Denny's (DENN) Q3 & Investor Day 2024 earnings summary

Executive summary

• Denny's and Keke's Breakfast Cafe presented Q3 2024 results, focusing on growth through a refreshed leadership team, dual-brand strategy, and investments in technology, guest experience, and franchisee partnerships.

• Both brands leveraged complementary strengths: Denny's targeted value and broad demographics, while Keke's focused on premium positioning and rapid expansion in the daytime eatery segment.

• Q3 2024 revenue was $111.8 million, down 2.1% year-over-year; net income was $6.5 million, down from $7.9 million in Q3 2023.

• Company and franchise same-store sales declined, but Denny's outperformed the BBI Family Dining index for the third consecutive quarter, and Keke's showed sequential improvement due to marketing and alcohol program expansion.

• The company continues to invest in technology transformation and maintains a strong liquidity position.

Financial highlights

• Q3 2024 total operating revenue: $111.8 million; net income: $6.5 million; adjusted EBITDA: $20.0 million; adjusted net income per share: $0.14.

• Operating income for Q3 2024: $11.7 million; operating margin: 10.5% (down from 12.3% in Q3 2023).

• Franchise and license revenue: $59.1 million; company restaurant sales: $52.7 million.

• Denny's Q3 2024 LTM AUV: $1.9 million; Keke's: $1.8 million.

• Cash flow from operations YTD: $20.9 million (down from $50.8 million YTD 2023).

Outlook and guidance

• 2024 guidance: 30-40 new restaurant openings (12-16 Keke's), 75-95 closures to optimize portfolio; net decline of 45-55 units.

• Adjusted EBITDA guidance for 2024: $81M–$84M; same-restaurant sales expected between (1%) and 0%.

• G&A reduction of 5%-6% expected over the next 12 months; general and administrative expenses forecasted between $82 million and $85 million.

• Commodity inflation expected at 2%; labor inflation between 3% and 4%.

• Technology platform investments ongoing, with rollout into 2025 and 2026.