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Denny’s moves to refranchise

The family-dining stalwart will be almost entirely franchisee-owned.
Photograph: Shutterstock

Denny’s plans to franchise more than 100 company-operated units in the next 18 months, as it transitions to become an almost entirely franchisee-owned brand, the family-dining chain announced this week in a call with analysts.

The company will move from being 90% franchise-owned to 95% to 97% franchised and will consolidate its market area of corporate units from 21 states down to eight states, executives said.

The move comes amid fairly stagnant sales. For the quarter ended Sept. 26, Denny’s posted same-store sales growth of 1% year over year.

Denny’s stock was up more than 24% midday Wednesday on the news.

The chain reported a bright spot in off-premise sales via the Denny’s On Demand app and website. Those sales now make up about 10% of all transactions at franchised restaurants, and off-premise sales have grown by more than 350 basis points as a percentage of total sales. About 70% of U.S. units currently offer delivery.

“We anticipate continued long-term growth in off-premise sales from Denny's On Demand platform as more restaurants expand their delivery channels,” John Miller, Denny’s president and CEO, said during the earnings call.

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