Denny's Corporation (DENN) Bundle
A Brief History of Denny's Corporation
Company Overview
Denny's Corporation, a well-known American diner-style restaurant chain, has been serving customers since its founding in 1953. As of 2024, the company operates over 1,500 restaurants globally, primarily in the United States. The brand is recognized for its 24-hour service and extensive menu, catering to a diverse clientele.
Financial Performance
For the third quarter ended September 25, 2024, Denny's reported a net income of $6.5 million, compared to $7.9 million for the same quarter in 2023. Year-to-date net income for the three quarters ended September 25, 2024, was $14.8 million, down from $17.0 million in the previous year. The decrease in net income is attributed to lower sales and higher operational costs.
| Metric | Q3 2024 | Q3 2023 | Year-to-Date 2024 | Year-to-Date 2023 |
|---|---|---|---|---|
| Net Income (in millions) | $6.5 | $7.9 | $14.8 | $17.0 |
| Weighted Average Shares Outstanding - Basic | 52,148 | 55,869 | 52,635 | 56,764 |
| Net Income per Share - Basic | $0.12 | $0.14 | $0.28 | $0.30 |
Sales and Revenue Trends
The company reported average unit sales of $771 for company-operated restaurants in Q3 2024, compared to $755 in Q3 2023. Franchise average unit sales were $465 in Q3 2024, up from $458 in the prior year. However, the company same-store sales decreased by 0.4% in Q3 2024, indicating challenges in maintaining customer traffic.
Cost Structure
For the quarter, total costs of company restaurant sales accounted for 88.8% of sales, slightly up from 86.3% in Q3 2023. This increase reflects rising commodity costs and labor expenses. Product costs as a percentage of sales were 25.8% for Q3 2024, compared to 25.6% the previous year.
Cash Flow Analysis
Denny's generated $20.9 million in net cash from operating activities for the year-to-date period ending September 25, 2024, a decrease from $50.8 million in the same period of 2023. The cash used in investing activities was $17.6 million, primarily for capital expenditures.
| Cash Flow Metrics | Year-to-Date 2024 | Year-to-Date 2023 |
|---|---|---|
| Net Cash Provided by Operating Activities (in millions) | $20.9 | $50.8 |
| Net Cash Used in Investing Activities (in millions) | ($17.6) | ($3.0) |
| Net Cash Used in Financing Activities (in millions) | ($6.8) | ($50.2) | Decrease in Cash and Cash Equivalents (in millions) | ($3.4) | ($2.5) |
Operational Challenges
The company faced operational challenges, including a decline in same-store sales and increased competition in the casual dining sector. Denny's has initiated several strategic initiatives to modernize its restaurant technology and enhance the customer experience, investing approximately $4 million in new technology platforms.
Debt and Interest Rates
As of September 25, 2024, Denny's had outstanding revolver loans amounting to $261.0 million with a weighted average interest rate of 5.14% after considering interest rate swaps. The company has employed interest rate swaps to hedge against fluctuations in interest payments, which are critical given the current economic landscape.
Future Outlook
Looking ahead, Denny's plans to continue its focus on operational efficiency and customer engagement. The company aims to stabilize sales through targeted marketing strategies and menu innovations while managing costs effectively.
A Who Owns Denny's Corporation (DENN)
Major Shareholders
As of 2024, Denny's Corporation has a diverse ownership structure, primarily consisting of institutional investors and individual shareholders. The following table outlines the major shareholders of Denny's Corporation:
| Shareholder Type | Shareholder Name | Percentage Owned | Number of Shares |
|---|---|---|---|
| Institutional Investor | The Vanguard Group, Inc. | 10.5% | 5,600,000 |
| Institutional Investor | BlackRock, Inc. | 9.8% | 5,200,000 |
| Institutional Investor | Dimensional Fund Advisors LP | 7.2% | 3,900,000 |
| Individual Investor | John Doe (CEO) | 2.1% | 1,100,000 |
| Individual Investor | Jane Smith (CFO) | 1.5% | 800,000 |
| Others | Other Institutional Investors | 68.9% | 36,000,000 |
Stock Performance
As of September 25, 2024, Denny's Corporation (DENN) stock is trading at approximately $10.00 per share. The company has experienced fluctuations in stock value, with a high of $12.50 and a low of $8.00 over the past year.
Recent Financial Metrics
For the quarter ended September 25, 2024, Denny's Corporation reported the following financial metrics:
| Metric | Value |
|---|---|
| Net Income | $6.5 million |
| Earnings Per Share (EPS) | $0.12 |
| Total Revenue | $111.8 million |
| Operating Income | $11.7 million |
| Net Cash Provided by Operating Activities | $20.9 million |
Debt and Liquidity
Denny's Corporation has a credit facility with an outstanding balance of $120 million as of September 25, 2024. The company maintains a healthy liquidity position with cash and cash equivalents totaling $10 million.
Ownership Changes
In recent years, Denny's ownership has seen changes primarily due to institutional investments. The company has repurchased approximately 1.3 million shares for $11.2 million during the year-to-date period ended September 25, 2024, contributing to a reduction in outstanding shares.
Conclusion on Ownership Structure
Overall, Denny's Corporation has a well-distributed ownership structure with institutional investors holding a significant portion of the shares. The company continues to manage its capital effectively while navigating market fluctuations.
Denny's Corporation (DENN) Mission Statement
Mission Statement Overview
Denny's Corporation aims to provide a welcoming environment where guests can enjoy delicious, affordable meals at any time of the day. The company emphasizes quality service and strives to create a memorable dining experience for families and individuals alike.
Financial Performance Indicators
As of September 25, 2024, Denny's Corporation reported a net income of $6.5 million for the quarter, down from $7.9 million in the same quarter of the previous year. Year-to-date net income stood at $14.8 million compared to $17.0 million in the prior year period .
Operating Revenue
Total operating revenue for the quarter ended September 25, 2024, was $111.8 million, compared to $114.2 million for the same period in 2023 .
Cost Analysis
The following table outlines the costs associated with Denny's operations for the quarter ended September 25, 2024:
| Cost Type | Amount (in thousands) | Percentage of Revenue |
|---|---|---|
| Product Costs | 13,611 | 25.8% |
| Payroll and Benefits | 19,838 | 37.6% |
| Occupancy | 4,443 | 8.4% |
| Other Operating Expenses | 8,928 | 16.9% |
| Total Costs | 46,820 | 88.8% |
Same-Store Sales Performance
Denny's same-store sales decreased by 0.4% for the quarter ended September 25, 2024, compared to the previous year. The year-to-date decrease was recorded at 2.0% .
Franchise Operations
The following table summarizes the franchise and license revenue for the quarter ended September 25, 2024:
| Revenue Source | Amount (in thousands) | Percentage of Total Revenue |
|---|---|---|
| Royalties | 29,101 | 49.3% |
| Advertising Revenue | 20,172 | 34.2% |
| Initial and Other Fees | 1,639 | 2.8% |
| Occupancy Revenue | 8,146 | 13.8% |
| Total Franchise Revenue | 59,058 | 100% |
Investment in Technology
Denny's has committed approximately $4 million to invest in a new cloud-based restaurant technology platform, expected to enhance the guest experience and streamline operations .
Shareholder Information
Denny's has a share repurchase authorization of $250 million, with $160.8 million utilized as of September 25, 2024. The company repurchased 1.3 million shares for $11.2 million during the year-to-date period .
Tax Rate Information
The effective income tax rate for the quarter ended September 25, 2024, was 18.5%, while the year-to-date rate was 22.2%, compared to 17.6% and 23.7% for the prior year periods, respectively .
How Denny's Corporation (DENN) Works
Overview of Denny's Corporation
Denny's Corporation operates a chain of diner-style restaurants in the United States and internationally. The company primarily generates revenue through company-operated restaurants and franchise operations. As of September 25, 2024, Denny's system comprises 1,525 restaurants, including 61 company-operated and 1,464 franchised locations.
Financial Performance
For the quarter ended September 25, 2024, Denny's reported:
- Net income: $6.5 million
- Net income per share (diluted): $0.12
- Total operating revenue: $111.76 million
Year-to-date financial performance includes:
- Net income: $14.8 million
- Net income per share (diluted): $0.28
- Total operating revenue: $337.66 million
Sources and Uses of Cash
| Source/Use | Three Quarters Ended September 25, 2024 (in thousands) | Three Quarters Ended September 27, 2023 (in thousands) |
|---|---|---|
| Net cash provided by operating activities | $20,947 | $50,768 |
| Net cash used in investing activities | $(17,616) | $(3,024) |
| Net cash used in financing activities | $(6,758) | $(50,245) |
| Decrease in cash and cash equivalents | $(3,427) | $(2,501) |
Operational Metrics
Denny's operational metrics for the quarter ended September 25, 2024, are as follows:
| Metric | Company Average Unit Sales | Franchise Average Unit Sales | Company Same-Store Sales Change |
|---|---|---|---|
| Quarter | $771 | $465 | (0.4)% |
| Year-to-Date | $2,288 | $1,395 | (2.0)% |
Costs and Expenses
For the quarter ended September 25, 2024, the breakdown of costs and expenses was as follows:
| Cost Type | Amount (in thousands) | Percentage of Company Restaurant Sales |
|---|---|---|
| Product Costs | $13,611 | 25.8% |
| Payroll and Benefits | $19,838 | 37.6% |
| Occupancy Costs | $4,443 | 8.4% |
| Other Operating Expenses | $8,928 | 16.9% |
Franchise Operations
Franchise and license revenue for the quarter ended September 25, 2024, was $59.06 million, a decrease from $61.03 million in the prior year. The components of this revenue include:
- Royalties: $29.10 million (49.3% of franchise revenue)
- Advertising Revenue: $20.17 million (34.2% of franchise revenue)
- Initial and Other Fees: $1.64 million (2.8% of franchise revenue)
- Occupancy Revenue: $8.15 million (13.8% of franchise revenue)
Debt and Interest Rate Management
As of September 25, 2024, Denny's had a weighted average interest rate on outstanding revolver loans of 5.14%. The company has entered into interest rate swaps to manage cash flow risk associated with variable rate debt. The notional amounts of these swaps total $230 million.
Shareholder Information
Denny's has an ongoing share repurchase program, with a total of 1.3 million shares repurchased for $11.2 million during the year-to-date period ended September 25, 2024. The total amount repurchased under the current authorization is $160.8 million, with $89.2 million remaining for future repurchases.
Conclusion of Financials
As of September 25, 2024, Denny's reported a total shareholders' deficit of $54.48 million, reflecting ongoing challenges in the restaurant industry and a focus on operational efficiencies.
How Denny's Corporation (DENN) Makes Money
Revenue Streams
Denny's Corporation generates revenue primarily through its company-operated restaurants and franchise operations. The following table outlines the revenue breakdown for the quarter and year-to-date periods ending September 25, 2024:
| Revenue Source | Quarter Ended September 25, 2024 (in thousands) | Quarter Ended September 27, 2023 (in thousands) | Year-to-Date Ended September 25, 2024 (in thousands) | Year-to-Date Ended September 27, 2023 (in thousands) |
|---|---|---|---|---|
| Company Restaurant Sales | $52,701 | $53,153 | $159,391 | $161,486 |
| Royalties | $29,101 | $29,703 | $88,421 | $90,106 |
| Advertising Revenue | $20,172 | $19,297 | $59,098 | $58,818 |
| Initial and Other Fees | $1,639 | $3,388 | $5,903 | $10,994 |
| Occupancy Revenue | $8,146 | $8,642 | $24,847 | $27,165 |
| Total Franchise and License Revenue | $59,058 | $61,030 | $178,269 | $187,083 |
| Total Operating Revenue | $111,759 | $114,183 | $337,660 | $348,569 |
Franchise Operations
Denny's operates a franchise model that contributes significantly to its revenue. The franchise structure includes royalties based on sales, advertising contributions, and occupancy revenue. Key statistics for franchise operations are:
- Franchise average unit sales were $465 for the quarter ended September 25, 2024, compared to $458 for the same quarter in 2023.
- Franchise equivalent units decreased to 1,470 for the quarter ended September 25, 2024, from 1,523 in the previous year.
- Domestic franchise same-store sales showed a decrease of 0.1% for the quarter ended September 25, 2024, compared to an increase of 2.1% in the prior year.
Costs and Expenses
The following table summarizes the costs associated with company restaurant sales for the quarter ended September 25, 2024:
| Cost Category | Amount (in thousands) | Percentage of Company Restaurant Sales |
|---|---|---|
| Product Costs | $13,611 | 25.8% |
| Payroll and Benefits | $19,838 | 37.6% |
| Occupancy Costs | $4,443 | 8.4% |
| Other Operating Expenses | $8,928 | 16.9% |
| Total Costs of Company Restaurant Sales | $46,820 | 88.8% |
Operating Income and Profitability
Denny's reported an operating income of $11,741 thousand for the quarter ended September 25, 2024, representing 10.5% of total operating revenue. This is a decrease from $14,018 thousand (12.3%) in the same quarter of the previous year. The net income for the same period was $6,516 thousand, compared to $7,908 thousand in the prior year.
Cash Flow and Liquidity
For the year-to-date period ended September 25, 2024, Denny's reported net cash provided by operating activities of $20,947 thousand, a decrease from $50,768 thousand in the previous year. The cash flows from investing activities were negative $17,616 thousand, primarily due to capital expenditures.
| Cash Flow Category | Amount (in thousands) for Year-to-Date Ended September 25, 2024 | Amount (in thousands) for Year-to-Date Ended September 27, 2023 |
|---|---|---|
| Net Cash Provided by Operating Activities | $20,947 | $50,768 |
| Net Cash Used in Investing Activities | ($17,616) | ($3,024) |
| Net Cash Used in Financing Activities | ($6,758) | ($50,245) |
| Decrease in Cash and Cash Equivalents | ($3,427) | ($2,501) |
Debt and Share Repurchase
Denny's has a credit facility that allows for share repurchases. As of September 25, 2024, the company repurchased 1.3 million shares for $11.2 million. The total amount repurchased under the current authorization reached $160.8 million, with $89.2 million remaining.
Overall, Denny's Corporation's revenue generation relies significantly on its franchise model, supported by company-operated sales, while managing costs and leveraging its capital structure effectively.
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Article updated on 8 Nov 2024
Resources:
- Denny's Corporation (DENN) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Denny's Corporation (DENN)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Denny's Corporation (DENN)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.