DENN - Earnings call transcript Q4 2019

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Operator

Good day, everyone, and welcome to the Denny’s Corporation Fourth Quarter and Fiscal Year 2019 Earnings Call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Curt Nichols, Vice President, Investor Relations and Financial Planning and Analysis. Please go ahead, sir.

Curt Nichols

Thank you, Sarah, and good afternoon, everyone. us fourth joining conference XXXX for call. you for quarter Denny's earnings Thank

from Miller, Denny's, are Officer; me management With today John and Financial Denny's and President Mark President; Denny's Robert Vice Verostek, Senior Chief Officer. Wolfinger, Executive Chief

available investor.dennys.com this website earnings along is our an webcast call. on reconciliation This to any our financial non-GAAP archive release find webcast and at call refer today. fourth to of will later Please measures with of our quarter press mentioned be the website on being

for John will of Mark it open Then, comments announced begin results our today's his questions. XXXX. for recap introductory up guidance brief changes. fourth our call on After will comments. with with that, Robert leadership a on along some we'll then provide quarter will provide commentary recently annual

Before XXXX, in remind we Such and XX-Q. XXXX, report accordance Reform the recent uncertainties ended and are factors members most may current and statements. this call year Safe Harbor call. risks caution reports are XX-K materially subject to that Securities set earnings Management XX, Company constitute of risks, of Company's that actual may this to forth trends Form subsequent the annual forward-looking Denny's management from performance factors in its on with during discussed other such quarterly the for indicated Act Such by Form December provided statements. cause matters knows the outlook the performance in different be in to statements Litigation begin, on the any or or the certain any be Private on urges me provisions and considering of of you let by that implied

call that, With Executive will Officer. now Denny's Chief the over to Miller, turn John I

John Miller

everyone. afternoon, Curt. you, Good Thank

sales industry yet for the Denny's a same-store achieved environment. consecutive year, dynamic despite positive ninth growth choppy

most refranchising consistent proud balancing our we a during team XXXX, local progressively our especially brand our of pillars. more execution of efforts family steadfast is becoming vision strategic our and commitment This our to four of franchised to with world's I'm beloved of vision As admired largest, transitioned by restaurants. driven a for highly the

First, our perpetuating consistent positioning of sales growth. the with brand goal around diner delivering relevant and a same-store differentiated

Second, consistent reliable operating service. great restaurants with and

Denny's close expanding U.S Third, by our allocation and markets. on cost a throughout capital our focus collaboration profitable geographic franchisees. with fourth, training, growth shareholders. in international reach and are for our driving of the the And with supported technology disciplined And continued along pillars employees these benefit and and franchisees, with investments

evolve menu more our Beyond our Hearty expectations Sizzlin' We Burger. continue higher our and for X-Grain to and menu features latest And products. our LTO good feel flavors, guest and to Breakfast Skillets meet new including Pancake craveable quality

you new the eat everyday offering starting been featuring traffic. buttermilk Slam with We to also all of our $X.XX pancakes, at have can value Duper Super as drive part

to a expand system delivery off-premise -- continue the in their While steady growth the a of overwhelming younger our nearly partner. dine-in in of launch prior of late X% in the represent transactions the toward approximately to channels. and least growth XX% skewed delivery anticipate majority our Denny’s more be long-term XX% sales, in to Approximately from engaged restaurants continued is off-premise at continue the sales of on from at to of has contributed Demand business We system actively platform [indiscernible]. domestic night our with fourth delivery to incremental Demand and now sales of one transactions as highly guest Denny’s These over-index on quarter. domestic sales the XX% growth

exterior And had to neutral relaxing of XXXX, the community perform mid-single-digit modernized Heritage latest Our name At out cost the $XXX,XXX. and Heritage with and X.X. $XXX,XXX system accent, range is prototype more Remodel sales boost lift. was colors guest original started next our have developed extensive research, to calling the XX% features Remodel on to based which ranges rolling remodel consistently and prototype, from tables and the in restaurants just vibrant feedback After attention generating the franchisees, well, we're a elements, image. consumer now XX Heritage Heritage grabbing program few. approximately testing image in end the with to continues similar program of This favorable we receiving approximately new

parts, improvements Also the Remodels new similar provide prototype will dinner most package, yielding sales tailwind strategy X.X a by all part. to Heritage pronounced for the day our while at Heritage X.X the for brand the prototype to continue come. across traffic original mid-single-digit day revitalization driven guest years to Heritage lift, including

and to Our continue is team through Right continues and focused development learning progressive system Ignite to platform, which currently in create our and scores pride our e-learning franchisees’ arise. initiatives Denny's curriculum deploy do our Delight and It the services Make on

Moving on to development.

initiatives international equal over system. international of growth the including since expansion current nine Arab XXXX, approximately our new openings Rico the Our opened year of the strongest XX% efforts the Canada, to representing Franchisees quarter, fourth United four international openings, of Puerto led in beginning have Emirates. With in XXXX to-date. revitalization in and restaurant to XXX was openings XX our restaurants

in the will effectively will we strategy. of year-end, sale, and total occur of fourth held refranchising that announcement development had restaurants the the of for in We strategy our as we marked degree the fourth effort. high which the conclude restaurants At XXXX. our term, since a sale in have XXX sale confidence near and four of restaurants those the quarter of nine refranchising in resulting to quarter, sold Turning a completed of

achieving not this of pace development growth. has successfully restaurants, with pleased, commitments to but only yielded franchise of XX new -- to community’s extremely number to been have domestic our strategy one also the secured and The primary We transactions, interest objectives restaurant with refranchising stimulate through effort. develop commitment domestic development the the of

stores global nearly by commitments opening These international domestic XXX begin have new enhanced restaurants. XXXX. in anticipate with pipeline development will We recently development our along expanded announced development agreements these our

is to upgrade with effort will of goal supports that strategy anticipate broader initiatives. end real the While estate with quality the ramping strategic refranchising XXXX. by our of our leverage continually We be capital balancing shareholder-friendly up, our profile allocation completed of portfolio the optimal we assess strategy an returns Denny's

consider proceeds In addition comprehensive of to thorough of to practice actively considerations investing with alternative review acquisitions decade, the our to internal from to and our of uses concept conversion, each for a We program, This process full like to with share various in the transaction. acquisition ongoing and our with more dividend is considerations Flying consideration considering J evaluating new transaction earlier our repurchase philosophy and our refranchising longstanding the risk. another accretion a brand, continues these cash. multiple from recently leverage array in balanced

and we leverage remaining credit revolving to began leverage the refranchising facility efforts. the XXXX in our capacity refranchising increase proceeds. We our beyond decreased of notable times temporarily have in Near-term, from X from intend approximately moderately level when EBITDA inflow

returns accretive generate however, prudent leverage of most and in moderately our and the remain We to alternatives. increase the assessment through timing shareholder these commitment risk-adjusted our steadfast,

free in The complete committed Demand, the enhancements our model, our menu we remodel commitment training initiatives adjusted of we highly to including program. market investing to shareholder-friendly sales generation continue quality of initiatives, to asset-light our to revitalization convenience value transition remain our Denny’s In returns and and allocations closing, a on compelling and system to guest experience, share and on These elevate the focus. as profitable to more invested successful accretive business cash growth, will everyday support gains, our of capital flow.

better to to the leadership Financial last Robert promotion to Officer. of us and Brand President the Officer, of Denny’s, of of Senior Vice success, To and promotion and John of week, Dillon realignment Wolfinger continued positions President the Vice the we including promotion Mark equip Executive for Verostek President Chief announced Chief some

now I'll briefly over Mark to call these the discuss turn changes. to

Mark Wolfinger

you, Thank John.

a planning The are Directors. successful of were changes ensure multi-year our of more combination kept effort led to franchised to Board transition business. the week intact by roles during Leadership last deliberately highly process refranchising a announced a the

time business success Now that with substantially strategy, the the our are realign continued we our Denny's. appropriate to is at it for long-term of here complete refranchising responsibilities

Miller purpose on to John of serve a our to of CEO brand from as enable a our Freeing will continue member Directors. and strategies forward, him John visionary responsibilities extending Board through leadership. will number ongoing Going revitalization of administrative his

be evolving support of I will more administration greater greater will in I Directors. a influence and President, our function business, as serve in center As also committee. of oversight our our our the continue aspects of the of to member of including Board leadership of involved day-to-day broader

relationships, franchisee marketing, development extending President, we synergies. Brand promoted alignment responsibility John realize Chief his he the for increasing as leadership Dillon Vice operations Officer. as will is With among to functions and brand advance Executive

his recognition where being Robert Verostek functions. promoted of be finance, responsible increasing in is Financial financial to leadership he purchasing Chief our and accounting, for will Officer

the represent before excited very positions. the as Denny's CFO. discussion in the years always, spent in brand confident Board great I Now, extremely I been in about Denny's to my who continued nearly Chief to new with brand leadership a the Officer. Verostek, this my new It's Denny's Robert my to contributing as leader for the Robert multitude received financial has experience brand, and future years as that I but support to excellent opportunities I forward to a XX over the of over am a growth appreciation wanted hand CFO, express Veodtec, very XX.X for the has I rewarding I Financial during chosen of role. challenging look remain, Denny’s

to indeed new XXXX now President Officer, over the and further call Robert? Vice And to our Robert Financial discuss to Chief the is turn results. pleasure Senior Verostek, my

Robert Verostek

you, everyone. Thank good Mark, and afternoon,

million. in closings. growing quarter cash restaurants. income franchise opened million offset $XX.X net sales franchisees XX highlights from include quarter. restaurants, year prior openings adjusted quarter by $X.X We share total X,XXX by were the XX.X% domestic $X.XX, up flow per as the These nine fourth and to free Adjusted ended same-store restaurant Denny's with $X.XX system-wide was Our increased

an to million, XX.X% and due an quarter. Franchise by and and our improved strategy, same-store and in driven to development expansion Company's to license the development Franchise primarily sales. in rate margin domestic a in XX.X% was revenue occupancy royalty margin primarily of year This and the margin. increased yielded prior refranchising XX.X% revenue compared increase impact was strategy, the X.X% which increase operating refranchising $XX.X

Company which impacted in This resulted number in $XX.X lower refranchising strategy, a Moving increase and for by by restaurants. restaurants. partially or approximately X.X% were XX.X%. sales. company same-store a offset Accordingly, sales of equivalent to the quarter, million a down development were our Sales was

of operating other prior to decreases leveraging the and Company in change benefit quarter. operating costs related This due refranchising improvements refranchising and property of the of mix primarily XX.X% Offsetting restaurant leased restaurants. the related margin owned restaurants. and from to the in an including year was occupancy increase margin costs XX.X% rate cost expenses, in benefit payroll was compared properties higher these was insurance versus costs to

a in incentive addition results general expense, by were changes Total expenses in to $XX.X partially million. valuation liabilities EBITDA personnel to a and an million compensation deferred performance-based costs, market plan impacted of decrease offset $XX.X administrative compensation in contributed in compensation. adjusted of in These share-based our and by increase reduction

$X.X lower to Depreciation restaurants strategy equivalent for development number million as restaurants primarily held and sale. at from and lower approximately classifying million, a due refranchising company was amortization resulting $X.X and expense a of

primarily million to XX.X%. quarter, in million, Interest taxes tax our rate the of to expense credit for income the effective a due The prior income decrease provision $X.X was $X.X facility. reflecting year approximately $X.X was of an in compared balance million

the to prior facilities included $XX.X taxes gains income compared interest a cash Adjusted free to estate prior was per of Cash $XX.X taxes compared in in and interest, Company $X.X restaurants, quarter. increases on net decrease capital year prior the by the in related and to the $X.XX cash primarily cash of $X.X quarter, maintenance acquisitions million year share the cash to cash flow compared expenditures real in was and due $X.XX partially in cash year expenditures a Adjusted to million million million capital cash after offset sale expenditures. capital quarter.

had to million the repurchases X.X full we including quarter-end at open represent repurchases XXth, year $XX.XX shares share. of Our These XXXX, We share of quarter and respectively. $XX.X credit million times $XXX debt $XX.X million February reduction total market adjusted we outstanding, to an allocated EBITDA share per million price our of XXXX quarter ratio million toward the million the facility. revolving an and $XX.X and and debt leverage in during repurchases. a was allocated end Between additional X.X $XXX average under approximately of

million approximately Since XXth, February authorized share remaining in beginning repurchases. of we our share had repurchases. $XXX As

beginning average approximately approximately share, in allocated of $XX.XX program approximately to shares repurchase Since million we price count million have our late XX%. XX in per of reduction a to net repurchase share $XXX XXXX, leading our at an share

I like refranchising of Now, status our everyone would the previously to strategy. and on update development announced

XX% one is we XX% complete as We have that a and between business been effort franchised, migrating model from are XXXX. of XX% end and that the of to franchise substantially

As restaurants XX attached we with and anticipated development XXX a XXX reminder, Company selling commitments. between and between XX total

sold. quarter, fourth bringing franchisees, nine XXX sold the we date to the to During total to restaurants restaurants strategy

classified held Additionally, XXXX, for as of sale. and the end have Company four restaurants of we

to domestic come. enhance With these we for have to development transactions continue XX that will years development our secured commitments

range level between times $XXX the transactions refranchising total proceeds front fees $XXX and these pretax and million an million $XXX and X.X in on of in date, yielding X.X approximately multiples times. we to have of multiple times receive to approximately EBITDA other fees, EBITDA X.X expected proceeds, million. Strategy transaction of restaurant received to pretax We end

on rental a proceeds impact expected of offset enable rationalization. cash shareholders. on transition royalty compelling a are and combined enhanced partially sold accretive with restaurants are cost and initially The impact model generate EBITDA actions EBITDA, us to by adjusted returns refranchising we These our for business to adjusted more share lower risk, contribution free adjusted income to an revenue, this asset-light will more anticipate per dilutive earnings While flow. have accretive

$XX from XX% migrating adjustments our captured Company of and are of currently G&A of approximately remaining Approximately costs support gradually to the to of of XX% rationalizing certain operating corporate business from Denny's come million XX% years. from costs the next in process coming franchise We come $XX million reductions structure in couple approximately savings costs with with in support franchisees will the in margins. the our functions savings and G&A from the shared will support over field

level similar efforts of adjusted pressures. rationalization EBITDA trailing costs, inflationary We to an following of yield delivered that expect our we business conclusion XXXX, refranchising results to and is in excluding the the the

in reduce maintenance with While costs model expenditures $XX our our we of Vegas continue operating portfolio $X cash a Las to million. asset-light capital areas, business restaurants between is volume of expected and strip, more highest the as transition Company by to annual such remodel trade million associated a and

reduction future and investments proceeds The shareholders. ongoing our capital coupled the in commitments associated capital of the to to including commitment remodel and our maintenance development further refranchising with and royalty revenue shareholder-friendly returns, support on return will

through part the estate second strategy exchanges. our a real like-kind of series of upgrading quality The includes portfolio our of

be from the lower to XX% quality redeployed real generating approximately that Proceeds $XX sale the and will estate. sale under the proceeds strategy. the approximately real owned higher units We million anticipate of the XX% in of of XX between from properties volume at of we estate the start acquire

million, approximately the total property strategy date fourth approximately the we for one quarter, million. bringing for properties $X.X to acquired to six $XX During

like-kind proceeds, these through we acquired five With a of have properties exchanges. series

take minutes now to expand the me section. few on business Let outlook a

For fiscal following XXXX fiscal to annual activity. XXXX, is we year guidance It XX note anticipate ranges. weeks includes that of the important year

restaurant openings decline We the growth restaurants of with restaurants. new XX XX system between to change We same-store of sales net growth expect between X%. five X% a anticipate domestic of of and system-wide five and a a

of and and operating license between total million. between $XXX $XXX million $XXX franchise million, and expect of $XXX including million We revenue revenue

margin restaurant XX.X% to between XX.X% We XX.X%, and between be expect and of franchise Company operating XX.X%. and operating margin

million be This between million. of $XX inclusive administrative expenses $XX and share-based million are and general $XX approximately is expected expense. of compensation to Total

week. and As a reminder, million general will total approximately by due administrative $X operating to expenses be impacted additional an

As a of between million. $XX million $XXX result, we adjusted anticipate and EBITDA

We to $XX $XX expect interest million. expense between and net be million

with between and and $X cash million. Our XX% to effective be expected rate income XX% of between taxes is $XX tax million

to of through estate estate lower real our We optimize of property volume to higher series by value quality a selling order in acquire real the under stores exchanges. like-kind portfolio some continue

cash real million from capital of expected million $XX million $XX range to including million, estate anticipated to are $XX Accordingly, acquisitions. $XX between expenditures and

Excluding to capital expect million. otherwise would real these approximately we cash expenditures anticipated $XX transactions, estate be

As will not cash the the captured reminder, of cash a adjusted estate these free real be cash from sale are from cash we or proceeds our CapEx provide. in cash proceeds consolidated flows real reported statement activities estate but in guidance metrics of flow in investing flows,

real cash the estate purchase to is included. However, outflow

therefore, of our range. we X.X which in mentioned, John very-encouraged remodels, And our we'll Heritage is of by Heritage the some company initial are included be as addition, test. In accelerating also the success guidance

guidance million the our million. would adjusted If free $XX flow our transactions excluded, Finally, and be be million. were $XX between cash flow anticipated approximately for adjusted real for estate and $XX anticipated $XX million is cash to expectations between free

That the begin wraps operator our our to portion the to prepared call call. the over I question-and-answer now will turn up remarks. of

Operator

Our first with Setyan Instructions] from come [Operator Wedbush Nick question Securities. will

Nick Setyan

you. Thank

Mark, the Just well-deserved and Curt congratulations, on promotions. Robert first,

I find maybe a few outside going share leadership. row time forward? Is we’d it's focus cash use and with now quarters opportunity increased of ask, of to there regarding of visionary think us. given an think, purchases you’ve And very John's detractors opportunity in alternative on about comment talked just big appropriate to two the an ahead maybe

John Miller

words leadership question, the for the team the Thanks kind toward Nick, and here. for

unlock lot growth this night. we momentum powerful. And more Denny’s bit in can that can the on little Dillon think team market. late a the that for of and think powerful. -- positioning we positioning gain in the there's brand global John breakfast, with think Steve the the bit I past of We think a is focus there's of be be the lot couple an be changes, focused We sort a and Dunn and years. been at this lunch, best of era these to growth of we're the of in brand. on are domestic make Denny’s diner pretty execution proposition little very think, a the and having dinner, business And Mark entering soft We can these so can brand I and could after Robert

So, that primary will of course our be objective.

and trying that simply been convey and that those strategic what And do to about consideration, for that at you the characterize these and think then, done this on question. and come betting share to alternatives, our thought for things have question give due brand to hand. as about the or I we've think, have them I to back years the we persistently, repurchases for appreciate asked and time

Nick Setyan

enough. Fair

the on owned on do many site, remodels remodels terms Company in the sites we In of expect how the approximately XXXX? owned Company

Robert Verostek

Hey, Nick. This Robert. is

cycle So, and Heritage we with accelerating functionally into when if I back in update we the we you recall was remodel three think remodel back approximately in years. XXXX and the X.X, last that launched and up accelerated, finishing ended

the the when at rollout. out, So, fast returns are you John experienced Heritage X.X we during again. look beginning to as cycle pointed the forward, we're next And very what similar

very what So, could by Company for encouraged the that we're deliver portfolio. that and

again, specifically normal pattern. of otherwise at if will remodels although would to history haven't bullish the further by the this about going go been So, into had, and look suggested forward, the are you we remodels, and the we the have than back that we returns guided number

Nick Setyan

I’ll and take question over. last others the let And Okay.

the to next bit terms to a an some XX%, the get of that little opportunity years, is In place beyond franchise as to the move rationalization of few over margin, higher takes there XXXX? XX% maybe

Robert Verostek

expect, transactions, again. regard the With with as FDP by to is year, would the the So, occupancy regard been Robert that margin, in current with to margin. Nick, to particularly volatility has that regard impacted this you the

margin leased So, the model. occupancy when really benefactor you look at there and owned complements that, of the the is the versus

franchise expect leveraging on the XX, that impact, we consultants business that you is oversight is XX%. call have that you as restaurant. to complement grow of you what So, one XX to franchise when would within It units, normal a a side XX% to

X effect what was Company compared units, X have on to to leveraging with been more as each, there So, is X we grow to a those would range. in side, which the the

which grow to -- we earnest the opportunity. to mentioned, noted, John grow And So, through potentially commitments, really would be begin -- that development franchise particularly, through as as FDP continue John XX looks commitments that in an these will as be the captured XXXX. process, were -- units, we in

Nick Setyan

much. very you Thank

Operator

will Company. question Oppenheimer come Tamas next our with Michael And from and

Michael Tamas

same-store gets sales. see you drivers? maybe First thinking kind in excited, what sales as what biggest do talk you you how most about XXXX, on about just do of Can are the Thanks.

John Miller

Yes.

will on the Demand off-premise moderately. think, Denny’s I continue to and that grow the

people is some so, gas there, for bit promotional stop margin. lot will on effort lower We'll a of And pressing a of do sort but little that. the it

long And There I about the that, some benefits business to so, on on than run headlong we're looking been term. us have think the providers. think third that's how optimization. for into party helped rather the wind cost among there And out focus

one impact after towards we're how of guest. restaurant. So, that whether better [ph] in sort while All sort improvements say few roll going those Right, scores through things every the ages in have watch getting be service and just working game, these for reductions driver will complaints, the promotional Yelp shift that and initiatives from foodservice with class in some recovery Make wrong and the the gone a we just and And of the how years out to and getting calendar, scores, the pride to it best bigger that initiatives are be when more Delight, that and to need of a get environment management scores, our to us credit recover for sort get online stickier I'd game. in and ticket in from passing another be we it in carefully, dark we're times more ago that the quarter, It of people

to feel consistent, drive throughout more much that will standards confidence I'm And brand. that more starting that you're reliable transaction what highest. much better, profitable about most and So, is the my growth sales excited service the much is

better, craveable just equities more it's proposition. beyond food's Our value and building we're

Michael Tamas

talk the maybe if think, are to post you anymore, margin there not XX% to it's case relative commentary? Company some what of would Thanks. we of previously? about XX% refranchising or When the can then, owned get was the guidance to XX% And the there now? differences I XX%

Robert Verostek

Yes. when -- in Michael, one you're at the that key we correct, the presentation FDP, put strategy, range about we of out you first this talking this that development look began differences when investor correcting quoted. that you you are

One believe of that as the that And things road. I that margin. -- what back the company we the on that out is What represented it began was operating means got we calling four-wall district four-wall managers. margin, the the that excluded

So, XX% that that XX% range that today. the range between to out key XX% XX% we really component the is and put to

will seen, XXXX. inside be As throughout and that that improve, -- you we as we have throughout move range we've have as migrated rate with do XXXX that continued throughout confidence we to has

Operator

will Jake Bartlett Our come next with question from SunTrust.

Jake Bartlett

media QSR? the value My here first to you evolve. either expect context with about be expect how side weight to up question toggle a out “breakfast able expect approach, see more But, as the kind the I XXXX that your -- of kind you strategy of on you to -- side are in is or you break look? the to or know of barbell, the end menu also Do promotional and have environment you kind to do the have do in ability weights about to more wars” that's premium or to just balanced

John Miller

same There is XXXX, an battle by Great I there theme question. general believe you're of the going eat-out the versus same the -- all entire issues. a battle with all-out share throughout XXXX see do driven industry. transactions mostly to throughout for are a for

franchise wage of so, a XX% guests, among proposition. desire earnest is the transactions inflation. and frequency around an their focus there maybe undefined little there's same to a value highly the little quality bit sensitivity XX% in profitable bit a to transactions At more driven more for among light some time, systems And on high of

franchise And that level a a industry. transactions is at aggressive respectable are of usually the so, of willingness longer toward than the -- good a XX in for history a little well a a brand with like bit grow of a little growth the to eat-out a of margin more continued pricing to and year four-wall up to economics continuing consequences some well-run give seat growth support XX to or in bit interest a and -- Denny’s. restaurants And count

So, creates some requires tension between two the -- a both. of calendar those that

quarter value premium side that the there's Delight then, inside for new rates It the XXXX, are and the we planning part of and/or and So, highlighting does of toggle toward job menu as throughout and any propositions. premium items our can upsell opportunities. when -- service have that our to down then Right Make model propositions and on required, will we nice the value up Delight prepare and/or our servers upsell do a better And

Curt couple I worked back others. really share how too could go inside promotion on taking air trade have than examples last that much our of a and of the some to time, Rather follow maybe year, up, well how or

another four, more it One then, little we fourth two, our is that, last which thing is menu six, I'll XX% ended a when call Super the to double-digit add down XX, the eight around Slam quarter from that's than in add year. And you on overall value XX%, the range, X%. mixed the in that barely where

teens ago in been a that few high years So, XXs. the where teens would've or low middle

of So, have side XXXX. that do we the through deemphasized menu, we'll continue that to

Jake Bartlett

to or consumers’ you for reflection more, Are consumers' protect margins willingness? system. a that Got you're willingness to just spend reaction it. doing to of Is try that help doing the to that

John Miller

are are way other same time. Well, all not it's or at of saying the that It's the true. a true one things

creditable what’s consumer There's true So, the products. wants is better standards -- more throughout culinary industry. stand the eat-out

dining so, And out is more competitive. becoming

economy so, and of Denny’s true. standard culinary is try a also also test have true good true face consumers with have It’s that in deals It’s that the premium a a of of those lots meet the lots expectations offers good smart is shop. there And that there to to of to items. willingness is deals,

today’s Tomorrow mind, paid an is like visit if day prosperous, feel their or they spent I a got feel deal deal, I at a don’t a if just they’ll might I don’t and I I in -- got So, feel home out like might deal. but experience. a have be, there

And true. so, all are

of smart consumers have on. with We lots going dealing

the time, degree. in the be the same that occasion. experience to compete we have we and on At premium business share to to of our side the have some for do hold So, to as competitors

time. are same both at so, And true the

And so, to brands have address good those strategies needs.

Jake Bartlett

last have savings in we the was think of pricing And was what's of the of around starting million that years. to million starting through G&A. point level for over But, savings the three And I set what's $X.X the expect You've somewhere compensation Trying refranchising. related kind on go? there's you the much the believe a kind But what's to is question Great. you to to expected of two next kind or stock cost saved that and the good moved the far comp -- what starting point? higher refranchising just incentive so point. ‘XX partly. because can stock given kind of some of around about so then, left lot how the $X the

John Miller

comp, in over this there XX to of the is There's that a confusing. XX units tax is number is just G&A. It second. which stock-based Robert can guidance rationalization, not cost implications, great be question. That's based on of to sold, a I'll there just turn

a lot numbers together. there of get can So, jumbled

and clarity. shot a add try some take we'll So, to

Robert Verostek

-- within to QX our back, this strategy the Yes. XXXX. announcement we With regard when the for basis, that, of look

also the this John as fully the of But, points, you also you leaping off is, year, would have a Over current that the kind need to, reconciliation that course been affected -- that that the that be reality not XXrd have pressures your have have have inflationary have are and XXXX. is the be different yet cost sharing realized. in you of week, that, you components fact point to different good So, for to spoke points there included. point,

you into we it that So, the take forth put gets all kind range when really that account, guidance to today. of of

what -- to does that an achieved does we EBITDA program, that we that level which range consistently in have returning this throughout XXXX. said is today Now contemplate

So, just $XXX million. XXXX was north of

not with rationalization side of on in, will have those inclusive of far the efforts of once baked the cost all we sharing this, that to level. all So, been return these, franchisees, of the

number And follow can more if it again, components probably need I that of reconciliation, -- with are there that. to a contemplated be leave I'll with up are through So specifics so. leave Curt that there to

Operator

question next & CL Brooks, our take Todd King from Associates. We'll

Todd Brooks

on Hey, roles, starter. questions. everybody, a congratulations as Couple new the quick

marked on up black there XX going color should we now is units to the the we above as tied not is following because more be be was the XXX. of to on my the an just XX XXX savings million to of the slightly kind Just being forward, now got more on business it the range, four the have XXX? amount kind it do about if that to, with success Is as saves Is program the more closer feels sale. tied this or impression for it that? thinking sold, in like against to will as million the performance-based million white cost that $XX held cost XX of and substantially $XX cost we've units complete saves And the

Robert Verostek

that out the that excellent components was impact I the an earlier, was left point, of is one up. that. you Thank The providing That's in for -- units bringing that explanation that number -- that Hey. additional would of of reconciliation that kind I that Todd. the

range of of that, by would range. would argue with your be lower units. XX, the end And affected of completed as towards the the XXX, between view of couldn't that there your ultimate you number I for having that four XX with held assets the view and sale So, that be know,

in that be would addition the I previously ones an have additional So component mentioned. to

Todd Brooks

the process? earlier voiced corporate would you've or Okay, really the success Heritage franchisees, we'll to restaurants, the a Heritage I so know the the and getting foresee it franchisees the get Heritage and franchisees stores. on follow-up excitement involved as the expect probably the in great. of about with kind It the when we And of be do refresh fairly the then, X.X of as consistency to involved success in quickly But through X.X? mandated proceed start returns well. you do remaining fact X.X that of to and maybe just

John Miller

Right.

two there's much pretty So, ways answer life. to it. is question interpret and of way to therefore Denny's the here Franchisee involvement a at

spec Development row a get vendor change, the we everything So, color onset, rationalization, change, they're Brand Franchisee consumer front booth Council, cost they test, Board to a franchise, from involved Advisory panels, Association our a a review, response, seat do. a the there's the and

they program it the to in to the time it's When brand be and process. standard remodels, it a waves to becomes franchisees dates, to sort by big feels would when the their a get it which reasonably a due whole here don't time franchisees, the our remodel seven-year endorsed they've or involved, tend material comes -- a really brand say like throughout welcome compliant So, and crunch therefore go we or is some cycle. brands mandate, it of a

so, and successor cycle practicality. of of transfer just eight-year into and leases sort that sort seven And by to agreements dragged a of because

And see that's why overlay. this so, you

all got short of seven-year got at them XX%. We’ve ride are a before to You've just of cycle or finished.

off I'm to doing Some ahead better where of I little so maybe of going remodel the are my I'm folks they schedule, said, early like gosh, got landlord happy, later. get negotiating a

So that a or month two. drags

have But they wave we the around of see coming do. to they coming So, now that up, planning, them those next, a others that J tend remodels their which about. inside do Flying cycle. to end or of we're at are to getting just big need excited And are mandate right the day, and due now, in what's

And that's XXXX. so, what's going on in

brings X.X. And the right they in of moving seating, finishes of building weren't some and X.X, some on a modernizes past this -- would sunrise XX if already have they modern the schemes. be like the at be bit that between, little inside more are due already Heritage franchisees the advantage color some skip treatments scheme that permitted version to of counter, eclectic, communities tables underway. colors and diner, if the X.X The a is that the year, the and the they'd just The throughout the to scheme

too there you X.X the primary, this if through colors dated they X think become get around. every become the exterior, years. more I But are just dated, or time on X, XX enhancements

coming a where that's excitement lot is enthusiasm So and the of from.

Operator

has MKM next with Levy Partners Brett our question.

Brett Levy

you're growth of XXXX? then, shrink, starting think the little said just the to in you've about And net we're XX just, finally, consumer just the seeing the on quarter rate instead you when leveled on a detail the are been about for off of to off ended been you going that provide And the you start gross, in do you're more What's competitive granularity at to seeing the of landscape? you Maybe with trends XX accelerate? actually to a -- see numbers XX%. bit since the thinking care unit to you or bit so rate And and what off-premise leveling how quarter? growth closures little Would a more maybe then, regionally?

John Miller

let to question. your that. it me of maybe and I'll about Well, one Robert Okay, pass talk to start take second three and sure.

on is categories, selling it's sell, omelet, kinds look drawn, just and rib if from But also a a the more differentiated inside what yet. most just omelet, our prime our quarter of things can evidence somewhere that also might consumer, and that say is I expensive consumer get can't is we our I the top cheese ham what about think I you talk omelet unique you see inside omelet else. the of a we it's

that like a crazy, something trial and more the culinary time, standards. more there's a around daring Over new interest been Moons of elements these but like brand branded of not long a on have So, long, twist necessarily My Hammy of or that traditions or

You menu chicken not our across kudos easy give program they experimentation to of Barrel, do. this items out see Cracker a lot to some Those competitive things of rolled . are To aggressive set.

kinds and meet with that raise great some consumer. out my expectations do of congratulations let's we’re things to delivery some there food, -- But, great So things of sort growing them. are culinary there of marketplace the in the the saying, expectations to and

has order our day grown And breakfast XX% QX. a has our of so, grown right we where day, things to all all that percentage items, in applied with up our are menu. people been, done finished but mix down too. of our fourth breakfast more number sort see We middle we've that in customers XX% breakfast mix business from all mix, we've day our There's mix but XX%, where breakfast a of the interesting XX% in total our -- at of about bigger the a to quarter about breakfast

cops, launched already casual being mentioned fast a But, competitive concepts a of out lot earlier, and I day have there launch year it. won’t breakfasts will industry. of And ninth some our guests. It's of yet, long-term part the and positive attention were to standard. have in that we are we're scale, in these a a items just introducing marketplace, and the twist a innovative it's on menu There the buoyancy some very So, that done added, we've of these make across the of offerings, new brand’s lot around get little drawn plan, think from short given items with breakfast, the our our biscuit it's of up to just be see some dinner the Nick. in the where by not each little but tried, plussed can a diner items although what this different we've been culinary you initiatives things traditional a bit crepes running

in things are of kinds eat-out the are these So, industry. driving innovation that

maybe Denny’s I they cooking think something dining mom’s with have good place really renaissance and a been been be. good This able it want we've about would just home. twist very people wouldn't prepare to where talking a gives to

And consumer. grow we quarter all with through what the that's the saw see that's fourth We basically in the the happen. see momentum, way about what to holidays. we expected So,

about from in that Rate grew and X% and XX% which QX total about of the launch since total sales grew to QX. was XX%, started XX% growth XX% to about Denny’s of about Demand, of on

So, that to calculate -- add? it’s Robert, do you pretty percent. want

Robert Verostek

regard the Yes. little question. the middle openings to I'll with take and Brett, closings question,

year, of closures. was set it talk the side XXXX. had closing That XX there, first. current about the closures down we in So, table is In to the XX kind let's from that

the we number to and So, better actually worked would not diligently we necessarily keep impacted that get what open, necessarily by -- get needed XXXX some would we landlord negotiate open. couldn't preferred the higher back issues, but where to was to in have unit we line. those use

-- in that had that about so was or of XX the in half half about We -- size So was that in number those about of XXXX, half was XXXX. it XXXX. it about the of

that out to pretty had number range likely persist. trade X% and number that trade continue that’s the So, look areas the There's moving just decade a areas. is and old, of in so. average, years of will to working we evolution XX that last XX a close or in the system over XXXX actually is with units In natural brand if the you

average. the that So, I of much wouldn't from change kind or expect that XX-year that closing number number, all will necessarily that historical

with the could the side openings is go other we of where the equation. Now,

So, XX to openings the guidance current with range look five to it's the up at for year, down a when of XX you five.

XX comments little in takes and his from a signing that lead in very in and time that have are opening XX-month unit that reiterated, will the range. to through development mentioned on Those in the development have typically As of we first XXXX. little captured to strategy come impact XXXX, John XX that's will the the given that commitment that of it likely actual commitments line our bit we spoke ago, as there I franchising

much have in XXXX. impact that'll broader So, a

experienced agreements have the quite We there, the and some are Philippines. captured development have at excited Canada solid particularly, that internationally if also in really look about growth you we and

on closure. with coupled the momentum coming there line the development from development continued that of commitments So, refranchising and strategy level with maintaining with

I think, get the plus the to when in will will net -- is of to after, that growth. which unit you're get you beyond question really be kind five

to down. the how -- I seen opposed again, it closings on the more would So, it to gross think get be should as up openings

Brett Levy

we how Could your you plant-based thought little you. provide about Thank of think and process a should background initiatives? around

John Miller

Yes.

estimate, So, Burger the conservative started conservative and it's market, we in we it's it a on the in I'd California had before well. performing because only launched of Beyond nationwide. we but estimate it that say, out so. market it's doing Well California that went and

all So, it's menus. up showing across now just

I may around this the whatever some all fact for think, and not it sense it people of sodium we high time, that a asked be really better the be question My is, you, to of are the is, get while. that long-term. it'll add, required is this it there. are trend The critical processes get a downside, for

hand, other carbohydrate the of on case. concerned foods put any there like, the high are fat, and that red are in On those to about amount and the they meat people conscientiously snack their want sodium and eat less

high So, they're about not trial periods now. there is very on concerned a right trade. going And particularly that

the it now expect chicken things the -- to year. to placeholders from good of eggs sense to would And I or my menu more plant-based brands over So, you anything in will and their to coming have some bacon can come is, fish, imagine.

Operator

[Operator question Group. Instruction] next from the Anderson, Stephen We'll take our Maxim

Stephen Anderson

Most question of my want questions have a been to answered program. but follow-up the do off-premise with I regard have

something see average at want looked potential you discussed? something potential simply, I that's that potentially so raising know ticket? the the you've I if something and And mentioned for just Is you've regard to to with franchisee for catering. that is and

John Miller

equities than be So, an that like Denny's Cracker has, the -- dinner stronger are you catering Barrel, a appropriate conversation. would think when have aspects, I

cater it the of in notion of breakfast about to it's strictly or of to barbecue meeting, on look lots trays Deli where Bakery you're like like have today, then is getting box what until That's room can ready see break coming even in, you and you menu shelf period when five-hour But it's four, the three, today, we party on have or a gets But reheat. it think, pancakes thing where When would be breakfast for eat to not the bun does product the trays, not eggs, kind oriented. long-term centric not bottom with or stable dine the mix. temperature to-go drive-thru you I solutions. easily does, sort dominant or soggy. our goal burgers you're meals, to sit from naturally that a of kind our it's the that or

an is off-premise, we've the So, think traditional specifically I to initiative that spoke announced. packs catering we not in family what more that sense is

Operator

this there are time. no at And further questions

for turn or any Mr. things Nichols, I'll to additional over you closing remarks. So, back

Curt Nichols

call. our thank Thank April forward look have Thank great on call us our everyone you, And conference XXXX joining earnings quarter a like late to you. in results. to to Sarah. I'd for evening. We’d next today's first discuss

Operator

us. joining And today's conclude Thanks that does everyone conference. for

Denny's (DENN) 11 Feb 202019 Q4 Earnings call transcript