Dine Brands Global, Inc. (DIN) Q1 2019 Earnings Report, Transcript and Summary

Welcome to the First Quarter 2019 Dine Brands Global Earnings Conference Call. My name is Paulette and I will be your Operator for today's call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. [Operator Instructions] Please note that this conference is being recorded. I will now turn the call over to Ken Diptee, Executive Director of Investor Relations. You may begin.

Thank you. Good morning and welcome to Dine Brands first quarter conference call. I'm joined by Steve Joyce, CEO; Tom Song, CFO; Darren Rebelez, President of IHOP; and John Cywinski President of Applebee's. Before I turn the call over to Steve, please remember our safe harbor regarding forward-looking information. During the call, management may discuss information that are forward-looking and involves known and unknown risks, uncertainties and other factors, which may cause the actual results to be different than those expressed or implied. Please evaluate the forward-looking information in the context of these factors, which are detailed in today's press release and 10-Q filing. The forward-looking statements are as of today and assumes no obligation to update or supplement these statements. We may also make reference to certain non-GAAP financial measures, which are described in our press release and also available on our website. With that, I'll turn the call over to Steve.

Thanks, Ken; good morning, everyone. Following very strong results for fiscal year 2018, Dine Brands started the year with a very impressive first quarter. Our performance reflects taking a long-term approach to managing the business and focusing on growth drivers that deliver sustainable positive results through industry and economic fluctuations. We've implemented multi-pronged strategies at both Applebee's and IHOP that essentially address every aspect of the guest experience, which includes how our guests engage with the brands, meeting their convenience needs either in our restaurants or off-premises as well as meeting their culinary expectations through innovation. Our holistic strategy has provided a solid foundation to drive positive performance and has led to marked improvement in results for both Applebee's and IHOP. With that, I'm pleased to report continued comp sales growth at both brands in the first quarter of 2019. Applebee's posted its sixth consecutive quarter of comp sales growth, and IHOP posted its fifth. I'd also like to highlight that both brands achieved comp sales growth despite industry headwinds in February, which had an adverse impact on the overall industry traffic. John and Darren are going to provide updates on the strategies being implemented at their respective brands a little bit later. Now let's switch gears to the corporate level. Our work to restore growth at both brands has led to continued improvement in our core business as reflected in robust first quarter adjusted EPS of $1.90, which compares very favorably to $1.11 in the first quarter of last year. In the first quarter, we experienced positive results in several key metrics. Franchise segment gross profit increased by approximately 21% in the first quarter of 2019 compared to the same quarter last year. Total revenues, excluding advertising revenues were up 32% compared to the first quarter of 2018. Combined system-wide sales held steady at approximately $2 billion. Improvement in our franchise operations and diligent management of our two largest expenses, G&A and franchise segment expenses contributed to continued strong growth in several key metrics compared to the first quarter of 2018. This includes a 23% increase in gross profit, a 71% increase in adjusted EPS, as well as a 40% growth in adjusted EBITDA. Dine's performance reflects the momentum of our core business and the advantages of having an asset-light model, which enables us to generate substantial and stable adjusted free cash flow. For the first quarter of 2019, adjusted free cash flow grew approximately 81%, compared to the same quarter of last year. Additionally we are focusing on technology at both Applebee's and IHOP to improve the guest experience, remove friction points, and improve operational efficiency. We are making foundational changes on this front, which includes enhanced Wi-Fi at our restaurants, wireless pay-at-the-table devices, our no-wait tool to reduce wait times at arrival in the restaurant, the I-have-arrived tool to provide a guest with a means to notify the restaurant they have arrived for their pick-up order, new payment methods like mobile pay and improved CRM for greater personalization and one-to-one marketing capabilities. Technology is a major focus. It is a key component to remove friction from our guests and enhance guest engagement. We are very pleased with our achievements in the first quarter and are optimistic about the remainder of 2019 for several reasons. To name a few, the strategies implemented at both brands are producing positive results. We have strong programs in place this year at both Applebee's and IHOP inclusive of culinary and advertising strategies. We're exploring meaningful development opportunities at both brands in urban and non-traditional areas to expand our domestic footprint. The appeal of Applebee's has significantly improved and our guests have a renewed attraction to the brand. We expect continued net unit growth at IHOP franchisees, which has consistently outpaced the family dining category. Our international operations are an important part of our growth strategy, as we recently announced a deal to develop 19 IHOP locations in Pakistan over the next nine years. And lastly, our off-premise business continues to gain traction. We believe this segment of the business has additional growth potential as we optimize our delivery platform and expand into catering. We are particularly pleased with consumer adoption of digital ordering, which yields a higher average check and enables us to develop stronger one-to-one marketing going forward. With all of the great work being done at Dine to deliver sustainable growth, I would like to provide some color on how we're thinking about the business. With both brands on solid footing and our Applebee's franchisees in a stronger position, we will continue to manage the brands with a long-term view by implementing plans that have a sustainable positive impact. This approach is inclusive of initiatives to improve franchisee profitability, focusing on operations excellence in our restaurants that elevate the guest experience, offering promotions aimed at driving repeat visits and brand loyalty and strategic traditional and non-traditional development. We believe these are key to brand longevity and sustaining our current trajectory. With that, I'm going to turn the call over to Tom to discuss the financial results. Tom?

Thank you, Steve. Good morning, everyone. Our solid first quarter results reflect the continued positive performance of our two category-leading brands and a sharpened focus on elevating the guest experience through investments in guest-facing technology, culinary innovation and operations excellence in our restaurants. With the performance-based culture we have developed at Dine and our analytic approach to decision making, we believe our trajectory is sustainable over the long-term. Now, let's turn to a brief recap of the first-quarter highlights starting with the notable changes on the income statement. For the first quarter of 2019, adjusted EPS was $1.90 compared to $1.11 for the same quarter of 2018. The 71% increase was primarily due to higher gross profit, since the $13.5 million franchise wide contribution made to the Applebee's national advertising fund in the first quarter of 2018 did not recur this year. Additionally, the operations 69 company-operated Applebee's restaurants, which we acquired last December, favorably impacted gross profit by $4.2 million, partially offset by approximately $1.4 million in foregone royalties. I'd like to highlight four drivers that are also contributing to the significant increase in franchise operations gross profit. Applebee's franchise fee revenue in the first quarter of 2019 increased by approximately 6% compared to the same quarter a year ago, primarily due to the improvement in collections, as a direct result of a much healthier franchisee base. IHOP franchise revenue grew by 4% in the first quarter compared to the same quarter of 2018, primarily due to higher sales of product mix and an increase in effective franchise restaurants as the result of net restaurant development over the previous 12 months. And both brands benefitted from the strong comp performance over the past year. Regarding total franchise operations expenses, the overall decline was due to both the lack of franchise or advertising contributions and previously mentioned and the significant decline in Applebee's bad debt expense compared to the first quarter of 2018. Importantly, we anticipate that bad debt will continue to remain at these low levels going forward. Turning to G&A, our G&A for the first quarter of 2019 was $43 million compared to $42 million for the same period of last year. The increase was primarily due to higher personnel-related costs, partially offset by a decline in costs for professional services. We will continue to diligently manage our G&A and expect modest growth over the long term consistent with the rate of inflation. We're pleased that we have been able to hold G&A relatively flat year-over-year despite increasing our total revenues excluding company restaurant sales for the quarter by over 7% from last year. Excluding G&A attributable to those company restaurant sales, G&A in the first quarter decreased year-over-year. As a reminder, our G&A during the second half of the year is generally affected by the timing of certain expenses. Regarding our tax rate, our GAAP effective tax rate for the first quarter of 2019 was 23.1% compared to 24.8% for the first quarter of last year. The tax rate was lower compared to the same quarter of 2018 because the company recognized excess tax benefits on share-based compensation during 2019 due to the recent strong stock performance. The excess tax benefit is a result of the company's tax deduction associated with share-based compensation being higher than the book expense recorded on the income statement. Turning briefly to the balance sheet. Effective January 1, we adopted new lease accounting guidance known as ASC 842. As a result, I would like to call out notable changes to the balance sheet. We are now required to recognize operating lease obligations. And offsetting these amounts, we also recognize operating lease right-of-use assets. The implementation of ASC 842 resulted in Dine reporting liabilities of approximately $453 million and after various reclassifications and adjustments offsetting assets of $396 million. The adoption of the ASC 842 had no significant impact on our cash flows from operations or our results from operations. Turning to cash flow statements. Our highly franchised model continue to generate strong adjusted free cash flow for the first quarter of 2019 of approximately $28 million compared to approximately $15 million for the same quarter of 2018. The favorable variance was due to an increase of $12 million in cash from operations compared to the same quarter of 2018 primarily due to higher net income. The increase in net income was mainly due to higher gross profit for the reasons discussed earlier. Net changes in working capital of used cash of approximately $13 million in the first quarter of 2019 compared to using cash of approximately $7 million during the same period of the prior year. Consolidated adjusted EBITDA in the first quarter of 2019 rose sharply to $74.6 million compared to $53.2 million for the same quarter of last year. I would like to highlight that excluding advertising revenue, our adjusted EBITDA margins for the first quarter of 2019 improved by 260 basis points to 45.4% from 42.8% for the first quarter of last year. Both brands contributed to the solid performance this quarter and achieved improving adjusted EBITDA margins. The return of capital to our shareholders remains a top priority. In the first quarter, we returned a combined total of over $23 million. This was comprised of approximately $11 million in quarterly cash dividends and the repurchase of approximately 151,000 shares of our common stock at a total cost of approximately $12 million. As mentioned in our press release this morning, we reiterate our financial performance guidance issued on February 21st. To close, improvement in our core business and solid fundamentals led to strong results for the first quarter. Both brands continue to deliver impressive positive performance. We'll continue to execute on our broad-based strategies which are grounded in consumer insights. To drive the business forward, we are focused on high-growth investments that will have the most impactful results for our two strong brands. With that, I'll now turn the call over to John.

Thanks, Tom, and good morning everyone. Applebee's momentum continued in Q1 as we posted our sixth consecutive quarter of positive comp sales growth. We delivered a plus 1.8% comp sales performance in Q1 on top of last year's plus 3.3% performance resulting in very healthy two-year comp sales of plus 5.1% for the quarter. The full quarter reflects strong January and March results with a challenging February sandwiched in between. As we look back, it's clear that February was an anomaly within the quarter, largely due to unfavorable weather and absence of an overt value proposition, which we did have in January with all-you-can-eat and in March with three-course meal. As with each of the past six quarters according to Black Box, Applebee's has outperformed the casual dining category on comp sales. This is particularly noteworthy in Q1 as we're lapping a plus 3.3 totalfrom a year ago, while the category excluding Applebee's was lapping a relatively easy minus 0.4. Yet we still outperformed the CDR category by 115 basis points. Now on the asset front, we're winding down our 3-year strategy of closing underperforming restaurants as we expect about 20 to 30 closures in 2019 with most of those being domestic. For context, we had four closures in the U.S. in Q1. This is very good news for the brand as we transition to a predictable closure rate of approximately 1% annually beginning next year. Additionally, in Q1, our top three comp sales performers are the newest entities within the Applebee's system including our recently acquired company restaurants in North and South Carolina. With only four months under our belt, we're very pleased with our results and the progress we've made to date. We're proud of the fact that we've retained 92 of 96 general managers and 100% of our above-restaurant leadership as part of this transition. And our top priority post-acquisition continues to be the coaching and development of our restaurant teams as we re-establish a best-in-class operating culture in the Carolinas. Now on a full-system basis, our franchise partners continue to elevate their restaurant-level execution. This is evident with our two most important brand attributes overall satisfaction and value for the money. As of February, according to NPD CREST Applebee's has now achieved an all-time high on both guest satisfaction and value for the money surpassing our primary competitors. This is a big achievement for Applebee's and supported by significant improvements over the past year on brand affinity and recommend-to-a-friend according to our internal brand tracker. In total, these four attributes are meaningful differentiators and fundamental leading indicators of brand preference and loyalty, which is our ultimate objective. Shifting to Applebee's off-premise business, we continue to outperform CDR with respect to off-premise comp sales. The category excluding Applebee's is growing at about a 15% rate while Applebee's is growing at a 40% rate, although I expect off-premise growth to moderate a bit as we lap 30% to 40% growth from a year ago. At the close of Q1, off-premise accounted for 13% of total system sales and will likely exceed 20% of mix within two to three years. At present, we have approximately 600 restaurants utilizing a third-party call center for to-go orders, which has improved our guest experience, average check and order accuracy. For context, about 60% to 70% of Applebee's total off-premise orders are now placed digitally or online. The CDR category among many categories is currently experiencing a fundamental convenience-driven shift in off-premise demand, driven primarily by delivery and secondarily by to-go. Since 2017 according to Black Box, CDR on-premise comp sales have declined while off-premise comps have grown at a double-digit rate with delivery representing the primary growth engine. This is true across QSR, fast-casual family dining and upscale dining, upscale-casual as well as casual dining of course. I expect this trend to continue until delivery penetration matures and stabilizes. I fully expect the cost of the third-party delivery to be passed along to the guest who will likely be willing to pay more for the convenience of delivery. This is a necessity given the margin implications of third-party fees. Our ultimate objective is margin neutrality as guests define what Eating Good in the Neighborhood means to them and that may be dine-in to-go or off-premise depending on their occasion. Without question, the off-premise landscape and business model are evolving rapidly and will continue to do so moving forward. At present Applebee's has about 1200 restaurants participating in some form of delivery and we anticipate between 1400 and 1500 participating restaurants by year-end. Included in this mix is Applebee's last-mile delivery through our own website as well as third-party delivery. Restaurant margins remain a top priority for the brand and our restaurant profitability initiative is very much on-track to deliver 100 basis points of P&L cost reduction here in 2019. While most of these savings will flow to the restaurants' bottom line, we're also selectively reinvesting where we have quality opportunities on the menu. This is a terrific example of us leveraging our supply-chain scale as a primary point of difference that smaller brands simply can't replicate. As we look forward, our franchise partners are particularly excited about our May-through-December innovation plan. In fact Applebee's leadership team is meeting with our full franchise community tomorrow -- actually this evening and tomorrow to discuss brand strategy and restaurant execution around our upcoming plans. These plans include a comprehensive review of our near-term off-premise and technology initiatives as well as our beverage and culinary innovations. In addition the marketing team is making good progress on our CRM initiative as we leverage data to better understand our guests and provide them with more targeted personalized and occasion-based communications. In closing, we remain aligned, confident and optimistic about Applebee's position as America's kitchen table and we continue to reduce operating variability while strengthening our leadership position in the category. With that I'll turn it to Darren.

All right, thank you John. Good morning everyone. I'm pleased to report that IHOP's comp sales for the first quarter rose 1.2%. This marks the fifth consecutive quarter that IHOP posted positive sales growth and outperformed the family dining category based on comp sales according to Black Box data by over 150 basis points. Our off-premise business continues to be a solid contributor to IHOP's sales growth. Off-premise comp sales in the first quarter increased by a healthy 54% and off-premise traffic increased by approximately 40%. By comparison off-premise comp sales and traffic growth were approximately 31% and 22% respectively for the first quarter of 2018. We've implemented a fully integrated online ordering system through our enhanced website and IHOP's mobile app to create a complete omnichannel experience for our guests and additional touchpoints for the brand. The implementation of guest-facing technology has enabled us to grow our off-premise business to 9% of total sales up from 5% in the first quarter of 2018. We believe to-go can increase to the low teens as a percentage of total sales over the next few years. IHOP's first-quarter sales growth reflects the execution of our comprehensive strategy underpinned by four key pillars. We believe our overall performance was adversely impacted by the unfavorable impact of Easter shifting into the second quarter of this year. Turning to the four key pillars of our broad-based strategy, these encompass reinventing the guest experience, running great restaurants, driving traffic and being where the guest is. Regarding the first pillar of reinventing the guest experience, we know that IHOP's Rise N' Shine remodel program plays a big part in influencing perceptions of the brand. The remodel program has helped to successfully reshape the consumer experience with a layout that feels more welcoming and appealing. Our franchisees completed 35 remodels in the first quarter and we expect to complete approximately 220 this year. We anticipate continuing at an estimated annual run rate in the range of approximately 200 to 250 until the program is completed. When combined with new restaurant openings since the inception of Rise 'N Shine remodel over 1,100 restaurants or approximately 65% of the domestic system have the new image. The latest iteration of the remodel, Rise 'N Shine 2.0 ties in all aspects of enhancing the guest experience. These updated restaurants are equipped with new technology, such as our no wait tool to provide guests with more accurate wait times, thereby improving their overall dining experience. Other in-restaurant technology includes server tablets to improve speed and accuracy, and wireless credit card devices that are brought to the table. The device removes friction by allowing guests to quickly and conveniently pay without ever having to release their credit card. I'm pleased to report that our sharpened focus on reinventing the guest experience has resulted in IHOP again achieving all-time high guest satisfaction scores, this time twice in the first quarter alone. Turning to the second pillar, running great restaurants. Operations excellence plays a pivotal role in not only ensuring guests of an enhanced dining experience in our restaurants, but also in exceeding their expectations on every visit. Our goal is to entice guests to return for that valuable incremental visit. To that end, we've elevated our focus and commitment to guest satisfaction, which has led to IHOP retaining its leadership position with the highest absolute scores among our peer group for overall satisfaction and revisit intent according to NPD CREST. Moving to the third pillar, driving traffic. We're leveraging our core equity in breakfast by providing guests with what they crave from IHOP, which is abundant value. In the first quarter, we sweetened the deal by bringing back our very popular all-you-can-eat pancakes promotion and coupling it with any classic breakfast combo. Guests also have the option of enjoying the pancakes a la carte for only $4.99. Following the success of the breakfast combo promotion, we continued our focus on abundant value by introducing a new all-you-can-eat pancakes with any omelet promotion, which had a noticeable positive impact on our dinner day part comps. To further drive incremental visits and build brand loyalty, we re-branded and re-launched our Pancake Revolution program as MyHop. The primary goals this year are to increase membership and to entice members to come back for one more visit. In the first quarter, we grew our overall membership by approximately 9%. We believe this will serve as a solid foundation for our CRM platform and effectively facilitate one-to-one marketing. We'll provide additional progress updates in due course. Another key component of our strategy to drive traffic is our off-premise business. The significant growth in our off-premise comp sales this quarter was primarily driven by a strong increase in comp traffic. We believe this business has further upside, as we continue to increase the number of restaurants offering delivery through more service providers. We now have close to 1,200 restaurants on the DoorDash platform and there are over 1,250 restaurants participating with at least one delivery service provider. Regarding the fourth pillar being where the guest is, our franchisees developed six new domestic restaurants in the first quarter. We'll continue to explore developmental opportunities in dense urban locations as well as travel centers universities and airports, where small and non-traditional formats are more suitable. Now switching gears, we announced this year the winner of our 2019 IHOP Kid Chef Competition. We are very pleased to select six-year-old Brody Simoncini as this year's IHOP Kid Chef Champion. As part of the IHOP Free Pancake Day Campaign, the Kid Chef Competition is an annual event that invites kids ages six to 16, who have been treated at a Children's Miracle Network Hospital to create their best pancake recipe. Brody earned this year's top honors with his Oreo Oh My Goodness pancakes. I'm happy to announce that we raised over $3 million for the Children's Miracle Network Hospital during this year's IHOP Free Pancake Day, including approximately $500,000 from the sale of Brody's Oreo pancakes. To close, we started the year with good momentum. Our continued execution against IHOP's defined four-pillar strategy, resulted in another strong quarter for the brand. We're very encouraged by the progress we've made in our to-go business over the past year, and we'll continue to look at off-premise opportunities to maximize the branch potential including catering. Our culinary pipeline remains very strong, with a compelling combination of unique breakfast creations and a very strong value proposition. IHOP's fundamentals remain solid, our franchisees are healthy, we have a strategic roadmap to deliver continued positive results. With that, I'll turn the call back over to Steve for his closing comments. Steve?

Okay. Thanks, Darren. To recap, we started the year with a solid quarter highlighted by significant improvement in our core business. We're enthusiastic about the remainder of 2019 as we continue to execute against our multi-pronged strategy, which has delivered positive results and positioned us for long-term success. Now, with that, we'd be pleased to open the call for questions. Operator?

Thank you. We will now begin the question-and-answer session. [Operator Instructions] And our first question comes from Brian Vaccaro from Raymond James. Please go ahead.

Thank you and good morning. Just wanted to revisit the comp cadence at Applebee's, if we could. And I think February was slower, I'd assume due to the weather and lacking the value promo that you mentioned, John. But I guess outside of weather, how do you view the underlying trend in the business, was March similar to January? Can you give any perspective there? Has the promotions performed versus expectations? And then were there any advertising mismatches that might have had an impact on the quarter?

Hey, Brian this is John. The promotions absolutely performed as expected. We kicked off the year with all you can eat a combination of proteins. As I mentioned, February was probably a bit self-inflicted and that we didn't have an overt value proposition in place and certainly had the impact that many have experienced in February from a weather perspective. And then March three course meal very successful so pleased with the quarter. It was a bit of an up and down ride so to speak, but we're pleased with the result and the outcome. Our franchisees are very pleased with that quarter.

Okay. And on Easter, could you quantify the impact that that had at IHOP and was there any impact one way or the other at Applebee's?

Yeah, Brian this is Darren. Yeah, we quantify that Easter mismatch impact is about 40 basis points on our overall comp sales.

And Brian from an Applebee's perspective, we wouldn't see perhaps the same impact that IHOP would see from a quarter-to-quarter basis in terms of Easter.

Okay. And on the guidance, I just wanted to confirm that that includes reiterating your comp guidance for each brand. And if that's the case, could you walk through the primary sales drivers either product or technology or just the primary sales drivers that you see having an impact as you move through 2019 at Applebee's? And perhaps give an update on what you're seeing quarter-to-date at each brand?

Brian this is John. We will continue our multi-pronged strategy, so our culinary innovation with a keen emphasis on abundant value is of primary importance to us. We have some significant innovations coming soon here within the brand. Our beverage program activation will continue on a monthly basis, and then of course our off-premise business. And probably the one item we're most proud of is franchisee execution at the restaurant level. I mentioned a year, year and a half ago the amount of variability we had in the system. That's tightened significantly. We've refined our portfolio and in effect have removed the bottom 10% of the system. We've closed underperforming restaurants and our franchise partners today are achieving again on overall satisfaction and value for the money all-time high scores. So those are the fundamental components that will drive results. We're in a far better position than we have been for three years quite frankly.

Yeah, Brian on the IHOP side, we're really looking at some culinary innovation and platform news that will be layered in throughout the year. We feel very good about that. We'll continue to drive our off-premise business, we had really solid comps in this last quarter, plus 50%. We may not be able to maintain a plus 50 but we expect it to be very strong throughout the balance of the year. And then getting further into our CRM platform with MyHop, we believe will be a contributor as well. So, between those three we expect to be well within our guidance range for the year.

Okay. And any comments on quarter-to-date directionally? Are you maintaining a positive gap to the industry? Any color there?

We feel good about where we are, but we really don't want to get too granular on quarter-to-date performance.

All right. I'll pass it along.

Thanks Brian.

Thank you.

Our next question comes from Nick Setyan from Wedbush Securities. Please go ahead.

Thank you. When you talk about the operating initiatives at franchisees and the 100 basis point or so target there, can you maybe talk about some of the details around what those initiatives are and where those 100 basis points are sort of coming from?

Sure Nick. I won't provide too much color, but suffice it to say -- this is John. On Applebee's front, the -- we're well on track to achieve our 100 basis points. As I mentioned, some of that will be reinvested back into the business in particular on the menu front. The vast majority of those savings are leveraging scale and come in the form of menu. And a portion of those we're beginning to move into the labor front which we hadn't tackled previously. So, primarily food secondarily labor. These are what I would categorize as low-hanging fruit opportunities and in some cases, these are opportunities where we actually improve quality and reduce cost. We do this in partnership with our supply chain organization and our franchisees and it's a distinct competitive advantage. It's something I you know fundamentally believe smaller brands would have a difficult time even attempting. It requires discipline and you're seeing it from both brands here.

In terms of the EBITDA guidance in range, can you maybe give us some idea of what the variability there is with respect to if the comp isn't within the guidance range, is there some leeway there to still get to EBITDA targets for the year?

Nick this is Tom. I think you're seeing that reflected in Q1 with respect to both you know when the comps fall out of that range, but earnings flow through is still very, very strong. I think it reflects our franchise business model. And frankly let's not forget that we do have a small portion of the business which we recently acquired. That business was performing very strong and contributed to both gross profit and obviously the EBITDA line as well.

And I know you don't want to really comment around April trends, but at least directionally, does April play a meaningful part in your reiterated guidance?

Yes, we haven't seen anything that would warrant a change in that guidance. Does that answer your question?

Yes. Thanks very much. Appreciate it.

Our next question comes from Stephen Anderson from The Maxim Group. Please go ahead.

Yes, good morning. I just wanted to maybe ask if I can dig a little deeper into the comps. You're looking at trends. I wanted to see if you saw any regional differences. Also wanted to ask if there were any shifts where you saw more strength on weekends versus weekdays. And maybe throw a little color also on the off-premise trends within that. Thank you.

Sure, this is Darren. I'll go ahead and start. Yes, I would say from a geographic difference, we saw the biggest drag on our comps in the Midwest and we would attribute that to weather. And that was -- when we modeled that out as a total impact on our overall comp sales, it was about 80 basis points overall, but the Midwest in particular was hit the hardest. That obviously slowed us down both in restaurant and with off-premise to a certain extent. But I think off-premise was able to help offset that to a certain extent, so it probably would have been worse had we not had this strong foundation with our meals-to-go program.

And Stephen on the Applebee's side really haven't seen any distinction between weekday and weekend. They have both performed well for the brand which is something that we had worked at. And then similar to what Darren outlined for IHOP on the Applebee's front the Midwest in the month of February in particular is where we saw the kind of geographic disparity. Secondarily, I'd say the Northeast and that again concentrated in the month of February.

Thank you.

And we have no further questions. I will now turn the call over to Steve Joyce for closing comments.

Thank you. So, we are very pleased obviously with the quarter we had. We appreciate your time today. We're scheduled to report results for the second quarter on July 31st and we look forward to talking to you about progress then. Have a great day.

Thank you ladies and gentlemen. This concludes today's conference. Thank you for participating and you may now disconnect.