Segment Information

12 Months Ended

Dec. 25, 2024

Segment Reporting [Abstract]

Segment Information

Segment Information

We manage our business by brand and as a result have identified two operating segments, Denny’s and Keke’s. In addition, we have identified Denny’s as a reportable segment. The Denny’s reportable segment includes the results of all company and franchised and licensed Denny’s restaurants. Our Keke’s operating segment, which includes the results of all company and franchise restaurants, is included in Other.

The primary sources of revenues for all operating segments are the sale of food and beverages at our company restaurants and the collection of royalties, advertising revenue, initial and other fees, including occupancy revenue, from restaurants operated by our franchisees. We do not rely on any major customer as a source of sales and the customers and assets of all operating segments are located predominantly in the United States. There are no material transactions between segments.

Management’s measure of segment income is restaurant-level operating margin. The Company defines restaurant-level operating margin as operating income excluding the following four items: general and administrative expenses, depreciation and amortization, goodwill impairment charges, and operating (gains), losses and other charges, net. The Company excludes general and administrative expenses, which include primarily non restaurant-level costs associated with support of company and franchised restaurants and other activities at their corporate office. The Company excludes depreciation and amortization expense, substantially all of which is related to company restaurant-level assets, because such expenses represent historical sunk costs which do not reflect current cash outlays for the restaurants. The Company excludes goodwill impairment charges and operating (gains), losses and other charges, net, to provide a clearer perspective of its ongoing operating performance and a more relevant comparison to prior period results. The Company’s chief operating decision maker (“CODM”) is our Chief Executive Officer. Restaurant-level operating margin is used by our CODM to evaluate restaurant-level operating efficiency and performance and make key operating decisions.

The following tables present revenues by segment and a reconciliation of restaurant-level operating margin to net income:

	Fiscal Year Ended December 25, 2024
	Denny’s		Other		Total
Revenues	(In thousands)
Company restaurant sales	$	193,572	$	18,209	$	211,781
Franchise and license revenue:
Royalties	113,804		4,901		118,705
Advertising revenue	78,192		1,781		79,973
Initial and other fees	8,351		360		8,711
Occupancy revenue	33,075		89		33,164
Total franchise and license revenue	233,422		7,131		240,553
Total operating revenue	426,994		25,340		452,334
Costs and expenses
Costs of company restaurant sales, excluding depreciation and amortization:
Product costs	48,976		4,955		53,931
Payroll and benefits	72,828		7,777		80,605
Occupancy costs	15,680		2,449		18,129
Other operating expenses:
Utilities	6,404		550		6,954
Repairs and maintenance	3,806		217		4,023
Marketing	7,098		752		7,850
Legal settlements	1,670		30		1,700
Pre-opening costs	—		1,548		1,548
Other direct costs	13,267		1,737		15,004
Total costs of company restaurant sales, excluding depreciation and amortization	169,729		20,015		189,744
Costs of franchise and license revenue, excluding depreciation and amortization:
Advertising costs	78,192		1,781		79,973
Occupancy costs	20,451		88		20,539
Other direct costs	18,675		1,039		19,714
Total costs of franchise and license revenue, excluding depreciation and amortization	117,318		2,908		120,226
Total restaurant-level operating margin	$	139,947	$	2,417	$	142,364
Reconciliation of restaurant-level operating margin to net income
General and administrative expenses					$	80,197
Depreciation and amortization					14,857
Goodwill impairment charges					20
Operating (gains), losses and other charges, net					1,974
Total other operating expenses					97,048
Operating income					45,316
Interest expense, net					17,974
Other nonoperating income, net					(1,907)
Net income before income taxes					29,249
Provision for income taxes					7,678
Net income					$	21,571

	Fiscal Year Ended December 27, 2023
	Denny’s		Other		Total
Revenues	(In thousands)
Company restaurant sales	$	201,175	$	14,357	$	215,532
Franchise and license revenue:
Royalties	115,004		5,127		120,131
Advertising revenue	77,932		562		78,494
Initial and other fees	13,112		770		13,882
Occupancy revenue	35,883		—		35,883
Total franchise and license revenue	241,931		6,459		248,390
Total operating revenue	443,106		20,816		463,922
Costs and expenses
Costs of company restaurant sales, excluding depreciation and amortization:
Product costs	51,939		3,850		55,789
Payroll and benefits	75,407		5,259		80,666
Occupancy costs	14,875		1,934		16,809
Other operating expenses:
Utilities	7,418		430		7,848
Repairs and maintenance	3,486		175		3,661
Marketing	5,524		79		5,603
Legal settlements	2,302		—		2,302
Pre-opening costs	—		288		288
Other direct costs	13,452		1,181		14,633
Total costs of company restaurant sales, excluding depreciation and amortization	174,403		13,196		187,599
Costs of franchise and license revenue, excluding depreciation and amortization:
Advertising costs	77,932		562		78,494
Occupancy costs	22,160		—		22,160
Other direct costs	21,778		20		21,798
Total costs of franchise and license revenue, excluding depreciation and amortization	121,870		582		122,452
Total restaurant-level operating margin	$	146,833	$	7,038	$	153,871
Reconciliation of restaurant-level operating margin to net income
General and administrative expenses					$	77,770
Depreciation and amortization					14,385
Goodwill impairment charges					6,363
Operating (gains), losses and other charges, net					2,530
Total other operating expenses					101,048
Operating income					52,823
Interest expense, net					17,597
Other nonoperating expense, net					8,288
Net income before income taxes					26,938
Provision for income taxes					6,993
Net income					$	19,945

	Fiscal Year Ended December 28, 2022
	Denny’s		Other		Total
Revenues	(In thousands)
Company restaurant sales	$	193,576	$	6,177	$	199,753
Franchise and license revenue:
Royalties	111,718		2,173		113,891
Advertising revenue	75,926		—		75,926
Initial and other fees	27,870		392		28,262
Occupancy revenue	38,597		—		38,597
Total franchise and license revenue	254,111		2,565		256,676
Total operating revenue	447,687		8,742		456,429
Costs and expenses
Costs of company restaurant sales, excluding depreciation and amortization:
Product costs	51,705		1,912		53,617
Payroll and benefits	74,157		2,255		76,412
Occupancy costs	14,310		844		15,154
Other operating expenses
Utilities	7,075		198		7,273
Repairs and maintenance	3,803		71		3,874
Marketing	5,294		—		5,294
Legal settlements	4,224		—		4,224
Other direct costs	13,243		367		13,610
Total costs of company restaurant sales, excluding depreciation and amortization	173,811		5,647		179,458
Costs of franchise and license revenue, excluding depreciation and amortization:
Advertising costs	75,926		—		75,926
Occupancy costs	24,090		—		24,090
Other direct costs	35,305		6		35,311
Total costs of franchise and license revenue, excluding depreciation and amortization	135,321		6		135,327
Total restaurant-level operating margin	$	138,555	$	3,089	$	141,644
Reconciliation of restaurant-level operating margin to net income
General and administrative expenses					$	67,173
Depreciation and amortization					14,862
Operating (gains), losses and other charges, net					(1,005)
Total other operating expenses					81,030
Operating income					60,614
Interest expense, net					13,769
Other nonoperating expense (income), net					(52,585)
Net income before income taxes					99,430
Provision for income taxes					24,718
Net income					$	74,712

	Fiscal Year Ended
	December 25, 2024		December 27, 2023
Segment assets:	(In thousands)
Denny’s	$	344,986	$	340,136
Other	151,288		124,682
Total assets	$	496,274	$	464,818