Denny’s Corporation Previews Fourth Quarter and Full-Year Results for 2024

Denny’s Corporation DENN has released selected financial results for the fourth quarter and fiscal year 2024, which ended on December 25, 2024. The company is known for its Denny’s Inc. and Keke’s Inc. brands.

As CEO Kelli Valade stated, “We maintained our positive momentum in the fourth quarter, reporting solid same-restaurant sales across our domestic operations, surpassing both Denny’s and Keke’s respective BBI indices. Additionally, Keke’s development accelerated with the opening of eight new cafes in four states.”

The official fourth-quarter results and fiscal year 2024 financial details will be shared on February 12, 2025, before the market opens.

On the trading day, DENN stock saw a slight increase of 0.2% but dropped 2.1% in after-hours trading on Monday.

Preliminary Q4 Results for Denny’s

Denny’s operates through two main segments, and the results will be reported for each brand.

For the Denny’s brand, domestic same-restaurant sales are expected to rise by 1.1%, a sequential increase of 120 basis points (bps) but down from the prior year’s 1.3%. Franchise same-restaurant sales are anticipated to dip to 1.2% from last year’s 1.5%. Overall same-restaurant sales are projected to be breakeven, rebounding from a 1.2% decline reported in the previous year. Furthermore, average unit sales values for company and franchised restaurants are expected to reach $800 million and $482 million, up from last year’s figures of $770 million and $467 million, respectively.

For the Keke’s brand, domestic same-restaurant sales are estimated to grow 3%, contrasting with a 3.1% decrease a year ago. Franchise same-restaurant sales are likely to improve to 4.1% from last year’s 3.8% decline. Overall same-restaurant sales are expected to decline by 3.7%, an unfavorable shift from the previous year’s 0.7% growth. The average unit sales value at company and franchised restaurants is predicted to be $404 million and $447 million, compared with $442 million and $432 million reported last year.

Preliminary Fiscal Year 2024 Results

For the Denny’s brand, domestic same-restaurant sales are expected to decrease by 0.2%, within the guidance range of -1% to 0%, as opposed to the 3.6% growth recorded in fiscal 2023. Franchise same-restaurant sales are expected to decline 0.1%, again reflecting the prior year’s growth of 3.6%. The overall same-restaurant sales are projected to drop by 1.5%, compared to a 2.7% growth from the previous year. Average unit sales values at company and franchised restaurants are expected to be $3.09 billion and $1.88 billion, up from $3.07 billion and $1.84 billion respectively.

For the Keke’s brand, the domestic same-restaurant sales are likely to fall by 1.7%, a slight improvement over the 3.9% decline in fiscal 2023. Franchise same-restaurant sales are anticipated to decrease by 1.6%, down from 4.4% last year. Overall same-restaurant sales are expected to decline by 2.7%, contrasting with a previous year’s decline of 1.1%. Average unit sales values for company and franchised restaurants are projected at $1.73 billion and $1.82 billion, slightly down from $1.80 billion and $1.83 billion respectively.

By the fiscal year-end 2024, borrowings under the credit facility are expected to total $261.3 million. The company forecasts adjusted EBITDA at the lower end of its guidance, estimating between $81 million and $84 million.

Expansion Plans for Denny’s

In the fiscal fourth quarter, Denny’s plans to open four franchised restaurants while closing 30 as part of a strategy to reduce lower volume locations. Additionally, the Denny’s Diner 2.0 remodel program aims to complete six projects. Keke’s is set to open three company-owned restaurants and five franchised locations, debuting in California, Colorado, Nevada, and Texas. The brand will also be extending its remodel test program to two additional cafes.

Total openings for Denny’s and Keke’s by the end of fiscal 2024 are expected to reach 14 and 12, respectively. Denny’s anticipates closing 88 restaurants while completing 23 remodels, including seven company locations. Keke’s is projected to expand into six new states during the year.

The company has guided consolidated restaurant openings between 30 and 40, which includes 12-16 new Keke’s restaurants, while anticipating a consolidated net decline of 45 to 55 restaurants.

Stock Performance Overview

In the past three months, Denny’s shares have decreased by 13.2%, in contrast to the Zacks Retail – Restaurants industry, which saw a 5.6% decline. Concerns persist over weak average unit sales and rising commodity costs. Nonetheless, Denny’s commitment to driving customer traffic through menu innovations, off-premises services, and strategic marketing is seen as a positive factor. Additionally, ongoing improvements in operational efficiency aim to create more shareholder value.

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The Zacks Consensus Estimate for DENN’s fiscal 2025 earnings per share (EPS) remains steady at 58 cents over the past 60 days. This projected figure indicates an 11.5% growth compared to the previous year’s EPS. Strong growth prospects are reinforced by its B-rated VGM Score and an A-rated Value Score, suggesting a favorable outlook among analysts and strong fundamentals.

Denny’s Zacks Rank & Other Notable Stocks

Currently, Denny’s holds a Zacks Rank of #2 (Buy).

Here are other top-rated stocks from the Zacks Retail-Wholesale sector:

The Gap, Inc. GAP has a Zacks Rank of #1 (Strong Buy) and boasts a trailing four-quarter earnings surprise of 101.2%. This stock has increased by 0.4% over the past six months. The Zacks Consensus Estimate for GAP’s fiscal 2025 sales and EPS reflect growth predictions of 2.1% and 6.6%, respectively.

Amazon.com, Inc. AMZN also has a Zacks Rank of #1. It recorded a trailing four-quarter earnings surprise of 25.9% on average, with a 13.3% gain over the last six months. The consensus estimates for AMZN’s 2025 sales and EPS suggest growth of 10.9% and 19.7%, respectively.

Deckers Outdoor Corporation DECK, also a Zacks Rank #1, has a trailing four-quarter earnings surprise of 41.1%, with a remarkable 36.4% gain over the past six months. The Zacks Consensus Estimate for DECK’s fiscal 2025 sales and EPS indicates increases of 13.6% and 14.2%, respectively.

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