On July 30, 2024, Denny's Corp (DENN, Financial) released its 8-K filing for the second quarter ended June 26, 2024. Denny's Corp, one of America's largest franchised full-service restaurant chains, reported mixed results, with revenue falling short of analyst estimates while earnings per share (EPS) met expectations.
Company Overview
Denny's Corp operates the Denny's and Keke's Breakfast Cafe brands, offering a variety of food items including pancakes, appetizers, soups, sandwiches, salads, breakfast melts, and omelets. The company generates revenue from food and beverage sales and from royalties, advertising revenue, and other fees from franchised restaurants.
Performance and Challenges
For Q2 2024, Denny's Corp reported total operating revenue of $115.9 million, slightly below the $118.98 million estimated by analysts. This represents a decrease from $116.9 million in the same quarter last year. The company faced challenges with a 0.6% decline in domestic system-wide same-restaurant sales, including a 0.4% drop at domestic franchised restaurants and a 2.6% decline at company-operated restaurants.
Financial Achievements
Despite the revenue shortfall, Denny's Corp achieved an EPS of $0.07, below the analyst estimate of $0.15. The company reported a net income of $3.6 million, down from $8.5 million in the prior year quarter. Adjusted net income was $6.9 million, or $0.13 per share.
Income Statement Highlights
Key details from the income statement include:
| Metric | Q2 2024 | Q2 2023 |
|---|---|---|
| Total Operating Revenue | $115.9 million | $116.9 million |
| Operating Income | $9.1 million | $14.9 million |
| Net Income | $3.6 million | $8.5 million |
| Adjusted EBITDA | $20.3 million | $22.9 million |
Balance Sheet and Cash Flow
As of June 26, 2024, Denny's Corp reported total assets of $459.9 million, slightly down from $464.8 million at the end of 2023. The company ended the quarter with $267.4 million in total debt, including $257.5 million of borrowings under its credit facility. Cash and cash equivalents stood at $1.2 million, down from $4.9 million at the end of 2023.
Commentary and Analysis
"I am very pleased that for the second quarter in a row Denny's outperformed BBI Family Dining same-restaurant sales, and Keke's continued to close the gap in Florida all while navigating a very competitive environment," stated Kelli Valade, Chief Executive Officer.
Despite the challenges, Denny's Corp remains confident in its strategies and initiatives. The company opened four new restaurants during the quarter, including one Keke's company location, and completed its first remodel test at a high-volume Keke's corporate location.
Business Outlook
Looking ahead, Denny's Corp has updated its full-year 2024 guidance, reflecting the current consumer and economic environment. The company expects domestic system-wide same-restaurant sales to range between -1% and 1%, and plans to open 30 to 40 new restaurants, including 12 to 16 new Keke's locations. Adjusted EBITDA is projected to be between $83 million and $87 million.
For further details on Denny's Corp's Q2 2024 earnings, please refer to the 8-K filing.
Explore the complete 8-K earnings release (here) from Denny's Corp for further details.
