Denny's (DENN) Q2 2024 earnings summary

Executive summary

• Q2 2024 operating revenue was $115.9M, down slightly from $116.9M year-over-year, with Denny's outperforming industry benchmarks and Keke's narrowing its sales gap in Florida.

• Adjusted net income per share was $0.13, adjusted EBITDA was $20.3M, and reported net income was $3.6M.

• Opened four new restaurants, including one Keke's company location, and completed a remodel test at a high-volume Keke's site.

• Keke's expanded outside Florida, with new locations in Tennessee outperforming system averages and annualized sales over $2M.

• Denny's operated 1,541 restaurants and Keke's operated 62 as of June 26, 2024.

Financial highlights

• Franchise and license revenue was $61.6M (down from $62.0M); company restaurant sales were $54.3M (down from $54.9M).

• Q2 domestic system-wide same-restaurant sales declined 0.6% year-over-year; Keke's same-cafe sales declined 4.6%.

• Adjusted franchise operating margin was 50%; adjusted company restaurant operating margin was 13.2%.

• Q2 2024 net income margin was 3.1%, and operating margin was 7.9%, both down year-over-year.

• Basic and diluted EPS for Q2 2024 were $0.07, compared to $0.15 in Q2 2023.

Outlook and guidance

• 2024 same-restaurant sales expected between -1% and 1%; restaurant openings guidance lowered to 30–40, including 12–16 new Keke's, with a net unit decline of 20–30.

• Commodity inflation forecasted at 0–2%; labor inflation at 3–4%.

• Adjusted EBITDA guidance reduced to $83M–$87M.

• Management expects the 2024 fiscal year effective tax rate to be between 23% and 27%.

• Technology investments of approximately $4M are planned for a new cloud-based platform, with rollout in 2024 and 2025.