Denny's Corporation

Denny’s reported total operating revenue of $117.7 million versus $115.9 million a year ago. System-wide same-restaurant sales were -1.3% and Denny’s company restaurant same-restaurant sales were flat; Keke’s same-restaurant sales were +4%. Denny’s system guest check average increased approximately 3%, while off-premises sales contributed 1.5% to same-restaurant sales and represented 21% of total sales. Adjusted franchise operating margin was $30.0 million, or 50.7% of franchise and license revenue, versus $30.8 million, or 50.0%, last year; adjusted company restaurant operating margin was $6.7 million, or 11.5% of company restaurant sales, versus $13.7 million, or 12.9%, last year. Adjusted EBITDA was $18.8 million and adjusted net income per share was $0.09. The company ended the quarter with approximately $279 million of total debt, including approximately $269 million borrowed under its credit facility. For 2025, management reiterated guidance for 25 to 40 openings, 70 to 90 closures, commodities of 3% to 5%, labor inflation of 2.5% to 3.5%, G&A of $80 million to $85 million, and adjusted EBITDA of $80 million to $85 million, and said it expects to resume share repurchases in Q4 and ultimately reach $15 million to $25 million.

Kelli Valade emphasized that the company is staying focused on profitable traffic-driving initiatives amid a volatile consumer backdrop. She highlighted value innovation, off-premise strength, and the upcoming points-based loyalty program as key tools to drive frequency and personalized marketing, saying the new program should add 50 to 100 bps of traffic over time. She also framed restaurant rationalization and Keke’s expansion as part of a broader strategy to improve portfolio quality and create a path back to flat-to-positive growth.

Robert Verostek said Denny’s saw sequential sales improvement despite a choppy macro environment, helped by 3% pricing, strong off-premise demand, remodels, and value promotions. He noted adjusted company restaurant margins were pressured by 80 bps of product cost inflation, about 115 bps of legal and medical reserve adjustments, and about 100 bps of new-cafe inefficiencies, but said those pressures should ease as egg prices decline and new Keke’s cafes mature. He also pointed to the company’s balance sheet and capital plans: roughly $279 million of total debt, debt covenant compliance, an ongoing refinancing, and a plan to restart buybacks in Q4.

Analysts focused on whether July trends and tougher comparisons still allow Denny’s to reach the low end of its same-store sales guidance. Management said July has been volatile but that the back half should benefit from value, remodels, and the soon-to-launch loyalty program; Robert said the low end of guidance remains “clearly within reach.” Questions also centered on whether the BOGO offer would return, with Kelli saying it was refreshed for summer but could come back depending on margin needs and guest demand. Analysts asked about the macro impact in key markets like Los Angeles, San Francisco, Houston, and Phoenix, and Kelli said the downdraft worsened around mid-June and was tied to headline-driven macro pressure.