Denny's Hits A Grand Slam, Says Refranchising Program 'Substantially Completed'

Family-dining restaurant chain Denny's Corp DENN announced fourth-quarter results Tuesday afternoon and provided an update on its late 2018 refranchising strategy.

Q4 Review

Denny's said it earned 23 cents per share in the fourth quarter on revenue of $113.8 million versus expectations of 17 cents per share and $106.97 million. Management guided its full-year domestic comps to be flat to up 2%, Adjusted EBITDA to be between $97 million to $100 million on operating sales of $453 million to $459 million.

Refranchising Update

Denny's announced in October 2018 a plan to transform its business from a 90% franchised model to one that is 96% to 97% franchised. Management said in its earnings report it's plan is "substantially complete" as of the end of 2019.

In addition to a refranchising strategy, management announced a plan to upgrade the quality of its real estate assets through a series of like-kind exchanges, the company said. The use of proceeds from refranchising along with a "moderate" increase in leverage should generate "more compelling returns" for stakeholders.

"This focus, along with the substantial completion of our refranchising strategy, should result in a higher quality, more asset-light business model and the sustainable creation of additional stakeholder value in the coming years," Nation's Restaurant News quoted Denny's CEO John Miller said in a statement.

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