SPARTANBURG S.C. Denny’s Corp. reported a steep drop in net income for the second quarter on slowed consumer spending at its family-dining chain and the sale of corporate restaurants.
For the quarter ended June 25, Denny’s posted profit of $3.2 million, or 3 cents per share, compared with earnings of $10.6 million, or 11 cents per share, a year ago. Revenue in the latest quarter fell 21 percent to $190.3 million.
Denny’s operated 141 fewer restaurants during the quarter than it did a year ago because of its refranchising program that started early last year. That effort has included the sale of 171 corporate units to franchisees, including 20 restaurants sold during the latest quarter.
Second quarter same-store sales fell 0.7 percent at corporate units and 3.7 percent at franchised locations, the company said.
Denny’s said it expected tightened consumer spending to continue and projected negative to flat same-store sales trends for the rest of the year. Still, with the company’s revised ratio of corporate-to-franchised restaurants coupled with improved unit-level margins, it increased annual guidance.
Adjusted income before taxes should total between $13 million and $17 million, a 25-percent to 60-percent increase from last year. The family-dining operator also said its new management structure and the elimination of 50 staff positions is expected to generate savings of between $6 million and $8 million next year, the company said.
Denny’s operates or franchises more than 1,500 units.