DENN - Earnings call transcript Q4 2021

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day and welcome to the Denny's Corporation Fourth Quarter and Fiscal Year 2021 Earnings Call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Curt Nichols, Vice President of Investor Relations and Financial Planning & Analysis. Please go ahead.

Curt Nichols

Thank you, Jess and good afternoon everyone. us fourth joining conference XXXX for call. you for quarter Denny's earnings Thank management Denny's Executive John Mark me are With from Miller, Chief Officer. President; Robert and Wolfinger, and Chief Verostek, President Denny's Vice Financial Denny's Officer; Executive investor.dennys.com this Please find quarter call with reconciliation today. our along financial non-GAAP to of refer release website any press measures fourth our any to at earnings mentioned on webcast is This later and will the be webcast of website available being call today. archive our on an with a call update. John today's will business begin will capacities, Mark comments franchisees our restaurant then around provide and development. recap will provide our Robert results Then financial and trends. a of third quarter current After for up that, questions. open we will it

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

John Miller

to we've in sales and good increasing the early November. in system-wide above progression in October above quarter experienced afternoon incredibly XXXX XXXX levels Thank X% sales to same-store levels you, with everyone. sales domestic X% sales with fourth am the pleased I Curt

and over normalized The ongoing and sequential last experienced We also remains X% the December channels in cases This our deceleration of due industry X% exception. reaffirms off sales sequentially service sales experienced drive-in for high same-store two contributing channels. that transactions demand off premise full dine-in growing with growth rise on-premise growth. in the all case COVID nearly to restaurant in both premise during weeks are no and counts promotions, of Denney's the of stickiness to was Omicron consumer

capacity during Christmas January are Additionally, into New we we were mismatches experienced impacted a variant Omicron weekend weekday greater in where Year's XXXX, where holiday typically the comparing at and December continued with potential. on impact to a by falling well. The upside as we

are However, have sales as now once momentum began our gaining to cases again. decline,

With longer outlook. We our a in gave investment that recruiting. few brand also have our us term wide competence latest in tailwind

XXX We recognition the practices as it workplaces for career of candidate Institute. two offer website This are by is easier and company jobseekers in one a franchise Brands apply increased growth serving have as by recent best we through career experiencing opportunities for and most people. XXXX only much at to restaurants, excited new we made are for and result, Denny's to for a our flow positions love Newsweek top and Restaurant exemplified for love

consumer pressures. healthy the despite generally Additionally, in inflationary remains now right position a

increasingly over the missed willing dining full to to experience continue have the pay items service they for to offer last years. two we While value are guests

Initiative, new to day while experience ability and kitchen as all offerings we to products. provides Modernization kitchen, Turning enhance system. menu progressing as rollout enhance cloud-based drive operational kitchen expected announced platform technology are the the initiatives, of strategic domestic our restaurant our our new recently well across are on the to And the equipment our these both while guest efficiencies across of the also

We the during pandemic. testing have X.X to prior implemented program, Heritage the sales restart mid-single-digit remodel generated which our

we domestic our the to two diversity, REEF, another our strategic also to franchisees a brand domestic management category. we our franchise equity, commitment continue made ghost I award And the am inclusion. amazing and serve initiatives at the progress of regards and drivers, for prestigious top new to are partnership how along have back would team Entrepreneur upfront the kitchens in give I to partnerships with Mobile we've Relief our to with proud so With develop years scholarship St. dedicated to and like their these I'm over also to We so the mention hospital, magazine we've program, cash our In led supporting communities thankful and through incentive to from last our closing, and and Jude commitment Hungry, a for anything to brand. I've our that, Children's proud Hunger the for turn this unlike to Research, a is Denise dedication I'm franchisees But be been teams Diner. ahead of our future our bins Mark brand. with bright, No President. and of ever The Kid such our Education call a experienced. and I'll innovative, and dynamic, Wolfinger agile part two with

Mark Wolfinger

for to restaurant I recent accolades Places being well of Newsweek's as you, is one as companies John. the list, truly as category entrepreneur reiterate in our number Thank Work two on I only Best proud how am to awards one want franchise of remarkable. brand recognized magazine's extremely the also this and

day increase from effective the hours we system. This with to XX percentage fourth December. third quarter, as Turning effective least point the is of to the hours on results, domestic operating of XX XX% hours operating continue in resulting a approximately our our in see our end the end of XX operating across improvement of at system quarter per average

staffing As hours. John mentioned to continue persistent operating impact effective industry-wide our challenges

believe our programs benchmarks. human competitive is in our has Hourly training below team we this company wages. efforts proactive due consistently has However, tremendous And resources our to progress. turnover hiring very is and made and our been largely in restaurants industry comprehensive

when one credit efforts. the employees, focus we on the places Also, on due at servers general position, right manager key allows leadership include since the of have company XXX% now In just once us across staffing minimum have to we and new in tenured first make company for reminding while you we work levels were This XXX% other and and the course. wage. our both best general our retention average, of the improved manager staffing that to and shift state on why our focus voted believe time of full metrics pandemic the minimum positions tips, the in all restaurants began. fact, our wage, not We restaurants the tip to

help our have similar levels staffing, hiring, a succeed We best and Additionally, developed had which practices to shared our domestic shares the document we approximately we our the estimate XX% that franchisees franchise limited well. staffing comprehensive pre-pandemic. operating to are pre-pandemic for with retention, at restaurants operating level and franchise XX/X achieved they as them recruiting, staffing restaurants have have of

encouraged course. However, flow our historical to applicant system see due to levels across believe improve continue domestic the average, in run will staffing we are and higher than

count XX X,XXX. fourth in seven franchise Mexico. Turning franchisees location unit to quarter, during by openings year international one end the offset were closures These restaurants to bringing our opened including development,

that additional color. programs announced January, three some mentioned While John provide new early I back to in we want

is program. restart our X.X Heritage first The remodel

who spending pandemic, effort in we've multiple the alleviate early With deferred remodels cycle delayed have months requirements of capital to from we years franchisees extended approximately the of all an expectation. eight worked remodels, the with capital During out seven a also years And normalized remodel to we've map to constraints. do more remodel two years.

Just the Heritage completed deferral remodels. returns X.X the quarter remodels drove company fourth we also during franchisees to compelling complete the and three

over two announcement new did but only refranchising of provides development shown it program as lucrative This is domestic near-term. franchisees. opening in the for to not existing been this metropolitan development we over our launch last domestic markets as call quarterly front last up outlook. to was provides includes ghost to Financial time. and Robert long-term very The have the of have development strategy. our fees new cash providing with certainly also $XXX,XXX Officer roof locations reduced new XXXX. in And performance, recently REEF, for the under use optimistic first program several programs as during great the first new But new recovery Robert? these to franchisees expect of completed us formal discuss We our challenge program enthusiasm upfront pandemic. a penetrated sales, practice unit our consumer announcement to available testing XXXX. This development agreement our ability and which development navigated And begin underrepresented kitchens from Our was few XX development with of We the signups to the our incremental in second a Denny's markets, Verostek, our restaurant franchisees reach. turn to domestic a in ground I'll place, historical more our the new incentives I'm remaining up and half them a commitments years pipeline, new about Chief opposed in on anticipate picking incentive to all have

Robert Verostek

our afternoon highlighting third for positive to results, preliminary XXXX. fourth earnings review brief system-wide good quarter call, the sales during continued our everyone. the the now well expectations compared during of same-store quarter sales sales and Mark you, as trend first same-store would quarter Thank quarter through a After our to I share October increased November. fourth as positive for X.X% Domestic like XXXX.

in softness the January COVID into holiday This softened December, variant with cases. sales continued in due and shifts both Omicron However, cases. to increase elevated

previous sales cases to However, begin to as variants, begun with as improve subside. have same-store

system see of of to at approximately at of end XX% end XX/X, the domestic system of the continue the January. domestic operating up of from progression We units XX% the to the number December in

an particularly Therefore, improved. operating We still a outperform these with extend nearly performance this system presents encouraged percentage as those levels our believe as hours staffing limited see of XX looks consistently points. spread restaurants ongoing are opportunity hours, to differential we to by

franchised restaurants. This $X.X million the was performance year million XX.X% compared prior X.X% margin the increase quarter. prior Company million or XX.X% were was quarter. reduced compared restrictions to million due results, million The the sales restaurants. to margin and prior sales sales XX.X% increase due to the XX.X% the was restrictions year in improving improvement million, our franchise of revenue dine-in or $XX.X in Now, quarter. and in sales quarter turning to $XX.X operating operating fourth year primarily due margin was company revenue margin up primarily Company to dine-in the increased improvement franchise in or to restaurant quarter. or in prior licensed to sales license primarily due at from performance Franchise at improvement restaurant to in $X.X to from $XX.X compared primarily $XX.X the XX.X%, year of

point line. experiencing. our pricing inflation franchisees to approximately percentage a leverage value our by likely However, we in We we have in counts, reducing resulted quarter, to that $X.X in at we continuously operating company the incidents, approximately near-term, approximately inflation by which fourth the legal medical factoring unfavorable collectively points. commodity pricing. million product items ensure XX offset in experienced X.X appropriate commodity recorded and of during These and are sales while pressures reserve margin transaction With basis improvement least adjustments XX%, with was improving midships from strategies, cost favorable in lower remain worked restaurant

general to deferred compensation, inflationary million We balance prior was opportunities quarter. XXXX this to incentive monitor the million administrative environment quarter additional the to decreases and CARES expenses in primarily compensation and have reductions. will addition tax share-based credits plan valuation were These in cost to and liabilities were quarter. offset Total $XX.X $XX.X compared throughout benefits compensation to the due in year of $X to decreases continue temporary prior change performance-based adjust compared the This million expense, prior to related year partially approximately the company's effects. changes to accordingly market by year in Act, in

of to are share adjusted million, tax results EBITDA income the do non-cash expense XX.X%. million. impact share effective changes to of share market was an in income These items $XX.X net collectively quarter. adjusted $X.XX compared adjusted reflecting reminder, provision of $XX.X per year Adjusted net for and EBITDA. per contributed was prior taxes The $X.XX, and collected As income not rate compensation valuation based loss a

expenditures estate remodel adjusted cash real the $X.X after related expenditures fourth generated Cash acquisitions, free addition quarter, capital and million $XX.X we capital $XX.X flow in During million capital. cash of approximately of to million. included maintenance to

excluded generated XXXX approximately estate the our As real from the previously proceeds flow, a parcels while purchase sale December is two included. $XX that in estate reminder, of of are announced million cash adjusted of real in free

quarter. cash for additional flow adjusted XXXX during quarter allocating in real the obtained estate million $X been first an towards the transaction approximately million $XX.X December trading anticipate acquisitions, kind the additional proceeds the fourth fiscal would have from exchange of Excluding free an light XXXX. We

adjusted $XXX approximately total -- EBITDA X.X borrowed times $XXX facility. including debt of outstanding, million we Our total quarter debt to credit end had our and under million

stated somewhere in term call, we whereas pandemic, have times. been of leverage would a are the have we few currently adjusted would longer comfortable times three three four -- more range we targeted As and in earnings we times times the leverage between last the near-term, two and EBITDA prior to between with have

approximately to our program at allocated authorization. late allocated end $XXX to we resulting remaining average February under the the allocated quarter, per share XXXX, XXth, price repurchase XXXX, XX an to we million $XX.XX million Since repurchase share existing allocated full and over of an approximately quarter in have for share million in our additional $XXX million repurchases, the shares Between share. $XX.X to we in repurchases repurchase the share beginning During fourth repurchases, million million of resulting year. $XX.X $XX

reduced Excluding count our offering the a XX%. have during follow-on net we pandemic, total by share

Mark to long development capital give has initiatives, as continue standing the optimizing great to flexibility investing such mentioned us program addition brand. and provided future while of our modernization in opportunities financial our In other practice our cash confidence random returning portfolio, new Recent estate investments also business. to of the earlier, transformation repurchases, in the that the shareholders, this iconic incentive real technology kitchen and share

outlook the our Let earnings me of now on business expand release. take a few minutes to section

year dynamic reasonably commodity impact cannot and around inflation the at we Given the and outlook cases business COVID-XX fiscal this operations a for labor of time. XXXX availability, volatility on provide company's full

expectations the economic However, XXth, standard to XXXX call, March of XXXX our opposed the for earnings current management's we to XXXX following as XXXX materially. return ending first prior XXXX. change first our not year reflect will our practice with sales environment fiscal will same-store estimates quarter Starting to of the comparing that quarter

return of our data. to intend to we practice of -- data Additionally, quarterly normal monthly normal reporting instead our

However, With first to we be clarity as between XX% system-wide the that said, domestic possible we we same-store and anticipate ongoing will compared recovery. XXXX. as provide as to still much quarter navigate through sales XX%

$XX sales adjusted cash compensation EBITDA. administrative This expenses are Our including $XX impact million, between which expectations EBITDA $X to between for and February of and on does compensation. I and primarily on million for for adjusted approximately described, related $XX is to weight anticipate million XXXX the total EBITDA million in approximately deceleration early $XX seasonality million share-based $X.X and general the including expense, related adjusted Based payments just and guidance to not fourth share-based quarter we of due January Omicron results. million,

are curve produced a we We the during the In variant, restaurants hours earlier, our experienced well we to EBITDA on COVID operating way with this domestic another XX/X, fourth from quarter, in closing while are impact temporary million mentioned providing our dissipate. recovery a as starting half Omicron still we approximately impact from as tailwind $XX pandemic. staffing through adjusted improves. However, we operating see the and of

a of the XX% shareholders. our remarks. approximately adjusted operator guests our our have of thank our call. EBITDA who begin our capital franchisees over free we returning business horizon. to wraps revitalization cash asset-light converts I model members of serving history and adjusted Our and team want That prepared flow to the exciting gearing Denny's now have maintained call dedicated question-and-answer up to will to I the for to turn portion the up on and on focus initiatives consistently

Operator

Michael Instructions] you. Thank line from go Tamas Oppenheimer [Operator Our Your comes ahead. first please is with open, question

Michael Tamas

thanks, All afternoon. right, everyone. Good

John Miller

Michael. Hey

Michael Tamas

investors? your a averaged or wanted and prepared guys piece. about bit mean, is have in that that bit You could little so growth unit but Long-term it really more what or I been same-store might to the it in a like dive what elusive look vision single-digits mentioned long-term press low sales talked release for and the into remarks and the the

could some these refranchising agreements, the REEF program, development you've be do we now blocks have with franchisee you the little So, sales, looking and talked sort at got the in that low think beyond situation in also that where building low there's of of place with nice a single-digit single-digits incentive there? algorithm new your unit about growth, partnership, combined as a XXXX same-store you and being

John Miller

Sure, great question.

believe precision with double-digit been get unit around to guide the that. I is these a where a course, of year, goal, we to net there's that back little to think, designed while which growth is obviously, as still term evidenced other ton But by we've not to off careful longer are bottom. that, growth, we the But of finished slowing, in a last growth. accelerate purging of all initiatives

that though this our On inside the in time, the that then we development do the agreements. program Canada, we will have that is some a in we for will restart At think growth have the What from with the pace end, take that this anticipated and that going Flying spurs efforts. venues of has it we of spur our to stimulus guide quarters. the gain once interest a than evidenced early like development little It head growth. our initiative pipeline, additional agreements for at coming getting FEP also this -- And the growth remodel does other bit the builds, have new of continue flywheel, in more year. our time little Philippines in accelerated it as momentum little come build that bit to faster programs J a those same like we in stimulated agent precision but the on can -- be a should does we new builds

The which as of is brand. another little but the first fairly it we year, end, our momentum catalyst go portion this substantial expect a sales in the do a slower year for building and visibility builds momentum will toward building and remodels

Michael Tamas

the also and And strategies. kitchen you Got new about sense. makes modernization talked you, then technology

doing different there So, do biggest you going that's about for maybe unlock sales the benefit to some roll you but going mentioned also can what those You than today? what you're sales to are implemented operational are allow maybe efficiencies, something is talk a advantages you out going that's you to that to drivers to now? that allow

John Miller

all to the night the these busy on shows we come with shift pace, now, fly of have or do list to to-go of tableside mini-management any of and advantage But channels control like the yes, these mundane tableside reside we of what be to the or we'll updating curbside, and we'll tedious for things of sort at of we're able new items When table Ultimately, with have that high what -- challenges we'll technologies. with changes. we'll There's that able and delete menu, long you code, Denny's, able adopt shift things with with a do Friday inventory, and self-checkout. mimic Right better efficiency, of technologies mix cloud maybe of have all orders are product up sort take our QR take degree number add item, at for be to updating on in able able cashiers prices technology, shift and like sort them. we'll servers. coming the don't be to that side, be is banking

form in base. disjointed one another. entire that initiatives. The company move system is integrated exists all many rather we one Now, or the franchising all these platform in of of now resides we're can marketplace And across unfolding advantage in right together this the than

and they'll it on to on So, shifts apps if do then able promotion just maybe middle easier, card the be many interface merchandise much to always this efficiently model easier of didn't a other a higher product across to hard does where products we've to use, and lot or a to things be we new our you And lower, different where few sort the but our ordering ultimately, want When say platform, all. you we too see on to don't best-in-class easier certain are the or adoption is guests. when return now, system these single might more credit tend or remember customers. entries to for own. it's do by I'd download guests, keystroke curbside platform data upgrades they're something, historically, The kiosk compared pack been rate at to lot or addresses become app things our And a best-in-class. their through we the with intuitive or as of as use, more of some

with that this of as pioneer. is expectation ubiquitous you retail they -- the and fast become that that other we it's to-go. casual bigger or see expectation there inside But dining capabilities, the full same with these go is ordering. level the whether benefit So, sort of technological they as there's is service an market, this dining, being in picture the have And in not

reasons just settle? wait? How information, menu, search and leave? you up How up And these digital capabilities. How in a be enter? a they with to and brand use look interface, be technology actual first some technology to you associated to think that a you will information? -- so have rather that pages that service able full are are you flip navigate you dining. pain than relationship a to will will eliminate And able How touch would through you pick human just as there more engine default with for safety, points they calorie rather order? those and menu more those that the be unfold, How sanitation How people than I promotional

to way middle. say forefront in these in enhance the that And be consumers rather all we're the the we soon just interact So, things than which proud at with will brands.

Michael Tamas

much. Thanks so Awesome.

Operator

to Securities. Bartlett [Operator with Instructions] Jake next We go Truist will

please ahead. go Your open, line is

Jake Bartlett

give -- help hurt Great. taking much saw the how quarter-to-date about question. My We you in impact the first the you're hole is far? understand you relationship And where I'm quarter, of just there? to December, kind hoping for idea to so or can guidance you us can digging do to for deceleration Omicron. an us the do of sales make of you have up of the first Thanks what Omicron in to out maybe the drill the has get

John Miller

Sure. Well, just-- let's

Robert Verostek

Go ahead, John.

John Miller

Go ahead Robert.

Robert Verostek

Hey, Jake, Robert. is this

Sorry about that.

look you of distinctly when the saw impact. that the about It end did trends Omicron, we the holidays. at saw December, in But came pretty talk came a So, the a you that the that little substantially. late impact on, by mismatch into you clearly, we December, were we hit time in of bit

I look be have range really you it that the you the we it's numbers. we Omicron but did several, magnitude would trends of EBITDA off and there, of way because suggest, Delta impacted easily prepared and reflected it AUDXX delta, look look that you AUDXX the both lower be tried adjusted you is exact there, consistently haven't at ranges, million you see a seen, you think the in gotten quarter. way we the seen to that back -- the and in you through the moved get of But be as into at timeframe, can very get impact couple the made how seasonality what may literally have August would expect would drop have it at the the as us the what to sense further XX%, clear in remarks. that pretty to dramatically million it, of carried seen, would the changing it's into and look otherwise our And that to we in in see heart we in we but biggest That I if January, typically not portrayed. February, dollars our million if then of it carry and as you've curve guidance XX% we can't particularly if in than a September in get can steep that February, forward

over small -- was longer highly number, suffice Delta more but see Omicron was to crowns. give much but period Now, for we do period it's winning impact, time. a hard but But a you out a of a that of the to intensive, topped time, shorter less, say exact

Jake Bartlett

on you Great, but what's driving and of running to how We in fairly lean What's other hold being my I'm sustain two-year you to some of understood there. helpful. know, labor I of is, question level think margins those mentioned. XXXX. you those, of level of the inflation efficiencies, still to able pieces labor the is get basis? wrestle of in you're the to that's if And charge the wondering million, restaurant those offsetting kind adding fourth delivery costs the one just despite, pretty but the have that's correctly, maybe the margins, level there, margins next isn't XX.X% moving margins, on on flat which Great. side, the then which margins. time, is with back AUDX.X I inflation, assume quarter And costs significant even there's also one that restaurant commodity kind that able

John Miller

it it. plus the That's Yes, that's you did. framed we way looking we do way an are internally cost. that's the question. that. believe Also the more Thank kind correctly, we just of the do for XX.X we at excellent we why one-time do that Jake. that Thanks. were to those the want, that set X.X, way the asking I really context --

volatile through I think it's a combination of various levers that timeframe. this we we move very are pulling as

management, a mix partially menu So, within issue there. a

of of some there. some the we've performing manage that within with items made we So, candidly, easier inclusive of And best aspects, value the the costs. that ones plays some really at operational an keeping looked from of of best the menu, food are some

mixed all taking course our about Saiyan plates positioning, between consistently X, not you it's X instance, our the we have So, XXXX. have value plates, X, we think the higher X, maintained our Super of items, if price over -- those and XX%, just value our and XX% value have

price the a have pandemic. that it's there. that initiatives pricing so that our if all do just more waste taking opportunities. the the we of and -- savings entered of to we side function plates team trigger opportunities We down is as of really pricing higher company levers Really, on that take needed. fact, we management. this So, XXXX as not those We focused again, we other a of also, additional throughout one of is really those our in And Again, dynamic did pricing haven't within have couple QX. on we've within take ops but has there do obviously, pulled some on tightened when yet, through then gone on X%

can savings commodity see through cost coming that as that leverage basis line product referenced, and along you coming points, some not XX% that opportunities we costs there, XX despite we the you inflation the through again, So, the other only such. with targeting that mentioned packaging in

one not there's So, thing. any

in in give another piece with to In information. this that's and that's margin, is you good not readily fact, apparent that there, there there, tidbit another I'll regard within really

that between back training as dollars this it full dollars within information, We or to levels the staffing good a half additional sitting overtime good QX not, Why a and point gets is couch I'm restaurants. in and point. have believe additional our additional going it to is

last course really on literally Inclusive of now XX with restaurants we've fully company the levels are the our and a are staffed that over and the out are Manager, of XX volatility like really that moved in all at which pre-pandemic staffing. with of staffing. post-pandemic are of of two the XX/X, General portfolio the years Our units units

excuse -- is, level. is reality as not positions me, the as efficient these are these the new pre-pandemic So,

to speed, dollars So, and to. to may up get additional fully additional season able to training more then you're experiencing shifts, them overtime dollars be a cover staff

a So, even moment, there's point further we from are away staffing. to a ultimately good that half into we that within standpoint really it's back of that staff. goes XX.X, level getting point a season to that for the But the get as

Jake Bartlett

That's you Thank Great. much. helpful. all so

John Miller

Thank you, Jake.

Operator

question Our next with from James Rutherford Stephens. comes

ahead. go please open, is line Your

James Rutherford

to getting staffing much of is ask true the challenges wanted full this do very -- for franchisees there's way simply more is I you that some are restaurants XX/X the operating open the think good how ask Hello, to guess pace -- want is true how hours. I I And is And to challenges? delay of the staffing afternoon, risk that the sort much middle or that's about run that at simplicity for consumer that kind component the just and night? of questions of couple a goes of change, habits hours limited a of the as it, the overall place content the what's is all? And Just in longer, can that they of they XX/X? that on kind around also go forget this

Mark Wolfinger

is Sure, momentum. to see those build And It up, questions. pick obviously, to we to are accelerate. this all starting we'd we'll great like think continue

the alluded in staffing those investment build Robert the to improves, to, and day As shifts nighttime in competence continues improve. shifts, to

night, followed breakfast, the and performing by performing look the best at weekend over then and lunch. the is late part XX/X is then dinner night. best late and it in the our last quarter you day If our stores, the But really before, quarter

that strong than during up from our it's younger outperformance audience, of so who's affluent historically brand of performance number filled recognize they the more rooms. And of and the our part, slightly dining day a benefits the see one, average a as that franchisees

introduced a competitors lot There's a not new renovation with to And associated a especially our product opened no we'll than lines, just with when items so better kitchen get soon way that hour. this there's to of is adding other and newly opportunity be tremendous during the exposure that.

in momentum the So, seeing XX/X the the they're faster build stores. benefits and

And Franchisee all not it. in a through I'm and this their for say, not anybody had dig the the We've is there. me, doing conversations, Board is commitment our not Association heels so way franchise from

And just so we the that don't see effect. that's evidence long-term

-- consumer position XX/X but service from we options the few to morning, available, curbside delivery, the a there's Now, across of of country the behavior, a serve there we terms move a have options the type that -- being number has full availability. lot. available, footprint one with full A.M. there's say dining, we service in menu and enjoy of are that items, service in from rare but X in habit -- not a X quick There that the are you full XX or

as transactions lines. So, stores those back we we momentum that continue do confident build and earn along have will to those those open confidence we'll that

Operator

Nick Securities. to go Wedbush with next We'll Setyan

go Your line ahead. is open, please

Nick Setyan

Thank you.

just million confirm correct? wasn't that adjusted adjusted so the $XX something to like and QX been have $X.X million. that I First, in want as to impact legal EBITDA would $XX.X Is million opposed

Robert Verostek

this Hey, Robert. is Nick,

of impact. that You're that impact. the margins are legal of inclusive legal correct the And million is XX.X% $XX.X inclusive

in EBITDA were if level one that it right to for to size XX% you to would restaurant for and closer closer million margins $XX.X adjusted those, item. reconciled get So, you

Nick Setyan

huge expecting, for what to EBITDA we're or on I mean, -- actually well XX% them it's above impact. the obviously well The on Omicron given we would the And QX guidance you the than comp the in actually lower said, just were slightly guidance it's, above system expecting overall comp, on XX% your what franchise over guys would is million XX% than for Okay. modeling the better and terms that below given beat we so, level margin, the were think margin? to is of $X have is expected like imply you

are seeing in So, comp, it seeing but impact, it not margin. the necessarily the in we're the alternate we

as margin is So, you I there's that know, bit think little of lower. confusion much a so to why

seeing we else peel company-owned To so that's margins delta? where then where you just you the And on expect maybe on are adjusted in else what that what company-owned embedded know for much are guess, comp are terms I QX for So, that that? system we're the the explain, guidance the where could know, of XX% that franchise is else kind we seeing margin maybe back we XX% then the understand Is you of And what onion, lower to guide? the help that that QX. kind us why apply? that of comp -- would into it EBITDA in

Robert Verostek

unpack Robert, a Nick, lot this to there's there. question, I is get the Hey,

things. couple a So, of

that the there's not the unit roll the time, again, for think pronounced allocated more -- that the company portfolio we the that as the had the do weight that differential we on there company So, there I to higher accompany of majority the begin necessarily franchise comp. not XX plus with when that necessarily and seen comp muted, fully so XXXX, is is as regard comp the we XX% a the roll between XX/X is modeling differential that to were and a now you we've have a over year-over-year, move over being now to of as of experiencing is little becomes you some into

in the my we're piece that out, stock-based I think call other that the look of we would from remarks. million $X.X cash seeing versus we We at what to seeing The regard included guys, is be compensation. if models-to-models ours you with component specifically may what in

as is the ends ultimately So, those itself in becomes are to But being EBITDA expense in what adjusted little functionally does hit. the a to participants the programs through up but itself nuanced, EBITDA the provided cover an this come withheld the are that that shares expense the to not that come out. adjusted and taxes scoped

may range, in we is that G&A. $XX to do of in XXXX we're some with if outpacing of were in estimate have $X.X model, those we to other payments, experiencing we that current in general, in that if the in what the that million core the that But of million $XX the that what what's million And So, included the outside then current clearly G&A those the model million outpacing aspects we G&A believe looking call just we've deferred the $XX that our adjustments, core the in the compensation, look at the kind compensation you the $XX and within models. incentive of be million included stock-based to

do be going clearly going within XX%. to that's at an impact do There range. able is I'm But Omicron about to point. clearly probably for to that impact, contained be sales best this I'm the best is probably that's the XX% to you. you able for think the same-store I to

Nick Setyan

is are within November, trending now Are we we contextualize And way that say range versus there October November? are maybe it. a we below and and can of Got any October still? sales where

Robert Verostek

to we're we trying question. down I'm two good a Omicron right the same Again, avoid you're it's at at see curve we're recorded into data weeks. over I comes getting looking think can last say. it's is and down and But what reality looking dramatically at into to Kurt Yes, these three the that comes that now looking to guides. the

very highly to about that, regard so. We are in recoveries experiencing with recovery spikes sales in correlated a the It's the is very, as quickly. the

Nick Setyan

much. very you thank Okay,

John Miller

Nick. Thanks

Operator

[Operator to Instructions] next with The Company. Brooks We move Benchmark Todd will

ahead. go line Your please open, is

Todd Brooks

thanks. Hey, everyone. Good evening,

John Miller

Todd. Hey

Mark Wolfinger

Todd. Hey,

Todd Brooks

with that to of in magnitude that one two some talks that in around platform efforts currently? little staffing bit, wise, of about And an peers about of incoming If staffing seeing. we for And talked hiring dig kind September, a October side improvement. position. now can flows position. for seeing talked of applicants improvement every seeing timeframe the every XX in How's to open kind you're applicants kind matchup on the you're you your the specific I know, company's open of that to the one qualitatively XX

John Miller

improvement what come our retention come and and historical. not but was was back trained running that and folks, momentum lot maybe then And Unfortunately, quite it our the for wasn't it's of as for started fully in back historically, back. in applicant a more higher burdensome brand seeing, smoothly, that position sort fills. and to then some flow, later, first not necessarily built work, the are experience, a resulted to then flow continued filling as this a back took higher again, applicant wave position quarters of suggesting in near work it's pretty positions, We time ready weren't or couple to and but staff, franchisees to

stories industries, different momentum construction of hours, a applicant there's sort So, been re-staffing career building and lots it's building service ahead retail, and similar of hear of where this sort where actual to committed bumpy of start way efforts. hearing sort healthcare, industries, of these across, in we're in you flow

range. at Manager to XX% starting franchisees are improved that see dramatically. we XX%, are are our are We company that XXX% still General in near level, approaching the position, that think we The XXX% staff stores staff

the fourth of about guiding around got year certainly we into the half yet, quarter we've but at the system so not And quarter, end or XX/X. the beyond XX% ended this

applicant that the but momentum. And how flow know is again, to I really no much to challenge. continues -- longer qualify that don't so further build

the won We for are is it we can places trying people are service recognition these averages to hear generally, looking levels doing spot. the to we're lower solve had insight why a work full been best work. some real-time our are we with which corporates, interviews get, than on any lot retention what and to much of Again, exit and for awards

of those of think the sort practices system. been more franchise entire I in those has best interest across to our lot gate a the that in

onboarding just have all we bit-by-bit. sure not it respectful people lot work that's a it for is only sure. of say focused improve we're paying the training, making attention But brand to So, right. environments, get I on And that does we and can that continue it, to

Todd Brooks

on put if of sure make we all to model, entering recent set XXXX? level just of kind kind rate mean, against turning think John the XX% a the look slope what out a that go increase staffing helpful. commented in retention, just operating I on that's What's curve kind to we -- Robert, should then improvements. the What staffing I across seem of slope levels of applicants that recovery month into back in like? with has X% want if better of what Okay, that stores better kind how to XXXX? take And XX/X about rolled curve we're just the improvement the should starting it recovery with exit here we're in what's Or then, tracking I model right in be we recently. way XX/X play on the the out that to maybe and as

Robert Verostek

question, million $XX the that's Yes, Todd.

the primarily side. the we're franchisees spot transparently which When You're on that adding, we're are company -- rate you look at on. because there at adding that the

with it's you on at the your going of XX%. December it Even was right? back it QX to in trend, spot January, release, from XX% here, earnings pin You're X%. in even If kind X% it'll to X% look in

called that I script. think out I my in

when near-term, that of accelerate in we expect I end would that we similar would we you there. is to the that But XXXX. the by would full we're not this, were probably something frankly, level and a to about to our look that, slope closer right? six you'd ago, think, I'm get initial months nine probably to thoughts, certain talking see something

spoke we're can know thinking staffing. levels over staffing very you somewhere best we he similar that The acceleration of XX/X don't of open are XX/X, staffing because on that again, units our the from not if So, levels, I between about pre-pandemic, X% to are was we it draw not staff this X% pre-pandemic at what John franchisee units curve XX%. current the that he franchisee that company they're very, are are at what regard think with units, approaching a when line in take And spot And X%. will on to moment. our

the going to again, up. the at So, question predominantly experienced a for probably it's last would too back this in we've move to and not issue beyond months. James' X% to like I point a is this the ramping would to I Yes, to staffing is that time levels -- eight of guide, this say we XX/X six that early and units. these just that. perception trend that like say could quote But about

Todd Brooks

when you're that day they've that and train, shift? this now a bringing an overnight They've while about reality before with into guess, lag to just it are talked those hiring What's overnight and between for readiness? work now, an got bodies to And map to made got operational ready John they them these operationally hire in shift. are throw don't a you I for people ready,

John Miller

Right.

experience lot level has So, a there levels, at this get with do depending can and cooks experience, of so to different servers their on in. coming

is starting are little a see reversal so level entry starting a in quarters, the that return. level that well. get much and to The couple experienced of as last , we're were employees to starting also to of relief less We experience

or go bench But position get they But Omicron be guide because or to wane, same saw this that it we're could year reiterate lot take yet. of to number on momentum. days, to of confidence depends you create then what affect the you a see deceleration, careful in more Omicron that the we and a it. dynamics Robert a manager we and just similar the delta couple There's helps we're shortening, starting improvement, out of weeks the And on not So, lot the another coming too -- of two. can cook just that of three the habits just or it we'll which to month is ready hold, shift. said have a wave is just wave to and so

Todd Brooks

the for feedback. Thanks great. Okay,

John Miller

Thanks Todd.

Operator

comes from question Capital of Markets. next Our KeyBanc Eric Gonzalez

Your line is please ahead. open, go

Eric Gonzalez

the that, on that increase units. in X% discussion up following Maybe thanks. around Hey, month-over-month XX/X the

If you what calling the a given discuss sick. maybe improvement? to surprised was drove what headwinds I could you're I little hear out that that exclusions guess in January, facing improved people and staffing from

a So, as the hours see in And you get drove willingness January? know, maybe, really week-over-week that X% an from go trends see correlation increase franchisee better improvement do and to to you correlation to XX overall mix? what perspective? Do that you a sales

John Miller

Yes, I do.

they almost per spiritual fully are other to holdouts franchisees down I or some really where so nearly down -- it further se, the crank there not were shut but rather, think much nothing. just behind

same the want and the shifts, get a they're on don't push staff, to that, bit sync bright of current we to Stability customer way still and want more little in and so drag and rebuilding pull, their while build want And do to to struggling satisfaction in they with too of -- are so we time, scores. underneath top before too out they themselves stable. of all but get reality their daytime they anything

So, team. with each location margin capabilities management the of we do step have to

when And of green at very the pace experienced different. so to management management, considerably you their with have stores same move capacity when you is

retention, a fleet, dividends and bigger fleet fully more supportive XX/X staff franchisees not manage in company we of from longer the upside some backed the staff every or franchisee same was stronger to higher same sheet by tremendous in or it through You term, the some average enjoyed the was sales, think going company for way volume bit units balance did little that -- more position. that's but pay in

Eric Gonzalez

just about could if ask Got it. I maybe pricing. And

your increase X%? maybe advising about I inflation just XXXX? your system? Can much you you and, said price do quarter, to you're the you the franchisees pricing seeing maybe outlook? Or took what said perhaps you think it in how on comment franchise in XX% at and and is price fourth markets stores, are the commodity You a talk for in company-owned for what is least effective

Mark Wolfinger

lunch kind higher and fleets we're Sure, on given and the about from and to-go dinner the from the right company franchisees, of a averages big of because We're as Rob on smaller beverage range change was we enjoyed in check the now, materially. the pricing, spite to franchisees California experiencing where, not of footprint entrées a pricing, scattered little about and incidents is again, of in changes higher earlier, transactions. stickiness coming are and company of that the our half have but ahead seeing half we're mix alluding being in same

moving a items good really in from quarter, melts, we of across this were idea national America, still menu. across placed believe value items away are pretty the many for So, strong some a place the we the where hot us right brands. and dining inside now said people that's -- hot are breakfast just hot chicken our value news very That promoting even family on has

scoring the in to slam our mix. consumer And make really we want promoted a also we the during out that's was so super there high then And quarter. product sure

we our And show the get positioning. early. but right is historically this because assist It's much and it attention a level early higher too historically check But also staffed a I this more guiding check a a I I'd know clarity on at not does more. enjoy to environment think it not a to commodities, time think lean are it's in to same frankly, to bit so in as we presence loud drivers that [ph] little now high the as better until It's in on we it's of menu. moment. We're at love traffic value a us for right do trial too staffed. get have to prepared frankly, environment, a don't When the fully comes items

Eric Gonzalez

enough. Fair it pass I'll on.

John Miller

Thanks Jerry.

Operator

Brett ahead. Partners, your open. to next go is We'll Please line Levy at MKM go

Brett Levy

the How taking on are for guess a Thanks point incremental just terms also Great. the about of would to continuing pursue just have you cadence messaging, bit. marketing? or spend? little but what And you also, to I you tranches one want of in that question. what of the thinking pricing? more take Not for

John Miller

sorry, could incremental-- repeat you of tranches more I'm or one

Brett Levy

Incremental menu pricing? Just--

John Miller

But outages. product did Got Denny's, is what's over we of really were it. short we time. supply short were of which not at sort interesting higher that supply, things happened lot Pricing a were is the saying and see of inflation then it's over of adjusted wage quarters last people as the -- while really some adjust couple in proud

just while allowed more items and So, cheeseburgers items to is little we trial little of see check we more among breakfast pushing a some we try little to offer with -- links things users about. some or And these the little breakfast more maintain bit new change heavy of were the a that that able overall, mind really steaks across a lower they pleased of that had of shift frequency do they're double users mix or to and menu focus What toward around talking average and very were bit those interruption. on in bit to kinds entrées dinner towards the us the menu price, than -- because that had higher there's a fried value chicken rather people breakfast brand. mix we're and and

say not that for pandemic favor long place, and and one So, to get is a place just night wanted late I is delivery dine-in day diner to trial anybody. to The for adoption third-party it our items we're diners, to great dinner, did revitalization this both that options America's credibility channels got with start high lunch, breakfast that more silver a the we breakfast, as -- that's channels lining around. a and all getting but heritage wouldn't

say a So will have of historically lines inflation, wage kitchen of a I through of to that market, price that will industry. This that be it's bit menu scenario on at maintain the the appropriate a a historical increase. invention the items would initiatives and pricing takes pricing that, some we'll days eat pressure exist little while norms out the not adding of creates there blur new where price because necessarily product not for sort above for be that's

better be menu some the several -- over evolves these quarters as next there'll commentary that about of that'll initiatives and more So, the be interesting unfold.

Brett Levy

not weakness going you anything Daypart or-- the where the you're or in give to granular quarter-to-date strength much just And -- saw is of terms greatest trends, too I terms know either detail but there share of you can in

John Miller

really strongest this best the was some system. last plus were Florida, Florida, positive Sure, also Same were our quarter no but performing Arizona was California, with Texas, Texas, of California, absolutely. odd Delta, and our markets, XX% we exception.

you've were Omicron, have struggle of hit Omicron, was I'd Colorado, say they of there's and spite again, got the this around. Northeast were when continue places lot areas Delta Illinois, most Missouri, and a the that that So, time Oregon, continues just lot the Nevada, momentum. in strong, to But a of true harder that Midwest positive to

Brett Levy

you. Thank

Operator

we'll Stephens. And with Rutherford return James to

ahead. is line please go open, Your

James Rutherford

I was into Hey, back want about on thanks to I earlier. second ask value. one for But queued getting mute in. my when I

wrong the overall has industry you consumer Correct if X, even if been the But that given and John. curious environment look enjoyed for me I strong which that's spending X your about think while I'm have mentioned now, X, ago, deemphasizing a you that. all I'm on you just -- But X, or is a in that menu. minute somewhat, in thoughts your data, to messaging may the that value the is any need the we're to environment most a at near back and indicate consumer shift pivot to Omicron future, that? early what or there aside change your signs a mix starting recent you all, are on way in just traffic at

John Miller

have based you a think a transactions for try is just keep all to I not the bit plays the to staffed Sure, when ready and lift. on of you you're playbook, situation the your going sort places to you deep little avoid circumstance value and addiction to less driving sake, if give

lose to not particular Midwest, uptake Northeast you're reason go the somebody in same In no post-Omicron may want as going rebuild discount transactions. to who these me that anyway don't looking to and going to or about to environment, we not anyway. yield when competitors there's start out the deal to get offering come and a If At or your we the people we're particularly have customers for the to get a are time, good share. one, for want

to has all we of quick-serve on that starts bit liquids quick-serve reversal less some players as close post-holiday what's what saying return to of starting to fast-casual a some a of you're and but pay little there's So, now, emphasis brands not to see attention as going to staffing seeing return discounting past, that. of post-Omicron, in bit been little body neat, to much The you're see the to language been and a environment are in the stabilize on. starting start dealing maybe some or recent

you as a the value to have overweight super-slim. to first were you'll our or ago, media is in an we players well. with form have see a degree moment ashamed some some for in exposure as the too tell early will to I heavyweight mid-scale I not and And but to mentioned not that true return precisely quarter other buy, it us -- not So, again, it's what casual guide to than

James Rutherford

Thanks for the thoughts.

Operator

the closing any back With for no to other questions Miller turn conference holding, I'll comments. Mr. additional or

John Miller

joining Okay. Thank to for us you. the I on would thanks say like call today.

efforts, in And we've we made navigating extensive will as recovery the we pleased correct with situation course. hiring the are and itself progress despite continue We believe challenges, very pandemic addressing and due making training and temporary through interruptions. we this and steady the progress staffing are

we the the and And those were for potential already our by hours our virtual of opportunities performance guest exciting brand XX/X. encouraged fourth and million highly adjusted see does the propel by our restaurant forward operating flow of through two quarter, the EBITDA levels the open it consistency elevated making We quality our volumes, adjusted supported extended, have model the free equipment with of on sales by As return to meaningful of which program. additional and brands. investments successful based during off-premise our launch are restaurants pleased are $XX brand also an which us been experience. are we product will share kitchen platforms and with business We cash to believe technology franchised high shareholders enhanced generated the enabled repurchase we

are Finally, opportunity relaunch successful program and new with franchisee program. the to enhance our to our existing trying Harry's we REEF our along with development our through remodel pipeline partnership incentive

earnings to in conference next early forward look our do we call May. So,

joining at discuss quarter will We and have results for nice XXXX that time. our first a everybody evening. again Thank you

Operator

today's Ladies you call. We participation. your for and conclude will thank that gentlemen,

You may disconnect at great this time and day. have a

Denny's (DENN) 16 Feb 222021 Q4 Earnings call transcript