Denny's Corporation reported its second-quarter 2025 financial results on August 4, 2025, with total operating revenue increasing to $117.66 million from $115.93 million in Q2 2024. However, net income for the quarter decreased to $2.47 million from $3.57 million in the prior year, and earnings per share of $0.09 missed the $0.11 consensus estimate.
A key concern for investors was the 1.3% decline in Denny's domestic same-restaurant sales, indicating continued challenges for the core brand amidst a 'choppy consumer environment.' In contrast, Keke's Breakfast Cafe continued its strong performance, delivering positive 4% system-wide same-restaurant sales, driven by both dine-in and off-premise transactions.
Adjusted company restaurant operating margin was 11.5% of company sales, impacted by approximately 115 basis points from legal and medical reserve adjustments and 100 basis points from new Keke's cafe opening inefficiencies. Product costs, particularly from higher egg prices, also pressured margins, though corporate administrative expenses saw a 3.5% reduction.
The company's liquidity position showed a consolidated leverage ratio of 3.98 times against a maximum covenant of 4.0 times, and a fixed charge coverage ratio of 2.05 times against a minimum of 1.5 times, indicating tight compliance with debt covenants. A refinancing process for its $400 million senior secured revolver, maturing in August 2026, is underway and expected to be completed before the Q3 earnings call. Additionally, a new points-based loyalty CRM platform is slated for launch in the second half of 2025, projected to deliver 50 to 100 basis points in traffic over time.
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