrees in an appetizer for $25 or $12.50 per person. That's easy math to do. And that is a great value, and that's what we will be communicating as our primary platform throughout 2026 as we did in the back half of '25. And to keep it fresh and top of mind, each quarter, we'll introduce a new entree and a new app so that we've got the innovative and the what's new piece as well. And Lawrence, I'll turn to you for IHOP.

Yes. Thanks, John. Yes, similar for IHOP, there are 3 key areas that we focus on this year, and those will extend into 2026 as well, which is great food. No question, our world famous pancakes, our innovation. We have a pantry of over 1,000 items that we can pull from that are exciting innovation and part of our road map. And then great service, which we've dedicated a lot of time focusing on our operations, improving our speed, our cleanliness of our restaurants and what we call hospitality. But as John's alluded to, is this anchor on value as well. And so we launched House Faves, which is our $6 value menu last October in 2024. That was a Monday through Friday program. And then we've evolved that because based on consumer research, I'm in restaurants pretty much every week, travel all across the country and talk to guests. That $6 price point, it's one of the guests even said it's cheaper to go to IHOP than it is to make this at home at $6. And so that's been a very core strategic insight that we've just been anchored on. And we evolved the platform this past September to go to everyday value in partnership with our franchisees, and we're going to continue into that into 2026.

Yes. And Eric, the fact that IHOP has beat Black Box, its comp set in traffic all year and posted absolute positive traffic gains in the third quarter, which hasn't done in years and years. And Applebee's has had positive comps the last couple of quarters, they're no accident, right? It's because of the focus on this new definition of value and the experience in the restaurants that we are certain is driving the stronger results this year.

I'm going to ask 2 follow-up questions from something you said, John, about 2 for $25 being the core platform. I think it was a couple of quarters ago, you talked about -- just correct me if I'm wrong, but my memory, I thought you were talking about maybe going more towards individual. Like how do you cater to that individual guy that comes in buying stuff he doesn't want to order on the 2 for $25 engine. And Lawrence, on the IHOP side, the $6 value menu, I always go back to this like independent diners are so expensive. Like it is so much more expensive to get an anomaly at a diner. It could be $20, $20-plus. So I have such a good value. So is this just about communicating that value in a more effective way? So 2 different questions there, but just related to what you guys just talked about.

Sure. Go ahead, Lawrence. You're going to roll, let's start with IHOP.

Yes. So you're right. The great part of our menu is value is one component. And when we first launched House Faves past October, our value incidence was higher. It's around 30% of our checks. And because it resonates extremely well, right? I mean we just talked about it, how amazing is the $6 item, which is 2 pancakes, 2 bacon, 2 eggs, and we have 3 other dishes that come along with that as well. But we were strategically focused on our barbell strategy and looking at our menu innovation tied to our other core products like our omelette, like our breakfast combos and that value incidence actually has gone down to around 15%, so half as we've launched everyday value, which is part of the strategy in the core. But the beautiful part about our menu and our offerings is that we have that balance. It's not just one price point for all items. That balance across our menu and our scope is a clear strategic priority for us and in partnership with our franchisees. But we want to provide our guests, especially in these uncertain times with that consistent, and I'd like to say our distinctive value. I think it's the best in the biz in our category. And right now, our guests are just loving it. So we're going to continue to evolve and amplify how we bring that messaging to life. If you haven't seen our current ad because it's all over the place right now, it's fantastic. It's like this dream state, this [ blissful ] state of pancakes and breakfast offerings, it just stands out from the competition. And so we're -- our creative team is already looking at the next evolution of that, and it's super exciting.

And it's fair to say, Lawrence, you're using the $6 promotion to drive guests into the restaurant. Once they get there, everything you put in front of them from a tabletop display collateral perspective is high-priced full margin items.

That's right. I would like to say we shout value from the mountain tops, get them into the restaurants. As John mentioned, traffic has been just improving every quarter and you get them in and some more value, but they see all the other items out there, and they're attempted and they're loving them.

Yes. And Eric, to your point about Applebee's, we decided to lead with 2 for $25 because -- when you look at what's in the marketplace at literally QSR, fast casual and full-service dining, the categories we compete in, the overwhelming majority of what's being promoted right now is some version of, right, burger, a soda and fries. And so we think the 2 for $25 is unique and breaks through in that regard. It's also consistent with Applebee's long-time message about being a place, a date night place and a place for groups to go. That said, we also have and we launched earlier this year, the Ultimate Trio, which is choosing 3 apps out of 10, 3 sauces out of 10. They are slightly smaller portions. When you put that all together, it functions as an entree, and we see that many singles are using that platform, which is great. And yes, we're continuing to look at a [ "14" ] and we will have news there earlier next year.

I was thinking about like being the third wheel -- being like an odd table 2 for $25.

Well, the hope is that the third wheel buys the steak.

Right i guess or Ultimate Trio.

Right, exactly.

What is the experience of the Ultimate Trio -- because it feels a lot like the triple dipper, but it is a few bucks cheaper. So...

It's a few bucks cheaper. And what's unique about it is the choice, right? And so there's over 80,000 combinations between those 3 appetizers and 3 sauces, and it's literally designed based upon what we know about how young people like to eat, right? They like to customize their food. They like to share their food. They like -- they wanted to be innovative and trendy in some way, and they want to be able to photograph it. And it's literally designed for that. And the 80,000 combinations and what's your combination, right, is literally designed for social media and for them to share their combos.

I want to maybe take a step back and just think about the casual dining industry, and I recognize that your brands have been outperforming on various metrics in their respective categories. But full service is actually having a little bit of a moment here. It's undeniable. So why do you think that is? And how can you sort of maximize your share of that moment as maybe it's consumers kind of looking away from fast food has got this perception that's gotten too expensive and you're providing a service and just a better value in a full-service meal. How much longer can these good times continue to roll on?

I think there's 2 parts to what's happened now. The first one you alluded to, which is the price of fast food, right, the $18 Big Mac in the Northeast was certainly good for us, right? Because as their pricing approaches our pricing, our burger and fries are so much better than what you can get from fast food. You don't have to eat out of a bag in the car, and you can sit down for 45 minutes or an hour and be served by great people in a great environment and really feel special for an hour. And so that pricing -- that price collapse has been certainly helpful in the micro. I think the macro explanation, Eric, it's still after all these years goes back to COVID. And I think we're finally getting back to that equilibrium that have existed for years and years and years and years, which is it took a really long time coming out of COVID, right, because people were in QSR and then in fast casual. And human beings are, by our nature, social beings, and we want to be together, and we want to sit down and we want to celebrate. And we're seeing in 2025, what is sort of normal and what casual and what full-service dining has always been. And I think it's just taken us a couple of years to get back here.

It certainly feels like -- how do you -- what are your expectations for the holiday season? I recognize this isn't -- it's not like you're in the retail segment where you have to deal with Black Friday and those sort of seasonal volatility. But what -- do you have any expectations for the holiday season, like the consumer, how do you feel is faring this season so far?

From the data that we look at, and I know that you and many listening to this call look at data as well, particularly for our guests, right, who's earning in this $50,000-plus range, the fall has gotten a little bit slower across multiple retail categories, and we're seeing that, too. And our -- we're not economists, but our interpretation of that is as we head into the holidays and guests continue and consumers continue to feel the pinch on their wallets, right, because of their perception of the economy, they're making choices between buying gifts and going bowling or going out to a bar going out to a restaurant. And so I think that's a little bit of the softness that you see this fall, and we expect it to strengthen again once we get past the holidays.

Do you have any expectations for some of the stimulus that's coming? Like how does no tax on tips and maybe the 40,000 so deduction, like how does that impact your consumer? I'm assuming the 40,000 thing is probably more of a higher-end luxury than some of your lower-income consumers. But maybe the no tax on tips is a big deal because that money gets spent in the restaurants and small nuances. How are you thinking about that?

It's definitely -- it's a tailwind, right? So it should be helpful. And even the 40,000 mortgage deduction, we saw it in the last couple of quarters, a greater percentage of our guests who are earning $100,000 and above, right? And that's a sign, too, that the economy is -- they're feeling the pinch as well. And the reason why our brands overperformed is because we gained more 100,000 plusers than we lost 50,000 and less at the bottom. So I think it's -- I think other than the fact that we think it's a tailwind, it's awfully hard to predict because I think many Americans don't realize what they're going to -- what's coming in the tax package. And so it's going to be very real time.

Yes. We've talked a lot about check management, too. That's been a topic that's come up on your conference calls. So do you think that trend has gotten worse over time? Or are you starting to see any normalizing there?

Yes. I think in general, I think, Vance, you can address that for both brands, right?

Yes. Eric, in terms of check management, we are seeing our guests managing their check as they have been for the past few quarters, but the P mix of that check has been down. But check overall has been fairly steady because sort of the low moderate menu inflation has sort of offset the negative P mix. So that sort of made sure that the check average has been fairly consistent for both of our brands, up and down a little bit, but it's not something that we're worried about.

Maybe we'll pivot to your -- our favorite topic, the dual brand strategy. For those who aren't familiar, maybe you could touch on that and just your expectations. I know it's only -- what is it? -- one -- how many do you have that 1 or 2?

20 are open in the U.S.

I'm sorry, I know you had the one in Texas, but you could talk about the early read on that and why you think this is such a good opportunity for the brands.

Sure. Thank you. So we have -- I'll define it in a moment, but first, the numbers. We have 40 dual brands open outside the U.S. We have 20 open now in the U.S. on the way to 30 by the end of the year. And we've stated that we see a path toward at least another 50 next year. So it will be a total of 80 in the U.S. And the concept is an Applebee's and an IHOP in the same box. And so anyone who has the time you can go to our IR website at dinebrands.com. We've got a great video that really shows you the inside and the outside of the restaurant, and it's really helpful to see it to understand it. But the outside is co-branded. There's one front door. You walk in and you're seated by a greeter. Imagine generally the blue side of the restaurant for IHOP and the red side for Applebee's and they blend together in the middle. It's one all-day dining menu that starts at breakfast and ends at dinner. There's 105 items on that menu, which is the same number of items that we have at an individual IHOP or an individual Applebee's. So we've taken the best of both brands and put them together. We also have only available with the dual brands a half a dozen mash-up items, so you can get Buffalo Chicken omelets at the dual brand. So the Applebee's boneless chicken in an IHOP omelet, which has already become the best-selling omelet at the dual brands, cross-trained back of house, cross-trained front of house. And most importantly, what we're seeing when an Applebee's adds an IHOP or an IHOP adds an Applebee's, that they are increasing their revenue by 1.5 to 2.5x, and they're increasing and the flow of that incremental revenue to profit is about 3x the margin of the restaurant before. So we think this is a big idea, Eric, for several reasons. One is it's transforming the economics of the box for the franchisee. The guest feedback has been terrific, both sort of from traditional feedback about I love having the ability to order from both menus. And from a social media perspective, right, the young folks are having a really good time talking about is it Apple Hop or is it IHOPlebee's, and it's none of those things. It's Applebee's and IHOP in one under one roof. And for Dine Brands, it's a big fuel and catalyst for our growth of new units. We're the only company that happens to own a premier AM brand and a premier PM brand and you can put them together. So this is all about complementary dayparts and not having dayparts that conflict with one another as others have tried in the past. And the last thing I'll say is we look at the country, we run our analysis. We see 900 opportunities for dual brands over the next decade or so. Of those 900, Eric, 450 are, call it, white space, meaning there's no Applebee's and there's no IHOP. So an existing franchisee or a new one can come in and build a restaurant. And we also see 450 opportunities with our existing restaurants to add an IHOP or add an Applebee's. And those can be done without having to worry about the territory of a new -- of an adjacent brand. So Applebee's adding an IHOP, they can do it free and clear because there's no IHOP near them. So it's a big opportunity. And based upon just the pipeline that I shared, franchisees are excited about it and are moving pretty assertively into that space.

Is it -- talk about the difference between adding an IHOP to an Applebee's or adding an Applebee's to an IHOP.

Yes. So if an Applebee's adds an IHOP, the cost of the franchisee is about $750,000 to $1 million, and they'll drive $1 million plus in additional revenue. So that's a 3-year or less payback, which is excellent. If it's an IHOP adding an Applebee's, it's more expensive. It's $1 million to $1.2 million. And the difference is the IHOP has to add the bar, right? So you got the plumbing, the electric equipment that already exists in an Applebee's. And same thing, when you add the Applebee's, you actually add a little bit more revenue. And so they too have got a 3-year payback.

Sorry, it was how much more for -- I didn't catch that.

So $750,000 to $1 million for an Applebee's to add an IHOP...

IHOP, yes.

And $1 million to $1 million in a quarter for an IHOP to add an Applebee's because of the added expenses of our...

And then there's the liquor license and all that other stuff, too, I would imagine.

Yes, yes, which are all -- those are onetime costs and things like that. But what's interesting is it enables IHOP now to have a Boozy Brunch menu, right? So they can do [ Monsters ] and Bloody Mary's using the Applebee's glassware, et cetera. And so our -- the Mucho Margarita at Applebee's and that gigantic glass is now a Bloody Mary on something morning at IHOP.

Well, it sounds like if you do this over the next decade, it's going to be really hard to sell one of the brands. I think they're tied to get via 900 stores, it's going to be hard to dismantle Dine Brands, so...

Good thing that's not our plan.

It doesn't sound like it. No, but it really is interesting. And have you done any corporate units? Would you -- is this an opportunity for you to do that in some of the company-owned stores?

Eric, it is. In fact, we've got 2 so far, and the plan is to get to about 10 to 12 company-owned dual brands. And the 2 that we have there in Kentucky, they are doing sort of north of 2x in sales and early days and still a lot of fine-tuning we need to do, but they're performing above our expectation. We're really happy with the results.

And what's the -- do you have to shut down if you were to add on like an IHOP to an Applebee's, do you have to shut down the Applebee's fully?

It's a gut renovation. We got to redo the whole thing. And so part of the reason why we saw some noise with company restaurants it's the construction with dual brands and construction with our remodeling, both require full shutdowns...

And are there any other costs or just the cost consistent with just adding the volume that you would expect? Like is the extra $1 million in sales the same as if Applebee's just grew that organically? Or is there other costs that we should think about?

No, I think it's primarily -- if you think about it, right, it's the same brand, same labor, as John mentioned. So the flow-through, the reason why it's so much higher than normal 4-wall margin from a new opening of a regular restaurant is because you're just leveraging the fixed cost that much better. It's mostly your gross margin that's flowing through, right? And so that's why the math is we're changing sort of the algorithm of the unit economics for our restaurants for our franchisees.

But maybe some upfront training costs and things like that.

There are some training cost is with any restaurants. And then doing construction, right? So if the restaurants are -- at least the way we're doing it, the different franchisees may have different perspectives on this. For the company-owned restaurants, when the restaurants are closed, we don't let go of the team. We keep the team. And so making sure that they're trained while the restaurant is down. And so that when the restaurant is ready to open, they're back right away versus have to re-recruit the whole team from scratch. So that's sort of this hidden cost that you have to bear in the meantime during construction.

Are there any just sort of interesting insights around consumer behavior when they're in a dual brand restaurant versus like the restaurant that was there before? Like are people getting pancakes all day that were typically irregulars that would come in for a steak, now they're getting pancakes or vice versa? Or just anything that surprised you that you're seeing with this -- with the experiment?

Yes. A couple of things come to mind. The first surprise was we assumed that based upon the reason they were going out to eat, right, whether it was daypart or breakfast or dinner that guests would prefer or indicate I want to sit on the Applebee's side or the IHOP side. We're seeing that's not the case. The restaurant is beautiful, and they're happy to sit on either side and because they had access to the full menu. In terms of behavior, what's interesting, Eric, is the off-period brand. So think IHOP at night and Applebee's in the morning, average sells less than 15%. So to your point, at 10:30 in the morning, we're selling a lot of pancakes and omelets, but we're also selling ribs and burgers from the Applebee's portion of the menu and the reverse is true at night.

Never less than 15% of the total mix.

Correct. Of the mix during that daypart. And the other thing that's compelling about it is the overall dayparts are very evenly distributed. So if you think breakfast, lunch and then dinner/late night, it's about 1/3, 1/3, 1/3. And so it's very good for the operators because they have a consistent approach to staffing and scheduling when you see the business fall that way.

I would be more concerned of the trade down to pancakes than I would the trade up to the stake. I guess that's something you need to manage.

Well, IHOP has always been open for dinner 24/7. So we continue to sell -- and we've always sell pancakes and I would sit dinner at IHOP. That's what we need to.

Yes. I guess that makes sense. Okay. Maybe just pivoting to just the overall -- the macros here again. The commodity basket, can you talk about what your expectations are for the rest of this year? And then as you look out into next year, I was on with Brinker yesterday, we're talking about the Brazil tariffs rolling off. I don't know if that's going to be a little bit of a relief pressure release for you guys, but does that impact your franchisees' P&L at all?

Yes. I mean, look, the rest of this year is -- the year is already over. So for this year, things are definitely more stabilized for our franchisees. The 3 baskets, the 3 items that are sort of a close lookout for us is eggs, coffee and beef. That's not -- that's the same across whole industry. We will have more details next year as we provide guidance for 2026. But so far, we're sort of expecting next year to not be meaningfully different than this year. Tariffs aside, we're looking at low to mid-single-digit sort of inflation environment for our market baskets, and it's really back to normal, fingers crossed.

And the tariff, do you have a lot of exposure to Brazil? You said it was coffee, eggs and beef. Those are where the Brazil tariffs impact you? I -- so I guess this is more of a benefit relative to your prior expectations. Is that...

Yes. I mean it is a fluid situation. So in the past sort of 6 months, it's gone good guys, bad guys...

Yes. I mean coffee, in particular, is helpful with the Brazil tariffs being relieved. But big picture, Eric, and Vance, to make sure I get this right, about 85% of what we procure -- 85% to 90% of what we procure for -- of goods and services into the restaurants, whether it's food or paper products, et cetera, is from the U.S. And of that remaining 10% to 15%, more than half is from Mexico and Canada, which maintain the most favorable tariffs through all of this. And so our exposure to outside the U.S., Mexico and Canada is fairly minimal. And one of the bigger ones there was coffee in Brazil, which we just got relief on.

All right. And what are you thinking -- do you have an early read on franchisee profitability in 2025? I mean you had decent comps, at least at the Applebee's side and certainly improving comps at IHOP. Do you expect when you finish out the year that the number is going to be higher than 2024?

We've already seen that in the past few quarters. Franchisees financials are improving versus 2024. The biggest part of the driver is just because of comps. Comps has been healthier than '24. And -- but we also talked about just the restaurant profitability initiatives that we were constantly working on to drive efficiencies out of the 4 walls of the restaurants in conjunction with the franchisees. And it helps when commodity costs are stabilizing, right? Still expensive. Everything is still expensive, labor and food items. But at least they're more predictable now. And so -- which is reflected in how franchisees price menu as well. Everything sort of become more stabilized and back to that low mid-single-digit sort of level. So when franchisees feel better about predictability of their menus of their cost, that translates into pricing and then that translates into how the consumers see it, right? And so hopefully, this is a positive trend for us and the consumers going forward.

Great. The off-premises business, this was a big deal during the pandemic, but maybe it's less of an emphasis today. Just what is the status of your off-premises business? And -- there were some companies they toyed with virtual brands, and that bad seemed to fade a little bit. But how are you guys thinking about that opportunity? Is that still a growing part of the business and something you want to allocate resources towards?

Lawrence, do you want to begin?

Yes, absolutely. So off-premise is around 20% of the IHOP overall sales. And we've been fairly consistent the past few years. But at the fundamental angle of it is we want to be where the consumers are. And so for example, with delivery and off-premise in that channel, as consumers continue to engage with the delivery providers, we're going to be where they are. And so we've actually amplified our programs this year to not just drive more awareness within those off-premise channels, but also just to continue to engage and drive more offerings together with our partners there. And so we're continuing to amplify or continue to, again, be where consumers are. Catering is a new part of our platform. And when you think about the offerings, especially during the breakfast hours, there aren't too many. You think about the same different offerings for breakfast when you go to like an event. And so pancakes and when we bring our catering items and it's a bigger focus for us in 2026. It's just a very distinctive offering that only IHOP can provide. And so that's one of the key areas that we're going to be looking into and amplifying in 2026 as well. But yes, like I mentioned, we're going to be where the consumers are, and that's one of our focal points.

Pre-COVID, Eric, for both IHOP and Applebee's, off-prem was 7%, 8%, 9%. And now it's 20% at IHOP, 22%, 23% at Applebee's. What's really interesting about that is that most of that off-premise guest is incremental and are unique to off-prem, and it's a fairly large distinction between them and those who dine in the restaurant. So that's incremental business we didn't have before with a guest that prefers to order out and not come into the restaurant. Applebee's grew off-prem this year 5%, and that wasn't an accident either, right? So internally, we reorganized at the beginning of the year. We put the loyalty program, CRM and off-prem under one team and one leader because the common denominator there is the guest data. And so they can -- they're working with that as a way to be much more targeted in terms of how we promote and reach out to our guests with special offers and invitations. And we've also changed our strategy up until very recently, the nationally advertised campaigns and promotions were not available on our off-prem channels. We changed that. They now are. So they're benefiting from all of that marketing muscle behind it. And we've gotten better at merchandising and working with the algorithms on the third parties. And so that's led to a really strong year for us, and we expect it to grow again next year.

So if you have these value platforms on these third-party platforms, I mean, how does the profitability compare to the franchisee?

The profitability is close to the same because the fees are on top of the cost of the item, right? They're charging the full menu cost and then there's a delivery fee on top or a Uber Eats fee on top. The difference there is the packaging, right, the to-go packaging and some restaurants have also added -- the better restaurants, the better performing restaurants have added staff that just focus on the to-go package and the accuracy of what goes in it. So it's still -- it is a profitable business. And like I said, it's an incremental business. And so it's an important business. At Applebee's, it's almost $900 million, which I like to round to $1 billion and say that's a $1 billion business, our off-prem, and it's equally significant at IHOP.

I do want to have IHOP, our $6 value menu is not available in the delivery channels, and that was intentional decision that we made with our franchisee partners.

Okay. That would be really generous of you to sell for $6 and deliver to my house. I would love it if you would do that. Maybe to close it out, just a quick one on Fuzzy's Tacos. What's the state of the union with that brand? What's the plan and the strategy for kind of nursing that brand back to health and setting it up as a growth vehicle in the future?

Yes. And that's a fair setup. We are giving it some TLC right now and refining it and reinventing itself. We like it because we wanted to learn more about fast casual and compete in that space. And we particularly like the Taco space. The Fuzzy's Taco is a Southern California-inspired Taco. And so it's tests well across the country in terms of the ability for national expansion. We've recently put in place a year ago a President/CMO that was one of our best Applebee's marketers, and we put in place a COO that was one of our best IHOP operators, both with long-time tenures with dine and headquarters. And they're making a big difference this year. We're seeing some really encouraging green shoots. They have streamlined the menu. They have upgraded the quality of the proteins. They're focusing the menu on tacos and margs. And most importantly, we just opened what we're calling a fast-casual-plus model. And the elements -- and we did that in Houston, the key difference is Fuzzy's historically, you went to the counter, you ordered your taco and beer, you got a buzzer, you sat down, the buzzer rang, you pick up your food, you ate it and you left. And the restaurants are built like almost like a sports bar, right, with a bar and lots of TVs and a reason to stick around for a while, but we were closing out the ticket so early. They weren't staying. So now you sit down at the table, you're getting -- you're placing your order with a server at the table, keeping your ticket or your check open, and we're seeing second rounds of tacos and second rounds of beers and margaritas. And the franchisees are encouraged by that. We've got about 6 of them that are signing up to develop this new model. So I would describe it as green shoots, and we think that this new model has potential, but we've got the next year to prove it out and to continue to tweak it. But that's the direction we're headed.

Got it. Well, I think we're coming up on time here. So thanks for that, and happy holidays, everybody, and really appreciate the time this week.

Thank you. Appreciate you including us.

Thank you. Bye.