On February 12, 2025, Denny's Corp (DENN, Financial) released its 8-K filing detailing the financial results for the fourth quarter and full year ending December 25, 2024. Denny's Corp, a prominent franchised full-service restaurant chain in the U.S., operates under the Denny's and Keke's Breakfast Cafe brands. The company generates revenue from food and beverage sales and royalties, advertising, and other fees from franchised restaurants.
Quarterly and Annual Financial Performance
For the fourth quarter of 2024, Denny's Corp reported total operating revenue of $114.7 million, slightly below the analyst estimate of $115.66 million. The company's adjusted net income per share was $0.14, aligning with the analyst estimate. Denny's domestic system-wide same-restaurant sales increased by 1.1%, while Keke's saw a 3.0% increase.
Annually, the company reported total operating revenue of $452.3 million, slightly under the estimated $453.37 million. The adjusted net income per share for the year was $0.54, surpassing the estimated $0.42. Denny's domestic system-wide same-restaurant sales saw a slight decline of 0.2%, and Keke's experienced a 1.7% decrease.
Strategic Initiatives and Challenges
Denny's Corp has been focusing on enhancing its brand health by closing lower-volume restaurants and completing 23 remodels. The company also expanded Keke's Breakfast Cafe into six new states, opening a record number of cafes. However, the company faces challenges from macroeconomic factors affecting consumer sentiment, which could impact future performance.
Kelli Valade, Chief Executive Officer, stated, "We are proud of our progress through 2024, culminating in strong performances from both Denny's and Keke's, which outperformed their respective BBI Family Dining indices in the fourth quarter."
Financial Achievements and Metrics
Operating income for the fourth quarter was $14.5 million, a significant increase from $7.7 million in the prior year quarter. The adjusted franchise operating margin was 51.2%, and the adjusted company restaurant operating margin was 11.3%. These metrics are crucial as they reflect the company's efficiency in managing costs and maximizing profitability.
For the full year, operating income was $45.3 million, down from $52.8 million in the previous year. The adjusted EBITDA for the year was $81.4 million, indicating an 11.1% increase compared to the prior year.
Income Statement and Balance Sheet Highlights
In the fourth quarter, franchise and license revenue increased to $62.3 million from $61.3 million in the prior year quarter, driven by higher local advertising contributions and positive same-restaurant sales. Company restaurant sales were $52.4 million, down from $54.0 million, primarily due to fewer Denny's equivalent units.
The company ended the quarter with $271.9 million in total debt, including $261.3 million under its credit facility. Cash and cash equivalents stood at $1.7 million, a decrease from $4.9 million at the end of 2023.
| Metric | Q4 2024 | Q4 2023 |
|---|---|---|
| Total Operating Revenue | $114.7 million | $115.4 million |
| Net Income | $6.8 million | $2.9 million |
| Adjusted EBITDA | $22.2 million | $19.9 million |
Analysis and Outlook
Denny's Corp's strategic focus on remodeling and expanding Keke's brand has shown positive results, with both brands outperforming their respective indices. However, the company must navigate challenges posed by changing consumer sentiment and macroeconomic conditions. The company's efforts to maintain its position as a value leader and invest in its brands are crucial for sustaining growth and delivering shareholder value.
Overall, Denny's Corp's performance in 2024 reflects a balanced approach to growth and operational efficiency, with a focus on strategic initiatives to enhance brand health and expand market presence.
Explore the complete 8-K earnings release (here) from Denny's Corp for further details.
