DIN
#Fair question.
I would say, maybe in this order, these four things ---+ the major investments the franchisees are making in the business, both in capital and training; I would say the differentiation of the platform in the industry; I would say the incredible massive effort on training.
I've never seen anything like it in the history of the brand.
And then I would say the new advertising campaign, which will launch here shortly.
So I would say all of those things are going to have a bearing on it.
And then clearly we've done a fair amount of research, which I would call my insurance, for how does the consumer view the kinds of things we are ready to do.
And the research has led me to believe that ---+ and the testing that I mentioned in the last question has led me to believe not only are we on the right track, but early signs.
Yes, I know there's a lot of people in the world of discounting.
I guess the way we think about it, we have one of the, as you know, lower average checks in the category.
We've kept our checks ---+ I think the franchisees have done a remarkable job of keeping the check in line, and really being responsive to the consumer.
Our whole notion behind the platform, behind the work we are doing, is really for the consumer to continue to look at Applebee's and say that's a $30 experience for $13.
It's this notion that we are way outperforming our price value quotient and really giving people what they want, wanting, so that's really our focus.
It's less about going on television and price pointing.
It's more about getting consumers and exceeding their expectations.
That's what all this work has been about, a real focus on providing that every day incredible price value.
So ours is more of an everyday platform as opposed to special LTOs.
So, very receptive.
And again, I think, if you think about the last remodel, again, it was due in six and they did it in 3.5.
So, I think they believe, just like we do, that a freshened or a more contemporary and relevant remodel helps their sales.
So I think this is less about all the ROI treatment and more about the cost of doing business to stay relevant and be contemporary and make a difference.
So there's been a lot of support.
And I think I mentioned on my pre-prepared remarks that we have every step of the way been collaborating with the franchisees on the remodels, so it's not us going on half whatever.
It's really the joint effort and I think their desire to be not only competitive and relevant that really offers a guest a wow.
And these are important assets and they put a lot of money into them, so keeping them relevant, I've not had any pushback.
What I think is more their question to me is how quickly can you get it done.
I think, if anything, they would love it yesterday.
So that's our focus.
So, you won't like my answer, which is I'm going to keep this kind of a secret.
I'll have a lot more information here.
We are very excited, very optimistic, about this transformational platform, which is happening in the next couple of weeks.
And I believe providing additional details at this time would really undermine both our marketing and advertising strategies ahead of the launch and give our competitors a jump start.
So, I'd rather not say, but I think I said on my earlier question-and-answer that one of the places we tested it was New England.
And obviously now not all of New England, but part of New England and that's the one area of the country that's positive.
So enough of a testing platform that we feel very comfortable, enough of a research platform that we feel very comfortable.
And again, you've got every franchisee in the system who spent the money and the wherewithal to make it happen.
So there is a maniacal focus and support for doing that.
You ask about Applebee's, and Applebee's Texas is negative just like the rest of Applebee's.
So there's not really ---+ there might be a slight more deterioration in the Southwest than the rest of the country.
But I think, as I mentioned, all areas of the country with the exception of New England were negative in the first quarter.
Yes.
At IHOP, we saw a slight decline in the Southwest as compared to the rest of the IHOP, which was up.
We don't really do it by quarter.
And as I said in my comments, the back half is going to be ---+ typically has a little bit higher seasonality.
But the $150 million to $154 million still works based on our forecast and then of course the $154 million to $158 million includes the restructuring costs for the restaurant support center consolidation.
I think the big thing we always say, <UNK>, is the franchisee convention.
And this year, we have both conventions.
In the back half.
In the back half.
So we always include that because that is an expense.
And this year, both of those conventions are in LA, so we will have more participants than we have historically.
That's the one big thing.
Okay, <UNK>.
Did one of the franchisees put you up to that question.
Just joking.
No, there's no incentive.
It's in their best interest to grow their business and invest in their business.
They've made major investments.
Think about it.
Land building and FF&E is over $2 million.
They want to be that asset in its best shape and form.
So whatever we can do to accentuate it or grow it, it's in their best interest to do it.
So again, they've been involved with this every step of the way and are very supportive.
Our investment, as you know, comes in the form of G&A, and from time to time CapEx and the creativity and the innovation and the strategy that we employ.
So it's a good partnership and they are very supportive on both brands.
So, the tabletop device is rolled out to all of the Applebee's in the system, and the IT team working with the Applebee's, a small group of Applebee's franchisees, is working on optimizing that to give it more bang for the buck, so that work is in process so that they all have it.
And that's the work that they are doing.
As I mentioned on my prepared remarks, very excited about the early returns on the online ordering app that we just installed and the mobile app.
A lot of positive support there, so feel really good about that work on the Applebee's side.
And then on the IHOP side, I wanted to pique your curiosity and let you know that we are looking to work with a third-party, but probably too soon to say much more about that.
But we will keep you posted.
So, the first half of last year you said we made major marketing changes.
Are you talking about the advertising, or are you talking about what we promoted.
So I think the lesson learned, and I said this on the last two calls, is that our initiatives, certainly last year and probably historically, have not been big enough and bold enough.
And all that work that we did last year was great for the platform, it was great to establish ourselves, it was important foundational work, but it wasn't big enough and it wasn't bold enough, and one would argue it's not fast enough.
So we need to do a lot more in bigger and bolder, and that is I think what you're going to see more of.
There's a tremendous amount of focus on bigger and bolder for Applebee's for not just the balance of this year, but for the next several years.
That's the biggest difference.
Isn't to say that that work isn't important.
There's a continual focus on Millennials, but I think there is a way to do that that is much more about the remodel and about the food quality, and the perception through the work that we are doing than just introducing a new LTO or a new product.
Fair question.
Two things.
One, just to refresh your memory, IHOP is doing very well at breakfast and has been very successful, no issues.
I think I mentioned earlier our opportunity is our lunch and dinner business sort of fell off for us in first quarter, and we have a unique opportunity to do things differently, we believe, which is a real focus for us with everything I just mentioned at lunch and dinner.
The other thing is I mentioned we have to compete more effectively about talking to the consumer about what we do that is uniquely different than breakfast category.
So you can't get an egg anyway you want it at a QSR restaurant.
You can at IHOP.
You can't get it boiled; you can't get it heavy fried or over easy or ---+ it's just not that business.
So our business models are different, but I think we have to be more aggressive in how we talk to the consumer about any differences that you get, and the food any way you want it, made fresh to order, those kinds of things I mentioned earlier we have to do more of.
In terms of our competitive set or our aggressive posture and price value, we have all-you-can-eat in first quarter at IHOP, which has always been a very successful promotion for us.
So that is uniquely different.
We still have a tremendous pipeline of innovation and creativity.
I think our real opportunity is in speaking a little bit differently to our wide swath of guests, and potential guests, about the things we do in our model and in our brand that you just can't get anywhere else.
And that's I think our brand opportunity.
Yes, we are looking for the total for the year to be about $4 million, and that was embedded in our guidance for the year.
That's in the guidance, right.
Thanks again for joining us on this call.
We are scheduled to report results for the second quarter on August 3.
Obviously, if you have any questions in the interim, feel free to contact us.
And thanks again for your time today.
