After posting a nearly 35-percent increase in profit during the second quarter, Denny’s Corp. president and chief executive John Miller is optimistic about the family-dining operator’s future.

Although the Spartanburg, S.C.-based company has experienced flat same-store sales growth for several quarters running, its core initiatives — including adding lunch and dinner items to the menu, and a new coffee platform — are starting to gain traction with consumers.

“We have confidence in our initiatives — consumers are responding to them — but where employment has been lagging, so have been our sales,” he said of the earnings report. “We’re more likely to say we’re disappointed. We’re happy with our initiatives, but we’d always like to see sales break out a little stronger.”

Miller discussed the 1,700-unit chain’s performance, and its future, with Nation’s Restaurant News last week in New York.

Denny’s released its second-quarter earnings last week. What do you think about the company’s performance?

There’s two sides of it. One is that we’re 90-percent franchised, so it’s very stable. We have really good high-quality free cash flows. With that comes a need to build our top lines.

Family [Dining] still has the more robust side of full-service sales. There was a good showing for family during the second quarter, with the stronger performers for the quarter being Denny’s and IHOP.

Why did family dining perform relatively well in the quarter versus casual-dining brands?

The value orientation. At the end of the day, the average check is $9 [at Denny’s] instead of $14. There’s maybe something there.

What matters most is when you come back, that when a customer comes in they intend to return. The most sacred thing about running a restaurant company is that the customer comes back.

The pressure on the table also matters. We’ve uncovered some consumers that say one of the attractions to family dining is that even if we’re busy and we’re on a wait, there’s less pressure to make you leave than in the casual business. If it’s Saturday morning and you’re waiting 30 minutes for your table, you’re not real worried about having that extra cup of coffee.



During the second-quarter earnings call with analysts, you said Denny’s will expand its beyond-breakfast menu items. Why?

This was borne out of, first and foremost, this broadening strategy to transform from this breakfast-all-day-only strategy. We talked really only about our breakfast items for the better part of 20 years. And when times were tough you go to a Grand Slam promotion and all was well with the world.

Today we believe that that’s important, to hold onto breakfast share. We’re not above a pancake promotion — we have a build-your-own-pancake promotion running right now. But this beyond-breakfast strategy, this 'America's Diner' idea, was a little bit bigger, a little broader, to have a little more relevance for lunch and dinner. That started a little while back, first with the research on the broadening positioning.

Dinner had been a part of our heritage as a diner. To be able to go back to that, sort of evolve backwards to be forward, is the idea behind [beyond breakfast].

Many new menu items, including the wild rice side, seem to have healthful cues as well as premium cues. Was that the goal?

That actually fits into our Fit Fare Menu. Our Fit Fare menu has grown from four introductory offers two years ago. We now have 12 items on the Fit Fare menu. And we cover lean, high protein, low calorie and high fiber, all with icons marking them throughout the menu. The new ones are lower in mix until they catch on, but the older ones that we’ve had a while are doing great. They’ve doubled since we put them on.

The top seller is the Fit Fare Omelette followed closely by the Fit Slam. The Senior Slam is next, and then the avocado turkey sandwich.

Historically, [when] you’d see Fit Fare items, or whatever these are called, on other peoples’ menus, you’d see less than 1 percent of menu mix. At Denny’s they add up to a significant number of items per day.