Core Insights - Denny's is launching a value-focused menu called "5 Slams Starting at $5" to cater to families during the back-to-school and fall season, featuring a variety of breakfast and diner classics [1][3] - The menu includes five complete meals priced between $5 and $10, with new items such as the Grand® Slam Burrito and Pumpkin Pecan Pancakes [2][4] - Denny's is also introducing a Loyalty Program that allows customers to earn rewards for their spending, enhancing customer engagement and retention [4] Menu Highlights - The "5 Slams Starting at $5" menu features new offerings including the Grand® Slam Burrito, BLT&E Slamwich®, 2-Egg Breakfast Slam®, Everyday Value Slam®, and Super Slam® [2][8] - Seasonal items like Pumpkin Pecan Pancakes are back, emphasizing the brand's focus on seasonal flavors [2][8] - Additional new menu items include the Bourbon Bacon Sirloin Dinner and Chocolate Cinnamon Milkshake, expanding the variety available to customers [8] Company Overview - Denny's operates 1,484 restaurants globally, with 1,422 being franchised and licensed, and 62 company-operated as of June 25, 2025 [6] - The company has a long-standing commitment to community support through initiatives like the Mobile Relief Diner and partnerships with organizations such as No Kid Hungry [5]

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Core Insights - Denny's reported mixed results for Q2 FY2025, with earnings per share (Non-GAAP) at $0.09, missing the estimate of $0.11, and revenue at $117.7 million, slightly below the target of $118.09 million but up from $115.9 million in Q2 2024 [1][2] Financial Performance - Same-restaurant sales for Denny's dropped by 1.3% in Q2 FY2025, while Keke's saw an increase of 4.0% [5] - Adjusted EBITDA was $18.8 million, down 6.0% from $20.0 million in the previous year [2] - Adjusted franchise operating margin decreased to $30.0 million (50.7%) from $30.8 million (50.0%) year-over-year [2][6] - Adjusted company restaurant operating margin fell to $6.7 million (11.5%) from $6.9 million (12.7%) in the prior year [2][6] Business Overview - Denny's operates primarily as a franchise-driven model, with over 96% of locations operated by franchisees [3] - The company focuses on all-day breakfast and value offerings, maintaining strong brand recognition through menu innovation and digital engagement [4] Operational Strategy - Denny's closed ten locations and opened three during the quarter, aiming to strengthen system health by closing lower-volume stores [5] - Keke's opened eight new cafes and expanded outside its core Florida market, contributing to overall sales growth [5] Cost Management - General and administrative expenses were $21.4 million, showing only a modest increase from the prior year, with pure administration costs down by 3.5% [7] - Rising ingredient costs, particularly for eggs, significantly impacted profitability, with egg prices remaining about twice as high as previous periods [6] Future Guidance - Management projects same-restaurant sales for FY2025 to range from -2.0% to 1.0%, with plans for 25 to 40 new restaurant openings and 70 to 90 closures [11] - Commodity inflation is expected to be between 3.0% and 5.0%, while labor costs are projected to grow by 2.5% to 3.5% [11] - Adjusted EBITDA is forecasted to be between $80 million and $85 million [11]

Core Insights - Denny's reported revenue of $117.66 million for the quarter ended June 2025, reflecting a 1.5% increase year-over-year, and an EPS of $0.09, down from $0.13 in the same quarter last year [1] - The revenue exceeded the Zacks Consensus Estimate of $117.5 million by 0.13%, while the EPS fell short of the consensus estimate of $0.10 by 10% [1] Financial Performance - Denny's shares have declined by 20.4% over the past month, contrasting with a 0.6% increase in the Zacks S&P 500 composite [3] - The company operated 84 restaurants at the end of the period, matching the average estimate from two analysts [4] - Same-Restaurant Sales for Company Restaurants remained flat at 0%, compared to an average estimate of -0.3% [4] - Domestic System-wide Restaurants experienced a decline of 1.3% in Same-Restaurant Sales, worse than the estimated decline of 0.8% [4] - Total restaurants at the end of the period numbered 1,558, exceeding the average estimate of 1,548 [4] Revenue Breakdown - Franchise and license revenue was reported at $59.26 million, below the average estimate of $59.93 million, representing a year-over-year decline of 3.8% [4] - Company restaurant sales reached $58.4 million, surpassing the average estimate of $57.58 million, with a year-over-year increase of 7.5% [4] Operating Margins - Franchise Operating Margin was reported at $30.05 million, slightly below the average estimate of $30.58 million [4] - Company Restaurant Operating Margin stood at $6.05 million, compared to the average estimate of $6.44 million [4]

Company Performance - Denny's reported quarterly earnings of $0.09 per share, missing the Zacks Consensus Estimate of $0.10 per share, and down from $0.13 per share a year ago, representing an earnings surprise of -10.00% [1] - The company posted revenues of $117.66 million for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 0.13%, compared to year-ago revenues of $115.93 million [2] - Denny's has not surpassed consensus EPS estimates over the last four quarters, although it has topped consensus revenue estimates twice during the same period [2] Stock Performance - Denny's shares have declined approximately 40.5% since the beginning of the year, contrasting with the S&P 500's gain of 6.1% [3] - The current Zacks Rank for Denny's is 3 (Hold), indicating that the shares are expected to perform in line with the market in the near future [6] Future Outlook - The current consensus EPS estimate for the upcoming quarter is $0.11 on revenues of $115.8 million, and for the current fiscal year, it is $0.45 on revenues of $474.78 million [7] - The outlook for the Retail - Restaurants industry, where Denny's operates, is currently in the bottom 42% of over 250 Zacks industries, which may impact the stock's performance [8]

Financial Data and Key Metrics Changes - Denny's reported system-wide same restaurant sales of negative 1.3%, reflecting a sequential improvement of approximately 170 basis points from the first quarter [6][25] - Total operating revenue increased to $117.7 million compared to $115.9 million for the prior year quarter, driven by 12 additional Kiki's company cafes [33] - Adjusted net income per share was $0.09, with an effective income tax rate of 34.3% compared to 25.1% for the prior year quarter [36] Business Line Data and Key Metrics Changes - Denny's Company restaurants delivered flat same restaurant sales for the second quarter, while Kiki's achieved positive same restaurant sales of 4% compared to the prior year quarter [31][25] - Off-premise sales contributed a 1.5% improvement in same restaurant sales during Q2, representing 21% of total sales [10][28] - Kiki's average check increased approximately 6% during the second quarter, driven by pricing and off-premise growth [31] Market Data and Key Metrics Changes - The top four DMAs (Los Angeles, San Francisco, Houston, and Phoenix) represented nearly 30% of Denny's comp sales base but faced macroeconomic pressures, contributing to a reduction in system-wide same restaurant sales [7] - Denny's experienced a significant improvement in the 50,000 to 70,000 income cohort, indicating a shift in spending patterns [26][48] Company Strategy and Development Direction - Denny's is focused on driving profitable traffic through value messaging and merchandising, with initiatives like the buy one, get one slam for a dollar deal [8][10] - The company is implementing a new points-based loyalty program aimed at increasing guest engagement and frequency [11][24] - Denny's is rationalizing its portfolio by closing underperforming restaurants, which has resulted in a franchise AUV increase of approximately 5% [12][29] Management's Comments on Operating Environment and Future Outlook - Management noted a choppy consumer environment with household incomes under pressure and volatile consumer sentiment [6][25] - There is optimism regarding the stabilization of the macro environment, which could positively impact sales initiatives [77] - The company expects to reach the low end of its same restaurant sales guidance range, supported by digital enhancements and strong off-premise sales [37][45] Other Important Information - Denny's opened three restaurants during the quarter and closed ten franchised restaurants, with average unit volumes of approximately one million dollars [28] - The company completed 14 remodels, bringing its company fleet to nearly 55 remodeled locations [29] - Denny's plans to resume share repurchases in the fourth quarter, aiming to achieve a guidance range of $15 to $25 million [39] Q&A Session Summary Question: What might July same store sales look like? - Management indicated that July has been volatile, but they are optimistic about achieving the lower end of the same store sales guidance due to upcoming initiatives [41][43] Question: Why did the 50,000 to 70,000 income cohort see the biggest improvement? - Management attributed this to effective promotions like the BOGO deal, which attracted new and lapsed users [48][49] Question: How is the value mix structured between everyday value and limited-time offers? - Management clarified that everyday value is crucial, but limited-time offers have also driven significant traffic, and they plan to continue testing new value propositions [53][56] Question: Can the buy one get one for $1 promotion return? - Management stated that while the promotion was successful, it was refreshed for summer with new offerings, but it could return depending on future conditions [91][93]

Financial Data and Key Metrics Changes - Denny's reported system-wide same restaurant sales of negative 1.3% for Q2 2025, reflecting a sequential improvement of approximately 170 basis points from Q1 2025 [6][24] - Total operating revenue increased to $117.7 million compared to $115.9 million for the prior year quarter, driven by the addition of Kiki's company cafes [32] - Adjusted net income per share was $0.09 for the current year quarter, with total debt outstanding at approximately $279 million [35][36] Business Line Data and Key Metrics Changes - Denny's company restaurants delivered flat same restaurant sales for Q2 2025, while Kiki's Breakfast Cafe achieved positive same restaurant sales of 4% compared to the prior year quarter [25][29] - Off-premise sales contributed a 1.5% improvement in same restaurant sales during Q2, representing 21% of total sales [11][27] - Kiki's opened eight new cafes during the quarter, including two previously closed locations, and has a strong average check increase of approximately 6% [18][29] Market Data and Key Metrics Changes - The top four DMAs (Los Angeles, San Francisco, Houston, and Phoenix) represented nearly 30% of Denny's comp sales base but faced macroeconomic pressures that negatively impacted sales [7] - The 50,000 to 70,000 income cohort showed the biggest improvement in sales, indicating a shift in spending patterns [25][46] Company Strategy and Development Direction - Denny's is focused on driving profitable traffic through value messaging and innovative promotions, such as the buy one, get one slam for a dollar deal [8][9] - The company is implementing a new points-based loyalty program aimed at enhancing customer engagement and driving repeat visits [12][23] - A strategic plan to close underperforming restaurants is underway, with the goal of returning to net flat to positive growth by 2026 [13][37] Management's Comments on Operating Environment and Future Outlook - Management noted a choppy consumer environment with household incomes under pressure and volatile consumer sentiment, but expressed confidence in the company's ability to navigate these challenges [6][22] - There is optimism regarding the stabilization of the macro environment, which is expected to support the company's initiatives [22][78] Other Important Information - Denny's completed 14 remodels during the quarter, with plans for additional remodels in both company and franchise locations [28] - The company is on track to achieve its adjusted EBITDA guidance of $80 million to $85 million for the year [36] Q&A Session Summary Question: What does July same store sales look like? - Management indicated that July has been volatile, but they are optimistic about achieving the lower end of the same store sales guidance due to upcoming value messaging and remodels [41][43] Question: Why did the 50,000 to 70,000 income cohort see the biggest improvement? - Management attributed this to effective promotions like the BOGO deal, which attracted new and lapsed users [46][48] Question: How is the value mix structured? - Management clarified that everyday value and limited-time offers (LTOs) are both important, with a focus on maintaining a balance between the two [53][56] Question: Can the BOGO promotion return? - Management stated that while the BOGO promotion was successful, it was refreshed for summer with new offerings, but it could return in the future depending on market conditions [92][95] Question: What is the status of the new loyalty program? - The new loyalty program is set to launch in the back half of the year, transitioning to a one-to-one marketing approach to better engage customers [86][88]

[PART I - FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) This section presents the company's unaudited financial statements, management's analysis, market risk, and controls [Item 1. Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents Denny's Corporation's unaudited consolidated financial statements and detailed explanatory notes [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) Consolidated balance sheets show slight asset and liability decreases, with a marginal increase in total shareholders' deficit Consolidated Balance Sheet Summary | Metric | June 25, 2025 (In thousands) | December 25, 2024 (In thousands) | | :-------------------------------- | :----------------------------- | :------------------------------- | | Total assets | $491,150 | $496,274 | | Total liabilities | $525,729 | $530,299 | | Total shareholders' deficit | $(34,579) | $(34,025) | [Consolidated Statements of Income](index=4&type=section&id=Consolidated%20Statements%20of%20Income) Operating revenue slightly increased, but net income and diluted EPS significantly decreased for the quarter and year-to-date Consolidated Statements of Income Summary | Metric | Quarter Ended June 25, 2025 (In thousands) | Quarter Ended June 26, 2024 (In thousands) | Two Quarters Ended June 25, 2025 (In thousands) | Two Quarters Ended June 26, 2024 (In thousands) | | :-------------------------------- | :--------------------------------------- | :--------------------------------------- | :------------------------------------------ | :------------------------------------------ | | Total operating revenue | $117,657 | $115,927 | $229,294 | $225,901 | | Operating income | $8,572 | $9,115 | $13,782 | $19,121 | | Net income | $2,470 | $3,568 | $2,796 | $8,259 | | Net income per share - diluted | $0.05 | $0.07 | $0.05 | $0.16 | [Consolidated Statements of Comprehensive Income (Loss)](index=5&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income%20(Loss)) The company reported a total comprehensive loss for the quarter and year-to-date, driven by negative cash flow hedge fair values Consolidated Statements of Comprehensive Income (Loss) Summary | Metric | Quarter Ended June 25, 2025 (In thousands) | Quarter Ended June 26, 2024 (In thousands) | Two Quarters Ended June 25, 2025 (In thousands) | Two Quarters Ended June 26, 2024 (In thousands) | | :-------------------------------- | :--------------------------------------- | :--------------------------------------- | :------------------------------------------ | :------------------------------------------ | | Net income | $2,470 | $3,568 | $2,796 | $8,259 | | Other comprehensive income (loss) | $(2,627) | $1,034 | $(5,936) | $7,198 | | Total comprehensive income (loss) | $(157) | $4,602 | $(3,140) | $15,457 | [Consolidated Statements of Shareholders' Deficit](index=6&type=section&id=Consolidated%20Statements%20of%20Shareholders'%20Deficit) Shareholders' deficit increased due to comprehensive loss and treasury stock purchases, offset by net income and share-based compensation Consolidated Statements of Shareholders' Deficit Summary | Metric | December 25, 2024 (In thousands) | June 25, 2025 (In thousands) | | :-------------------------------- | :------------------------------- | :----------------------------- | | Total Shareholders' Deficit | $(34,025) | $(34,579) | | Net income | N/A | $2,796 | | Other comprehensive loss | N/A | $(5,936) | | Purchase of treasury stock | N/A | $(1,595) | [Consolidated Statements of Cash Flows](index=8&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Operating cash flow was stable, investing activities increased cash usage, and financing activities provided cash from long-term debt Consolidated Statements of Cash Flows Summary | Cash Flow Activity | Two Quarters Ended June 25, 2025 (In thousands) | Two Quarters Ended June 26, 2024 (In thousands) | | :-------------------------------- | :------------------------------------------ | :------------------------------------------ | | Net cash provided by operating activities | $14,368 | $14,396 | | Net cash used in investing activities | $(17,536) | $(10,349) | | Net cash provided by (used in) financing activities | $2,636 | $(7,774) | | Decrease in cash and cash equivalents | $(532) | $(3,727) | [Notes to Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) These notes detail accounting policies, financial instrument fair values, debt, revenue, operating charges, and segment information [Note 1. Introduction and Basis of Presentation](index=9&type=section&id=Note%201.%20Introduction%20and%20Basis%20of%20Presentation) Denny's Corporation operates 1,558 restaurants across two brands, mostly franchised - As of **June 25, 2025**, Denny's Corporation operated **1,558 restaurants**, comprising **1,474 franchised/licensed** and **84 company-operated** units[20](index=20&type=chunk) - The company's portfolio includes the **Denny's** brand (**1,484 restaurants**) and the **Keke's Breakfast Cafe** brand (**74 restaurants**)[21](index=21&type=chunk) [Note 2. Summary of Significant Accounting Policies](index=9&type=section&id=Note%202.%20Summary%20of%20Significant%20Accounting%20Policies) The company is evaluating new accounting standards, ASU 2023-09 and ASU 2024-03, on its financial statements - **ASU 2023-09**, "Income Taxes (Topic 740): Improvements to Income Tax Disclosures," is effective for annual periods beginning after **December 15, 2024** (**fiscal 2025**)[25](index=25&type=chunk) - **ASU 2024-03**, "Disaggregation of Income Statement Expenses (Subtopic 220-40)," is effective for annual periods beginning after **December 15, 2026** (**fiscal 2027**)[26](index=26&type=chunk) [Note 3. Receivables](index=11&type=section&id=Note%203.%20Receivables) Total net receivables decreased, primarily due to reductions in trade accounts, vendor, and credit card receivables Receivables, Net | Receivables, net (In thousands) | June 25, 2025 | December 25, 2024 | | :------------------------------ | :------------ | :---------------- | | Trade accounts receivable from franchisees | $13,564 | $15,798 | | Vendor receivables | $1,703 | $3,632 | | Credit card receivables | $822 | $1,815 | | Total receivables, net | $19,074 | $24,433 | [Note 4. Goodwill and Intangible Assets](index=11&type=section&id=Note%204.%20Goodwill%20and%20Intangible%20Assets) Goodwill increased from franchise acquisitions, while net intangible assets slightly decreased, with trade names as the largest component Goodwill and Intangible Assets Summary | Metric (In thousands) | June 25, 2025 | December 25, 2024 | | :-------------------- | :------------ | :---------------- | | Total goodwill | $68,526 | $66,357 | | Intangible assets, net | $89,630 | $91,739 | | Trade names | $79,687 | $79,687 | - Goodwill additions included **$2,157 thousand** from the acquisition of **five Keke's franchise units** and **$404 thousand** from **one Denny's franchise unit**[29](index=29&type=chunk) [Note 5. Other Current Liabilities](index=12&type=section&id=Note%205.%20Other%20Current%20Liabilities) Other current liabilities decreased, mainly due to reductions in accrued advertising and gift card liabilities Other Current Liabilities Summary | Other Current Liabilities (In thousands) | June 25, 2025 | December 25, 2024 | | :--------------------------------------- | :------------ | :---------------- | | Accrued payroll | $14,516 | $15,434 | | Accrued advertising | $6,686 | $11,785 | | Gift cards | $6,786 | $8,382 | | Other current liabilities | $53,701 | $58,842 | [Note 6. Fair Value of Financial Instruments](index=12&type=section&id=Note%206.%20Fair%20Value%20of%20Financial%20Instruments) Fair value of financial instruments decreased due to interest rate swaps, with $3.3 million in impairment charges recognized Fair Value Measurements | Fair Value Measurements (In thousands) | June 25, 2025 | December 25, 2024 | | :------------------------------------- | :------------ | :---------------- | | Deferred compensation plan investments | $10,227 | $10,400 | | Interest rate swaps | $11,745 | $20,841 | | Total recurring fair value | $21,972 | $32,347 | - Impairment charges of **$3.3 million** were recognized for assets held and used during the year-to-date period ended **June 25, 2025**[35](index=35&type=chunk) [Note 7. Long-Term Debt](index=13&type=section&id=Note%207.%20Long-Term%20Debt) The $400 million credit facility has $268.6 million outstanding, with covenant compliance and interest rate swaps hedging floating debt - Outstanding revolver loans were **$268.6 million** with **$15.9 million** in outstanding letters of credit, leaving **$115.5 million** in unused commitments as of **June 25, 2025**[39](index=39&type=chunk) Financial Covenant Compliance | Financial Covenant | June 25, 2025 | | :----------------- | :------------ | | Consolidated leverage ratio | **3.98 times** | | Consolidated fixed charge coverage ratio | **2.05 times** | - Interest rate swaps designated as cash flow hedges had a fair value asset of **$11.7 million** as of **June 25, 2025**, and are expected to reduce interest expense by **$3.6 million** in the next **12 months**[44](index=44&type=chunk) [Note 8. Revenues](index=15&type=section&id=Note%208.%20Revenues) Operating revenue slightly increased from company restaurant sales, while franchise revenue decreased, with $5.3 million in deferred revenue Revenue by Type | Revenue Type (In thousands) | Quarter Ended June 25, 2025 | Quarter Ended June 26, 2024 | Two Quarters Ended June 25, 2025 | Two Quarters Ended June 26, 2024 | | :-------------------------- | :-------------------------- | :-------------------------- | :------------------------------- | :------------------------------- | | Company restaurant sales | $58,395 | $54,348 | $112,295 | $106,690 | | Franchise and license revenue | $59,262 | $61,579 | $116,999 | $119,211 | | Total operating revenue | $117,657 | $115,927 | $229,294 | $225,901 | - Deferred franchise revenue, net of contract asset amortization, expected to be recognized in the future totals **$5.3 million**[52](index=52&type=chunk) [Note 9. Operating (Gains), Losses and Other Charges, Net](index=16&type=section&id=Note%209.%20Operating%20(Gains),%20Losses%20and%20Other%20Charges,%20Net) Operating (gains), losses and other charges significantly increased year-to-date due to higher impairment and restructuring costs Operating Charges Summary | Charge Type (In thousands) | Quarter Ended June 25, 2025 | Quarter Ended June 26, 2024 | Two Quarters Ended June 25, 2025 | Two Quarters Ended June 26, 2024 | | :------------------------- | :-------------------------- | :-------------------------- | :------------------------------- | :------------------------------- | | (Gains) losses on sales of assets and other, net | $425 | $526 | $(1,317) | $(94) | | Impairment charges | $49 | $619 | $3,265 | $714 | | Restructuring charges and exit costs | $1,226 | $420 | $3,663 | $618 | | Total operating (gains), losses and other charges, net | $1,700 | $1,565 | $5,611 | $1,238 | - Severance and other restructuring charges for the year-to-date period ended **June 25, 2025**, resulted from the elimination of **66 positions** as part of a cost savings initiative[58](index=58&type=chunk) [Note 10. Share-Based Compensation](index=17&type=section&id=Note%2010.%20Share-Based%20Compensation) Share-based compensation increased, with 0.9 million PSUs and 1.4 million RSUs granted, and $19.2 million unrecognized cost Share-Based Compensation Summary | Share-Based Compensation (In thousands) | Quarter Ended June 25, 2025 | Quarter Ended June 26, 2024 | Two Quarters Ended June 25, 2025 | Two Quarters Ended June 26, 2024 | | :-------------------------------------- | :-------------------------- | :-------------------------- | :------------------------------- | :------------------------------- | | Employee share awards | $2,772 | $2,409 | $5,324 | $4,980 | | Restricted stock units for board members | $210 | $215 | $443 | $420 | | Total share-based compensation | $2,982 | $2,624 | $5,767 | $5,400 | - As of **June 25, 2025**, **$19.2 million** of unrecognized compensation cost related to unvested PSU and RSU awards remained, with a weighted average remaining contractual term of **2.0 years**[63](index=63&type=chunk) [Note 11. Income Taxes](index=18&type=section&id=Note%2011.%20Income%20Taxes) Effective income tax rate significantly increased due to share-based compensation discrete items; OBBBA impact is being assessed Effective Income Tax Rate | Effective Income Tax Rate | Quarter Ended June 25, 2025 | Quarter Ended June 26, 2024 | Two Quarters Ended June 25, 2025 | Two Quarters Ended June 26, 2024 | | :------------------------ | :-------------------------- | :-------------------------- | :------------------------------- | :------------------------------- | | Effective tax rate | **34.3%** | **25.1%** | **36.2%** | **24.8%** | - The effective income tax rate for the quarter and year-to-date periods ended **June 25, 2025**, included discrete items relating to share-based compensation of **9.0%** and **11.5%**, respectively[66](index=66&type=chunk) - The company is currently assessing the impact of the **One Big Beautiful Bill Act (OBBBA)**, enacted on **July 4, 2025**, on its consolidated financial statements[67](index=67&type=chunk) [Note 12. Net Income Per Share](index=18&type=section&id=Note%2012.%20Net%20Income%20Per%20Share) Basic and diluted net income per share decreased for the quarter and year-to-date, reflecting lower net income Net Income Per Share Summary | Net Income Per Share | Quarter Ended June 25, 2025 | Quarter Ended June 26, 2024 | Two Quarters Ended June 25, 2025 | Two Quarters Ended June 26, 2024 | | :------------------- | :-------------------------- | :-------------------------- | :------------------------------- | :------------------------------- | | Basic EPS | $0.05 | $0.07 | $0.05 | $0.16 | | Diluted EPS | $0.05 | $0.07 | $0.05 | $0.16 | [Note 13. Shareholders' Deficit](index=19&type=section&id=Note%2013.%20Shareholders'%20Deficit) The company repurchased 0.4 million shares for $1.6 million, and accumulated other comprehensive loss increased from cash flow hedge changes - During the year-to-date period ended **June 25, 2025**, the company repurchased **0.4 million shares of common stock** for **$1.6 million**, with **$87.6 million** remaining under the current authorization[70](index=70&type=chunk) Accumulated Other Comprehensive Loss, Net | Component of Accumulated Other Comprehensive Loss, Net (In thousands) | December 25, 2024 | June 25, 2025 | | :-------------------------------------------------------------------- | :---------------- | :------------ | | Defined Benefit Plans | $(209) | $(192) | | Derivatives | $(31,830) | $(37,783) | | Total Accumulated Other Comprehensive Loss, Net | $(32,039) | $(37,975) | [Note 14. Commitments and Contingencies](index=19&type=section&id=Note%2014.%20Commitments%20and%20Contingencies) Management believes legal proceedings will not materially affect the company's consolidated results or financial position - Management's opinion is that the ultimate liability from legal proceedings will not materially affect consolidated results of operations or financial position[74](index=74&type=chunk) [Note 15. Supplemental Cash Flow Information](index=20&type=section&id=Note%2015.%20Supplemental%20Cash%20Flow%20Information) Supplemental cash flow includes $2.25 million in income taxes paid and $8.411 million in interest paid, plus noncash activities Supplemental Cash Flow Information | Supplemental Cash Flow (In thousands) | Two Quarters Ended June 25, 2025 | Two Quarters Ended June 26, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | | Income taxes paid, net | $2,250 | $3,668 | | Interest paid | $8,411 | $8,185 | | Restaurant acquisition payable | $300 | $0 | | Accrued purchase of property | $549 | $229 | [Note 16. Segment Information](index=20&type=section&id=Note%2016.%20Segment%20Information) The company operates two segments, Denny's and Keke's, with Denny's generating $106.0 million and Keke's $11.6 million in quarterly revenue - The company manages its business by two operating segments: **Denny's** (reportable segment) and **Keke's** (included in Other)[76](index=76&type=chunk) Segment Revenue and Margin | Segment Revenue (Quarter Ended June 25, 2025, In thousands) | Denny's | Other (Keke's) | Total | | :---------------------------------------------------------- | :------ | :------------- | :---- | | Company restaurant sales | $48,474 | $9,921 | $58,395 | | Franchise and license revenue | $57,545 | $1,717 | $59,262 | | Total operating revenue | $106,019 | $11,638 | $117,657 | | Restaurant-level operating margin | $35,389 | $706 | $36,095 | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=25&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's analysis of financial performance, condition, and results, covering revenue, costs, segments, liquidity, and capital [Overview](index=25&type=section&id=Overview) Denny's Corporation operates two segments, Denny's (1,484 restaurants) and Keke's (74 restaurants), as of June 25, 2025 - As of **June 25, 2025**, the **Denny's** brand comprised **1,484 restaurants** (**1,422 franchised/licensed**, **62 company-operated**), and the **Keke's** brand had **74 restaurants** (**52 franchised**, **22 company-operated**)[84](index=84&type=chunk) - **Keke's** operating segment revenues represented less than **10%** of total consolidated revenues for the reported periods, leading to its inclusion in 'Other' for segment reporting[85](index=85&type=chunk) [Statements of Income](index=26&type=section&id=Statements%20of%20Income) Operating revenue slightly increased, but net income and diluted EPS significantly decreased due to higher costs, interest, and tax Key Income Statement Metrics | Metric | Quarter Ended June 25, 2025 | Quarter Ended June 26, 2024 | Two Quarters Ended June 25, 2025 | Two Quarters Ended June 26, 2024 | | :-------------------------------- | :-------------------------- | :-------------------------- | :------------------------------- | :------------------------------- | | Total operating revenue | $117,657 | $115,927 | $229,294 | $225,901 | | Operating income | $8,572 | $9,115 | $13,782 | $19,121 | | Net income | $2,470 | $3,568 | $2,796 | $8,259 | | Net income per share - diluted | $0.05 | $0.07 | $0.05 | $0.16 | Same-Store Sales Change (YoY) | Same-Store Sales Change (YoY) | Quarter Ended June 25, 2025 | Two Quarters Ended June 25, 2025 | | :------------------------------ | :-------------------------- | :------------------------------- | | Denny's Company | **0.0%** | (**0.4%)** | | Denny's Domestic Franchise | (**1.4%)** | (**2.3%)** | | Keke's Company | **3.4%** | **2.0%** | | Keke's Franchise | **4.2%** | **4.2%** | [Company Restaurant Operations](index=28&type=section&id=Company%20Restaurant%20Operations) Company restaurant sales increased from Keke's unit growth and same-store sales, but costs as a percentage of sales rose due to higher commodity and occupancy - Company restaurant sales increased by **$4.0 million (7.4%)** for the quarter and **$5.6 million (5.3%)** year-to-date, primarily due to a **12-unit increase** in **Keke's** equivalent units and **Keke's** same-store sales growth of **3.4%** for the quarter[93](index=93&type=chunk) Company Restaurant Cost as % of Sales | Cost as % of Company Restaurant Sales | Quarter Ended June 25, 2025 | Quarter Ended June 26, 2024 | Two Quarters Ended June 25, 2025 | Two Quarters Ended June 26, 2024 | | :------------------------------------ | :-------------------------- | :-------------------------- | :------------------------------- | :------------------------------- | | Product costs | **25.8%** | **25.1%** | **26.1%** | **25.3%** | | Payroll and benefits | **37.5%** | **37.7%** | **38.3%** | **38.4%** | | Occupancy | **8.9%** | **8.6%** | **9.1%** | **8.7%** | | Other operating expenses | **17.5%** | **16.2%** | **17.7%** | **17.4%** | - Product costs as a percentage of sales increased primarily due to higher commodity costs, particularly egg prices[95](index=95&type=chunk) [Franchise Operations](index=29&type=section&id=Franchise%20Operations) Franchise and license revenue decreased from lower Denny's units and same-store sales, though initial and other fees significantly increased Franchise Revenue by Type | Franchise Revenue Type (In thousands) | Quarter Ended June 25, 2025 | Quarter Ended June 26, 2024 | Two Quarters Ended June 25, 2025 | Two Quarters Ended June 26, 2024 | | :------------------------------------ | :-------------------------- | :-------------------------- | :------------------------------- | :------------------------------- | | Royalties | $29,091 | $30,014 | $56,928 | $59,320 | | Advertising revenue | $19,490 | $20,788 | $38,563 | $38,926 | | Initial and other fees | $2,804 | $2,448 | $5,678 | $4,264 | | Occupancy revenue | $7,877 | $8,329 | $15,830 | $16,701 | | Total franchise and license revenue | $59,262 | $61,579 | $116,999 | $119,211 | - Initial and other fees increased by **14.6%** for the quarter and **33.2%** year-to-date, driven by increased revenue from equipment sales to franchisees and a **$0.6 million early franchise termination fee**[101](index=101&type=chunk)[102](index=102&type=chunk) - Costs of franchise and license revenue decreased by **12.6%** for the quarter and **5.3%** year-to-date, primarily due to a **$2.6 million distribution** to franchisees related to an advertising cost review in the prior year[103](index=103&type=chunk) [Other Operating Costs and Expenses](index=30&type=section&id=Other%20Operating%20Costs%20and%20Expenses) G&A expenses varied, depreciation increased, and operating charges significantly rose year-to-date from impairment and restructuring costs Other Operating Costs and Expenses Summary | Expense Type (In thousands) | Quarter Ended June 25, 2025 | Quarter Ended June 26, 2024 | Two Quarters Ended June 25, 2025 | Two Quarters Ended June 26, 2024 | | :-------------------------- | :-------------------------- | :-------------------------- | :------------------------------- | :------------------------------- | | General and administrative expenses | $21,445 | $20,486 | $41,475 | $41,708 | | Depreciation and amortization | $4,378 | $3,735 | $8,485 | $7,316 | | Operating (gains), losses and other charges, net | $1,700 | $1,565 | $5,611 | $1,238 | - Corporate administrative expenses decreased due to the elimination of positions, while share-based compensation and incentive compensation increased due to plan performance adjustments and performance against plan metrics[106](index=106&type=chunk) - Restructuring charges and exit costs for the year-to-date period ended **June 25, 2025**, primarily consisted of severance costs from the elimination of **66 positions** as part of a cost savings initiative[110](index=110&type=chunk) [Liquidity and Capital Resources](index=32&type=section&id=Liquidity%20and%20Capital%20Resources) Operating cash flow was stable, investing activities increased cash usage, and financing activities provided cash from long-term debt Cash Flow Activities | Cash Flow Activity (Two Quarters Ended, In thousands) | June 25, 2025 | June 26, 2024 | | :---------------------------------------------------- | :------------ | :------------ | | Net cash provided by operating activities | $14,368 | $14,396 | | Net cash used in investing activities | $(17,536) | $(10,349) | | Net cash provided by (used in) financing activities | $2,636 | $(7,774) | | Decrease in cash and cash equivalents | $(532) | $(3,727) | Capital Expenditures and Acquisitions | Capital Expenditures (Two Quarters Ended, In thousands) | June 25, 2025 | June 26, 2024 | | :------------------------------------------------------ | :------------ | :------------ | | Capital expenditures | $16,384 | $9,948 | | Acquisitions of restaurants | $4,082 | $0 | - The working capital deficit was **$55.7 million** at **June 25, 2025**, compared to **$55.6 million** at **December 25, 2024**, which is manageable due to cash-based restaurant operations and rapid inventory turnover[122](index=122&type=chunk) [Credit Facility](index=33&type=section&id=Credit%20Facility) The $400 million credit facility has $268.6 million outstanding, with covenant compliance and 89% fixed-rate debt from interest rate swaps - The credit facility has a **$400 million senior secured revolver**, with **$268.6 million outstanding** and **$115.5 million in unused commitments** as of **June 25, 2025**[125](index=125&type=chunk) Financial Covenant Compliance | Financial Covenant | June 25, 2025 | | :----------------- | :------------ | | Consolidated leverage ratio | **3.98 times** | | Consolidated fixed charge coverage ratio | **2.05 times** | - Interest rate swaps increased the ratio of fixed rate debt from **4% to 89%** of total debt as of **June 25, 2025**[133](index=133&type=chunk) [Technology Transformation Initiatives](index=34&type=section&id=Technology%20Transformation%20Initiatives) The company is investing $4 million in a new cloud-based restaurant technology platform for domestic franchise restaurants, rolling out through 2026 - The company is investing approximately **$4 million in a new cloud-based restaurant technology platform** for domestic franchise restaurants, with rollout continuing through **2026**[128](index=128&type=chunk) [Critical Accounting Policies and Estimates](index=34&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) Critical accounting policies and estimates are incorporated by reference from the company's latest Annual Report on Form 10-K - Critical Accounting Policies and Estimates are referenced from the **Annual Report on Form 10-K** for the fiscal year ended **December 25, 2024**[129](index=129&type=chunk) [Implementation of New Accounting Standards](index=34&type=section&id=Implementation%20of%20New%20Accounting%20Standards) New accounting standards implementation information is incorporated by reference from Note 2 of the financial statements - Information on new accounting standards implementation is incorporated by reference from **Note 2** of the financial statements[130](index=130&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=34&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company faces interest rate risk on its variable-rate credit facility, hedged by swaps, with a 100 basis point change impacting annual cash flow by $0.2 million - The company's credit facility borrowings bear variable interest rates based on **Adjusted Daily Simple SOFR** plus **2.25% per annum**[131](index=131&type=chunk) - Interest rate swaps effectively increased the ratio of fixed rate debt from **4% to 89%** of total debt as of **June 25, 2025**[133](index=133&type=chunk) - A hypothetical **100 basis point change** in interest rates would result in a **$0.2 million change** in annual cash flow and income before taxes[133](index=133&type=chunk) [Item 4. Controls and Procedures](index=35&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective, with no material changes in internal control over financial reporting - Management concluded that disclosure controls and procedures were effective to provide reasonable assurance that required information is recorded, processed, summarized, and reported timely[135](index=135&type=chunk) - No material changes in internal control over financial reporting were identified during the fiscal quarter ended **June 25, 2025**[136](index=136&type=chunk) [PART II - OTHER INFORMATION](index=35&type=section&id=PART%20II%20-%20OTHER%20INFORMATION) This section covers legal proceedings, risk factors, equity sales, other information, and exhibits [Item 1. Legal Proceedings](index=35&type=section&id=Item%201.%20Legal%20Proceedings) Legal proceedings information is referenced from Note 14, with management expecting no material adverse effects on financial position or results - Information on legal proceedings is incorporated by reference from **Note 14** of the financial statements[137](index=137&type=chunk) [Item 1A. Risk Factors](index=35&type=section&id=Item%201A.%20Risk%20Factors) No material changes to risk factors have occurred since the Annual Report on Form 10-K for fiscal year 2024 - No material changes in risk factors have occurred since the **Annual Report on Form 10-K** for the fiscal year ended **December 25, 2024**[138](index=138&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=36&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company repurchased 0.2 million shares for $0.6 million under its $250 million program, with $87.6 million remaining Share Repurchases | Period | Total Number of Shares Purchased (In thousands) | Average Price Paid Per Share | | :-------------------------------- | :-------------------------------------------- | :--------------------------- | | March 27, 2025 - April 23, 2025 | 143 | $3.34 | | April 24, 2025 - May 21, 2025 | 37 | $3.56 | | May 22, 2025 - June 25, 2025 | — | — | | Total | 180 | $3.39 | - During the quarter ended **June 25, 2025**, the company purchased **0.2 million shares** for **$0.6 million** under its **$250 million share repurchase program**, with **$87.6 million** remaining[141](index=141&type=chunk) [Item 5. Other Information](index=36&type=section&id=Item%205.%20Other%20Information) No Rule 10b5-1 trading arrangements were adopted or terminated by directors or officers during the quarter - No **Rule 10b5-1 trading arrangements** were adopted or terminated by directors or officers during the quarter ended **June 25, 2025**[142](index=142&type=chunk) [Item 6. Exhibits](index=37&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed, including the Amended and Restated 2021 Omnibus Incentive Plan and CEO/CFO certifications - Exhibits include the **Amended and Restated 2021 Omnibus Incentive Plan**, **certifications (31.1, 31.2, 32.1)** from the CEO and CFO, and **Inline XBRL documents**[143](index=143&type=chunk) [Signatures](index=38&type=section&id=Signatures) The report was signed by Robert P. Verostek, EVP & CFO, and Jay C. Gilmore, SVP, CAO & Corporate Controller, on August 4, 2025 - The report was signed by **Robert P. Verostek** (EVP & CFO) and **Jay C. Gilmore** (SVP, CAO & Corporate Controller) on **August 4, 2025**[147](index=147&type=chunk)

Financial Performance - Denny's system-wide same-restaurant sales increased by 3.7% YTD in 2025[4] - Keke's Q2 2025 LTM system AUV sales reached $1.9 million[4] - Denny's Q2 2025 domestic average weekly sales were approximately $38,400[14] - Denny's allocated over $713 million towards share repurchases since the program began in late 2010[49] - Denny's has approximately $88 million remaining under existing repurchase authorization[49] Sales Mix and Trends - Denny's off-premises sales mix was 16% YTD in 2025[4] - Keke's off-premises sales were approximately 16% during Q2 2025[12] - Over 65% of Denny's overall domestic Q2 2025 sales were during the breakfast and lunch dayparts[16] Restaurant Footprint and Franchise - Denny's has a total of 1,484 restaurants[4] - Denny's has 1,321 restaurants in the U S[23] - Denny's international presence includes 163 restaurants in 14 countries and U S Territories[23] - Keke's operates 74 cafes in seven different states[43]

Executive Summary [CEO's Strategic Commentary](index=1&type=section&id=CEO%27s%20Strategic%20Commentary) Denny's Corporation CEO Kelli Valade highlighted strategic efforts, innovation, and customer focus across both Denny's and Keke's brands, achieving operational efficiencies and shareholder value initiatives - Denny's brand addresses market changes through innovative value platforms, strengthened off-premise business, and optimized franchise system[2](index=2&type=chunk) - Keke's brand expanded its unit portfolio by **7%** during the year and successfully launched its first system-wide promotion, continuing to grow market share[2](index=2&type=chunk) - The company achieved approximately **3.5%** in corporate G&A savings and plans to enhance shareholder value through balanced investments and meaningful share repurchases[2](index=2&type=chunk) [Second Quarter 2025 Highlights](index=1&type=section&id=Second%20Quarter%202025%20Highlights) Q2 2025 saw total operating revenue of $117.7 million, operating income of $8.6 million, with Keke's domestic system same-restaurant sales up 4.0% and Denny's down 1.3% 2025 Second Quarter Key Financial Metrics | Metric | Amount (Million USD) | | :--------------------------------- | :----------------: | | Total Operating Revenue | 117.7 | | Total Operating Income | 8.6 | | Net Income | 2.5 | | Diluted Net Earnings Per Share | 0.05 | | Adjusted Net Income | 4.8 | | Adjusted Diluted Net Earnings Per Share | 0.09 | | Adjusted EBITDA | 18.8 | 2025 Second Quarter Same-Restaurant Sales Change (YoY) | Brand | Same-Restaurant Sales Change | | :------------------------- | :-------------: | | Denny's Domestic System | (1.3%) | | Keke's Domestic System | 4.0% | - Denny's opened 3 franchised restaurants and completed 14 remodels (including 5 company-owned units) Keke's opened 8 cafes (including 4 franchised units) and refranchised 3 company-owned cafes[3](index=3&type=chunk) 2025 Second Quarter Adjusted Operating Margins | Metric | Amount (Million USD) | % of Revenue | | :------------------------- | :----------------: | :-------------: | | Adjusted Franchise Operating Profit | 30.0 | 50.7% | | Adjusted Company Restaurant Operating Profit | 6.7 | 11.5% | Second Quarter 2025 Financial Performance [Revenue Analysis](index=2&type=section&id=Revenue%20Analysis) Total operating revenue increased 1.5% to $117.7 million in Q2 2025, driven by Keke's company-owned unit growth, partially offset by Denny's franchise closures 2025 Second Quarter Revenue Overview | Revenue Category | Q2 2025 (Million USD) | Q2 2024 (Million USD) | YoY Change (%) | | :------------------------- | :--------------------------: | :--------------------------: | :------------: | | Total Operating Revenue | 117.7 | 115.9 | 1.5% | | Franchise and Licensing Revenue | 59.3 | 61.6 | (3.7%) | | Company Restaurant Sales | 58.4 | 54.3 | 7.5% | - Total operating revenue growth primarily driven by increased Keke's company-owned equivalent units, partially offset by Denny's franchised restaurant closure strategy[4](index=4&type=chunk) - Franchise and licensing revenue decline primarily due to fewer Denny's franchised equivalent units and weaker same-restaurant sales[5](index=5&type=chunk) [Operating Margins](index=2&type=section&id=Operating%20Margins) Q2 2025 adjusted franchise operating margin rose to 50.7%, while adjusted company restaurant operating margin decreased to 11.5% due to cost pressures and marketing investments 2025 Second Quarter Adjusted Operating Margins | Metric | Q2 2025 (Million USD) | Q2 2025 (%) | Q2 2024 (Million USD) | Q2 2024 (%) | | :------------------------- | :--------------------------: | :------------------: | :--------------------------: | :------------------: | | Adjusted Franchise Operating Profit | 30.0 | 50.7% | 30.8 | 50.0% | | Adjusted Company Restaurant Operating Profit | 6.7 | 11.5% | 6.9 | 12.7% | - The increase in adjusted franchise operating margin is primarily attributed to optimized cost structure, despite fewer Denny's equivalent units and weaker same-restaurant sales[6](index=6&type=chunk) - The decrease in adjusted company restaurant operating margin is mainly impacted by rising egg prices, increased marketing investment, and inefficient new cafe openings[7](index=7&type=chunk) [Expenses](index=2&type=section&id=Expenses) Total general and administrative expenses increased to $21.4 million in Q2 2025, influenced by incentive compensation and equity awards, despite corporate G&A savings 2025 Second Quarter Expense Overview | Expense Category | Q2 2025 (Million USD) | Q2 2024 (Million USD) | YoY Change (%) | | :------------------------- | :--------------------------: | :--------------------------: | :------------: | | Total General and Administrative Expenses | 21.4 | 20.5 | 4.4% | | Income Tax Expense | 1.3 | 1.2 | 8.3% | | Effective Tax Rate | 34.3% | 25.1% | 9.2 percentage points | | Corporate G&A Savings | 0.6 | - | (3.5%) | - Total general and administrative expenses increased primarily due to incentive compensation, equity-based compensation, and deferred compensation valuation adjustments[8](index=8&type=chunk) - Corporate G&A savings of approximately **$0.6 million**, a year-over-year reduction of approximately **3.5%**[8](index=8&type=chunk) - Effective income tax rate increased to **34.3%**, primarily including discrete items related to equity-based compensation[9](index=9&type=chunk) [Net Income and EPS](index=2&type=section&id=Net%20Income%20and%20EPS) Q2 2025 net income was $2.5 million with diluted EPS of $0.05, while adjusted net income reached $4.8 million with adjusted diluted EPS of $0.09 2025 Second Quarter Net Income and EPS | Metric | Amount (Million USD) | EPS (USD) | | :------------------------- | :----------------: | :--------------: | | Net Income | 2.5 | 0.05 | | Adjusted Net Income | 4.8 | 0.09 | [Debt and Liquidity](index=2&type=section&id=Debt%20and%20Liquidity) As of Q2 2025 end, total debt stood at $278.6 million, with $268.6 million attributed to credit facility borrowings 2025 Second Quarter End-of-Period Debt | Metric | Amount (Million USD) | | :------------------------- | :----------------: | | Total Debt | 278.6 | | Credit Facility Borrowings | 268.6 | Capital Allocation [Investments and Acquisitions](index=2&type=section&id=Investments%20and%20Acquisitions) The company invested $7.3 million in cash capital expenditures and $4.1 million in strategic acquisitions of Keke's cafes and a Denny's franchised restaurant this quarter 2025 Second Quarter Capital Expenditures and Acquisitions | Category | Amount (Million USD) | | :------------------------- | :----------------: | | Cash Capital Expenditures | 7.3 | | Keke's Cafe Acquisitions | 4.1 | | Denny's Franchised Restaurant Acquisitions | (Included in $4.1 million) | - Capital expenditures primarily allocated to Keke's new cafe development and Denny's company restaurant remodels[11](index=11&type=chunk) - Strategic acquisitions included 5 Keke's cafes and one Denny's franchised restaurant in a core market[11](index=11&type=chunk) [Share Repurchases](index=2&type=section&id=Share%20Repurchases) The company allocated $0.6 million to share repurchases this quarter, with $87.6 million remaining under the existing authorization 2025 Second Quarter Share Repurchases | Metric | Amount (Million USD) | | :------------------------- | :----------------: | | Share Repurchases This Quarter | 0.6 | | Remaining Repurchase Authorization | 87.6 | Business Outlook [Full Year 2025 Expectations](index=3&type=section&id=Full%20Year%202025%20Expectations) For FY2025, the company projects Denny's domestic system same-restaurant sales between (2.0%) and 1.0%, 25-40 new openings, 70-90 closures, and adjusted EBITDA of $80-85 million Full Year 2025 Expectations (53 Operating Weeks) | Metric | Expected Range | | :--------------------------------- | :--------------------------------: | | Denny's Domestic System Same-Restaurant Sales | (2.0%) to 1.0% | | Combined New Restaurant Openings | 25 to 40 Units | | Combined Restaurant Closures | 70 to 90 Units | | Commodity Inflation | 3.0% to 5.0% | | Labor Inflation | 2.5% to 3.5% | | Total General and Administrative Expenses | $80 million to $85 million | | Adjusted EBITDA | $80 million to $85 million | | Share Repurchases | $15 million to $25 million | - Total general and administrative expenses include **$60 million to $62 million** for corporate and administrative expenses (including approximately **$1 million** impact from the 53rd week), **$6 million to $9 million** for incentive compensation, and approximately **$14 million** for equity-based compensation (not impacting Adjusted EBITDA)[18](index=18&type=chunk) - Adjusted EBITDA expectations include an approximate **$2 million** impact from the 53rd week[18](index=18&type=chunk) Company Profile and Operations [About Denny's Corporation](index=3&type=section&id=About%20Denny%27s%20Corporation) Denny's Corporation, a leading US full-service restaurant chain, operated 1,558 restaurants as of June 25, 2025, comprising 1,474 franchised and 84 company-owned units under the Denny's and Keke's brands Restaurant Count as of June 25, 2025 | Brand | Company-Owned | Franchised and Licensed | Total | | :------------------------- | :----------: | :--------------: | :----: | | Denny's Corporation (Total) | 84 | 1,474 | 1,558 | | Denny's Brand | 62 | 1,422 | 1,484 | | Keke's Brand | 22 | 52 | 74 | [Restaurant Unit Activity](index=12&type=section&id=Restaurant%20Unit%20Activity) As of June 25, 2025, Denny's had 1,484 restaurants and Keke's had 74, with specific unit openings, closures, and refranchising activities during the quarter 2025 Second Quarter Restaurant Unit Activity | Brand | Company-Owned (End of Period) | Franchised and Licensed (End of Period) | Total (End of Period) | New Openings (This Quarter) | Closures (This Quarter) | Refranchised (This Quarter) | | :------------------------- | :----------------: | :--------------------: | :-----------: | :-----------: | :-----------: | :--------------------: | | Denny's | 62 | 1,422 | 1,484 | 3 (Franchised) | 10 (Franchised) | - | | Keke's | 22 | 52 | 74 | 4 (Company), 4 (Franchised) | - | 3 (Company) | Equivalent Unit Changes (2025 Second Quarter vs 2024 Second Quarter) | Brand | Company-Owned | Franchised | Total | | :------------------------- | :----------: | :--------: | :----: | | Denny's | (3) | (59) | (62) | | Keke's | 12 | (3) | 9 | [Same-Restaurant Sales and Average Unit Sales](index=12&type=section&id=Same-Restaurant%20Sales%20and%20Average%20Unit%20Sales) Q2 2025 saw Denny's domestic system same-restaurant sales decline by 1.3%, while Keke's domestic system sales grew 4.0%, with varying average unit sales performance 2025 Second Quarter Same-Restaurant Sales Change (YoY) | Brand | Company-Owned | Domestic Franchised | Domestic System | | :------------------------- | :----------: | :------------: | :--------: | | Denny's | 0.0% | (1.4%) | (1.3%) | | Keke's | 3.4% | 4.2% | 4.0% | 2025 Second Quarter Average Unit Sales (Thousand USD) | Brand | Company-Owned | Franchised | | :------------------------- | :----------: | :--------: | | Denny's | 789 | 479 | | Keke's | 433 | 484 | Non-GAAP Financial Measures [Non-GAAP Definition Changes](index=4&type=section&id=Non-GAAP%20Definition%20Changes) The company revised non-GAAP financial metric definitions for enhanced clarity and comparability, excluding non-recurring and non-core operating items, and adjusting EBITDA deductions - Company adjusted non-GAAP financial metric definitions to enhance clarity and comparability with peers[19](index=19&type=chunk) - Adjusted metrics exclude non-recurring legal settlement expenses, pre-opening expenses, and other non-core operating items[20](index=20&type=chunk) - Company no longer deducts cash payments for restructuring and exit costs or equity-based compensation from adjusted EBITDA[20](index=20&type=chunk) [Reconciliation of Net Income to Non-GAAP Measures](index=8&type=section&id=Reconciliation%20of%20Net%20Income%20to%20Non-GAAP%20Measures) This section reconciles GAAP net income to adjusted EBITDA, adjusted net income, and per-share equivalents for Q2 and year-to-date 2025 and 2024, detailing various adjustments Reconciliation of Net Income to Adjusted EBITDA (2025 Second Quarter) | Metric | Q2 2025 (Thousand USD) | Q2 2024 (Thousand USD) | | :--------------------------------- | :--------------------------: | :--------------------------: | | Net Income | 2,470 | 3,568 | | Income Tax Expense | 1,291 | 1,198 | | Operating (Gains), Losses and Other Expenses, Net | 1,700 | 1,565 | | Equity-Based Compensation Expense | 2,982 | 2,624 | | Interest Expense, Net | 5,374 | 4,573 | | Depreciation and Amortization | 4,378 | 3,735 | | Adjusted EBITDA | 18,787 | 20,040 | Reconciliation of Net Income to Adjusted Net Income (2025 Second Quarter) | Metric | Q2 2025 (Thousand USD) | Q2 2024 (Thousand USD) | | :--------------------------------- | :--------------------------: | :--------------------------: | | Net Income | 2,470 | 3,568 | | Interest Rate Swap Derivative Losses and Amortization, Net | 879 | 167 | | Operating (Gains), Losses and Other Expenses, Net | 1,700 | 1,565 | | Tax Impact | (932) | (1,127) | | Adjusted Net Income | 4,794 | 6,986 | | Adjusted Diluted Net Earnings Per Share | 0.09 | 0.13 | [Reconciliation of Operating Income to Non-GAAP Measures](index=9&type=section&id=Reconciliation%20of%20Operating%20Income%20to%20Non-GAAP%20Measures) This section reconciles GAAP operating income to restaurant-level, company restaurant, and franchise operating profits, using non-GAAP metrics to assess operational efficiency Reconciliation of Operating Income to Restaurant-Level Operating Profit (2025 Second Quarter) | Metric | Q2 2025 (Thousand USD) | Q2 2024 (Thousand USD) | | :--------------------------------- | :--------------------------: | :--------------------------: | | Operating Income | 8,572 | 9,115 | | General and Administrative Expenses | 21,445 | 20,486 | | Depreciation and Amortization | 4,378 | 3,735 | | Operating (Gains), Losses and Other Expenses, Net | 1,700 | 1,565 | | Restaurant-Level Operating Profit | 36,095 | 34,921 | | Adjusted Restaurant-Level Operating Profit | 36,740 | 37,714 | Restaurant-Level Operating Profit Components (2025 Second Quarter) | Component | Q2 2025 (Thousand USD) | Q2 2024 (Thousand USD) | | :------------------------- | :--------------------------: | :--------------------------: | | Company Restaurant Operating Profit | 6,050 | 6,770 | | Franchise Operating Profit | 30,045 | 28,151 | | Restaurant-Level Operating Profit | 36,095 | 34,921 | Detailed Financial Statements (Unaudited) [Consolidated Balance Sheets](index=5&type=section&id=Consolidated%20Balance%20Sheets) As of June 25, 2025, total assets were $491.2 million, total liabilities $525.7 million, and shareholders' deficit $34.6 million, showing slight shifts from December 2024 Consolidated Balance Sheet Summary (Thousand USD) | Metric | June 25, 2025 | December 25, 2024 | | :------------------------- | :-------------: | :--------------: | | Total Assets | 491,150 | 496,274 | | Total Liabilities | 525,729 | 530,299 | | Shareholders' Deficit | (34,579) | (34,025) | | Cash and Cash Equivalents | 1,166 | 1,698 | | Long-Term Debt | 268,600 | 261,300 | [Condensed Consolidated Statements of Income (Quarter Ended)](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income%20%28Quarter%20Ended%29) Q2 2025 total operating revenue was $117.7 million, with net income of $2.5 million and diluted EPS of $0.05, reflecting a slight revenue increase but decreased profitability year-over-year Condensed Consolidated Statements of Income Summary (Q2 2025 vs Q2 2024, Thousand USD) | Metric | June 25, 2025 | June 26, 2024 | | :--------------------------------- | :-------------: | :-------------: | | Total Operating Revenue | 117,657 | 115,927 | | Operating Income | 8,572 | 9,115 | | Net Income | 2,470 | 3,568 | | Diluted Net Earnings Per Share | 0.05 | 0.07 | | Total General and Administrative Expenses | 21,445 | 20,486 | [Condensed Consolidated Statements of Income (Two Quarters Ended)](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income%20%28Two%20Quarters%20Ended%29) For the half-year ended June 25, 2025, total operating revenue was $229.3 million, with net income of $2.8 million and diluted EPS of $0.05, indicating revenue growth but significant profit decline year-over-year Condensed Consolidated Statements of Income Summary (H1 2025 vs H1 2024, Thousand USD) | Metric | June 25, 2025 | June 26, 2024 | | :--------------------------------- | :-------------: | :-------------: | | Total Operating Revenue | 229,294 | 225,901 | | Operating Income | 13,782 | 19,121 | | Net Income | 2,796 | 8,259 | | Diluted Net Earnings Per Share | 0.05 | 0.16 | | Total General and Administrative Expenses | 41,475 | 41,708 | [Operating Margins (Quarter Ended)](index=10&type=section&id=Operating%20Margins%20%28Quarter%20Ended%29) Q2 2025 company restaurant operating margin was 10.4% (adjusted 11.5%), while franchise operating margin was 50.7% (adjusted 50.7%), showing a decline for company units and an increase for franchise units year-over-year Company Restaurant Operating Margins (2025 Second Quarter vs 2024 Second Quarter) | Metric | June 25, 2025 (%) | June 26, 2024 (%) | | :------------------------- | :----------------: | :----------------: | | Company Restaurant Operating Margin | 10.4% | 12.5% | | Adjusted Company Restaurant Operating Margin | 11.5% | 12.7% | | Product Costs as % of Sales | 25.8% | 25.1% | | Payroll and Benefits as % of Sales | 37.5% | 37.7% | Franchise Operating Margins (2025 Second Quarter vs 2024 Second Quarter) | Metric | June 25, 2025 (%) | June 26, 2024 (%) | | :------------------------- | :----------------: | :----------------: | | Franchise Operating Margin | 50.7% | 45.7% | | Adjusted Franchise Operating Margin | 50.7% | 50.0% | | Royalty Revenue as % of Revenue | 49.1% | 48.7% | | Advertising Revenue as % of Revenue | 32.9% | 33.8% | [Operating Margins (Two Quarters Ended)](index=11&type=section&id=Operating%20Margins%20%28Two%20Quarters%20Ended%29) For the half-year ended June 25, 2025, company restaurant operating margin was 8.8% (adjusted 10.3%), and franchise operating margin was 50.8% (adjusted 50.8%), with company unit margins decreasing and franchise margins increasing year-over-year Company Restaurant Operating Margins (2025 Half-Year vs 2024 Half-Year) | Metric | June 25, 2025 (%) | June 26, 2024 (%) | | :------------------------- | :----------------: | :----------------: | | Company Restaurant Operating Margin | 8.8% | 10.3% | | Adjusted Company Restaurant Operating Margin | 10.3% | 12.9% | | Product Costs as % of Sales | 26.1% | 25.3% | | Payroll and Benefits as % of Sales | 38.3% | 38.4% | Franchise Operating Margins (2025 Half-Year vs 2024 Half-Year) | Metric | June 25, 2025 (%) | June 26, 2024 (%) | | :------------------------- | :----------------: | :----------------: | | Franchise Operating Margin | 50.8% | 49.0% | | Adjusted Franchise Operating Margin | 50.8% | 51.2% | | Royalty Revenue as % of Revenue | 48.7% | 49.7% | | Advertising Revenue as % of Revenue | 33.0% | 32.7% | Additional Information [Conference Call and Webcast](index=3&type=section&id=Conference%20Call%20and%20Webcast) The company will host a webcast on August 4, 2025, at 4:30 PM ET to discuss Q2 2025 results, accessible via its investor relations website - Company to host a webcast on August 4, 2025, at 4:30 PM ET to discuss second-quarter results[14](index=14&type=chunk) - Webcast accessible via the company's investor relations website investor.dennys.com[14](index=14&type=chunk) [Cautionary Language](index=4&type=section&id=Cautionary%20Language) This press release contains forward-looking statements subject to risks and uncertainties that may cause actual results to differ materially, with no obligation for the company to update them unless legally required - This press release contains forward-looking statements, involving risks, uncertainties, and other factors that could cause actual results to differ materially from expectations[22](index=22&type=chunk) - The company undertakes no obligation to update these forward-looking statements unless required by law[22](index=22&type=chunk) [Contact Information](index=4&type=section&id=Contact%20Information) Investor inquiries can be directed to 877-784-7167, and media inquiries to 864-597-8005 - Investor contact phone: 877-784-7167[23](index=23&type=chunk) - Media contact phone: 864-597-8005[23](index=23&type=chunk)