Denny’s Corp. in a few weeks will officially relaunch its $2-$4-$6-$8 value menu, with an added $10 category, to help drive traffic at the family-dining chain, executives said Tuesday.
The Spartanburg, S.C. company, which also owns the Keke’s Breakfast Café brand, is “about to go even deeper into value, bringing back a key brand differentiator in a big way,” said Kelli Valade, Denny’s CEO and president, on an earnings call for the second quarter, which ended June 26.
The company in 2020 brought back the $2-$4-$6-$8 platform to celebrate its 10th anniversary.
“This was a value platform unique to Denny's that launched years ago to amazing results, and it's a unique equity only we have,” Valade said. “We're thrilled to bring back this consumer-friendly traffic-driving platform based on extensive testing and reengineering.”
Valade said that in test markets the $2-$4-$6-$8 menu was mixing in the mid-teens and higher in some markets.
“We feel really confident in both the consumer feedback, the operator feedback, the alignment with the franchisees, and then just the true equity that we have in $2-$4-$6-$8,” she said.
“This evolved platform is a top-rated value concept across multiple options we tested, consumer research validated and increased likelihood of guest ordering and making a special visit to Denny's due to positive perceptions around variety, relative value and the inclusion of fresh, high-quality ingredients,” she said.
“Our test results suggest that not only can this revamped platform drive incremental traffic and new customer trial, but it is also engineered to protect profitability,” Valade added, citing the $2 and $4 levels for their ticket add-on potential.
She said Denny’s has completed the rollout of a new cloud-based point-of-sale system in all company restaurants. “We're continuing to expand this in franchise restaurants,” Valade said. “We now have approximately 130 restaurants on the new platform, and it is opening the door to provide future labor savings, smart upsell opportunities, server handhelds, and payment at the table.”
The new equipment package comes with an upgraded kitchen visualization system, or KVS, which provides “meaningful waste-saving opportunities,” she added. That should appeal to franchisees, Valade noted.
Valade said Keke’s during the quarter opened its second corporate cafe in Tennessee just outside of Nashville in Gallatin.
“As excited as we were about our Henderson, Tenn., cafe being on pace to deliver approximately $2 million in annualized sales volume,” she said, “Gallatin is proving to be even better and [is] bolstered by expanded outdoor patio seating capacity.”
Keke’s also completed its first remodel test at the largest volume corporate cafe in Orlando, Fla., during June. “While it's still very early, we are extremely encouraged by the trend shift at that location and look forward to sharing more in the future,” she said.
The company is looking at new Keke’s markets like California and Texas later this year, Valade said.
Denny’s also plans to expand its Banda Burrito virtual concept, introduced first in California, and add it to the existing Burger Den and Meltdown virtual concepts.
Robert Verostek, Denny’s chief financial officer, said Denny's domestic average weekly sales per restaurant for the second quarter were $38,000, including off-premises sales of about $8,000, or about 20% of total sales.
Verostek said Keke’s expanded the rollout of alcoholic beverages to more than 40% of the system, “providing check building opportunities in those locations.”
Besides the one new Keke’s opened in the quarter, Denny’s added three new Denny’s franchise restaurants, he said. “There were also 15 closures with an average unit volume of slightly under $1.1 million and were open on average for 24 years,” he said.
For the second quarter ended June 26, Denny’s net income was $3.6 million, or seven cents a share, compared to $8.5 million, or 15 cents a share, in the same quarter a year ago. Revenue was $115.9 million, down from $116.9 million in the same quarter a year ago.
Denny's domestic systemwide same-store sales were down 0.6% from the same quarter of 2023. That included declines of 0.4% at domestic franchised restaurants and declines of 2.6% at company units.
Denny’s as of June 26 had 1,603 restaurants, 1,528 of which were franchised and licensed restaurants and 75 of which were company operated. The Denny's brand consisted of 1,541 global restaurants, 1,477 of which were franchised and licensed restaurants and 64 of which were company operated. The Keke's brand had 62 restaurants, 51 of which were franchised restaurants and 11 of which were company operated.
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