Nick Setyan

Nick Setyan from Mizuho asked about Dine Brands' strategy for 2026 regarding value offerings and incremental comparable sales drivers for both Applebee's and IHOP, questioning if the current cadence of value is sufficient or if more is needed. He also inquired about the operating cash flow expectations for 2026, specifically if it should be in line with or above 2025, considering the provided EBITDA guidance.

Answer

CEO John Peyton explained Applebee's strategy for 2026 involves fewer, longer promotions, primarily leveraging the '2 for $25' menu (22% of tickets) with new entree and appetizer innovations quarterly. Lawrence Kim, President of IHOP, outlined a similar strategy of fewer, longer promotions centered on the '$6 IHOP Value Menu,' complemented by a 'barbell strategy' including promotions like bottomless pancakes and new innovations such as proprietary coffee and omelet platforms. CFO Vance Chang addressed the cash flow question, stating that 2025's Adjusted Free Cash Flow was impacted by timing issues (two quarters of interest expense), higher remodeling incentives, and CapEx. He expects 2026 cash flow to improve and return to a more normalized basis, in line with the higher EBITDA guidance.

Nick Setyan asked about the 2026 strategy for value offerings at both brands, specifically if the current cadence is sufficient or if more is needed, and what other incremental comparable sales drivers are planned.

Answer

CEO John Peyton outlined Applebee's strategy: fewer, longer promotions (6-8 per year), with the Two for $25 menu as the primary message (22% of tickets), complemented by quarterly new entree and appetizer innovations. President of IHOP Lawrence Kim described IHOP's similar approach: fewer, longer promotions centered on the $6 IHOP Value Menu, balanced with a barbell strategy including promotions like bottomless pancakes and innovation such as new proprietary coffee and omelet platform enhancements. Nick Setyan also questioned why operating cash flow in 2026 shouldn't be in line with or above 2025, given the EBITDA guidance. CFO Vance Chang explained that 2025 cash flow was impacted by timing issues (two quarters of interest expense), higher remodeling incentives, CapEx, and working capital changes, expecting 2026 to be more normalized with improved cash flow due to higher EBITDA.

Nick Setyan from Wedbush requested directional commentary on sales trends quarter-to-date in Q1, considering the volatility observed across the restaurant industry.

Answer

CFO Vance Chang stated that the company expects Q1 performance to show modest improvement from Q4, though the overall consumer environment is anticipated to remain challenging. He noted IHOP's performance strengthened late in Q4 driven by its 'House Faves' menu, while Applebee's improved over Q3 due to its 'Really Big Meal Deal,' with these trends informing the Q1 outlook.

Nick Setyan questioned if Applebee's upcoming 'Big Meal Deal' and IHOP's Q4 plans are sufficient to reverse negative trends and drive positive comparable sales in the fourth quarter.

Answer

Applebee's President Tony Moralejo stated the new campaign is designed to drive positive comps, not just stem declines, and is more comprehensive than prior successful promotions. IHOP President Jay Johns expressed confidence that the new 'House Faves' value platform, combined with holiday menu innovation, is well-positioned to improve results in Q4.

Nick Setyan asked about the consistent increase in CAVA's digital mix (up 200+ basis points for three consecutive quarters), seeking insights into the underlying drivers beyond the loyalty program revamp, and requesting details on average check differences between third-party versus first-party and digital versus non-digital orders.

Answer

CEO Brett Schulman attributed the digital mix increase to improved operational execution across digital channels, specifically citing the KDS investment, enhanced order accuracy, and better timeliness, which collectively led to increased transaction growth. He did not provide specific average check details for different digital channels.

Nick Setyan asked for insights into the consistent 200+ basis point increase in digital mix for three consecutive quarters, inquiring about drivers such as third-party versus first-party sales, average check, and digital versus non-digital performance.

Answer

CEO Brett Schulman attributed the digital mix growth to improved operational execution on digital channels, specifically mentioning the KDS investment helping with accuracy and timeliness. He did not provide specific check details.

Nick Setyan asked for an update on the diversity of CAVA's COGS basket with the addition of beef, and whether the Assistant General Manager (AGM) investment should be considered an incremental labor cost in 2026.

Answer

CFO Tricia Tolivar confirmed that the COGS basket mix (typically 25% proteins, 25% produce, 25% grocery, 25% other) has not materially changed with the addition of beef. She clarified that the AGM role is a reimagined General Manager in Training role, not an incremental headcount, but it does come with a higher overall compensation rate, leading to a modest impact on overall labor in 2026.

Nick Setyan asked for an update on the composition of CAVA's COGS basket, particularly with beef now included, and whether the Assistant General Manager (AGM) investment will be an incremental labor cost in 2026.

Answer

Tricia Tolivar, CFO, stated that the addition of beef has not materially changed the overall COGS mix, which typically remains around 25% for proteins, produce, grocery, and other categories. She clarified that the AGM role is a reimagined General Manager in Training position, not an incremental headcount, but its higher compensation rate will result in a modest impact on overall labor costs in 2026.

Nick Setyan asked for a breakdown of the 2026 system same-shop sales growth guidance (3%-5% for the year, 4%-6% for Q1) to understand the embedded company-owned comp expectations, given its primary role in driving fundamentals.

Answer

Josh Guenser, CFO, stated that Dutch Bros is not providing a decomposition of the system same-shop sales guidance on an outlook basis. He expressed satisfaction with the Q4 performance of both company-operated and system-wide shops, confirming both will contribute to the 2026 growth.

Nick Setyan asked for a decomposition of the 3%-5% system same-shop sales growth guidance for the full year and the 4%-6% for Q1 into company-owned comp figures.

Answer

Josh Guenser, CFO, stated that Dutch Bros is not providing a decomposition of the system same-shop sales growth guidance into company-owned comp figures for the outlook. He affirmed that both company-operated and system-wide shops contributed strongly to Q4 performance and are expected to contribute to the Q1 and full-year 2026 growth.

Nick Setyan from Wedbush Securities asked about the impact of mobile ordering on ticket mix, the reasons for the negative mix trend in Q3, and the company's future pricing strategy.

Answer

CFO Josh Guenser stated that mobile order tickets are similar to other channels but with higher tips, and he expects a similar overall ticket composition in Q4. CEO Christine Barone noted that while they have a strong value proposition and see pricing opportunities, they will be very thoughtful and do not expect major price increases next year, typically evaluating pricing in January and mid-year.

Nick Setyan questioned the sales performance of recent Kona Grill and RA Sushi openings and asked for an update on current construction costs for new restaurants. He also asked if it was fair to assume Benihana's comparable sales turned positive in Q1 2025, given the commentary on sequential improvement.

Answer

CEO Emanuel Hilario reported that recent openings are performing well, with the RA Sushi in Plantation tracking on-brand and the new Saltwater Social concept exceeding expectations. He stated that gross construction costs are currently in the $600s-$700 per square foot range, with net costs in the mid-$500s after tenant allowances. While not providing specific brand guidance for Q1, Hilario confirmed Benihana's positive progression from a nearly flat Q4 (-20 bps), attributing the momentum to initiatives around happy hour, throughput, and product innovation, which also drove a 300 basis point margin improvement for the brand.

Nick Setyan of Wedbush Securities questioned management's confidence in expanding company and franchise margins for 2025, referencing prior statements from the ICR conference and recent consumer softness.

Answer

EVP and CFO Robert Verostek reiterated high confidence in expanding company margins toward the mid-teens, crediting a focus on controllable factors. He noted that mature Keke's cafes are improving margins toward the high-teens goal, while newer locations are still ramping up, maintaining a confident outlook despite recent consumer uncertainty.

Nick Setyan focused on Keke's, asking about the expected same-store sales trajectory in the second half and whether new Texas and California locations would be company-owned or franchised. He also questioned if the new '$2 to $10' value menu was sufficient to compete in the current promotional environment.

Answer

CEO Kelli Valade acknowledged the tough Florida market for Keke's but noted positive momentum and numerous growth drivers like new high-volume units, remodels, and menu innovation. She confirmed the Texas expansion will be a mix of company and franchise units, while California will be franchise-led. Regarding the competitive landscape, she expressed strong confidence in the '$2, $4, $6, $8' platform as a unique brand equity for Denny's, while noting they have other value options available if needed.

Nick Setyan of B. Riley Securities asked if the new U.S. administration has increased HIVE's desire to own operating assets in the U.S. and requested more details on the potential conversion of existing data centers to support HPC, including any CapEx estimates.

Answer

CFO Darcy Daubaras confirmed that the new, more crypto-friendly U.S. administration has positively changed HIVE's view on operating in the country, welcoming clearer regulations. He also stated that HIVE has engaged consultants to analyze converting its Sweden and New Brunswick facilities for HPC, with a key focus on ensuring the stable, non-curtailable power required for Tier 3 operations.

Nick Setyan of Wedbush noted that the restaurant industry seems to have troughed in July and asked if this could mean that GPV per location also troughed in Q3, with potential for improvement going forward.

Answer

CFO Elena Gomez stated that GPV per location was down 3% year-over-year, consistent with Q2 and recent quarters. She indicated that the Q4 guidance reflects a similar trend and that while the company constantly monitors the macro environment, they expect GPV per location to remain within a tight band and follow a similar trend over the next couple of quarters.

Nick Setyan inquired about the future promotional cadence, asking if the Pizookie Meal Deal is permanent and how much the overall promotional calendar remains in flux. He also asked which menu areas beyond Pizookie would receive more focus.

Answer

President Lyle Tick stated that while the team is encouraged by the Pizookie Meal Deal and will leverage it through Q4, the long-term promotional strategy is still in a discovery phase. He expressed a preference for building a sustainable value platform over cyclical LTOs. Interim CEO Brad Richmond added that the goal is not to become heavily promotional but to be 'everyday approachable.' Regarding other menu items, Tick said future focus areas will be determined by a strategic menu architecture review, acknowledging the need for more platforms of 'authority' besides Pizookie.