Dennys 2025 Q1 Earnings Net Income Plummets 93%

Denny'S (DENN) reported its fiscal 2025 Q1 earnings on May 05th, 2025. The company's performance showed a decline, with net income dropping 93.1% from the previous year. Despite the revenue increase of 1.5% to $111.64 million, Denny's fell short of expectations for earnings per share (EPS), reporting only $0.01 compared to $0.09 in Q1 2024. The guidance reflects a cautious outlook amidst ongoing economic challenges, projecting same-restaurant sales in the lower half of a negative 2% to positive 1% range for 2025. The company is focused on strategic initiatives and value-driven promotions to navigate these headwinds.

Revenue
Denny'S experienced a 1.5% increase in total revenue, reaching $111.64 million in Q1 2025 compared to $109.97 million in Q1 2024. Company restaurant sales contributed $53.90 million, with franchise and license revenue adding $57.74 million. Royalties generated $27.84 million, while advertising revenue amounted to $19.07 million. Initial and other fees were $2.87 million, and occupancy revenue was $7.95 million, culminating in total operating revenue of $111.64 million.

Earnings/Net Income
Denny'S's EPS dropped significantly by 88.9% to $0.01 in 2025 Q1, down from $0.09 in the previous year. The company's net income fell to $326,000, marking a 93.1% decline from $4.69 million reported in 2024 Q1. This indicates a challenging financial performance for the quarter.

Post Earnings Price Action Review
Analyzing the impact of Denny's earnings report on its stock price reveals varied responses based on revenue, net income, and EPS figures. In Q4 2024, revenue slightly missed analyst expectations, leading to a minor surprise, yet this had little effect on stock price due to the marginal deviation. Net income showed a significant rise from the previous year, which generally boosts investor confidence and positively impacts stock performance. Operating income also increased considerably, signaling improved operational efficiency. EPS for Q4 2024 aligned with estimates, providing stability in stock price movements. However, the annual adjusted EPS exceeded expectations, which typically draws positive investor reactions. Overall, Denny's stock price tends to respond favorably to higher-than-expected earnings figures, particularly substantial increases in net income and EPS, enhancing investor confidence and potentially driving stock price gains.

CEO Commentary
Kelli Valade, Chief Executive Officer, noted that Denny's faced a challenging start to the year with macro pressures impacting consumer sentiment and spending. Despite a 3% decrease in same-restaurant sales, the introduction of the buy one Slam get one for $1 promotion successfully attracted lapsed and new customers, resulting in flat sales in April. Valade emphasized the importance of value-driven initiatives and collaboration with franchisees to enhance guest experience, stating, "We are hopeful that the environment will continue to stabilize and improve." She expressed confidence in Keke's Breakfast Cafe's growth, highlighting positive sentiment and plans for expansion.

Guidance
Denny's expects same-restaurant sales to be in the lower half of the guidance range of negative 2% to positive 1% for 2025. The company anticipates 12 to 20 openings for Keke's and 70 to 90 closures. Commodity inflation is projected between 3% and 5%, with labor inflation remaining at 2.5% to 3.5%. Adjusted EBITDA guidance is set at $80 million to $85 million, and share repurchase guidance remains at $15 million to $25 million, reflecting a cautious approach amid ongoing economic uncertainty.

Additional News
Denny's Corporation has made notable strides in expanding its operations, opening six franchised restaurants and completing six remodels, including five at company locations. Additionally, Keke's has launched three new cafes, marking its inaugural presence in Georgia, and acquired five franchised cafes to strengthen its market position. Furthermore, the company allocated $1.0 million to share repurchases during the first quarter, with approximately $88.2 million remaining under its existing repurchase authorization. These strategic moves underscore Denny's commitment to bolstering its brand presence and navigating current market challenges.