Denny's expects to hit '08 income targetDenny's expects to hit '08 income target

SPARTANBURG S.C. Despite a year when traffic fell 6.9 percent from the year before, Denny’s Corp. said Thursday its 2008 income will increase substantially because of the company’s efforts to sell corporate restaurants to franchisees and pay down debt.

Denny’s expects to meet or exceed its $20 million target for full-year adjusted income before taxes, which is a 90-percent increase from the prior year, the company said. The operator or franchisor of 1,541 family-dining restaurants cited food cost management, lower depreciation expenses from asset sales and lower interest expense from debt reduction.

In 2008, Denny’s sold 79 restaurants to franchisees, making the system 80 percent franchised, compared with 66-percent franchised prior to the company’s restaurant sales efforts that began in 2007. Denny’s did not disclose how much debt it paid down in 2008, but in the September-ended third quarter it had paid down about $70 million.

“While driving customer traffic remained difficult, we executed on our strategic initiatives and cost-saving actions in order to protect our operating margins and cash flow,” said Nelson Marchioli, Denny's president and chief executive.

For the full year ended Dec. 31, revenues are expected to total $184 million, down from $220 million in the prior year, mainly because of the sale of corporate restaurants. Fiscal 2008 systemwide same-store sales fell 3.7 percent and reflected a traffic decline at corporate restaurants of 6.9 percent and a 5.9-percent increase in the average check. For the latest fourth quarter, systemwide same-store sales fell 6.1 percent.