Denny’s is forgoing $3 million in royalty fees this quarter in a new effort to help franchisees persevere through the COVID-19 pandemic.
The franchisor said in a business update issued Tuesday morning that it has also negotiated rent abatements or deferrals for 77% of the locations where its name is on the lease. Included are sites where the location is sub-leased to franchisees, with the benefits passed along, the company said.
As of June 10, average unit sales had climbed back to within 40% of the year-ago level. That still puts the family chain behind many of the big brands in casual dining, where rebounds to at least 70% of pre-COVID sales are now common. Many family brands have reported continued softness at breakfast, a core daypart for their sector.
Open Denny’s units were collecting only 21% of their 2019 sales levels during the week ended April 1, when dine-in service was suspended virtually nationwide to slow the spread of COVID-19.
Denny’s said that 99% of its franchisees have received federal assistance loans through the Paycheck Protection Program, the federal government’s main program for helping small businesses walloped by the pandemic. About 92% of the Denny’s system is franchised, according to Technomic data. About 93 domestic franchised stores remain temporarily closed.
The chain said that 1,234 units have resumed dine-in service, but a majority of those are operating at 60% or less of their pre-COVID seating capacities.
Those stores have retained 90% of the increase in off-premise business they generated since dining rooms were forced to close at the height of the pandemic, the franchisor said.
Members help make our journalism possible. Become a Restaurant Business member today and unlock exclusive benefits, including unlimited access to all of our content. Sign up here.