DIN
#You should think about the exterior of course going through some transformation, the seating area, the entry area, some really new ---+ sort of think about it as the new way to sort of enter the IHOP restaurant.
Many of the IHOPs need a new bathroom, an updated bathroom.
As you know, guests find that very important, and we think it's important as well.
So that's a focus.
Less so in the back of the house.
You'll see it would be minor in general.
We have some platform work, but it's not significant.
The real dollars, if you looked at it, would be in the dining room, the entry, the exterior, and then it's not a system-wide bathroom, there's probably 40%, 50% have to do some major work.
So I will have a better answer on the costs in our next call because we would have people signed up for it and know pretty much who is doing bathroom this year and who is not.
But in general, it's really thinking of it as more contemporary and meeting the needs of our guests.
Very exciting.
I didn't cover it.
Almost identical to IHOP.
IHOP, it is their contract every five years.
Applebee's is every six years.
So it's pretty standard, so you'll see that process start all over again on the Applebee's side.
So it's sort of a continuous ---+ we've gotten this down to a pretty good system that you'll see a fifth to a sixth of the system every year at both brands.
I think the last couple of announcements we've made on remodels, the reason it's been lesser than that is because the franchisees have been so interested in the remodel, they're willing to do it ahead of their requirement.
But pretty standard.
No.
I think investors sometimes forget that it's not just royalty we take in on the IHOP side.
There are several revenue streams, both the rental income stream, the equipment stream, dry mix.
There are several multiple scenarios.
So when sales go up, it has sort of a ---+ <UNK> <UNK> There's a collateral impact.
Yes, a collateral impact, if you will.
<UNK> <UNK> On the rent.
On the rent especially and the dry mix.
Anything that relates to sales has an impact.
When sales go up, you have a large majority or a lot of the franchisees on percentage rent, so when sales go up, it impacts rent.
We had sort of an unusual level of prepayments in 2015.
I think in other years, it sort of holds together (multiple speakers).
I was just going to say we're (multiple speakers)
So our outlook is a little bit harder to anticipate because this event, it's sort of circumstantial.
But if we look into 2016, we are not anticipating anything unusual.
Just as a refresher, you know that we don't dictate price.
It's illegal in the domestic US.
So franchisees can price however they want.
We can give them a guideline.
We can tell them when a product costs too much or doesn't cost enough.
We give broad guidelines.
But pricing is a very individual, very specific item and the franchisees often take it down all the way to the store level or the market or the trade area.
So, what we have suggested to franchisees is ---+ and always do ---+ to be sensitive to pricing, and they have been at both brands.
IHOP has two menus this year.
Applebee's has three menus this year.
So when you reprint the menu, it gives franchisees an opportunity to rethink their pricing strategy.
But I find both brands and both sets of franchisees very thoughtful about the art and the science of pricing.
And what we have seen is people being very thoughtful about increases, or strategic about them, but nothing dramatic or large.
It's not like a 5%, 6% price increase.
To be honest with you, we don't tell this very often, but the large majority of that is because we have this purchasing co-op that I think we've said in the first five years take over $250 million in the middle of the P&L for our franchisees.
So we use that co-op to our advantage.
And when you are as big as we are, they don't feel the need to take massive amounts of pricing, because they're giving the value back to the consumer.
And frankly, that's because the co-op does such a great job.
So, I don't think we are seeing anything on the horizon that would indicate there's aggressive pricing nor is there a need to take it.
Especially in this environment, I think consumers want as much price value as possible.
No.
In fact, I would tell you, in general, when bar and grill goes on television, when you have a regional ---+ we just don't see any impact.
In other words, it's not like somebody goes on the air and oh my God we see a 2% decline.
It just doesn't work that way.
We're just so large, and I think really when you think about it, where you're really looking to see the change in independent because the category is made up so much of independents.
I would tell you, on the IHOP side, there's no question that McDonald's is affecting I think everybody in the breakfast space because they are spending so much money on breakfast, and so we are being very thoughtful about that.
I think, in the bar and grill category, not seeing anything meaningful.
I think our real opportunity at both brands is to think about how we can win in our own ---+ when you think about the future, how do we win in a different way.
So if our to-go business or our car side to-go business is more effective and efficient, we know we get a higher check average when we do that.
There's real opportunity (technical difficulty).
When you think about our products and their ability not only to travel but our ability to give great service, consumers love that in a timely way.
So it's really our ability to win looking at the business slightly differently, like you get a home-cooked from-scratch meal and don't have to stay in a line at a drive-through or through a queue.
So I think there's a real focus for us this year, how do we win with our competitive advantages.
And that's really what we're focused on.
We do have a big competitive advantage in all-day breakfast.
(multiple speakers)
(multiple speakers) 56 years at IHOP.
Thank you very much.
Thanks again for joining us.
We are scheduled to report results for the first quarter on May 5, so we look forward to talking to you all then.
If you have questions in the interim, please feel free to call <UNK> or <UNK> or myself.
The best, bye-bye.
