Staffing improvements have helped Denny’s Corp. move toward its goals of returning post-pandemic to 24/7 operations, executives said on Tuesday
The Spartanburg, S.C.-based family-dining brand, which also owns the Keki’s Breakfast Café brand, continues to push “forward on increasing the number of domestic restaurants operating 24 hours, which is currently at approximately 71% of the domestic system and continuing to grow,” said Kelli Valade, Denny’s CEO, in a first-quarter earnings call Tuesday.
In January, Valade said staffing had allowed about 63% of the system to return to full-day hours.
Franchisees are seeing increased retention and staffing improvements, she said, which is helping them see the profitability of the late-night daypart.
“The late-night daypart is still strong for us and growing, and so that business case is there,” Valade said. “It's just a matter of being good stewards, being good partners with them and continuing to have the conversation. But our plans are still in place and we are working toward that every day.”
While momentum toward the goal of 90% of the system with late-night hours slowed in the first quarter, Valade said she felt good about the progress.
Robert Verostek, Denny’s chief financial officer, said, “We will continue to make progress week in and week out. … I am still bullish … But that's why we provide ranges, frankly. I mean, within a 2% range that could mean that we could get there in June, that could mean we could get there in September and we would still fall within that range.”
In other developments, Valade said the company had completed a thorough look at the Keke’s Breakfast Café brand, which Denny’s acquired for $82.5 million in July 2022, and is working on some possible modifications.
“We're currently testing alcohol and a new menu design as we speak, which will better highlight what Keke's customers love are made from scratch, fresh ingredients and abundant portions,” she said. “We’ll leverage all these new learnings and test results to support accelerated long-term growth within and outside of the state of Florida, and we now have key training and operations leaders in place to ensure we're set up for future openings.”
A franchised Keke’s opened in April.
Denny’s is also set to relaunch its rewards program in June, Valade said. “The forthcoming relaunch of the Denny's rewards program next month will position Denny's as a leader in customer centric innovation, demonstrating the brand's commitment to using data and technology to drive growth and loyalty,” she said.
The company also plans to make further use of new kitchen equipment, which provided new items like Sizzlin’ Skillets and oven-baked lasagna, with a limited-time and regular menu items, Valade said.
For the first quarter ended March 29, Denny’s reported net income of $597,000, or one cent a share, down from $21.8 million, or 34 cents a share, in the prior-year period. Revenues rose to $117.5 million from $103.1 million in the prior-year quarter.
Denny's domestic systemwide same-store sales rose 8.4% in the quarter, including increases of 8.1% at domestic franchised restaurants and 11.4% at company restaurants.
As of March 29, Denny’s had 1,648 restaurants, 1,574 of which were franchised and licensed and 74 of which were company operated. Of those 1,648 restaurants, 54 were under the Keke’s brand, of which 46 were franchised and eight of which were company-operated.
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