Segments

3 Months Ended

Mar. 31, 2024

Segment Reporting [Abstract]

Segments

Segments

The Company identifies its reporting segments based on the organizational units used by management to monitor performance and make operating decisions. The Company currently has six operating segments: Applebee's franchise operations, IHOP franchise operations, Fuzzy's franchise operations, rental operations, financing operations, and company-operated restaurant operations. The Company has four reporting segments: franchise operations (an aggregation of each restaurant concept's franchise operations), company-operated restaurant operations, rental operations and financing operations.

 As of March 31, 2024, the franchise operations segment consisted of 1,636 restaurants operated by Applebee’s franchisees in the United States, two U.S. territories and 12 countries outside the United States; 1,809 restaurants operated by IHOP franchisees and area licensees in the United States, two U.S. territories and 13 countries outside the United States; and 127 restaurants operated by Fuzzy's franchisees in the United States. Franchise operations revenue consists primarily of franchise royalty revenues, franchise advertising revenue, sales of proprietary products to franchisees, and other franchise fees. Franchise operations expenses include advertising expense, the cost of proprietary products, pre-opening training expenses and other franchise-related costs.

Rental operations revenue includes revenue from operating leases and interest income from real estate leases. Rental operations expenses are costs of operating leases and interest expense from finance leases on which the Company is the lessee. 

Financing operations revenue primarily consists of interest income from the financing of IHOP equipment leases and franchise fees and interest income on notes receivable due from franchisees. Financing operations expenses primarily are the cost of taxes related to IHOP equipment leases.

In December 2022, three company-operated Fuzzy's restaurants were acquired, of which two were subsequently refranchised in the second quarter of 2023. As of March 31, 2024, the company restaurants segment consisted of one company-operated Fuzzy's restaurant. All company-operated restaurants are located in the United States. Company-operated restaurant operation revenue consists of retail sales at company operated restaurants. Company-operated restaurant operation expenses are operating expenses such as food, beverage, labor, benefits, utilities, rent and other operating costs.

Information on segments is as follows:

		Three Months Ended March 31,
		2024		2023
	(In millions)
Revenues from external customers:
Franchise operations		175.9		$	180.0
Rental operations		29.5		32.0
Company restaurants		0.3		1.0
Financing operations		0.5		0.8
Total revenues from external customers		$	206.2	$	213.8
Interest expense:
Rental operations		$	1.1	$	1.0
Corporate		18.1		14.7
Total interest expense		$	19.2	$	15.7
Depreciation and amortization:
Franchise operations		$	2.4	$	2.5
Rental operations		2.6		2.6
Company restaurants		0.0		0.0
Corporate		4.7		4.1
Total depreciation and amortization		$	9.7	$	9.2
Gross profit by segment:
Franchise operations		$	89.4	$	92.6
Rental operations		7.6		10.4
Company restaurants		0.0		0.0
Financing operations		0.4		0.7
Total gross profit		97.4		103.7
Corporate and unallocated expenses, net		(73.4)		(67.5)
Income before income taxes		$	24.0	$	36.2