Jake Bartlett: Great. I appreciate it. Thank you.
Operator: Thank you. One moment for our next question. Next question comes from Jeffrey Bernstein with Barclays. Please proceed.
Jeffrey Bernstein: Great. Thank you very much. Two questions. The first one is just on the unit growth, and I know you mentioned it’s an important part of the story. The temperate IHOP guidance, but it seems like it’s due to permitting and construction delays, I should say, not a lack of franchisee demand. I know you maintain the guidance for declines at Applebee’s on a net basis. But all that said, as we look out to next year, I’m just wondering how you think about franchisee sentiment. Whether there’s any perhaps more cautious tone from franchisees, whether due to a more challenging macro or higher interest rates. Whether there’s any reason to believe that the growth outlook might be challenged going into 2024 because of those issues or whether perhaps you’re not hearing anything about that at all from the franchisee conversations? And then I had 1 follow-up.
John Peyton: Sure, Jeffrey, it’s John. I’ll make a general comment, confirming what you said that the IHOP push from fourth quarter into the first quarter, consisting of what happened last year, is about timing related to the new construction environment that seems to be the new normal and that our franchisees are meeting their commitments and building as they were. And for Applebee’s, we adjusted that guidance, reflecting in part the work we’re doing on our prototype and franchisees working with us to be ready to do that. I don’t know if Jay, you have anything to add about IHOP specifically?
Jay Johns: Yeah, John. Hey, thanks, Jeffrey, for the question. I think the thing that’s consistent about IHOP is we’ve been a steady developer for many, many years now. We’ve got a pretty steady pipeline. We’ve got a good pipeline. And the thing that’s just been tough in this environment is predicting when they’re going to open. So that’s been a little bit of a challenge for us. But the ones that roll into next year, actually, just to give you a little bit of a jump start on next year’s numbers. We’ve already opened 29 this year. The fourth quarter should be busy for us as well. So we’re going to end up not quite as well as we thought we would this year based on timing, but we’ll end up with a good year, and we’ll start the year off strong and having the year next year vision.
Jeffrey Bernstein: Okay. So it doesn’t sound like in terms of conversations with franchisees that there’s tempering of enthusiasm for either brand because of the broader macro environment at this point, I guess, looking to 2024, it seems like you’re on track for a return to perhaps net openings at the Applebee’s brand?
Tony Moralejo: Yes. So I’m happy to take that one. We’re not going to provide guidance beyond 2023 on net openings, but we still remain optimistic about Applebee’s return to net unit growth. 3 of our last four restaurant openings are conversions, and they generate, on average, AUVs that exceed the system average. So we’ve shifted our short-term focus to conversion opportunities. Our franchisees recognize the benefits of conversions, right, including shorter construction time lines for openings, as we leverage the benefit of conversions, we’ll work on new, efficient and economical prototype for the system. Collectively, these strategies, they should drive net unit growth. That’s still the goal. And we’ll keep you posted as we work through these challenges.
John Peyton: Jonathan, conversion is a key focus for both brands, 70% of IHOP’s openings this year for conversions and we anticipate that, that will be a focus for both brands next year as well.
Jeffrey Bernstein: Understood. And then just to follow-up. I think you made reference to 2024, briefly at least that you still see moderating but still elevated inflation. Just wondering if you can offer any specifics in terms of your outlook or franchisees’ outlook perhaps for commodities and labor, whether you can share what the baskets were in the current quarter or whether you’re talk about directionally what you’re thinking for 2024 as we think about the pricing environment going into next year? Thank you.
John Peyton: Sure. Vance, will look at that.
Vance Chang: Sure. Hey, Jeff. So — we talked about the fact that we’re seeing deflationary commodity pricing for our franchisees for the rest of this year, which is a positive now. And our franchisees, we’re working with our franchisees closely to encourage everyone to take that into consideration in setting menu pricing, right? But for — and most of that, the improvement that we’re seeing is really driven by probably not a surprise to you by coffee, by eggs, by poultry, but wheat and beef sort of remain elevated in — for our baskets. But next year, look, what we’re seeing in stores, we’ll have more color next year. But for now, we are expecting sort of moderately inflation for next year, but not a ton of details just yet. And that’s pretty fast-moving environment that we’re managing through. But for now, it does seem like things have meaningfully moderated.
Jeffrey Bernstein: Do you guys share the component of the comp maybe in the current quarter, how much of that is price versus the other components just so we can gauge the pricing contribution?
John Peyton: You mean in terms of our menu pricing as part of the comp? That was – was that the question?
Jeffrey Bernstein: That would be great. Yes. Please.
John Peyton: So I think for Applebee’s, let me see — so Applebee’s many pricing increase for Q3 year-over-year is about 4%, for IHOP it’s about 8%.
Jeffrey Bernstein: Thank you.
Operator: Thank you. One moment for our next question. This question comes from the line of Nick Setyan with Wedbush. Please proceed.
Nick Setyan: Thank you. Q3 was obviously a pretty nice EBITDA quarter despite the lower cost at Applebee’s. You know, as we kind of look at Q4, it sounds like the DOLLARITA has resulted in some kind of an acceleration versus Q3? I know you guys don’t want to quantify it. G&A guidance lowered slightly. And so the implied EBITDA would kind of result in a pretty big deceleration from Q3 to Q4 maybe even no growth versus Q4 of last year. And so just given the expectation that DOLLARITA has maybe normalized to even results in a little bit of an uptick in comp in Q4? Why should that be the case? Why should EBITDA be a little bit higher?
John Peyton: Vance?
Vance Chang: Yes, I will address that. So part of — a big part of that, we talked about this in the prior quarters is that Q4 our G&A just for seasonality and accrual purposes, G&A tends to be a little higher than other quarters. So that’s primarily the reason that you’re going to see this quarter-over-quarter drop in EBITDA. It’s more related to that than any of the top-line trends that we’re seeing.
