Dine Brands Global Reports 11.9% Revenue Growth but Declining Net Income in Q2 2025

Dine Brands Global, Inc. reported its financial results for the second quarter of 2025, revealing total revenues of $230.8 million, an increase of 11.9% compared to $206.3 million in the same period last year. The growth was primarily driven by the operation of newly acquired restaurants, including 47 Applebee's and 10 IHOP locations. However, net income for the quarter fell to $13.8 million, or $0.89 per diluted share, down from $23.2 million, or $1.50 per diluted share, in the prior year, reflecting a decrease in gross profit and increased general and administrative expenses.

The company's gross profit for the quarter decreased to $92.2 million from $99.3 million a year earlier, attributed to lower revenues from franchise operations and company-owned restaurants. Franchise revenues totaled $174.7 million, down from $176.5 million, with declines in IHOP and Fuzzy's same-restaurant sales contributing to the decrease. The company also faced increased closure and impairment charges, totaling $1.2 million for the quarter, compared to $0.4 million in the previous year.

In terms of operational metrics, Dine Brands reported a decrease in the number of effective franchise restaurants, with Applebee's franchise locations dropping to 1,514 from 1,625 year-over-year. The company also experienced a decline in same-restaurant sales for IHOP, which fell by 2.3% for the quarter, while Applebee's saw a 4.9% increase. The overall number of effective restaurants across all brands was 1,577, down from 1,627 in the prior year.

Strategically, Dine Brands has been active in acquiring restaurants to enhance its operational footprint. In addition to the previously mentioned acquisitions, the company also acquired 12 Applebee's restaurants in May 2025. These acquisitions are part of a broader strategy to invest in its restaurant systems and improve operational efficiencies. The company continues to evaluate opportunities for refranchising these locations under favorable conditions.

Looking ahead, Dine Brands remains cautious about the economic environment, particularly regarding inflation and its impact on franchisees. The company is focused on maintaining its debt service coverage ratio, which stood at approximately 3.3x as of June 30, 2025, well above the required threshold. The management is also assessing the potential impacts of recent tax law changes on its financial outlook. Overall, while the company has made strides in expanding its restaurant base, it faces challenges in maintaining profitability amid fluctuating sales and rising operational costs.