Company restaurant sales were up 31 percent at $44 million, which CFO Robert Verostek attributed to reduced dine-in restrictions and limited operating hours in the prior-year quarter. Company restaurant operating margin was $5.4 million compared to $3.4 million during the same period in 2021.
Commodity and labor inflation were both felt by Denny’s at 15 percent and 10 percent, respectively.
“These inflationary pressures were partially offset by the improving transaction counts, pricing, and product mix benefits,” Verostek said.
Adjusted EBITDA was $17.7 million, an increase of $5.9 million compared to the same period in 2021.
Despite operational hurdles, Denny’s is moving forward with introducing new kitchen equipment throughout its system. It will be used to make bacon crispier and sausage more evenly brown and allow for freshly baked bread.
More than 300 locations have received this new equipment, with the remaining balance of installations expected to be completed later this year.
Additionally, the brand is testing a new cloud-based restaurant technology platform, which will soon enter the beta testing phase. It's expected to be introduced systemwide by the end of 2023.
“Both the kitchen equipment and the technology platforms are expected to enhance the guest experience and drive operational efficiencies while the former also provides the ability to further upgrade our menu across all dayparts,” Miller said.
Franchisees completed six Heritage 2.0 remodels, while the company finished three. Franchisees opened five new units during the quarter, including one international location in Canada and two ghost kitchens in Baltimore via REEF Kitchens. The ghost kitchens will serve as a testing ground for new consumer reach in underrepresented metropolitan markets.
On Tuesday, Denny’s announced Kelli Valade would be joining the company as the new CEO effective June 1. The news comes after CEO John Miller’s early April announcement he would be retiring. Miller said he will stay through August 3 to ensure a “seamless leadership transition.”
Valade comes to Denny’s after an eight-month stint as CEO of Red Lobster. She has 30 years of experience in the restaurant industry, including roles as president, COO, and senior vice president of human resources at Chili’s parent Brinker International. Valade also spent time as the CEO of Black Box Intelligence, a position she held for two years.
“We are delighted to announce that Kelli Valade will become our next chief executive officer and president,” Miller said. “She has 30 years of restaurant industry experience in multiple executive leadership positions and brings a proven history of developing and executing bold strategies. She is absolutely the right person for the job, with the energy to not only drive our business forward, but to accelerate our growth.”
In addition to Miller, President Mark Wolfinger will retire effective June 1. He’s been with Denny’s for 17 years and has also served as CFO and chief administration officer.
“The future of this organization is indeed bright,” Miller said. “We have a steadfast and thoughtful board of directors, and new energetic and experienced CEO and president joining shortly, an exceptionally talented and tenured management team and a new complementary brand that will accelerate our growth.”