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Denny’s expects 2009 sales drop

SPARTANBURG S.C. Denny’s Corp. said late Wednesday that its revenues in 2009 will fall from 2008 levels, and that same-store sales are expected to remain negative, despite the family-dining company’s massive marketing efforts.

Citing the “unprecedented economic uncertainties” impacting its family-dining chain, Denny’s said 2009 revenues would total between $605 million and $623 million, compared with $760.3 million recorded in 2008. Also hurting its top line performance is Denny’s on-going transition to a more franchised business model, which reduces corporate sales.

The parent to more than 1,500 restaurants also predicted that 2009 same-store sales would fall between 3 percent and 5 percent at franchised units and between 1 percent and 3 percent at corporate restaurants.

“We are encouraged by the reception to our new marketing programs and our new product offerings but cannot yet predict a change in our sales trends,” said Mark Wolfinger, chief financial officer, “particularly against an industry outlook that projects considerable sales weakness in 2009.”

Earlier this month Denny’s served 1.5 million customers a free Grand Slam breakfast to jump start the chain’s new marketing and advertising efforts aimed to lure consumers who had not eaten at a Denny’s for some time. The company said its latest marketing efforts will focus on the chain’s “real breakfast.”

For the December-ended fourth quarter, Denny’s recorded a net loss of $3.2 million, or 3 cents per share, compared with a profit of $14.7 million, or 15 cents per share, in the same quarter a year earlier. Denny’s booked charges totaling about $3.7 million in the latest quarter.

Revenues fell 16 percent to $184.7 million, mainly because Denny’s operated 131 fewer corporate locations compared with the prior-year quarter after numerous sales of restaurants to franchisees. Fourth-quarter same-store sales fell 7.2 percent at franchised stores and 3.2 percent at corporate locations.

For the full year, Denny’s earned $14.7 million, or 15 cents per share, compared with year-earlier earnings of $31.4 million, or 32 cents per share. Full-year 2008 revenues totaled $760.3 million, down 19 percent from the year earlier.

Contact Elissa Elan at [email protected].

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