Denny’s(DENN)2025-02-12 19:49Financial Data and Key Metrics Changes - Denny's reported fourth quarter domestic system-wide same-restaurant sales of positive 1.1% and outperformed the BBI Family Dining Index for the fourth consecutive quarter [25] - Average guest check increased approximately 6.5% compared to the prior year quarter, attributed to a categorization change in the 4 8 Value Menu [26] - Total operating revenue was 115.4 million for the prior year quarter, primarily driven by refranchising and strategic closures [35] Business Line Data and Key Metrics Changes - Denny's maintained positive quarter-over-quarter same-restaurant sales at positive 1.1%, while Keke's generated same-restaurant sales of positive 3% [8] - Domestic franchise restaurants delivered same-restaurant sales of positive 1.2%, while company same-restaurant sales were flat compared to the prior year quarter [25] - Keke's opened 8 new cafes during the fourth quarter, marking the highest number of openings in a year since its founding [32] Market Data and Key Metrics Changes - Denny's outperformed the BBI Family Dining sales index for the fourth consecutive quarter, indicating strong market performance [9] - Keke's outperformed the BBI Family Dining sales index in Florida for the second consecutive quarter [9] - System-wide same-restaurant sales for Keke's were impacted by approximately 110 basis points due to Hurricanes Helene and Milton [30] Company Strategy and Development Direction - The company is focused on executing profitable traffic-driving initiatives and expanding its growth brand, Keke's Breakfast Cafe [7] - Denny's is leaning into off-premise strategies and expanding its virtual brands, which contributed significantly to same-restaurant sales growth [12] - The company plans to accelerate the closure of lower-volume restaurants to improve franchisee cash flow and reinvest in traffic-driving initiatives [28][48] Management Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term fundamentals of being America's diner despite recent consumer sentiment shifts [22] - The company anticipates a temporary decline in same-restaurant sales due to evolving macroeconomic factors but remains optimistic about future sales initiatives [21][46] - Management noted that they are prepared to navigate the current environment with a focus on value leadership and strategic initiatives [66] Other Important Information - Denny's completed 23 remodels during 2024, which delivered a 6.5% sales lift during testing [29] - The company plans to deploy between 25 million towards share repurchases in 2025 [53] - Commodity inflation was approximately 3% during the quarter, driven by increases in pork, orange juice, and eggs [39] Q&A Session Summary Question: Can you revisit your confidence in expanding both company margins and franchise margins? - Management expressed high confidence in expanding company margins despite recent softness in sales trends, with improvements expected in cafes owned for more than 12 months [57][58] Question: Can you unpack the commentary about the shift in sales trends starting in late January? - Management noted that weather and inflation uncertainties impacted sales trends, but they remain confident in their initiatives and value leadership position [65][66] Question: What is the marketing strategy for 2025? - Management confirmed that they will continue to emphasize the 4 8 platform while balancing it with innovation and premium items [80][84] Question: Can you provide more detail on the franchise agreements that were canceled? - Management clarified that the cancellations were due to the franchisees' balance sheets, and they are optimistic about capturing additional corporate cafes in the Orlando market [95][96]