John Peyton: Yes, Andrew, it’s John, I’m going to suggest this. Vance, why don’t you address the franchisee specifically and then I think it’s helpful for Jay and Tony to talk about the committee structure and the way we collaborate with franchisees and around our programming decisions. So we’ll start with Vance.
Vance Chang: Sure. John. Hey, Andrew. So with franchisees, we’re constantly having a conversation of margin dollars versus margin percent, right. So you pay rent, you pay labor with dollars, not percentages. So these are longer term conversations and we’re focused on franchisee health and on average, both systems are in a great shape based on the non-audited financials that our franchisees have shared with us. Of course, we do have normal course of business type of requests from our franchisees as a system of our size would have. But generally speaking, you see in our reported numbers, franchisees are seeing strong AUV growth and with the second half commodity inflation with the labor availability improving, those are positive trends.
But on top of that, we’re also working with our franchisees on cost saving initiatives at the restaurant level. So these include packaging and distribution and waste energy reduction front and back of the house efficiency, et cetera. So these are all incremental things that we’re working on together collectively to make sure that that they’re protected and their franchisee health is maintained and improved over time. Tony or Jay, anything to add there?
John Peyton: Why don’t we just have Jay speak on behalf of both brands in terms of how we work with our franchisees through the committee structure, et cetera. Jay?
Jay Johns: Yes. Hi Andrew. We have various committees. We have an operations committee that looks at how we execute, how we operate. They deal with a lot of this on cost of doing business, food costs, ways to improve efficiencies on execution, on labor, et cetera. So we work very closely with them. And there’s different – there’s almost different buckets that this falls in. You heard John talk before about our restaurant profitability initiatives that both our brands do. For example, at IHOP, 35 basis points that we’ve been able to save on that initiative alone, obviously the commodity reductions are going to be back in half a year, will help franchisees as well. I want to go back to your question though, about sales and how sales tend to help the franchisor more at least perception wise.
One of the things that we also make sure talking about penny profit is sales actually help franchisees way more than they help the franchisor. We get a percentage obviously, of the top line, but the flow through of an incremental sale is kept franchisee mainly and that’s where they understand that we need to cut costs, but we also need to raise revenues, and that’s their sales and that’s their traffic. And that’s really one of the biggest focuses. You think about all the work we do with marketing and initiatives and value and pricing. All of that is about how do you get more guests to come in and have a great time in your restaurant experience, a fantastic experience, which adds more to the value equation, and then come back and the franchisees work on all of those things.
Brett Levy: We’re ready for the next question, Gerald.
Operator: Thank you. [Operator Instructions] One moment please. Our next question comes from Jeffrey Bernstein of Barclays. You may proceed.
Jeffrey Bernstein: Great, thank you very much. Couple of questions. The first one, just following up on the Applebee’s comp trends, I think it mentioned that it started soft, but then you introduced the state promotion within 25, and I thought you mentioned that traffic improved. So I’m just trying to get the sense for, I know you don’t get monthly trends, but just want to confirm that directionally you were saying trends got better through the second quarter and into July. And within that, if you can maybe just share the components of the comp, including price and whatnot for the second quarter result for both brands.
John Peyton: Yes, so Jeff, it’s John, I’ll clarify the comment I made about the Applebee’s comps, and then we can ask Vance to address the traffic and price split. What – we’re not commenting on July because that’s obviously the third quarter. And what I did say is that we saw, stabilization and then improvement of traffic as the quarter progressed. Vance, do you want to talk about the mix?
Vance Chang: Yes. So, hey Jeff, for Q2 on a year-over-year basis, I think Applebee’s was close to that menu. Saw menu pricing increase in IHOP saw about close to 8%, a little bit under 8% menu pricing increase. And then there’s the rest of that, that ticket change was in mix and then traffic was negative.
