Ken Diptee – Executive Director, IR Julia Stewart – Chairman and Chief Executive Officer Tom Emrey – Chief Financial Officer Gregg Kalvin – Senior Vice President, Corporate Controller.

Brian Vaccaro – Raymond James Chris O’Cull – KeyBanc Alton Stump – Longbow Research Imran Ali – Wells Fargo Michael Gallo – CL King.

Welcome to the Second Quarter 2015 DineEquity Earnings Conference Call. My name is Alexandra 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. Please note that this call is being recorded.

I will now turn the call over to Ken Diptee, Executive Director of Investor Relations. Mr. Diptee, you may begin..

Good morning and welcome to DineEquity’s second quarter 2015 conference. I’m joined by Julia Stewart, Chairman and CEO; Tom Emrey, CFO; and Gregg Kalvin, Corporate Controller. Before I turn the call over to Julia and Tom, please renumber our Safe Harbor regarding forward-looking information.

During the call, management may discuss information that are forward-looking and involve known and unknown risks, uncertainties and other factors which may cause actual the results to be substantially different than those expressed or implied.

We caution you to note that such forward-looking information is 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 we assume no obligation to update or supplement these statements.

We may also refer to certain non-GAAP financial measures which are provided in our press release and also available on DineEquity’s Investor Relations website. With that, I will now turn the call over to Julia.

Julia?.

Thank you, Ken. Good morning, everyone, and thanks for joining us today. I’ll briefly review the highlights for the quarter and then Tom will walk you through the financial results. We’ve got a lot to cover this morning, so let’s get started. I am very pleased to report stellar results for the second quarter.

We posted significant growth in adjusted earnings per diluted share and both brands continue to achieve positive sales, particularly at IHOP. IHOP sales grew an impressive 6.2% compared to the strong second quarter of last year. And on a two-year basis, sales increased over 9%.

Additionally, sales at Applebee’s were positive for the fifth consecutive quarter, rising 1%. And it gives me a great deal of pleasure to announce that, for the eighth consecutive year, both IHOP and Applebee’s were again ranked number one in their respective categories by Nation’s Restaurant News on the basis of U.S.

system-wide sales for the last fiscal year. I’d like to thank all of our franchisees for their continued hard work, their dedication and commitment. Congratulations on being ranked number one once again. I’ll provide more details on each brand a bit later.

To create even more shareholder value and move the business forward, we have remained laser focused on the key strategic priorities for DineEquity we discussed with you last quarter. As a reminder, these are, first, innovating and driving organic growth at our two strong brands through consistent and sustainable positive sales and traffic.

And the second priority is to have more restaurants built at a faster pace. And to that end, I’m pleased to announce that Jim Anhut is joining DineEquity as Senior Vice President of Development on August 17.

We are excited that his experience and insight will help drive new restaurant development not only in the number of restaurants built but working with our franchisees, Jim will be charged with creating new designs, prototypes and opportunities that will help pave the way for our future growth.

For more than 30 years, Jim has created an impressive resume through collaboration and brand building solutions. The last 18 years, he has been in senior franchise development and brand management roles with Intercontinental Hotels Group, which has a presence in almost 100 countries.

Jim’s addition to our already impressive leadership team will allow us to expand our dominant footprint and increase market share. Our third and ongoing priority is to maintain strong financial discipline to maximize free cash flow as demonstrated by our focus on G&A. Tom will provide a little bit more color on G&A shortly.

Now I will provide a brief update on our two brands. First, let’s look at Applebee’s. I am really looking forward to spending more time with the management team at Applebee’s. There are some interesting and key learnings from IHOP since its turnaround, and we believe that we can use that same playbook at Applebee’s.

We know that there is an opportunity to improve and make the guest experience at Applebee’s much more fulfilling. And to achieve this, we are making good progress against our brand promise of being a modern grill and bar.

As part of this evolution, we are elevating the guest experience by focusing on a strategy built on the three main pillars we discussed last quarter. Again, these are food and menu, the guest experience, and marketing, which is how and where we talk to our guests.

While we’ve seen some positive results, we recognize that it takes time to change perception, and we are on the right track. We are still in the early process and will continue to fine-tune our strategy as necessary. But make no mistake, we intend to break out.

Turning to the first pillar, the food and menu, we have taken a consumer insights-based approach to overhaul the menu. We then launched a new menu design nationwide on May 18 as part of our plan to establish very strong signature platforms which we will continue to introduce during the remainder of the year.

Building on the successful new pub diet menu and appetizers platform, which were both introduced in the first quarter, we launched our new handhelds platform. This was also very well received. While much has been done around the menu, there still more to do.

Our guests can expect to see even more offerings that meet the definition of a modern grill and bar over the next 18 months. Turning to the second pillar, the guest experience, we are executing on our strategy to evolve both our brands and our menus, so now we must also reevaluate our service.

Further emphasis is being placed on the in-restaurant service each guest receives. This combined with our great food is what keeps our guests coming back. Through a new operations framework, we are focused on speed and consistency. We have reorganized our operations team to be even more focused on these opportunities.

We realize that this is important, and we are focused on improving the four-wall guest experience. We’ve worked hard to understand what consumers think and to determine where we can improve. And we are actively working with franchisees to address this. Another tangible touch point is the experience at the bar.

Our goal is to make the bar a destination in our restaurants, and it starts with our people. Currently, we are working with our franchisees to implement a responsible nationwide bartender certification program. We want to drive the guest experience by training our bartenders to create a sense of energy and excitement at the bar.

Regarding the broader initiative to make the bar increasingly relevant, we are still in the early stages and in the process of rolling out the program to test partners. We will provide an update in the coming months.

And regarding the third pillar, marketing, we are continuing to refine our marketing and advertising campaigns with the goal of driving traffic into our restaurants and changing perception. During the course of the year, we took our marketing and social media initiatives to the next level.

We hosted two exciting events focused on providing samples of our new sandwiches and appetizers to the hundreds of thousands of attendees combined over both days. Each event generated significant attention in social and traditional media, resulting in nearly 950 million impressions combined.

We are a work in progress and remain focused on the four-wall guest experience with our strategy grounded in consumer insight. I’d like to thank our franchisees for their continued hard work, dedication and collaboration. Now let’s switch to IHOP. I am very excited about the success that we and our franchisees are together driving.

We saw continued strong momentum in the second quarter, posting stellar results to cap off IHOP’s ninth consecutive quarter of positive comp sales. Further, the strong 6.2% improvement in sales is the highest quarterly increase in over a decade.

The increased annual contribution percentage of restaurant gross sales to the IHOP national advertising fund by a large majority of IHOP franchisees continues to have a positive impact on sales and traffic.

The second quarter’s solid performance was partially driven by our all new Summer Stacks pancakes offering and the return of our popular line of brioche French toast. In order to sustain the momentum we’ve built at IHOP, we are executing against a three-pillar strategy as well which I outlined earlier. I’ll begin with the menu and the food.

These are the most tangible touch points for our guests and has been a central focus for us. On June 1, we introduced a new menu design featuring our new logo that places an emphasis on seasonal and freshly made food.

Menu items that are made fresh to order are a real point of competitive differentiation that others in QSR, fast casual and even in our own category can’t duplicate. And we are talking about this in a much more meaningful way. The new menu is easier to navigate and contains additional visual changes such as food images that have a more authentic feel.

We are pleased with our guests’ positive reactions to the new design. Moving to the guest experience, our commitment to improving the guest experience by continually raising the bar to achieve operations excellence has yielded very positive results.

We have also seen our guest loyalty index scores improve since January 2014 in the areas of overall satisfaction, likely to return, and likely to recommend. There is more work to be done. Regarding our third pillar, marketing. The evolution of IHOP continued in the second quarter with the first new logo change in more than two decades.

The change reflects IHOP’s commitment to continually evolving its look, feel and offerings to maintain and build its lead in the category. The new logo was introduced on the menus and CLT in all of our restaurants on June 1, along with our advertising.

The exterior signage is being updated with various stages of restaurant remodels, so you can expect to see this change as the program progresses. The launch of the new Smile logo is being celebrated with a series of summer smiles events during the second half of the year.

The first event was a monumental pancake lunch for over 6,000 attendees of the Kiwanis International Convention in Indianapolis. The second event was the celebration of IHOP’s 57th anniversary on July 7.

Our social media and digital efforts helped to create an outstanding buzz, making IHOP one of the most popular topics in the US on Facebook and Instagram that day. Our traditional media results were great as well with nearly 1 billion media impressions regarding the anniversary.

In May, we used social media to launch our fun new Breakfastarian campaign. Breakfastarians are defined as people who embrace eating breakfast foods during non-breakfast hours, especially during dinner. These consumers represent a large percentage of the American population.

According to National Restaurant Association 2015 restaurant industry forecast, 70% of Americans wish that restaurants would serve breakfast all day long. And importantly, IHOP has been doing so for almost 57 years. In fact, in the second quarter, over 50% of all breakfast item sales were during non-breakfast dayparts.

Additionally, breakfast items accounted for over 50% of total sales across all dayparts. We are pleased with our progress at IHOP and believe that we are taking the right strategic steps to expand our lead in the category. And now that Darren Rebelez has joined IHOP as its President, I have more time to focus on each brand equally.

With that, I’ll turn the call over to Tom to discuss the second quarter’s financial results.

Tom?.

one, interest payments on our long-term debt; two, higher estimated income tax payments; three, marketing payments in the first six months of 2015 compared to the same period last year.

As a reminder, our current securitized debt requires quarterly interest payments whereas a large portion of our previous debt required semiannual interest payments in April and October. Overall, we generated strong free cash flow of approximately $50 million in the first six months of 2015.

We reiterate our full year guidance for free cash flow which is expected to range between $114 million and $124 million. Now an update on returning cash to shareholders. In the second quarter, we were pleased to return approximately $37 million to shareholders in the form of cash dividends and share repurchases.

To provide some color, we repurchased approximately 205,000 shares of our common stock during the quarter for a total of roughly $20 million. Regarding our financial performance guidance for fiscal 2015, we reiterate our outlook issued on February 25 except for domestic system-wide sales at both IHOP and Applebee’s.

We now expect IHOP sales to range between positive 4% and positive 6%, reflecting an increase from previous expectations of between positive 2% and positive 5%. For Applebee’s, we are lowering the top end of the range from positive 4% to positive 3%. We’re committed to closely reviewing our guidance each and every quarter.

Lastly, I’d like to inform you that the sale of the 23 Company-operated Applebee’s in Kansas City was completed last week and on a GAAP basis, we expect to recognize a gain on the sale of approximately $2 million in the third quarter and receive approximately $9.5 million in cash proceeds from the sale.

Although the sale proceeds are not included as a component of our free cash flow, we expect to utilize the cash primarily for future share repurchases. To close, I’m very proud of our financial discipline.

The stability of our business model and our ability to generate strong free cash flow has strengthened our commitment to returning cash to shareholders while still allowing us to invest for growth. We have a very sustainable capital structure in place which positions the Company for long-term success, and I’m very pleased with our accomplishments.

And now I will turn the call back over to Julia..

Thanks Tom. To recap, we had a stellar quarter and reported significant growth and adjusted EPS. The successful execution of our strategy is that both brands have yielded progress in addition to consistent positive comp sales at both Applebee’s and IHOP.

Of course, we remain committed to innovation at both brands and building a platform for sustainable growth, including a potential acquisition that is a strategic fit and does not compete with our two current brands. And now Tom and I would be pleased to answer your questions.

Operator?.

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

Thank you and good morning. Just first I wanted to just touch on IHOP, and obviously you’ve done a ton of work on the menu, improving ops consistency across the system, also the more efficient media spend with sort of the reallocation to the national media spend in the last, say, six to 12 months.

But Julia, can you kind it maybe rank order each of these items in terms of what you think is driving the business, say, in the last six to nine months or even in the first half of the year? And also just specifically on the IHOP daypart trends, are you seeing outside sales in any particular daypart? It sounds like you might be seeing some strength in the dinner daypart behind the Breakfastarian initiative, et cetera.

So if you could touch on that, that would be helpful..

I did have some fun with the Breakfastarian, I have to admit that. All of the dayparts have been very successful at IHOP, so there’s nothing that stands out. The truth of the matter, it’s hard, as you know. If I could answer that question with certainty, I would probably be doing something else for a living.

I don’t know how on earth you can ever rank and stack. The truth of the matter, it’s a combination of everything that has made us incredibly successful. I think it’s – as you recall, pyramid that I used present it shows it was always the same thing.

You start with the basics of improving your operations and the four-wall capability, then you really stretch with the menu, then you work on the marketing. Last but not least, you work on the remodel and the development. So it’s really all those things in combination.

Which came first, second, third or fourth it’s hard to say, but the combination works very well for the brand..

Yes, Understood. I wanted to just quickly switch gears to Applebee’s and touch on two fronts really quickly. First, obviously, again, seen a lot of menu innovation, the quality, flavor profile upgrades, new categories of items.

Can you speak to how those items are resonating with guests maybe in terms of the sales mix you are seeing on those items versus expectations, what you’re seeing in terms of guest satisfaction scores and the like? And then also if you are seeing signs that these changes are gaining traction with lapsed users in particular..

Yes. There’s no question that the appetizers and the pub diet and all that had a substantial impact. I think it was like a 15%, 16% mix. So, there’s no question that that was well-received and liked. In terms of increasing folks that haven’t been in a while, it takes time.

And that’s why I think you are seeing some of the work that we are doing to change perceptions. But that’s not the kind of thing that happens overnight. I think we serve like almost between the two brands over 2 million people a day. The truth of the matter is there’s a lot of consistent users. We just want them to come back more frequently.

That has a huge impact on Applebee’s capability on sales and traffic. So it’s really getting people to come back more often as opposed to trying to go after people who have never been to an Applebee’s or haven’t been in 10 years type of thing. It’s really focused on getting our existing users to come back more often, and that’s taking time.

I think part of that is it’s really a function of changing perceptions and getting people to come back more often and focusing, as I said earlier in the script, on this inside the four walls, what can we do to consistency, what can we do with a seat? It’s all of that we are combining that we are focused on..

Yes. That’s a great segue into the last piece of it, sort of working on the overall guest experience. Obviously it’s menu, but also the service and the consistent brand execution across markets. But maybe if you could sort of prioritize where you see the biggest opportunities for improvement on the guest experience side of things.

And I know you’ve reorganized your franchise support infrastructure, which you’ve talked about recently.

What areas are, say, they focused on, say, over the next 12 to 18 months on that front?.

It’s actually a very good question, Brian. We divided the ops organization of [ph] and setting up operations really did make a decision to working with the franchisees to divide the ops structure into two pieces.

So the best way to describe that is one group is really focused on consulting with the franchisees and the other group is really focused on getting into those restaurants and measuring their speed capability and their consistency capability.

And that, separating those two functions and really having them focus on what are the key deliverables in that category and in our brand, which is speed and consistency, probably has the greatest impact, right because you are really able to focus one group on let’s measure and focus on that measurement and what are the areas of improvement, and then the other group really being consultative.

That’s probably having the greatest short-term impact. And we really do see that as a positive and at the same time, just as we are doing at IHOP, consistently raising the bar, which is really what our franchisees want anyway. They want that bar raised.

So there is that great opportunity and what the consumer sees when they go in a restaurant is the impact of that, that they are getting the food the same way each time, that they are getting that great service each time, that there’s a sense of urgency, and the energy that we talked about in the bar, all of that work it does take time but I’m very confident both in Sanjiv leadership and the group’s work and frankly the response from the franchisees..

Sure. All right, thank you very much..

And our next question comes from Chris O’Cull from KeyBanc. Please go ahead..

Thanks, good morning guys..

Good morning..

Hi..

My question relates to the Applebee’s consumer research you guys have done.

Julia, can you give us some color or more color as to what changes to the menu consumers would like to see Applebee’s make and maybe just elaborate on specifics of – I know you made change to the menu design, but what about some of the trends that are going on right now in the food category, or the food, restaurants, clean labels, and healthier eating options? What’s the consumer telling you about Applebee’s in that regard?.

That’s a great question. In general, as I said, we serve almost 1 million people a day. And I think the large majority of those people would tell you they like it just the way it is. They like Applebee’s, they visit Applebee’s.

There is this perception that we are working on that maybe it’s not as fresh and made-to-order, and the truth of the matter is it is. And we don’t necessarily get all the credit in the world for that. So the work that we are doing both in the four-wall experience as well as the marketing tries to bring that more to life.

But we have some real opportunity to change people’s perception of the Applebee’s from yesteryear. And there really is that unique opportunity. And the way you change perceptions is both in the marketing of it as well as what you get in the four-wall experience. And that doesn’t happen overnight. That takes time.

We get a lot of credit for being the first in the category, if not the industry, to do Under 515 and Fabulous. We get all the credit in the world for the work we did with Weight Watchers. We get all the credit in the world for Better for you, the Skinny Margarita. If you think of a lot of the innovation in the category, it’s from us.

So we get that credit. Maybe we need to continue doing it at a more rapid pace, but we get all that credit. Getting people to come in more frequently – all by the way, we get the price value credit as well. But it does just take time.

And I think I mentioned earlier speed and consistency is our greatest single opportunity in that four walls, and that’s the work we are focused on..

Okay. Fair enough. And then Tom, it appears that you guys are tracking ahead of guidance on several key operating assumptions, including rental and financing segment profitability. G&A spend seems to be below the low end of the guidance.

Can you remind us why you expect kind of a significant fall off in profitability at the rental income level, and maybe why G&A should accelerate in the back half?.

The G&A we talked about a little bit in my remarks about the fact that we do have a lot of time. As you heard here, we made some key executive hires.

We have some seasonality as far as our franchise conferences [indiscernible] so if you look at last year’s G&A and how it slows through the year, it will look similar to what we are looking for this year. As far as the rental segment goes, we’re pulling up the financing for that there..

Yes, let’s make sure we’ve got the right answer..

We’re going to have to look at that at the end of the third quarter. It could be that we do a little better, but we are not sure enough of it yet and it’s too early in the year to say. We don’t really feel strongly enough about it to want to change the guidance, but we will definitely have another report back at the end of the third quarter.

But the G&A, the seasonality we see every year is the real deal and we expect the same thing to happen this year..

Fair enough. Thanks guys..

Thank you..

Our next question comes from Alton Stump from Longbow Research..

Good morning and good job on the quarter..

Thank you..

Thank you..

I think just if I look at Applebee’s and maybe kind of delve down, obviously there’s already been several questions. But I can just tell by looking at commercial certainly that you’re trying to attract more Millennials I would guess in the store, just with the advertising but also on the new product front.

Is there any color that you could provide on how well that’s working to get Millennials into the store here over the last four to five months?.

So the one thing I want to reassure the investment community is we get a very strong showing of Millennials today at both brands. We’ve done enough research internally to indicate that we have a very robust following of Millennials at those brands. So that’s the good news.

We think we can get more Millennials in more frequently with some of the work we’re doing both with the menu and the positioning. I’m smiling at a Millennial right now. And I think the reality is it’s got to be organic and real. It can’t be contrived or put upon. It’s got to be the real organic way.

And I think probably the opportunity and the work we’re doing in social and digital organically probably has the single greatest opportunity to bring more Millennials in more often. And that’s the work that we’ve started doing. But as I said earlier, we have a very strong base of Millennials. We think we can get them in more frequently as well.

So I think, in all cases, we attract a great group of people today and a great cross-section of consumers. It’s getting them to come more often that we are very focused on..

Excellent, thanks Julia. And then for a follow-up, I look at IHOP, obviously great job once again on the result.

But as you look at new store growth, are you seeing any increase from franchisees to start to pick up the pace of store growth, given the fact that comps have been so strong now for the last 24 plus months?.

Yes, we anticipated that question. Our franchisees, since we changed the model in January 1, 2003 and introduce the notion that we would no longer be developing but that our franchisees would develop, we have – they’ve been building 40 to 60 restaurants a year since 2003. So that interest hasn’t really waned.

The truth of the matter is, as I mentioned earlier in my prepared remarks, that Jim Anhut really has a unique opportunity here with different designs and concepts and prototypes and wherewithal maybe to increase that interest by providing other asset classes and capability for the franchisees.

So I think there’s a real opportunity at both brands to not only increase development, but where we go. So I think that’s what we are looking forward to with Jim. But the interest really hasn’t waned. It’s been pretty consistent throughout the last several years..

Got you. Thanks so much..

And our next question comes from Imran Ali from Wells Fargo. Please go ahead..

Good morning. Thanks for taking my questions.

Just regarding Applebee’s, can you just talk about what trends you’re seeing more broadly in casual dining, or the grill and bar segment in particular? And what would you say is the state of the consumer today from your vantage point?.

Well my famous quote for five years now, it’s lumpy and it’s bumpy when it comes to the consumer. I’m not sure that’s really changed. I do think the consumer has certainly greater expectations than ever before.

I would say to you, in casual dining, I think there are some of our competitors who have really taken on the aggressive discounting, which as I said a million times is neither our focus nor our strategy. We believe in organic real value and price value and believe that discounting – well, first of all, it never pays.

And our franchisees don’t make money that way, and we care about our franchisees’ profitability. And secondarily, we believe, over time, that denigrates the brand. So, we are not into discounting.

We are very much into creating organic price value that we can do each and every day, and I think we’ve demonstrated that over the last several years and, frankly, our check shows that. But I think the reality is the biggest thing in casual dining is people breaking through or trying to break through and having difficulty in doing that.

If it was easy, everybody would do it and be doing it very quickly. So that’s why I said earlier I think our objective is to break out and break through the unique and differentiated. The more you can differentiate in casual dining or, frankly, in any category, the better off you are. And albeit it’s hard to do and not necessarily everyone is doing it.

I think, in the absence of that, you are seeing some pretty heavy-duty discounting, which is, again, not our strategy. I would say that’s the one trend that I’m seeing. And the notion of how do you bring that to bear. And again our strategy has never been about discounting. It’s always been about adding price value.

But something that’s breakthrough and that’s really differentiating I would say we are probably taking more of a leadership role in the category than most. But having said that, there’s more work to do..

Understood. That’s great color. Thanks for that. And just shifting to commodities, I recognize that you have a franchise model.

Do you have an updated view on the commodity or food inflation outlook that your franchisees might be seeing this year?.

I do. And in fact, I want Tom to give a little bit of color on that. We had started off the year actually telling you we were going to be favorable on the IHOP side, and due to the whole recent avian flu, that crisis, now we are flat, which is still phenomenal in this environment. I don’t know anybody projecting flat. That’s on the IHOP side.

On the commodity inflation on the Applebee’s side, we’ve gotten slightly better since we started the year at 2.6% and now we are at 2.4%.

Any color on that?.

No, I think, you know, cattle prices are moderating some and the grain prices are moderating some. The ATA thing on the IHOP side has had an impact, but we think we are recovering from that nicely, but pretty much..

I just don’t know anyone giving those kind of numbers. We have saying that every year.

It’s been pretty phenomenal for what we’ve done with the first in co-op?.

Understood, thanks very much for that..

Our next question comes from Michael Gallo from CL King. Please go ahead..

Hi, good morning..

Good morning..

My question is just if you could update us on some of the technology initiatives, where you stand at this point with tablets and what you’re seeing as well as mobile ordering and app and loyalty program. Thanks..

So, thank you. On the tablets, we are continuing to roll out the tablet program at Applebee’s. We’ve got a robust team working on it. I think the addition of Adrian Butler, which Tom mentioned in his comments, recently joining DineEquity to lead this global effort I think will certainly help the program.

On the consumer-facing integration, it remains a priority on both brands, so the work that we’re doing in all aspects. But candidly, I think hiring Adrian was intentional to really help drive that [indiscernible]..

Then in terms of mobile ordering, are you doing a little of that at Applebee’s at this point?.

That’s rolled out. The online ordering – is fully integrated at Applebee’s. That’s a work in progress..

We are always looking to improve it..

But here’s the most important part of that story is that because we have shared services at DineEquity, those platforms that we are building in IT can then be implemented at both brands and carried through. So that’s the great news is that we are not having to start all over.

You build a platform and then the brand brings it to life in their own way, so that’s the exciting part for IT. And I do think it’s a great question. As the year progresses or maybe early next year, we will do a more in-depth review and update because Adrian would’ve had the time to really get in here and bring it to life..

Okay. Great. Then can you update us? Have you seen any regional changes in the brand? I guess I’m referring more specifically Texas, obviously you have a lot of Applebee’s stores. Have you seen any changes from the drag there as a result of the oil and gas pullout, or you see pretty even performance across the various regions? Thanks..

So we’ve seen very consistent performance across both brands. We’re slightly higher in the West in IHOP and slightly higher in the east at Applebee’s. But it’s pretty much across the board..

Yeah..

Okay, thank you..

And we have a question from John Ivankoe from JPMorgan..

Hi, great. And thank you, just a couple of quick ones if I may. Last year in the second half, the industry picked up, and with you guys obviously being such a big part of the industry, I’m speaking about Applebee’s specifically in this case, your sales picked up as well.

And I guess, Julia, I’m asking you to do a forward-looking comment not on your sales but the industry sales.

How are you thinking about, in terms of your overall plan, your overall guidance, the industry’s second half relative to the industry first half? In other words, with all the different economic conditions to consider, do you think the more difficult comparisons are going to show themselves with slower same-store sales?.

That’s really hard to comment on. I’m not a big soothsayer on the casual dining category. I think I mentioned to you before in casual dining, you go in there today and there are winners and there are losers in the category. So it’s hard to make a blanket statement.

I would tell you that we are really focused on the back half of the year and the kinds of things that we can do, and we are continuing. And I think wasn’t specific in my comments and my script, but we are doing a tremendous amount of testing.

I think I mentioned that early in the year probably more than I can ever remember us doing at Applebee’s thanks to our franchisees. So there’s a tremendous amount of work going on to just keep us focused. As you know, the consumer doesn’t think about it by quarter or I’ll come and more often starting January 1 or December.

So I think we are just very, very focused on what we can do to break through and break out. I feel very strongly that it’s less about – and I’ve always said this – it’s less about the category and it’s a lot more about what you are doing to break through.

And as you know, we have some really tough comps the second half of the year on the IHOP side that we are lapping over. So it’s just really that focus. And as you’ve known from our comments, we generally - I don’t remember ever talking about the category because our goal is just to break through and break out.

I know that’s hard for you guys because you want us to talk more about the category, but we really believe breaking through and breaking – and frankly IHOP is your greatest account of that, that we are so substantially ahead of the category, we just don’t think about the category.

We think about what we need to do at IHOP to break through and create that insurmountable lead. I feel the same way about Applebee’s. Not in the same place today, but opportunistically that’s exactly where we want to go..

Okay. Understood. And Julia, I don’t know if it was intentional or not, but in terms of your new hire, your Senior Vice President of Development that was at Intercontinental, which is in 100 countries, kind of does beg the opportunity that maybe there is a much greater international opportunity than what the brands have currently realized.

So are you kind of preparing to build an international organization, or maybe get more aggressive with international territories to greatly expand either one of these brands outside of the United States relative to the current footprint?.

Yes. In the prepared remarks, I mentioned that, at least for the time being, Jim is very focused on the domestic U.S.

That’s all he’s focused on is bringing to bear all his years of experience and really increasing the pace of development in the US as well as where we might develop and what kind of assets or designs or building prototypes he might be able to create.

He brings a certain amount of creativity that we are really looking for to expedite that kind of growth, so that’s his focus. There’s no question that he can certainly add some influence to international, but international is really doing a great job right now in building that profile and building that expedited growth.

So I am less concerned about that. I really want to make sure we give that focus to the domestic U.S. So what he brings to bear more than anything is this notion of expediting the growth and creating new assets that franchisees can utilize that make them money. It’s that investment to sales ratio that we are really looking for to expedite that growth.

So, tremendous opportunity there in the U.S..

Okay. And one more quick one if I may. With hiring different people throughout 2015, maybe these new people want to build out their own teams, perhaps wage inflation in general for your staff.

Are you guys beginning to think about a 2016 G&A target? Is there any kind of preliminary thought that you could have, especially in the context of how well you’ve managed G&A really for years now?.

We’ll guide in February, but I think we’ve said repeatedly throughout the years that our whole goal is to drive our sales and topline and have our G&A be less than that kind of growth. So we really are very focused on keeping G&A down, and certainly growing at a very small pace as compared to our topline growth.

So, that whole strategy and target has not waned or changed..

It has not changed at all..

Thank you..

So we have no further questions at this time. I will now turn the call back over to Chairman and CEO Julia Stewart for closing remarks..

Thanks operator. And thank you all again for joining us on the call today. And for those of you that have been too busy with earnings season to make it to an Applebee’s or an IHOP to see the fabulous new menu of our both brand, please give Ken a call and he will send one to you. I’m really excited about the menu.

Lastly, the reporting date for the third quarter’s results is scheduled for October 29. If you have any questions in the interim, please feel free to contact us. Thanks so much..

Thank you, ladies and gentlemen this concludes today’s call. Thank for participating. You may now disconnect..