SPARTANBURG S.C. Denny’s Corp. said Monday it would cut between 80 and 90 jobs in what it deemed an "operational realignment" that would reduce annual costs by $8 million to $9 million. The reorganization includes Denny’s field management structure in company and franchise operations, as well as certain support functions, the company said.
The move would help Denny’s better execute its strategic initiatives, the company added, which include new restaurant growth, new products and facilities, improved operations and a stronger emphasis on franchising. Denny’s said it planned to invest $3 million of the expected cost savings from the restructuring into those initiatives, which are expected to help drive sales and unit growth.
“By optimizing our field leadership structure, investing in an expanded management training program and placing more accountability and responsibility on restaurant-level management we believe our restaurants will operate more effectively and efficiently,” Nelson Marchioli, president and chief operating officer of Denny’s, said in a statement. “We are reallocating resources to fund innovation and growth at Denny’s to ensure that we are more responsive, more relevant and more profitable in an increasingly competitive industry.”
The cost saving, excluding certain one-time expenses, are expected to total about $1 million in the company’s fourth quarter, which begins next month.
Severance and other expenses related to the restructuring are expected to total charges between $4 million and $4.5 million in the current, September-ending third quarter, Denny’s said. Excluding those charges, however, the company still expects to meet its fiscal 2007 full-year guidance of between nil dollars and $10 million of adjusted income before taxes.
Separately, a federal jury on Friday ordered Denny’s to pay $600,000 to 15 members of a black family who claimed their white server purposely ignored them and used racial slurs, according an Associated Press report.
Each member of plaintiff Sandra Green’s family is to be given $5,000 in compensatory damages and $35,000 in punitive damages in connection with a November 2003 meal at a Denny’s restaurant in the St. Louis suburb of Fairview Heights, Ill. The server, who later was fired, allegedly waited on white patrons and disregarded the family, leaving members to obtain their own drinks, utensils and napkins.
An attorney for Spartanburg, S.C.-based Denny's reportedly conceded to jurors that the family had received bad service, but insisted they were not harmed. Denny’s had yet to decide whether to appeal, the lawyer was quoted as saying.
Denny’s operates 488 family-dining restaurants and franchises 1,051 franchised units.