Denny's income drops

By Charles Sowell  

AUGUST 27, 2010 7:08 a.m. (0)

Spartanburg-based Denny’s Corp. net income fell 42 percent in the second quarter, the company reported.

Net income for the quarter was reported at $5.46 million, according to a company statement. Same store sales were down 6.2 percent and 5.9 percent at franchise locations.

The chain has posted disappointing sales figures and recently replaced CEO Nelson Marchioli with Debra Smithart-Oglesby, who is acting as interim chief executive officer and board chair.

Smithart-Oglesby said "Our second quarter showed encouraging signs of progress towards our key areas of focus. First, we have seen a positive and sequential change in trend in same-store guest counts… This momentum carried into July as same-store sales for company units of -1.7% was driven by this improving guest count trend. Second, excluding cost related to the proxy contest, we continued to deliver growth in adjusted income before taxes. Third, our franchisees continued to build new units and began the process of converting an initial 70 Flying J sites to Denny's. Last, we continue to refranchise targeted company units and to further reduce our debt."

Denny’s said same store guest counts were down 3.7 percent but were sequentially stronger in each month of the quarter.

The company opened seven new franchise restaurants and sold nine company restaurants under the Denny’s Franchise Grown Initiative.

Adjusted gross income before taxes was $6.2 million, a decrease of $1.1 million that was driven by one-time proxy contest related costs of $1.5 million.

Excluding these costs adjusted income before taxes increased nearly 6 percent or about $500,000.

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