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DENNY'S Corp (DENN)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 revenue was $113.24M and diluted EPS was $0.01; adjusted EPS was $0.08, with adjusted EBITDA of $19.32M .
  • Versus S&P Global consensus, DENN missed on EPS ($0.08 vs $0.10*), revenue ($113.24M vs $116.27M*), and EBITDA ($14.03M vs $20.17M*); the quarter featured a $1.5M benefit tied to historic credit card fees that aided company restaurant margins .
  • Management announced a definitive agreement to be acquired by TriArtisan Capital Advisors, Treville Capital Group, and Yadav Enterprises; the company suspended its earnings call and withdrew FY25 guidance pending the transaction .
  • Operationally, Denny’s domestic system-wide SRS declined 2.9% YoY, while Keke’s grew 1.1%; franchise revenue fell on fewer Denny’s equivalent units amid strategy to close low-volume stores, while Keke’s continued footprint growth .

Note: *Values retrieved from S&P Global.

What Went Well and What Went Wrong

What Went Well

  • Adjusted company restaurant operating margin expanded to 13.5% (vs 11.5% LY), helped by a $1.5M benefit from excess credit card fees charged by Visa/Mastercard (2004–2019) .
  • Keke’s domestic system-wide SRS increased 1.1% with four new café openings and three remodels, sustaining momentum in the fastest-growing daytime eatery segment; “Keke’s is capitalizing on continued portfolio growth and exceptional guest satisfaction” (CEO) .
  • Adjusted franchise operating margin remained robust at 52.0%, despite softer Denny’s sales and fewer equivalent units .

What Went Wrong

  • Denny’s domestic system-wide SRS fell 2.9% YoY; franchise and license revenue declined to $55.87M from $59.06M, reflecting fewer franchise equivalent units and softer sales .
  • G&A expenses rose to $22.57M (from $19.83M LY), driven by incentive comp and transaction costs; effective tax rate spiked to 67.4% due to discrete share-based items, depressing net income to $0.63M .
  • Company flagged ongoing macro choppiness and withdrew guidance during M&A process, reducing visibility for investors .

Financial Results

Quarterly Financial Summary

MetricQ1 2025Q2 2025Q3 2025
Total Operating Revenue ($USD Millions)$111.64 $117.66 $113.24
Company Restaurant Sales ($USD Millions)$53.90 $58.40 $57.38
Franchise & License Revenue ($USD Millions)$57.74 $59.26 $55.87
Operating Income ($USD Millions)$5.21 $8.57 $10.39
Adjusted EBITDA ($USD Millions)$16.82 $18.79 $19.32
Net Income ($USD Millions)$0.33 $2.47 $0.63
Diluted EPS ($USD)$0.01 $0.05 $0.01
Adjusted Net Income ($USD Millions)$4.20 $4.79 $4.21
Adjusted EPS ($USD)$0.08 $0.09 $0.08

Margin Detail

Margin MetricQ1 2025Q2 2025Q3 2025
Company Restaurant Operating Margin (Adj, %)9.1% 11.5% 13.5%
Franchise Operating Margin (Adj, %)50.9% 50.7% 52.0%
Restaurant-level Operating Margin (Non-GAAP, %)29.8% 30.7% 32.0%

Segment/Revenue Components

ComponentQ1 2025Q2 2025Q3 2025
Royalties ($USD Millions)$27.84 $29.09 $27.75
Advertising Revenue ($USD Millions)$19.07 $19.49 $18.60
Initial & Other Fees ($USD Millions)$2.87 $2.80 $1.77
Occupancy Revenue ($USD Millions)$7.95 $7.88 $7.75
Costs of Company Restaurant Sales ($USD Millions)$50.03 $52.35 $50.17
Costs of Franchise & License Revenue ($USD Millions)$28.35 $29.22 $26.81

KPIs

KPIQ1 2025Q2 2025Q3 2025
Denny’s Domestic System-wide SRS (YoY %)(3.0%) (1.3%) (2.9%)
Keke’s Domestic System-wide SRS (YoY %)3.9% 4.0% 1.1%
Denny’s Franchised Restaurant Openings (Units)6 3 1
Denny’s Franchised Restaurant Closures (Units)14 10 26
Keke’s New Cafés Opened (Units)3 8 4
Remodels Completed (Denny’s)6 14 10
Remodels Completed (Keke’s)——3

Guidance Changes

MetricPeriodPrevious Guidance (latest prior)Current (Q3)Change
Denny’s Domestic System-wide SRSFY 2025(2.0%) to 1.0% No guidance provided Withdrawn
Consolidated OpeningsFY 202525 to 40 No guidance provided Withdrawn
Consolidated ClosuresFY 202570 to 90 No guidance provided Withdrawn
Commodity InflationFY 20253.0% to 5.0% No guidance provided Withdrawn
Labor InflationFY 20252.5% to 3.5% No guidance provided Withdrawn
Total G&AFY 2025$80M to $85M No guidance provided Withdrawn
Adjusted EBITDAFY 2025$80M to $85M No guidance provided Withdrawn
Share RepurchasesFY 2025$15M to $25M No guidance provided Withdrawn

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2)Current Period (Q3)Trend
Digital & LoyaltyNew points-based loyalty CRM launching “late this quarter” in Q3; digital investments driving off-premise and conversion No call; program not elaborated in Q3 press release Execution underway, visibility reduced
Value StrategyBOGO “Slam for $1” drove traffic; four Slams < $10; value mix ~20%; balancing everyday vs LTO value Press release emphasizes evolving value offerings and brand relevance Continued emphasis
Off-Premise StrengthContributed +1.0% (Q1) and +1.5% (Q2) to SRS; ~21–22% sales mix; virtual brands aiding traffic Not updated in Q3 release; operational focus implied Stable to positive
Macro/Tariffs“Choppy” consumer; pressures in key DMAs; tariff rhetoric affecting lower-income cohorts No call; press release notes choppy backdrop Persistent headwind
Commodities (Eggs)Egg inflation impacted margins; surcharges temporary and removed by end of May; expected moderation Not discussed in Q3 release; margin aided by credit card fee settlement Moderating; other factors aided margins
Development & RefranchisingKeke’s expansion in Nashville/Dallas; refranchising progress; seed-and-feed horizon 18–24 months Keke’s opened 4 cafés, 3 remodels; Denny’s rationalizing closures Ongoing; portfolio optimization
Corporate ActionsPlan to resume buybacks in Q4 (pre-Q3) M&A announced; call canceled; guidance withdrawn Major strategic shift (take-private)

Management Commentary

  • “Our third quarter progress on strategic initiatives demonstrates our ability to remain agile and focused on what is within our control amid a choppy industry backdrop.” — Kelli Valade, CEO .
  • “Denny’s is evolving its value offerings… with an enhanced digital presence… and the launch of its highly-anticipated new loyalty program. Keke’s is capitalizing on continued portfolio growth and exceptional guest satisfaction…” — Kelli Valade, CEO .
  • The company recorded a $1.5M benefit related to excess credit card fees from 2004–2019, aiding company restaurant margins; transaction costs lifted G&A; effective tax rate increased due to discrete share-based compensation .
  • Definitive agreement to be acquired by TriArtisan, Treville, and Yadav; closing expected in Q1 2026, after which DENN will be delisted from Nasdaq .

Q&A Highlights

Note: No Q3 2025 earnings call was held; highlights below are from Q2/Q1 calls for context.

  • Value mix and everyday vs LTO: Management balanced everyday value (legacy $2/$4/$6/$8) with LTOs (BOGO Slams; 4 Slams < $10) to drive traffic while protecting margins; value incidents ~20%, LTO BOGO mix ~4–5% with traffic offsetting check drag .
  • Loyalty CRM timing: Points-based, one-to-one marketing program slated to launch late Q3; expected to add 50–100 bps to traffic over time .
  • Macro sensitivity: Choppy demand, particularly in key DMAs (LA, SF, Houston, Phoenix); guidance anchored to low end with back-half drivers (value, remodels, loyalty) .
  • Keke’s development and refranchising (seed-and-feed): Nashville/Dallas ramp; refranchise timeline guided at 18–24 months; refranchised cafés in N. Florida optimized oversight .
  • Pricing/mix: ~3% effective pricing in Q2 (mostly rollover), with value promotions engineered to be margin-neutral or better .

Estimates Context

Q3 2025 Actuals vs S&P Global Consensus

MetricConsensusActual
EPS Normalized ($USD)$0.10*$0.08*
Revenue ($USD Millions)$116.27*$113.24*
EBITDA ($USD Millions)$20.17*$14.03*
  • All three key metrics missed consensus. Note: Company-reported adjusted EBITDA was $19.32M (non-GAAP), which differs from SPGI’s EBITDA actual shown above .
  • Consensus recommendation and broader estimate set were not available via SPGI in this query window.

Note: *Values retrieved from S&P Global.

Key Takeaways for Investors

  • The announced take-private transaction is the predominant near-term catalyst; with guidance withdrawn and call canceled, public-market visibility has been intentionally reduced pending close (expected Q1 2026) .
  • Q3 printed modest revenue growth YoY (+1.3%) but missed Street on EPS/revenue/EBITDA; non-GAAP adjustments and the credit card fee benefit buoyed margins, masking softer underlying Denny’s franchise trends .
  • Portfolio optimization continues: deliberate closures of low-volume Denny’s units weighed on franchise revenue but have lifted franchise AUVs; Keke’s expansion remained a growth lever with positive SRS and new-unit momentum .
  • Operational levers (value promotions, digital/off-premise, loyalty CRM, remodels) remain credible drivers; however, macro choppiness and higher effective tax rate (discrete items) create earnings variability .
  • For valuation or trading frameworks, incorporate non-GAAP vs GAAP divergences (adjusted EBITDA $19.32M vs SPGI EBITDA $14.03M*) and recognize the suspension of forward guidance under M&A .
  • Near-term thesis: merger spread/risk assessment and regulatory/closing timeline dominate; medium-term fundamentals less relevant given expected delisting .
  • Monitoring points: transaction approvals/timing, any incremental disclosures in subsequent filings, and sustained Keke’s momentum and Denny’s value/digital execution as operational backdrop .

Appendix: Q3 Context Details

Additional Q3 Press Releases

  • Earnings call canceled in light of announced transaction; results released after market close on Nov 3, 2025 .
  • Prior notice of Q3 results timing (Oct 13, 2025) .

Balance Sheet Snapshot (Q3)

  • Total debt $269.22M (credit facility $259.50M; finance leases $9.72M); cash $2.22M .
  • Total assets $502.92M; shareholders’ deficit $(32.69)M .