The diner chain is pushing for cost savings and profit expansion by closing underperforming outlets, trimming its menu, and focusing on growing its Keke’s Breakfast Cafes.
Denny’s Corp’s (DENN) shares and retail sentiment notched higher on Monday following the diner chain’s quarterly results.
The company fell short of revenue and profit expectations, with same-store sales also slipping. Still, investors appeared to back its relatively steady performance and ongoing overhaul efforts amid an increasingly challenging restaurant landscape.
DENN shares 2.4% in extended trading. On Stocktwits, retail sentiment shifted to ‘extremely bullish’ from ‘bullish’ the previous day, while the 24-hour message volume rose over 130%.
A user said Denny’s is “stable” and “generate(s) cash,” while praising the closure of underperforming outlets and expansion of Keke’s Breakfast Cafes, which “is the future.”
The optimism comes as Denny’s shares have declined 40% year-to-date, as of their last close.
“We have continued to stay nimble, innovate, and meet the guests where they are,” CEO Kelli Valade said in a statement. “For Denny’s, this meant innovating its value platform, leaning into its off-premises strength, and optimizing the franchise system, while Keke’s expanded its portfolio 7% year-to-date, launched its first-ever system-wide promotion, and continued to steal share from its competitive set.”
The company reported $117.7 million in revenue for the second quarter, up from $115.9 million in the same quarter the previous year. Analysts were expecting revenue of $118.1 million. Same-store sales declined 1.3%, after declining 3% in Q1.
Adjusted earnings were $0.09 per share, also below the expectation of $0.11.
In recent years, Denny’s has undergone a major realignment, including shuttering over 100 outlets, trimming its menu, moderating round-the-clock open hours, and expanding its virtual Banda Burrito brand and the Keke’s Breakfast Cafes.
Valade admitted to “near-term choppiness” in the restaurant market and stated that the chain had reduced corporate administrative expenses by approximately 3.5%.
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