Denny's (DENN) Q2 Earnings call transcript Jul 30, 2024

Denny's Corporation recently held its second quarter 2024 earnings call, revealing significant progress and strategies to drive profitability and growth in both its flagship Denny's and emerging Keke's Breakfast Cafe brands. The call, led by Kelli Valade, Denny's President and CEO, and Robert Verostek, Denny's Executive Vice President and CFO, highlighted several key themes and trends that are shaping the company's future.

Strategic Initiatives and Outperformance

Denny's has shown resilience in a competitive industry, outperforming the BBI Family Dining Sales Index for the second consecutive quarter. This achievement is a testament to the company's focus on value and its ability to attract customers even in challenging market conditions. Kelli Valade emphasized Denny's commitment to stealing share and innovating to drive traffic during all dayparts, including the launch of its third virtual brand, Banda Burrito, which has shown promising results in over 300 restaurants. The company's strategic initiatives, such as its barbell strategy, new value platforms, and local co-op investments, are expected to drive incremental traffic and revenue.

Financial Performance and Guidance

Robert Verostek provided an overview of Denny's financial performance, reporting a slight decline in system-wide same-restaurant sales for the second quarter. However, the company's adjusted EBITDA remains strong, reflecting the successful execution of its strategic initiatives. Looking ahead, Denny's has revised its full-year 2024 guidance, projecting a domestic system-wide same-restaurant sales range of negative 1% to positive 1%, with a projected consolidated adjusted EBITDA range of $83 million to $87 million. This guidance reflects the company's cautious outlook amidst a challenging macroeconomic environment.

Keke's Breakfast Cafe's Progress

The call also touched upon the performance of Denny's emerging brand, Keke's Breakfast Cafe. Despite facing challenges in Florida, the brand has shown significant progress in narrowing the gap to BBI Family Dining sales. Innovations like menu updates and kids meal improvements have been successful in attracting customers and increasing guest satisfaction scores. The opening of a second corporate cafe in Tennessee has been a success, with plans to expand into California and Texas in the near future.

Conclusion

Denny's Corporation's second quarter 2024 earnings call highlighted the company's strategic focus on value, innovation, and growth. The successful execution of its strategic initiatives, including the launch of Banda Burrito and its barbell strategy, underscores Denny's commitment to outperforming the industry. Despite the challenges in the macroeconomic environment, Denny's remains optimistic about its future, with a focus on driving incremental traffic, expanding its virtual brand offerings, and investing in its emerging Keke's Breakfast Cafe brand. With a strong financial performance and a clear strategic vision, Denny's is well-positioned to navigate the challenges ahead and continue its growth trajectory.