Denny's Q2 2025: Navigating Contradictions in Promotions, Consumer Spending, and Economic Trends

Impact of LTO promotions on same-store sales, economic environment and consumer spending moderation, future of the BOGO promotion strategy, value mix and promotion strategy, macroeconomic impact on consumer behavior are the key contradictions discussed in Denny's latest 2025Q2 earnings call.



Sales Performance and Consumer Environment:
- Denny's reported system-wide same-restaurant sales of negative 1.3% for Q2, a 170 basis point sequential improvement from Q1.
- The company operated in a volatile consumer environment, with household incomes under pressure and consumer sentiment remaining uncertain, impacting sales in key states and markets like Los Angeles, San Francisco, Houston, and Phoenix.
- Denny's continued to adapt, introducing value promotions and leveraging off-premise strategies to drive profitability.

Value Promotion Effectiveness:
- The buy-one-get-one Slam for $1 promotion drove traffic, with over 15% of new and lapsed users returning, aiding in a 5% traffic increase.
- Following the success, a 4 Slams under $10 promotion was introduced, which continued to attract new users and enhance profitability.
- These promotions helped mitigate the impact of macroeconomic pressures and competitive pricing strategies.

Digital and Off-Premise Growth:
- Off-premise sales contributed a 1.5% improvement in same-restaurant sales during Q2, driven by smart investments in digital channels.
- Digital efforts increased online sales, conversion rates, and effective promotions on third-party platforms, supporting overall same-store sales.
- The company plans to launch a new points-based loyalty program in the back half of the year to further enhance digital engagement and customer retention.

Operational Strategy and Cost Management:
- Denny's initiated a strategy to close underperforming restaurants, which resulted in a 5% increase in franchise AUVs.
- The company focused on cost efficiency, expecting up to 200 basis points of savings over the next 12 to 18 months through various operational and supplier negotiations.
- This strategy aligns with Denny's goal to return to flat to slightly positive sales growth by 2026.