Denny’s Corporation Reports Results for First Quarter 2024

Rhea-AI Summary

Denny's reported first-quarter 2024 results, highlighting a decrease in total operating revenue compared to the previous year. The company saw a decline in domestic same-restaurant sales, but remains optimistic about upcoming sales driving initiatives. Adjusted net income and EBITDA were also reported.

Positive

• Denny's reported outperforming family and casual dining segments in domestic same-restaurant sales, indicating resilience in a tough operating environment.

• The company is expanding its new virtual brand, Banda Burrito, and testing new designs, which are expected to drive incremental sales and margins.

Negative

• Total operating revenue decreased to $110.0 million from $117.5 million in the prior year quarter, signaling a decline in business performance.

• Net income was $4.7 million, down from $0.6 million in the prior year quarter, primarily due to losses related to interest rate swap valuation adjustments.

Insights

Financial Analyst

The key takeaway from Denny’s Q1 2024 report is a mixed performance with certain challenges. While Denny's overall revenue has dipped from $117.5 million to $110.0 million year-over-year, the report highlights an important contrast between franchise and company operations. The adjusted franchise operating margin has improved, now standing at 52.2% of franchise and license revenue, even though total revenue in this segment is down. This suggests tighter control over franchise costs or improved revenue quality. For retail investors, this could indicate a stable franchising business model which can be more resilient against economic headwinds. However, the decline in same-restaurant sales by 1.3% signals that consumer footfall has decreased, which is concerning for future revenue streams. The adjusted company restaurant operating margin sees a decrease to 11.5%, driven by increased liabilities like worker's compensation. This may pinch profitability in the short term, but is not necessarily indicative of long-term trends. The net income increase to $4.7 million or $0.09 per diluted share might initially appear positive, but considering the adjusted net income per share has decreased from $0.13 to $0.11, the underlying profitability is under pressure. For investors, the efficiency in franchise operations is a positive note, but the impact of operational challenges in company-owned restaurants and the overall decrease in revenue may raise some concerns about the company's near-term growth trajectory.

Market Research Analyst

Denny’s expansion with Keke's outside Florida and the test of a new design in the latest openings indicates an attempt to innovate and capture new market segments. The launch of the third virtual brand, Banda Burrito, coupled with the remodel program, shows Denny's strategic push to diversify and adapt to changing consumer demands. For investors, these are signs of a company not resting on its laurels, but one that is proactive in driving sales through multiple avenues. However, the implementation of these initiatives amidst the reported labor inflation of between 4% and 5% and commodity inflation of 0% to 2% will be a test of operational efficiency. Investors should keep a close eye on how these inflationary pressures are managed, as they will heavily influence both top-line growth and bottom-line results. The mixed sales forecast with same-restaurant sales expected to be between 0% and 3% reflects the uncertainty in the market, indicating that while there is potential for growth, it is not guaranteed and is likely to be modest at best.

Debt Market Analyst

From a debt perspective, Denny’s sits with $271.4 million of total debt at the end of the quarter, which is a significant figure that investors should monitor. While the company’s debt position may be sustainable, especially with an improvement in franchise margins, the ability to service this debt comfortably will depend on consistent revenue and earnings. The effective tax rate has seen a substantial decrease from 61.5% to 24.6%, likely improving net income and cash flows which can be used for servicing debt or reinvestment into the business. The report also mentions an investment of $4.9 million in cash capital expenditures, primarily for new Keke's café openings and allocation of $4.8 million to share repurchases. This suggests a balanced approach to capital allocation between growth investments and shareholder returns. However, with capital expenditures geared towards expansion and share repurchases, retail investors should consider whether these uses of cash will generate expected returns and support the servicing of the existing debt load. The remaining $95.7 million under the existing repurchase authorization will be a point of interest for investors tracking shareholder value propositions.

SPARTANBURG, S.C., April 30, 2024 (GLOBE NEWSWIRE) -- Denny’s Corporation (the "Company") (NASDAQ: DENN), owner and operator of Denny's Inc. ("Denny's") and Keke's Inc. ("Keke's") today reported results for its first quarter ended March 27, 2024 and provided a business update on the Company’s operations.

Kelli Valade, Chief Executive Officer, stated, "I am very pleased that our first quarter domestic same-restaurant sales and traffic outperformed both the family and casual dining segments, while overcoming the industry's tough operating environment. We were also excited for Keke's to expand outside of Florida and begin testing our new design in the latest Florida openings. I am encouraged by the sales driving initiatives planned for the back half of the year including expanding our third virtual brand, Banda Burrito, launching our test with Franklin Junction, reigniting our Denny's remodel program and having the full force of our local co-op advertising fund for the first time since the pandemic began. These initiatives are sure to generate incremental sales and margins at our flagship brand.”

First Quarter 2024 Highlights⁽¹⁾

• Total operating revenue was $110.0 million compared to $117.5 million in the prior year quarter.
• Denny's domestic system-wide same-restaurant sales** were (1.3%) compared to the equivalent fiscal period in 2023, including (1.2%) at domestic franchised restaurants and (3.0%) at company restaurants.
• Opened eight restaurants, including three international Denny's locations and three Keke's company locations.
• Operating income was $10.0 million compared to $16.1 million in the prior year quarter.
• Adjusted franchise operating margin* was $30.1 million, or 52.2% of franchise and license revenue, and Adjusted company restaurant operating margin* was $6.0 million, or 11.5% of company restaurant sales.
• Net income was $4.7 million, or $0.09 per diluted share.
• Adjusted net income* and adjusted net income per share* were $5.7 million and $0.11, respectively.
• Adjusted EBITDA* was $18.4 million.

(1) Beginning fiscal 2024, the Company has evolved its definition of non-GAAP measures. Please see the definitions, explanations, and reconciliations further in this release.

First Quarter 2024 Results

Total operating revenue was $110.0 million compared to $117.5 million in the prior year quarter.

Franchise and license revenue was $57.6 million compared to $64.0 million in the prior year quarter. This change was driven by a $2.1 million decrease in initial and other fees associated with the sale of kitchen equipment in the prior year quarter, and a $1.5 million decrease in advertising revenue primarily related to lower local advertising co-op contributions in the current quarter.

Company restaurant sales were $52.3 million compared to $53.5 million in the prior year quarter primarily driven by a decrease of (3.0%) in Denny's same-restaurant sales, partially offset by one additional Keke's equivalent unit.

Adjusted franchise operating margin* was $30.1 million, or 52.2% of franchise and license revenue, compared to $31.6 million, or 49.4% in the prior year quarter. This margin change was primarily due to lower sales and lease terminations.

Adjusted company restaurant operating margin* was $6.0 million, or 11.5% of company restaurant sales, compared to $7.1 million, or 13.2% in the prior year quarter. This margin change was primarily due to higher worker's compensation and general liability in the current quarter of approximately $1.0 million, or 1.9ppts of company restaurant sales.

Total general and administrative expenses were $21.2 million compared to $20.1 million in the prior year quarter. This change was primarily due to an increase in corporate administration expense.

On a GAAP basis, the effective income tax rate was 24.6% for the current quarter compared to 61.5% in the prior year quarter. This change was primarily due to discrete items relating to share-based compensation in the prior year quarter.

Net income was $4.7 million, or $0.09 per diluted share, compared to $0.6 million, or $0.01 per diluted share, in the prior year quarter. This change in net income was primarily due to losses related to dedesignated interest rate swap valuation adjustments in the prior year quarter.

Adjusted net income* per share was $0.11 compared to $0.13 in the prior year quarter. This change was primarily due to higher worker's compensation and general liability in the current quarter which weighed on adjusted net income* per share by approximately $0.02.

The Company ended the quarter with $271.4 million of total debt outstanding, including $261.2 million of borrowings under its credit facility.

Capital Allocation

The Company invested $4.9 million in cash capital expenditures, primarily related to new Keke's café openings.

During the quarter, the Company allocated $4.8 million to share repurchases resulting in approximately $95.7 million remaining under its existing repurchase authorization.

Business Outlook

The following full year 2024 expectations reflect management's expectations that the current consumer and economic environment will not change materially.

• Denny's domestic system-wide same-restaurant sales** between 0% and 3%
• Consolidated restaurant openings of 40 to 50, including 12 to 16 new Keke's restaurants, with a consolidated net decline of 10 to 20.
• Commodity inflation between 0% and 2%.
• Labor inflation between 4% and 5%.
• Total general and administrative expenses between $83 million and $86 million, including approximately $12 million related to share-based compensation expense which does not impact Adjusted EBITDA*.
• Adjusted EBITDA* between $87 million and $91 million (vs. between $85 million and $89 million) primarily due to changes in the non-GAAP definition.

*   Please refer to the Reconciliation of Net Income to Non-GAAP Financial Measures, as well as the Reconciliation of Operating Income to Non-GAAP Financial Measures included in the tables below. The Company is not able to reconcile the forward-looking non-GAAP estimate set forth above to its most directly comparable U.S. generally accepted accounting principles (GAAP) estimates without unreasonable efforts because it is unable to predict, forecast or determine the probable significance of the items impacting these estimates, including gains, losses and other charges, with a reasonable degree of accuracy. Accordingly, the most directly comparable forward-looking GAAP estimate is not provided.

** Same-restaurant sales include sales at company restaurants and non-consolidated franchised and licensed restaurants that were open during the comparable periods noted. Total operating revenue is limited to company restaurant sales and royalties, advertising revenue, initial and other fees and occupancy revenue from non-consolidated franchised and licensed restaurants. Accordingly, domestic franchise same-restaurant sales and domestic system-wide same-restaurant sales should be considered as a supplement to, not a substitute for, the Company's results as reported under GAAP.

Conference Call and Webcast Information

The Company will provide further commentary on the results for the first quarter ended March 27, 2024 on its quarterly investor conference call today, Tuesday, April 30, 2024 at 4:30 p.m. Eastern Time. Interested parties are invited to listen to a live broadcast of the conference call accessible through the Company's investor relations website at investor.dennys.com.

About Denny's Corporation

Denny’s Corporation is one of America’s largest full-service restaurant chains based on number of restaurants. As of March 27, 2024, the Company consisted of 1,614 restaurants, 1,539 of which were franchised and licensed restaurants and 75 of which were company operated.

Denny's Corporation consists of the Denny’s brand and the Keke’s brand. As of March 27, 2024, the Denny's brand consisted of 1,553 global restaurants, 1,489 of which were franchised and licensed restaurants and 64 of which were company operated. As of March 27, 2024, the Keke's brand consisted of 61 restaurants, 50 of which were franchised restaurants and 11 of which were company operated.

For further information on Denny's Corporation, including news releases, links to SEC filings, and other financial information, please visit investor.dennys.com.

Non-GAAP Definition Changes

The Company has evolved its definition of non-GAAP financial measures starting in fiscal 2024 to provide more clarity and comparability relative to peers. Denny's Corporation management uses certain non-GAAP measures in analyzing operating performance and believes that the presentation of these measures provides investors and analysts with information that is beneficial to gaining an understanding of the Company's financial results. Non-GAAP disclosures should not be viewed as a substitute for financial results determined in accordance with GAAP.

The Company will begin excluding legal settlement expenses, pre-opening expenses, and other items management does not consider in the evaluation of its ongoing core operating performance from adjusted operating margin*, adjusted net income*, adjusted net income per share*, and adjusted EBITDA*. In addition, the Company will no longer deduct cash payments for restructuring and exit costs, or cash payments for share-based compensation from adjusted EBITDA*. Lastly, the Company will transition to utilizing GAAP cash flows included in its SEC filed documents in lieu of a non-GAAP financial measure.

Reconciliations of these non-GAAP measures are included in the tables of this press release and a recast of historical non-GAAP financial measures can be found on the Company's website, or its most recent investor presentation.

Cautionary Language Regarding Forward-Looking Statements

The Company urges caution in considering its current trends and any outlook on earnings disclosed in this press release. In addition, certain matters discussed in this release may constitute forward-looking statements. These forward-looking statements, which reflect management's best judgment based on factors currently known, are intended to speak only as of the date such statements are made and involve risks, uncertainties, and other factors that may cause the actual performance of Denny’s Corporation, its subsidiaries, and underlying restaurants to be materially different from the performance indicated or implied by such statements. Words such as “expect”, “anticipate”, “believe”, “intend”, “plan”, “hope”, "will", and variations of such words and similar expressions are intended to identify such forward-looking statements. Except as may be required by law, the Company expressly disclaims any obligation to update these forward-looking statements to reflect events or circumstances after the date of this release or to reflect the occurrence of unanticipated events. Factors that could cause actual performance to differ materially from the performance indicated by these forward-looking statements include, among others: economic, public health and political conditions that impact consumer confidence and spending, commodity and labor inflation; the ability to effectively staff restaurants and support personnel; the Company's ability to maintain adequate levels of liquidity for its cash needs, including debt obligations, payment of dividends, planned share repurchases and capital expenditures as well as the ability of its customers, suppliers, franchisees and lenders to access sources of liquidity to provide for their own cash needs; competitive pressures from within the restaurant industry; the Company's ability to integrate and derive the expected benefits from its acquisition of Keke's Breakfast Cafe; the level of success of the Company’s operating initiatives and advertising and promotional efforts; adverse publicity; health concerns arising from food-related pandemics, outbreaks of flu viruses or other diseases; changes in business strategy or development plans; terms and availability of capital; regional weather conditions; overall changes in the general economy (including with regard to energy costs), particularly at the retail level; political environment and geopolitical events (including acts of war and terrorism); and other factors from time to time set forth in the Company’s SEC reports and other filings, including but not limited to the discussion in Management’s Discussion and Analysis and the risks identified in Item 1A. Risk Factors contained in the Company’s Annual Report on Form 10-K for the year ended December 27, 2023 (and in the Company’s subsequent Quarterly Reports on Form 10-Q and Current Reports on Form 8-K).

DENNY’S CORPORATION
Consolidated Balance Sheets
(Unaudited)
($ in thousands)				3/27/24				12/27/23
Assets
	Current assets
		Cash and cash equivalents		$	1,164			$	4,893
		Investments			2,787				1,281
		Receivables, net			17,288				21,391
		Inventories			2,073				2,175
		Assets held for sale			1,060				1,455
		Prepaid and other current assets			9,646				12,855
			Total current assets		34,018				44,050
	Property, net				94,985				93,494
	Finance lease right-of-use assets, net				5,785				6,098
	Operating lease right-of-use assets, net				114,912				116,795
	Goodwill				65,908				65,908
	Intangible assets, net				93,046				93,428
	Deferred financing costs, net				1,543				1,702
	Other noncurrent assets				50,214				43,343
			Total assets	$	460,411			$	464,818
Liabilities
	Current liabilities
		Current finance lease liabilities		$	1,363			$	1,383
		Current operating lease liabilities			15,547				14,779
		Accounts payable			15,076				24,070
		Other current liabilities			56,986				63,068
			Total current liabilities		88,972				103,300
	Long-term liabilities
		Long-term debt			261,200				255,500
		Noncurrent finance lease liabilities			8,845				9,150
		Noncurrent operating lease liabilities			111,553				114,451
		Liability for insurance claims, less current portion			7,550				6,929
		Deferred income taxes, net			7,864				6,582
		Other noncurrent liabilities			30,171				31,592
			Total long-term liabilities		427,183				424,204
			Total liabilities		516,155				527,504
Shareholders' deficit
		Common stock			533				529
		Paid-in capital			7,534				6,688
		Deficit			(17,093	)			(21,784	)
		Accumulated other comprehensive loss, net			(35,495	)			(41,659	)
		Treasury stock			(11,223	)			(6,460	)
			Total shareholders' deficit		(55,744	)			(62,686	)
			Total liabilities and shareholders' deficit	$	460,411			$	464,818
Debt Balances
	Credit facility revolver due 2026			$	261,200			$	255,500
	Finance lease liabilities				10,208				10,533
		Total debt		$	271,408			$	266,033

DENNY’S CORPORATION
Condensed Consolidated Statements of Income
(Unaudited)
			Quarter Ended
($ in thousands, except per share amounts)			3/27/24				3/29/23
Revenue:
	Company restaurant sales		$	52,342			$	53,452
	Franchise and license revenue			57,632				64,019
		Total operating revenue		109,974				117,471
Costs of company restaurant sales, excluding depreciation and amortization				48,118				46,492
Costs of franchise and license revenue, excluding depreciation and amortization				27,374				32,387
General and administrative expenses				21,222				20,118
Depreciation and amortization				3,581				3,656
Operating (gains), losses and other charges, net				(327	)			(1,329	)
		Total operating costs and expenses, net		99,968				101,324
Operating income				10,006				16,147
Interest expense, net				4,420				4,505
Other nonoperating (income) expense, net				(637	)			10,093
Income before income taxes				6,223				1,549
Provision for income taxes				1,532				952
Net income			$	4,691			$	597
Net income per share - basic			$	0.09			$	0.01
Net income per share - diluted			$	0.09			$	0.01
Basic weighted average shares outstanding				53,068				57,638
Diluted weighted average shares outstanding				53,214				57,840
Comprehensive income			$	10,855			$	954
General and Administrative Expenses
	Corporate administrative expenses		$	15,192			$	14,179
	Share-based compensation			2,776				3,094
	Incentive compensation			2,523				2,387
	Deferred compensation valuation adjustments			731				458
		Total general and administrative expenses	$	21,222			$	20,118

DENNY’S CORPORATION

Reconciliation of Net Income to Non-GAAP Financial Measures

(Unaudited)

The Company believes that, in addition to GAAP measures, certain non-GAAP financial measures are useful information to investors and analysts to assist in the evaluation of operating performance on a period-to-period basis. However, non-GAAP measures should be considered as a supplement to, not a substitute for, operating income, net income, and net income per share, or other financial performance measures prepared in accordance with GAAP. The Company uses adjusted EBITDA, adjusted net income and adjusted net income per share internally as performance measures for planning purposes, including the preparation of annual operating budgets, and for compensation purposes, including incentive compensation for certain employees. These non-GAAP measures are adjusted for certain items the Company does not consider in the evaluation of its ongoing core operating performance. These adjustments are either non-recurring in nature or vary from period to period without correlation to the Company's ongoing core operating performance.

	Quarter Ended
($ in thousands)	3/27/24				3/29/23
Net income	$	4,691			$	597
Provision for income taxes		1,532				952
Operating (gains), losses and other charges, net		(327	)			(1,329	)
Other nonoperating (income) expense, net		(637	)			10,093
Share-based compensation expense		2,776				3,094
Deferred compensation plan valuation adjustments		731				458
Interest expense, net		4,420				4,505
Depreciation and amortization		3,581				3,656
Legal settlement expenses		1,449				109
Pre-opening expenses		366				—
Other adjustments		(148	)			(8	)
Adjusted EBITDA	$	18,434			$	22,127
Net income	$	4,691			$	597
Losses and amortization on interest rate swap derivatives, net		141				10,662
Gains on sales of assets and other charges, net		(620	)			(1,522	)
Impairment charges		95				129
Legal settlement expenses		1,449				109
Pre-opening expenses		366				—
Other adjustments		(148	)			(8	)
Tax effect (1)		(316	)			(2,436	)
Adjusted net income	$	5,658			$	7,531
Diluted weighted average shares outstanding		53,214				57,840
Net income per share - diluted	$	0.09			$	0.01
Adjustments per share		0.02				0.12
Adjusted net income per share	$	0.11			$	0.13

(1

)

Tax adjustments for the quarter ended March 27, 2024 reflect an effective tax rate of 24.6%. Tax adjustments for the quarter ended March 29, 2023 reflect an effective tax rate of 26.0%.

DENNY’S CORPORATION

Reconciliation of Operating Income to Non-GAAP Financial Measures

(Unaudited)

The Company believes that, in addition to GAAP measures, certain other non-GAAP financial measures are useful information to investors and analysts to assist in the evaluation of restaurant-level operating efficiency and performance of ongoing restaurant-level operations. However, non-GAAP measures should be considered as a supplement to, not a substitute for, operating income, net income, and net income per share, or other financial performance measures prepared in accordance with GAAP. The Company uses restaurant-level operating margin, company restaurant operating margin and franchise operating margin internally as performance measures for planning purposes, including the preparation of annual operating budgets, and for compensation purposes, including incentive compensation for certain employees.

Restaurant-level operating margin is the total of company restaurant operating margin and franchise operating margin and excludes: (i) general and administrative expenses, which include primarily non-restaurant-level costs associated with support of company and franchised restaurants and other activities at their corporate office; (ii) depreciation and amortization expense, substantially all of which is related to company restaurant-level assets, because such expenses represent historical sunk costs which do not reflect current cash outlays for the restaurants; (iii) special items, included within operating (gains), losses and other charges, net, to provide investors with a clearer perspective of its ongoing operating performance and a more relevant comparison to prior period results.

Company restaurant operating margin is defined as company restaurant sales less costs of company restaurant sales (which include product costs, company restaurant level payroll and benefits, occupancy costs, and other operating costs including utilities, repairs and maintenance, marketing and other expenses) and presents it as a percent of company restaurant sales. Adjusted company operating restaurant margin is defined as company restaurant operating margin less certain items such as legal settlement expenses, pre-opening expenses, and other items the Company does not consider in the evaluation of its ongoing core operating performance.

Franchise operating margin is defined as franchise and license revenue (which includes franchise royalties and other non-food and beverage revenue streams such as initial franchise and other fees, advertising revenue and occupancy revenue) less costs of franchise and license revenue and presents it as a percent of franchise and license revenue. Adjusted franchise operating margin is defined as franchise operating margin less certain items the Company does not consider in the evaluation of its ongoing core operating performance.

Adjusted restaurant-level operating margin is the total of adjusted company restaurant operating margin and adjusted franchise operating margin and is defined as restaurant-level operating margin adjusted for certain items the Company does not consider in the evaluation of its ongoing core operating performance. These adjustments are either non-recurring in nature or vary from period to period without correlation to the Company's ongoing core operating performance.

	Quarter Ended
($ in thousands)	3/27/24				3/29/23
Operating income	$	10,006			$	16,147
General and administrative expenses		21,222				20,118
Depreciation and amortization		3,581				3,656
Operating (gains), losses and other charges, net		(327	)			(1,329	)
Restaurant-level operating margin	$	34,482			$	38,592
Restaurant-level operating margin consists of:
Company restaurant operating margin (1)	$	4,224			$	6,960
Franchise operating margin (2)		30,258				31,632
Restaurant-level operating margin	$	34,482			$	38,592
Adjustments (3)		1,667				101
Adjusted restaurant-level operating margin	$	36,149			$	38,693

(1)		Company restaurant operating margin is calculated as operating income plus general and administrative expenses; depreciation and amortization; operating (gains), losses and other charges, net; and costs of franchise and license revenue, excluding depreciation and amortization; less franchise and license revenue.
(2)		Franchise operating margin is calculated as operating income plus general and administrative expenses; depreciation and amortization; operating (gains), losses and other charges, net; and costs of company restaurant sales, excluding depreciation and amortization; less company restaurant sales.
(3)		Adjustments include legal settlement expenses, pre-opening costs, and other adjustments the Company does not consider in the evaluation of its ongoing core operating performance.

DENNY’S CORPORATION
Operating Margins
(Unaudited)
					Quarter Ended
($ in thousands)					3/27/24						3/29/23
Company restaurant operations: (1)
	Company restaurant sales				$	52,342		100.0	%		$	53,452		100.0	%
	Costs of company restaurant sales, excluding depreciation and amortization:
			Product costs			13,311		25.4	%			14,039		26.3	%
			Payroll and benefits			20,474		39.1	%			20,240		37.9	%
			Occupancy			4,573		8.7	%			4,094		7.7	%
			Other operating costs:
				Utilities		1,655		3.2	%			2,057		3.8	%
				Repairs and maintenance		1,005		1.9	%			889		1.7	%
				Marketing		1,604		3.1	%			1,395		2.6	%
				Legal settlements		1,449		2.8	%			109		0.2	%
				Pre-opening costs		366		0.7	%			—		0.0	%
				Other direct costs		3,681		7.0	%			3,669		6.9	%
	Total costs of company restaurant sales, excluding depreciation and amortization				$	48,118		91.9	%		$	46,492		87.0	%
	Company restaurant operating margin (non-GAAP) (2)				$	4,224		8.1	%		$	6,960		13.0	%
			Adjustments (3)			1,815		3.5	%			109		0.2	%
	Adjusted company restaurant operating margin (non-GAAP) (2)				$	6,039		11.5	%		$	7,069		13.2	%
Franchise operations: (4)
	Franchise and license revenue:
	Royalties				$	29,306		50.8	%		$	30,027		46.9	%
	Advertising revenue					18,138		31.5	%			19,668		30.7	%
	Initial and other fees					1,816		3.2	%			4,990		7.8	%
	Occupancy revenue					8,372		14.5	%			9,334		14.6	%
	Total franchise and license revenue				$	57,632		100.0	%		$	64,019		100.0	%
	Costs of franchise and license revenue, excluding depreciation and amortization:
	Advertising costs				$	18,138		31.5	%		$	19,668		30.7	%
	Occupancy costs					5,132		8.9	%			5,672		8.9	%
	Other direct costs					4,104		7.1	%			7,047		11.0	%
	Total costs of franchise and license revenue, excluding depreciation and amortization				$	27,374		47.5	%		$	32,387		50.6	%
	Franchise operating margin (non-GAAP) (2)				$	30,258		52.5	%		$	31,632		49.4	%
	Adjustments (3)					(148	)	(0.3	%)			(8	)	0.0	%
	Adjusted franchise operating margin (non-GAAP) (2)				$	30,110		52.2	%		$	31,624		49.4	%
Total operating revenue (5)					$	109,974		100.0	%		$	117,471		100.0	%
Total costs of operating revenue (5)						75,492		68.6	%			78,879		67.1	%
Restaurant-level operating margin (non-GAAP) (5)					$	34,482		31.4	%		$	38,592		32.9	%
(1)			As a percentage of company restaurant sales.
(2)			Other operating expenses such as general and administrative expenses and depreciation and amortization relate to both company and franchise operations and are not allocated to costs of company restaurant sales and costs of franchise and license revenue. As such, operating margin and adjusted operating margin are considered non-GAAP financial measures and should be considered as a supplement to, not as a substitute for, operating income, net income or other financial measures prepared in accordance with GAAP.
(3)			Adjustments include legal settlement expenses, pre-opening costs, and other adjustments the Company does not consider in the evaluation of its ongoing core operating performance.
(4)			As a percentage of franchise and license revenue.
(5)			As a percentage of total operating revenue.

DENNY’S CORPORATION
Statistical Data
(Unaudited)
		Denny's				Keke's
Changes in Same-Restaurant Sales (1)		Quarter Ended				Quarter Ended
(Increase (decrease) vs. prior year)		3/27/24		3/29/23		3/27/24		3/29/23
	Company Restaurants	(3.0%)		11.4%		(1.1%)		N/A
	Domestic Franchise Restaurants	(1.2%)		8.1%		(4.0%)		N/A
	Domestic System-wide Restaurants	(1.3%)		8.4%		(3.6%)		N/A
Average Unit Sales
($ in thousands)
	Company Restaurants	$743		$762		$455		$466
	Franchised Restaurants	$457		$452		$472		$491
(1)	Same-restaurant sales include sales at company restaurants and non-consolidated franchised and licensed restaurants that were open during the comparable periods noted. Total operating revenue is limited to company restaurant sales and royalties, advertising revenue, initial and other fees and occupancy revenue from non-consolidated franchised and licensed restaurants. Accordingly, domestic franchise same-restaurant sales and domestic system-wide same-restaurant sales should be considered as a supplement to, not a substitute for, the Company's results as reported under GAAP.

Restaurant Unit Activity			Denny's									Keke's
						Franchised								Franchised
			Company			& Licensed			Total			Company		& Licensed		Total
Ending Units December 27, 2023			65			1,508			1,573			8		50		58
	Units Opened		—			5			5			3		—		3
	Units Closed		(1	)		(24	)		(25	)		—		—		—
		Net Change	(1	)		(19	)		(20	)		3		—		3
Ending Units March 27, 2024			64			1,489			1,553			11		50		61
Equivalent Units
	Year-to-Date 2024		65			1,501			1,566			9		50		59
	Year-to-Date 2023		65			1,529			1,594			8		46		54
		Net Change	—			(28	)		(28	)		1		4		5

 

FAQ

What were Denny's 's first quarter 2024 total operating revenue?

Denny's reported total operating revenue of $110.0 million for the first quarter of 2024.

What were Denny's domestic system-wide same-restaurant sales for the first quarter of 2024?

Denny's domestic system-wide same-restaurant sales were (1.3%) compared to the equivalent fiscal period in 2023.

Who is the CEO of Denny's ?

Kelli Valade is the Chief Executive Officer of Denny's