Applebee's First Positive Traffic in 2 Years Driven by 2 for $25
Applebee's achieved positive comparable sales of 4.9%, driven by a significant increase in traffic, the first since Q1 2023.
Traffic growth was supported by the 2 for $25 value platform, which the company is leaning into as a primary marketing message.
Introduction of new menu items each quarter, including Bourbon Street Cajun Pasta, New Skillets & Steak, and Chicken Parmesan Fettuccine, to sustain traffic and sales growth.
Operational processes for new menu rollouts are well-tested and manageable, with franchisees supporting frequent updates.
Value mix decreased slightly to 30%, but remains above historical levels, with positive guest feedback and strong traffic signals.
Adjusted company restaurant operating margin was $6.7 million or 11.5% of company restaurant sales, down from 12.9% prior year, impacted by product cost increases and new cafe inefficiencies.
Adjusted EBITDA was $18.8 million, and adjusted net income per share was $0.09.
Adjusted franchise operating margin was $30.0 million or 50.7% of franchise and license revenue, slightly down from prior year.
Company restaurants delivered flat same-restaurant sales despite macroeconomic pressures.
Denny's opened 3 restaurants and closed 10 franchise restaurants with average unit volumes of approximately $1 million during the quarter.
Denny's reported Q2 2025 domestic system-wide same-restaurant sales of negative 1.3%, a 170 basis point sequential improvement from Q1.
General and administrative expenses increased slightly to $21.4 million, but corporate administrative expenses decreased by approximately 3.5%.
Keke's Breakfast Cafe delivered strong Q2 same-restaurant sales growth of 4%, outperforming the BBI Family Dining Index in Florida by over 220 basis points.
Off-premise sales contributed a 1.5% improvement in same-restaurant sales, representing 21% of total sales.
System guest check average increased approximately 3% year-over-year, primarily due to carry-over pricing.
Top 4 DMAs (Los Angeles, San Francisco, Houston, Phoenix) experienced outsized macroeconomic pressures in Q2, contributing to a 30 basis point reduction in system-wide same-restaurant sales.
Markets affected by macro pressures saw a significant downturn starting mid-June, punctuated by headlines and macroeconomic news.
Management remains optimistic that consumer sentiment volatility will moderate over time, which could stabilize sales.
Strategic Focus on Long-Term Growth Initiatives and Brand Positioning
Management has clarified their brand positioning and established four strategic priorities: team member experience, handcrafted food and beverages, WOW hospitality, and keeping BJ's atmosphere fresh.
Progress includes momentum with value platforms like the Pizookie Meal Deal, and brand relevance through innovative offerings like the Snickers Pizookie and Fryckles.
Long-term initiatives are set to roll out in the second half of 2025 and into 2026, with a focus on sustainable and profitable growth.
Impact of Hardie's Business Attrition on Volume and Profitability
Hardie's protein and produce programs were partially or fully exited during Q2, impacting reported case growth and volume metrics.
Excluding these programs, specialty case growth was 5.8%, and center-of-the-plate pounds increased by 5.8%.
The company expects continued impact on reported volume numbers until the second half of 2026, as they fully cycle out these high-volume, low-margin programs.
Management emphasizes that shedding non-core business improves overall profitability and aligns with their long-term strategic focus.
Brinker's 3-Year Turnaround Achievements and Future Outlook
Brinker has completed three years into its turnaround plan, with consistent positive results over seven quarters of outperformance in traffic and sales growth.
The company's average restaurant volume increased from $3.1 million in 2022 to $4.5 million in 2025, reflecting significant operational improvement.
Brinker's restaurant operating margin improved from 11.9% in 2022 to 17.6% in 2025, driven by menu simplification, increased labor investment, and better equipment.
The company paid down over $570 million of debt in three years, reducing leverage to 1.7x and strengthening its balance sheet.
Management emphasizes that the brand is fundamentally different today, with a focus on fundamentals, marketing, and operational excellence.
Accelerated Rollout of Green Apron Service and Technology Integration
Green Apron Service to be fully scaled across all U.S. company-operated stores by mid-August, ahead of initial schedule.
Early pilot results show significant improvements in transaction times, customer service, and full-day sales performance.
Implementation includes new staffing models, SmartQ order sequencing technology, and a new performance report ('grow report') to enhance operational focus and store performance.
The rapid deployment aims to build a stronger operational foundation to support future innovation and customer experience enhancements.
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