Denny’s Corporation Provides Business Update in Response to COVID-19

SPARTANBURG, S.C., June 16, 2020 (GLOBE NEWSWIRE) — Denny’s Corporation (NASDAQ: DENN), franchisor and operator of one of America’s largest franchised full-service restaurant chains, today provided a business update on the impact of the COVID-19 pandemic on the Company’s operations.
The Company remains focused on the safety and wellbeing of its guests, restaurant teams, franchisees, employees, and suppliers as dining rooms continue to open. Enhanced training materials and communications have been distributed to the entire system of restaurants, reinforcing strict food safety procedures, handwashing and personal hygiene standards, and enhanced daily deep cleaning protocols.SalesWhile the COVID-19 pandemic and various related government mandates restricting dine-in restaurant service have disrupted domestic and international operations for Denny’s Corporation and its franchisees, domestic system-wide same-store sales¹ have sequentially improved on a weekly basis during the second quarter of 2020, as compared to the equivalent weeks of 2019. During this time, most restaurants have been operating with streamlined menus and reduced operating hours, which have impacted same-store sales¹ results. The following table presents the percentage change for second quarter weekly results as compared to the equivalent fiscal weeks in 2019:Second Quarter 2020 Weekly Domestic System-Wide Same-Store Sales¹ for the weeks ended:^*Weekly results previously reported.As dine-in restrictions have continued to ease, the number of Denny’s restaurants with open dining rooms has grown significantly, as illustrated in the following table:Number of Domestic Restaurants Operating with Open Dining Rooms for the weeks ended:Of those restaurants operating with open dining rooms as of June 10, 2020, approximately 56% were limited to a capacity of 50% – 60% and approximately 2% were limited to a capacity of 25% – 33%.  In addition, all restaurants required to adhere to social distancing guidelines were doing so; this constituted approximately 42% of our restaurants as of June 10, 2020.The easing of dine-in restrictions has contributed to the reopening of restaurants that previously had elected to temporarily close. The following table presents the percentage of total domestic restaurants open each week:Percentage of Domestic Restaurants Open for the weeks ended:As of June 10, 2020, 107 Denny’s restaurants remained temporarily closed, including 93 domestic franchise restaurants and 14 international franchise restaurants.Average unit volumes of off-premise sales more than doubled between February 2020 and April 2020, supported by temporarily waived delivery fees, new “Dine-Thru” curbside service programs, and recently launched shareable family meal packs. As dining rooms have started reopening, Denny’s restaurants have retained over 90% of the increase in off-premise sales thus far during fiscal June 2020, compared to fiscal April 2020. Franchisee SupportIn addition to the previously disclosed direct financial relief to Denny’s franchise partners, the Company has agreed to a one-time $3 million royalty abatement in the second fiscal quarter of 2020. The Company has secured rent relief in the form of abatements or deferrals for over 77% of the leases in which the Company is a lessee, including those instances in which the Company subleases to franchisees and will be extending the same relief to the franchisees as a pass through.Substantially all Denny’s franchisees are pursuing available forms of relief under federal stimulus programs, and franchisees representing approximately 99% of total domestic franchise restaurants have received funding under the Paycheck Protection Program.¹Same-store sales include sales at company restaurants and non-consolidated franchised and licensed restaurants that were open the same period in the prior year. Total operating revenue is limited to company restaurant sales and royalties, advertising revenue, fees and occupancy revenue from non-consolidated franchised and licensed restaurants. Accordingly, domestic system-wide same-store sales should be considered as a supplement to, not a substitute for, our results as reported under GAAP.