SPARTANBURG S.C. Denny’s Corp., still feeling the pinch of the recession during its September-ended third quarter, said profit fell 6 percent as revenue declined 23 percent, mostly because of the sale of corporate restaurants to franchisees as well as negative same-store sales trends.
For the three months ended Sept. 30, net income totaled $10 million, or 10 cents per share, compared with earnings of $10.6 million, or 11 cents per share, in the same quarter a year ago.
Latest-quarter revenue totaled $146.1 million, down from $189.3 million in the same quarter last year. Denny’s tallied 89 fewer corporate locations this quarter from the sale of those units to franchisees, part of the refranchising effort that the Spartanburg-based company has undertaken all year.
Same-store sales fell 6.6 percent at corporate restaurants and 7.3 percent at franchised locations.
Nelson Machioli, president and chief executive of Denny’s, which operates or franchises 1,545 restaurants, said the company would continue to follow its strategic plan of building new units, refranchising corporate stores, paying down debt and growing profitability.
“Our ability to accomplish these goals despite the on-going same-store sales challenges faced by the industry and Denny’s is evidence of the strength of the Denny’s brand,” he said.
He added that Denny’s will introduce new products at affordable prices to increase traffic and sales.
“Although we are making progress toward our strategic goals, our sales trends must improve,” he said. “Denny’s is focused on driving sales by delivering new and craveable products at an affordable price with great guest service. We are confident our focus, which includes strengthened communication with our target customers, will drive improvement to guest counts over time.”
Still, the company said it expected same-store sales at corporate stores to fall between 3 percent and 3.75 percent in the fourth quarter, compared with an earlier forecast of a drop between 1 percent and 3 percent. It also said same-store sales at franchised units are expected to fall between 3 percent and 5 percent.
Contact Elissa Elan at [email protected].