• Same Restaurant Sales (Denny's): Positive 1.1% for the fourth quarter.
• Same Restaurant Sales (Keke's): Positive 3% for the fourth quarter.
• Average Guest Check Increase: Approximately 6.5% compared to the prior year quarter.
• Off-Premise Sales (Denny's): 21% of total sales in the fourth quarter.
• New Store Openings (Denny's): Four franchise restaurants opened during the quarter.
• Store Closures (Denny's): 30 restaurants closed during the fourth quarter.
• Operating Revenue: $114.7 million for the fourth quarter.
• Adjusted Franchise Operating Margin: $31.9 million or 51.2% of franchise and license revenue.
• Adjusted Company Restaurant Operating Margin: $5.9 million or 11.3% of company restaurant sales.
• Adjusted EBITDA: $22.2 million, an increase of 11.1% year-over-year.
• Adjusted Net Income Per Share: $0.14 for the current year quarter.
• Total Debt Outstanding: Approximately $272 million.
• 2025 Guidance - Same Restaurant Sales: Expected between negative 2% and positive 1%.
• 2025 Guidance - New Store Openings: 25 to 40 restaurants expected to open.
• 2025 Guidance - Store Closures: Expected between 70 and 90 closures.
• 2025 Guidance - Adjusted EBITDA: Expected between $80 million and $85 million.

• Warning! GuruFocus has detected 5 Warning Signs with DENN.

Release Date: February 12, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Denny's Corp (NASDAQ:DENN) reported positive same restaurant sales growth of 1.1% for Denny's and 3% for Keke's Breakfast Cafe in the fourth quarter of 2024.
• The $2, $4, $6, $8 value menu was a successful initiative, driving traffic and profitability for franchisees.
• Denny's Corp (NASDAQ:DENN) outperformed the BBI Family dining sales index for the fourth consecutive quarter.
• The Diner 2.0 remodel program showed a 6.5% lift in traffic at remodeled restaurants, contributing to increased sales and profitability.
• Keke's expanded its footprint from Florida to six different states by the end of 2024, with a record-breaking year for growth.

Negative Points

• Denny's Corp (NASDAQ:DENN) experienced a decline in system-wide same restaurant sales at the start of 2025, with a 0.7% decrease in January and a 5% decrease in early February.
• The company anticipates closing between 70 and 90 lower volume Denny's restaurants in 2025 to improve franchisee cash flow.
• Keke's same restaurant sales were impacted by hurricanes in Florida, reducing potential growth.
• Consumer sentiment has shifted due to macroeconomic factors, leading to conservative guidance for 2025.
• New Keke's cafe openings faced operational inefficiencies, impacting overall adjusted company margins by approximately 70 basis points.

Q & A Highlights

Q: Can you revisit your confidence in expanding both company and franchise margins for 2025? A: Robert Verostek, CFO, expressed high confidence in expanding company margins, emphasizing the focus on controllable factors despite recent softness. He noted that Keke's cafes owned for over 12 months are improving towards high 10s margins, while newer ones take time to stabilize.

Q: What macro factors are affecting consumer behavior, and what gives you confidence that sales will accelerate after Q1? A: Robert Verostek, CFO, mentioned weather impacts and inflation as factors affecting consumer behavior. He expressed confidence in their initiatives, including CRM loyalty, remodels, and maintaining value leadership, which are expected to drive sales growth throughout the year.

Q: How does Denny's performance compare to the industry in early 2025? A: Kelli Valade, CEO, noted it's early to determine exact performance relative to the industry due to holiday timing and other factors. However, they continue to monitor family and casual dining trends closely.

Q: What is the marketing strategy for 2025, particularly regarding value and innovation? A: Kelli Valade, CEO, highlighted the continuation of the $2, $4, $6, $8 value platform, complemented by a barbell strategy. They plan to balance value with innovation, introducing new items and leveraging franchisee suggestions to drive growth.

Q: Can you provide more details on the recent franchise agreement cancellations and Keke's sales trends? A: Robert Verostek, CFO, explained that the cancellations were due to franchisee balance sheet issues. He expressed optimism about the cafes taken over, noting they are strong performers. Kelli Valade, CEO, added that Keke's momentum continues, driven by initiatives like the alcohol program and off-premise business.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.