Positive growth in first two months lost to 19% drop in March
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Denny’s Corporation has adjusted downward its financial performance for the first quarter of 2020 as a result of most of its dining rooms being closed in response to the COVID-19 pandemic. It also has cut executive salaries and furloughed workers.
The Spartanburg, S.C..-based parent of the Denny’s family-dining chain said domestic same-store sales were down by 19% in March. Balanced with a 2% increase in comps for January and February, same-store sales were down by 6% for the quarter.
“The global COVID-19 pandemic and various related government mandates restricting dine-in restaurant service has disrupted domestic and international operations for Denny’s Corporation … and its franchisees,” Denny’s said in documents filed with the Securities & Exchange Commission.
“While the situation is evolving, the overwhelming majority of restaurants in the Denny’s system continue operating with take out or delivery only options, some with reduced menus and hours,” it said.
The company also has implemented several cost-cutting measures, including salary reductions of executives and other officers as well as director-level employees effective April 2. It also has reduced the cash retainer fees of non-employee directors.
It did not say how large those reductions were.
It also said it has implemented work-reduction furloughs for some employees, although it didn’t say how many, and is considering weekly work hour reductions.
Additionally, Denny’s has suspended all travel, put a hold on hiring people for vacant corporate and field positions and either cancelled field team meetings or converted them to virtual meetings “using existing technology.”
Denny’s said it is also analyzing whether federal tax credits available in connection with the COVID-19 pandemic apply to the company as well whether loans and loan forgiveness might be available for wages paid to employees that the company has retained.
Also in response the pandemic, Denny’s distributed additional retraining materials reinforcing current food-safety procedures and handwashing and personal hygiene standards. It also introduced enhanced daily deep-cleaning protocols.
The company also said it was staying in touch with its suppliers and did not see any supply-chain issues.
Those cost-cutting measures are in addition to moves taken on March 16 to shore up its financial position by securing additional funding through its revolving credit facility. On that day it also canceled a share repurchase plan that had been scheduled for March 16-April 20.
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Contact Bret Thorn at [email protected]
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