Denny’s Corporation Reports Results for Second Quarter 2025

SPARTANBURG, S.C., Aug. 04, 2025 (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 second quarter ended June 25, 2025 and provided a business update on the Company’s operations.

Kelli Valade, Chief Executive Officer, stated, "I am incredibly proud of our teams and franchisees for their unwavering commitment to delivering on our strategic initiatives amid shifting consumer trends. We have continued to stay nimble, innovate, and meet the guests where they are. For Denny’s, this meant innovating its value platform, leaning into its off-premises strength, and optimizing the franchise system, while Keke’s expanded its portfolio 7% year-to-date, launched its first ever system-wide promotion, and continued to steal share from its competitive set. Despite near-term choppiness, we are focused on what is within our control which also resulted in corporate administrative expense savings of approximately 3.5% compared to the prior year quarter, and refranchising three Keke’s company cafes with more on the horizon. We will continue to be agile and are committed to delivering shareholder value through balanced investments and returning to share repurchases in a meaningful way."

Second Quarter 2025 Highlights

• Total operating revenue was $117.7 million and total operating income was $8.6 million.
• Denny's domestic system-wide same-restaurant sales** were (1.3%) compared to the prior year quarter.
• Keke's domestic system-wide same-restaurant sales** increased 4.0% compared to the prior year quarter.
• Denny's opened three franchised restaurants.
• Denny's completed 14 remodels, including five at company restaurants.
• Keke's opened eight new cafes, including four franchised locations.
• Keke's refranchised three company cafes in Florida.
• Adjusted franchise operating margin* was $30.0 million, or 50.7% of franchise and license revenue, and adjusted company restaurant operating margin* was $6.7 million, or 11.5% of company restaurant sales.
• Net income was $2.5 million, or $0.05 per diluted share.
• Adjusted net income* and adjusted net income per share* were $4.8 million and $0.09, respectively.
• Adjusted EBITDA* was $18.8 million.
  
  

Second Quarter 2025 Results

Total operating revenue was $117.7 million compared to $115.9 million for the prior year quarter. This increase was primarily driven by additional Keke's company equivalent units and partially offset by the Company's previously communicated strategy to intentionally close lower volume Denny's franchised restaurants to improve the overall health of the brand.

Franchise and license revenue was $59.3 million compared to $61.6 million for the prior year quarter. This change was primarily due to fewer Denny's franchise equivalent units and softer Denny's same-restaurant sales**.

Company restaurant sales were $58.4 million compared to $54.3 million for the prior year quarter. This increase was primarily driven by additional Keke's equivalent units.

Adjusted franchise operating margin* was $30.0 million, or 50.7% of franchise and license revenue, compared to $30.8 million, or 50.0% for the prior year quarter. This margin change was primarily due to fewer Denny's equivalent units and softer Denny's same-restaurant sales**.

Adjusted company restaurant operating margin* was $6.7 million, or 11.5% of company restaurant sales, compared to $6.9 million, or 12.7% for the prior year quarter. This margin change was primarily due to increased product costs due to higher egg prices, investments in marketing and inefficiencies associated with new cafe openings.

Total general and administrative expenses were $21.4 million compared to $20.5 million in the prior year quarter. This change was primarily due to additional incentive compensation, along with additional share-based compensation and deferred compensation valuation adjustments, neither of which affect Adjusted EBITDA*. These impacts were partially offset by corporate administrative expenses savings of approximately $0.6 million, or a reduction of approximately 3.5% compared to the prior year quarter.

The provision for income taxes was $1.3 million, reflecting an effective tax rate of 34.3% for the current quarter, compared to $1.2 million and an effective tax rate of 25.1% in the prior year quarter. The higher effective income tax rate for the current quarter included discrete items related to share-based compensation which were not comparable to the prior year quarter.

Net income was $2.5 million, or $0.05 per diluted share. Adjusted net income* was $4.8 million, or $0.09 per diluted share.

The Company ended the quarter with $278.6 million of total debt outstanding, including $268.6 million of borrowings under its credit facility.

Capital Allocation

The Company invested $7.3 million in cash capital expenditures during the current quarter, which included Keke's new cafe development and Denny's company restaurant remodels. In addition, the Company invested $4.1 million to complete the acquisition of five Keke's cafes the Company assumed operation of during the first quarter and the strategic acquisition of a Denny's franchise restaurant in one of the Company's core markets, Texas.

The Company also allocated $0.6 million to share repurchases during the current quarter resulting in approximately $87.6 million remaining under its existing repurchase authorization.

Business Outlook

The following full year 2025 (53 operating weeks) expectations reflect management's expectation that recent shifts in consumer sentiment due to macro events will moderate over time.

• Denny's domestic system-wide same-restaurant sales** between (2.0%) and 1.0%.
• Consolidated restaurant openings of 25 to 40.
• Consolidated restaurant closures between 70 and 90.
• Commodity inflation between 3.0% and 5.0%.
• Labor inflation between 2.5% and 3.5%.
• Total general and administrative expenses between $80 million and $85 million, inclusive of:
  • Corporate and administrative expenses between $60 million and $62 million, including approximately $1 million related to the 53rd week;
  • Incentive compensation between $6 million and $9 million; and,
  • Approximately $14 million related to share-based compensation expense which does not impact Adjusted EBITDA*.
• Adjusted EBITDA* between $80 million and $85 million, inclusive of approximately $2 million related to the 53rd week.
• Share repurchases between $15 million and $25 million.

Conference Call and Webcast Information

The Company will provide further commentary on the results for the second quarter ended June 25, 2025 on a webcast today, Monday, August 4, 2025, at 4:30 p.m. Eastern Time. Interested parties are invited to listen to the webcast 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 June 25, 2025, the Company consisted of 1,558 restaurants, 1,474 of which were franchised and licensed restaurants and 84 of which were company operated.

The Company consists of the Denny’s brand and the Keke’s brand. As of June 25, 2025, the Denny's brand consisted of 1,484 global restaurants, 1,422 of which were franchised and licensed restaurants and 62 of which were company operated. As of June 25, 2025, the Keke's brand consisted of 74 restaurants, 52 of which were franchised restaurants and 22 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 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 excludes certain legal settlement expenses not considered to be normal and recurring, 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 no longer deducts cash payments for restructuring and exit costs, or cash payments for share-based compensation from Adjusted EBITDA*.

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 potential impacts of tariffs; 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 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 25, 2024 (and in the Company’s subsequent Quarterly Reports on Form 10-Q and Current Reports on Form 8-K).

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.

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.