SEC Form 10-Q filed by Denny's Corporation

8/4/25 4:59:04 PM ET

$DENN

Restaurants

Consumer Discretionary

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denn-20250625

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 25, 2025

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______________ to ________________

Commission File Number 0-18051

DENNY’S CORPORATION

(Exact name of registrant as specified in its charter)


Delaware		13-3487402
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

203 East Main Street
Spartanburg,	South Carolina	29319-0001
(Address of principal executive offices)		(Zip Code)

(864) 597-8000

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

$.01 Par Value, Common Stock

DENN

The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ý No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer

☐

Accelerated Filer

Non-Accelerated Filer

☐

Smaller Reporting Company

☐

Emerging Growth Company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ý

As of July 30, 2025, 51,498,994 shares of the registrant’s common stock, par value $0.01 per share, were outstanding.

TABLE OF CONTENTS


			Page
PART I - FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)
Consolidated Balance Sheets			3
Consolidated Statements of Income			4
Consolidated Statements of Comprehensive Income (Loss)			5
Consolidated Statements of Shareholders' Deficit			6
Consolidated Statements of Cash Flows			8
Notes to Consolidated Financial Statements			9
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations			23
Item 3. Quantitative and Qualitative Disclosures About Market Risk			32
Item 4. Controls and Procedures			33

PART II - OTHER INFORMATION

Item 1. Legal Proceedings			33
Item 1A. Risk Factors			33
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			34
Item 5. Other Information			34
Item 6. Exhibits			35
Signatures			36

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

Denny’s Corporation and Subsidiaries

Consolidated Balance Sheets

(Unaudited)


	June 25, 2025		December 25, 2024
	(In thousands, except per share amounts)
Assets
Current assets:
Cash and cash equivalents	$	1,166	$	1,698
Investments	—		1,106
Receivables, net	19,074		24,433
Inventories	2,129		1,747
Assets held for sale	1,096		381
Prepaid and other current assets	8,866		10,628
Total current assets	32,331		39,993
Property, net of accumulated depreciation of $162,101 and $159,588, respectively	118,601		111,417
Finance lease right-of-use assets, net of accumulated amortization of $6,813 and $6,783, respectively	5,695		6,200
Operating lease right-of-use assets, net	126,457		124,738
Goodwill	68,526		66,357
Intangible assets, net	89,630		91,739
Deferred financing costs, net	748		1,066

Other noncurrent assets	49,162		54,764
Total assets	$	491,150	$	496,274

Liabilities
Current liabilities:
Current finance lease liabilities	$	1,306	$	1,284
Current operating lease liabilities	16,676		15,487
Accounts payable	16,299		19,985
Other current liabilities	53,701		58,842
Total current liabilities	87,982		95,598
Long-term liabilities:
Long-term debt	268,600		261,300
Noncurrent finance lease liabilities	8,729		9,284
Noncurrent operating lease liabilities	122,108		120,841
Liability for insurance claims, less current portion	5,750		5,866
Deferred income taxes, net	6,276		9,964
Other noncurrent liabilities	26,284		27,446
Total long-term liabilities	437,747		434,701
Total liabilities	525,729		530,299
Shareholders' deficit
Common stock $0.01 par value; 135,000 shares authorized; June 25, 2025: 51,893 shares issued and 51,495 outstanding; December 25, 2024: 51,329 shares issued and outstanding	$	519	$	513
Paid-in capital	4,175		—
Retained earnings (deficit)	297		(2,499)
Accumulated other comprehensive loss, net	(37,975)		(32,039)
Treasury stock, at cost, 398 and 0 shares, respectively	(1,595)		—
Total shareholders' deficit	(34,579)		(34,025)
Total liabilities and shareholders' deficit	$	491,150	$	496,274

See accompanying notes

Denny’s Corporation and Subsidiaries

Consolidated Statements of Income

(Unaudited)


	Quarter Ended				Two Quarters Ended
	June 25, 2025		June 26, 2024		June 25, 2025		June 26, 2024
	(In thousands, except per share amounts)
Revenue:
Company restaurant sales	$	58,395	$	54,348	$	112,295	$	106,690
Franchise and license revenue	59,262		61,579		116,999		119,211
Total operating revenue	117,657		115,927		229,294		225,901
Costs of company restaurant sales, excluding depreciation and amortization:
Product costs	15,086		13,632		29,297		26,943
Payroll and benefits	21,869		20,493		42,965		40,967
Occupancy	5,181		4,671		10,240		9,244
Other operating expenses	10,209		8,782		19,868		18,542
Total costs of company restaurant sales, excluding depreciation and amortization	52,345		47,578		102,370		95,696
Costs of franchise and license revenue, excluding depreciation and amortization	29,217		33,428		57,571		60,802
General and administrative expenses	21,445		20,486		41,475		41,708
Depreciation and amortization	4,378		3,735		8,485		7,316
Goodwill impairment charges	—		20		—		20
Operating (gains), losses and other charges, net	1,700		1,565		5,611		1,238
Total operating costs and expenses, net	109,085		106,812		215,512		206,780
Operating income	8,572		9,115		13,782		19,121
Interest expense, net	5,374		4,573		9,802		8,993
Other nonoperating income, net	(563)		(224)		(401)		(861)
Income before income taxes	3,761		4,766		4,381		10,989
Provision for income taxes	1,291		1,198		1,585		2,730
Net income	$	2,470	$	3,568	$	2,796	$	8,259

Net income per share - basic	$	0.05	$	0.07	$	0.05	$	0.16
Net income per share - diluted	$	0.05	$	0.07	$	0.05	$	0.16

Basic weighted average shares outstanding	52,059		52,689		52,191		52,879
Diluted weighted average shares outstanding	52,131		52,787		52,294		53,002

See accompanying notes

Denny’s Corporation and Subsidiaries

Consolidated Statements of Comprehensive Income (Loss)

(Unaudited)


	Quarter Ended				Two Quarters Ended
	June 25, 2025		June 26, 2024		June 25, 2025		June 26, 2024
	(In thousands)
Net income	$	2,470	$	3,568	$	2,796	$	8,259
Other comprehensive income (loss), net of tax:
Minimum pension liability adjustment, net of tax of $2, $13, $5 and $19, respectively	9		41		17		51
Changes in the fair value of cash flow hedges, net of tax of $(898), $680, $(1,810) and $3,103, respectively	(2,665)		2,017		(5,372)		9,192
Reclassification of cash flow hedges to interest expense, net of tax of $(212), $(387), $(483) and $(768), respectively	(628)		(1,149)		(1,432)		(2,276)

Amortization of unrealized losses related to interest rate swaps to interest expense, net of tax of $222, $42, $287 and $78, respectively	657		125		851		231
Other comprehensive income (loss)	(2,627)		1,034		(5,936)		7,198
Total comprehensive income (loss)	$	(157)	$	4,602	$	(3,140)	$	15,457

See accompanying notes

Denny’s Corporation and Subsidiaries

Consolidated Statements of Shareholders’ Deficit

For the Quarters Ended June 25, 2025 and June 26, 2024

(Unaudited)


	Common Stock			Treasury Stock			Paid-in Capital		Retained Earnings (Deficit)		Accumulated Other Comprehensive Loss, Net		Total Shareholders’ Deficit
	Shares	Amount		Shares	Amount
	(In thousands)
Balance, March 26, 2025	51,649	$	516	(218)	$	(981)	$	1,566	$	(2,173)	$	(35,348)	$	(36,420)

Net income	—	—		—	—		—		2,470		—		2,470
Other comprehensive loss	—	—		—	—		—		—		(2,627)		(2,627)

Share-based compensation on equity classified awards, net of withholding tax	—	—		—	—		2,612		—		—		2,612
Purchase of treasury stock, including excise tax	—	—		(180)	(614)		—		—		—		(614)



Issuance of common stock for share-based compensation	244	3		—	—		(3)		—		—		—

Balance, June 25, 2025	51,893	$	519	(398)	$	(1,595)	$	4,175	$	297	$	(37,975)	$	(34,579)


	Common Stock			Treasury Stock			Paid-in Capital		Deficit		Accumulated Other Comprehensive Loss, Net		Total Shareholders’ Deficit
	Shares	Amount		Shares	Amount
	(In thousands)
Balance, March 27, 2024	53,262	$	533	(1,143)	$	(11,223)	$	7,534	$	(17,093)	$	(35,495)	$	(55,744)

Net income	—	—		—	—		—		3,568		—		3,568
Other comprehensive income	—	—		—	—		—		—		1,034		1,034

Share-based compensation on equity classified awards, net of withholding tax	—	—		—	—		2,601		—		—		2,601
Purchase of treasury stock, including excise tax	—	—		(627)	(4,702)		—		—		—		(4,702)



Issuance of common stock for share-based compensation	77	—		—	—		—		—		—		—

Balance, June 26, 2024	53,339	$	533	(1,770)	$	(15,925)	$	10,135	$	(13,525)	$	(34,461)	$	(53,243)

See accompanying notes

Denny’s Corporation and Subsidiaries

Consolidated Statements of Shareholders’ Deficit

For the Two Quarters Ended June 25, 2025 and June 26, 2024

(Unaudited)


	Common Stock			Treasury Stock			Paid-in Capital		Retained Earnings (Deficit)		Accumulated Other Comprehensive Loss, Net		Total Shareholders’ Deficit
	Shares	Amount		Shares	Amount
	(In thousands)
Balance, December 25, 2024	51,329	$	513	—	$	—	$	—	$	(2,499)	$	(32,039)	$	(34,025)

Net income	—	—		—	—		—		2,796		—		2,796
Other comprehensive loss	—	—		—	—		—		—		(5,936)		(5,936)

Share-based compensation on equity classified awards, net of withholding tax	—	—		—	—		4,181		—		—		4,181
Purchase of treasury stock, including excise tax	—	—		(398)	(1,595)		—		—		—		(1,595)



Issuance of common stock for share-based compensation	564	6		—	—		(6)		—		—		—

Balance, June 25, 2025	51,893	$	519	(398)	$	(1,595)	$	4,175	$	297	$	(37,975)	$	(34,579)


	Common Stock			Treasury Stock			Paid-in Capital		Deficit		Accumulated Other Comprehensive Loss, Net		Total Shareholders’ Deficit
	Shares	Amount		Shares	Amount
	(In thousands)
Balance, December 27, 2023	52,906	$	529	(667)	$	(6,460)	$	6,688	$	(21,784)	$	(41,659)	$	(62,686)

Net income	—	—		—	—		—		8,259		—		8,259
Other comprehensive income	—	—		—	—		—		—		7,198		7,198

Share-based compensation on equity classified awards, net of withholding tax	—	—		—	—		3,451		—		—		3,451
Purchase of treasury stock, including excise tax	—	—		(1,103)	(9,465)		—		—		—		(9,465)



Issuance of common stock for share-based compensation	433	4		—	—		(4)		—		—		—

Balance, June 26, 2024	53,339	$	533	(1,770)	$	(15,925)	$	10,135	$	(13,525)	$	(34,461)	$	(53,243)

See accompanying notes

Denny’s Corporation and Subsidiaries

Consolidated Statements of Cash Flows

(Unaudited)


	Two Quarters Ended
	June 25, 2025		June 26, 2024
	(In thousands)
Cash flows from operating activities:
Net income	$	2,796	$	8,259
Adjustments to reconcile net income to cash flows provided by operating activities:
Depreciation and amortization	8,485		7,316
Goodwill impairment charges	—		20
Operating (gains), losses and other charges, net	5,611		1,238
Amortization on interest rate swaps, net	1,138		308
Amortization of deferred financing costs	318		318
Gains on investments	(36)		(14)
(Gains) losses on early termination of debt and leases	(126)		132
Deferred income tax benefit	(1,874)		(2,144)
Increase of tax valuation allowance	193		179
Share-based compensation expense	5,767		5,400
Changes in assets and liabilities, excluding acquisitions and dispositions:
Receivables	5,256		1,509
Inventories	(293)		280
Prepaids and other current assets	1,762		3,639
Other noncurrent assets	(4,060)		622
Operating lease assets and liabilities	120		(806)
Accounts payable	122		(8,524)
Other accrued liabilities	(9,494)		(1,836)
Other noncurrent liabilities	(1,317)		(1,500)
Net cash flows provided by operating activities	14,368		14,396
Cash flows from investing activities:
Capital expenditures	(16,384)		(9,948)
Acquisition of restaurants	(4,082)		—


Proceeds from asset sales	1,910		1,000
Investment purchases	—		(1,500)
Proceeds from sale of investments	1,142		—

Collections on notes receivable	518		252
Issuance of notes receivable	(640)		(153)
Net cash flows used in investing activities	(17,536)		(10,349)
Cash flows from financing activities:
Revolver borrowings	62,100		70,000
Revolver payments	(54,800)		(68,000)
Repayments of finance leases	(613)		(726)

Tax withholding on share-based payments	(1,000)		(1,872)

Purchase of treasury stock	(1,668)		(9,380)

Net bank overdrafts	(1,383)		2,204
Net cash flows provided by (used in) financing activities	2,636		(7,774)
Decrease in cash and cash equivalents	(532)		(3,727)
Cash and cash equivalents at beginning of period	1,698		4,893
Cash and cash equivalents at end of period	$	1,166	$	1,166

See accompanying notes

Denny’s Corporation and Subsidiaries

Notes to Consolidated Financial Statements

(Unaudited)

Note 1. Introduction and Basis of Presentation

Introduction

Denny’s Corporation, or the Company, is one of America’s largest full-service restaurant chains based on number of restaurants. As of June 25, 2025, the Company consisted of 1,558 restaurants, 1,474 of which were franchised/licensed restaurants and 84 of which were company operated.

The Company consists of the Denny’s brand ("Denny's") and the Keke’s Breakfast Cafe brand (“Keke’s”). As of June 25, 2025, the Denny's brand consisted of 1,484 restaurants, 1,422 of which were franchised/licensed restaurants and 62 of which were company operated. As of June 25, 2025, the Keke's brand consisted of 74 restaurants, 52 of which were franchised restaurants and 22 of which were company operated.

Basis of Presentation

Our unaudited consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission for interim financial information. Therefore, certain information and notes normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) have been omitted. In our opinion, all adjustments considered necessary for a fair presentation of the interim periods presented have been included. Such adjustments are of a normal and recurring nature. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. Actual results may differ from these estimates under different assumptions or conditions; however, we believe that our estimates are reasonable.

These interim consolidated financial statements should be read in conjunction with our consolidated financial statements and notes thereto as of and for the fiscal year ended December 25, 2024 which are contained in our audited Annual Report on Form 10-K for the fiscal year ended December 25, 2024. The results of operations for the interim periods presented are not necessarily indicative of the results for the entire fiscal year ending December 31, 2025. Our significant interim accounting policies include the recognition of advertising and marketing costs, generally in proportion to revenue, and the recognition of income taxes using an estimated annual effective rate.

Change in Presentation

Certain reclassifications have been made in the 2024 interim consolidated financial statements and notes to conform to the 2025 presentation. These reclassifications did not affect total revenues or net income.

Note 2. Summary of Significant Accounting Policies

Accounting Standards to be Adopted

In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures”. The new guidance requires enhanced effective tax rate reconciliation and income taxes paid disclosures. ASU 2023-09 is effective for annual periods beginning after December 15, 2024 (our fiscal 2025). We are currently evaluating the impact that the adoption of this new guidance will have on our consolidated financial statements and will add necessary disclosures upon adoption.

In November 2024, the FASB issued ASU 2024-03, “Disaggregation of Income Statement Expenses (Subtopic 220-40)”. The new guidance requires disaggregation of certain relevant expenses included in the consolidated statements of income. ASU 2024-03 is effective for annual periods beginning after December 15, 2026 (our fiscal 2027) and interim periods beginning after December 15, 2027 (our fiscal 2028). We are currently evaluating the impact that the adoption of this new guidance will have on our consolidated financial statements and will add necessary disclosures upon adoption.

We reviewed all other newly issued accounting pronouncements and concluded that they are either not applicable to our business or are not expected to have a material effect on our consolidated financial statements as a result of future adoption.

Note 3. Receivables

Receivables consisted of the following:


	June 25, 2025		December 25, 2024
	(In thousands)
Receivables, net:
Trade accounts receivable from franchisees	$	13,564	$	15,798
Notes and loan receivables from franchisees	417		490

Vendor receivables	1,703		3,632
Credit card receivables	822		1,815
Other	2,870		3,140
Allowance for credit losses	(302)		(442)
Total receivables, net	$	19,074	$	24,433

Note 4. Goodwill and Intangible Assets

The following table reflects the changes in carrying amounts of goodwill and goodwill by segment:


			June 25, 2025
			(In thousands)
Balance, beginning of year			$	66,357
Additions related to the acquisition of five Keke’s franchise units			2,157
Additions related to the acquisition of a Denny’s franchise unit			404
Write-offs and reclassifications associated with the sale of Keke's units			(392)


Balance, end of period			$	68,526

Goodwill by segment consisted of the following:
	June 25, 2025		December 25, 2024
	(In thousands)

Denny’s	$	37,911	$	37,507
Other	30,615		28,850
Total goodwill	$	68,526	$	66,357

Intangible assets consisted of the following:


	June 25, 2025				December 25, 2024
	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
	(In thousands)
Intangible assets with indefinite lives:
Trade names	$	79,687	$	—	$	79,687	$	—
Liquor licenses	120		—		120		—
Intangible assets with definite lives:
Reacquired franchise rights	9,722		6,599		9,135		6,188
Franchise agreements	8,217		1,517		10,603		1,618
Intangible assets, net	$	97,746	$	8,116	$	99,545	$	7,806

Amortization expense for intangible assets with definite lives totaled $0.4 million and $0.7 million for the quarter and year-to-date periods ended June 25, 2025, respectively. Amortization expense for intangible assets with definite lives totaled $0.4 million and $0.8 million for the quarter and year-to-date periods ended June 26, 2024, respectively.

Note 5. Other Current Liabilities

Other current liabilities consisted of the following:


	June 25, 2025		December 25, 2024
	(In thousands)
Accrued payroll	$	14,516	$	15,434
Current portion of liability for insurance claims	4,433		4,494
Accrued taxes	4,808		4,432
Accrued advertising	6,686		11,785
Gift cards	6,786		8,382
Accrued legal settlements	3,859		4,114
Accrued interest	4,402		4,368
Other	8,211		5,833
Other current liabilities	$	53,701	$	58,842

Note 6. Fair Value of Financial Instruments

Financial assets and liabilities measured at fair value on a recurring basis are summarized below:


	Total		Quoted Prices in Active Markets for Identical Assets/Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(In thousands)
Fair value measurements as of June 25, 2025:
Deferred compensation plan investments (1)	$	10,227	$	10,227	$	—	$	—
Interest rate swaps (2)	11,745		—		11,745		—

Total	$	21,972	$	10,227	$	11,745	$	—

Fair value measurements as of December 25, 2024:
Deferred compensation plan investments (1)	$	10,400	$	10,400	$	—	$	—
Interest rate swaps (2)	20,841		—		20,841		—
Investments (3)	1,106		—		1,106		—
Total	$	32,347	$	10,400	$	21,947	$	—

(1) The fair values of our deferred compensation plan investments are based on the closing market prices of the elected investments and are included in other noncurrent assets in our Consolidated Balance Sheets.

(2) The fair values of our interest rate swaps are based upon Level 2 inputs, which include valuation models. The key inputs for the valuation models are quoted market prices, interest rates, forward yield curves and credit risk adjustments that are necessary to reflect the probability of default by the counterparty or us. For disclosures about the fair value measurements of our derivative instruments, see Note 7.

(3) The fair values of our investments are valued using a readily determinable net asset value per share based on the fair value of the underlying securities. There are no significant redemption restrictions associated with these investments.

Those assets and liabilities measured at fair value on a non-recurring basis are summarized below:


			Significant Unobservable Inputs (Level 3)		Impairment Charges
		(In thousands)
Fair value measurements as of June 25, 2025:

Assets held and used(1)(2)			$	—	$	49


(1)	As of June 25, 2025, impaired assets were written down to their estimated fair value. To determine fair value, we used the income approach, which assumes that the future cash flows reflect current market expectations. These fair value measurements require significant judgment using Level 3 inputs, such as discounted cash flows from operations, which are not observable from the market, directly or indirectly. There is uncertainty in the projected future cash flows used in the Company's impairment analysis, which requires the use of estimates and assumptions. If actual performance does not achieve the projections, or if the assumptions used change in the future, the Company may be required to recognize impairment charges in future periods.
(2)	Assets held and used that are measured at fair value on a non-recurring basis include property, operating lease right-of-use assets, finance lease right-of-use assets, goodwill and intangible assets.

During the quarter and year-to-date periods ended June 25, 2025, we recognized impairment charges of less than $0.1 million and $3.3 million related to certain of these assets, respectively. See Note 9.

The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable and accrued expenses are deemed to approximate fair value due to the immediate or short-term maturity of these instruments. The fair value of notes receivable approximates the carrying value after consideration of recorded allowances and related risk-based interest rates. The liabilities under our credit facility are carried at historical cost, which approximates fair value. The fair value of our senior secured revolver approximates its carrying value since it is a variable rate facility (Level 2).

Note 7. Long-Term Debt

The Company and certain of its subsidiaries have a credit facility consisting of a five-year $400 million senior secured revolver (with a $25 million letter of credit sublimit). The credit facility includes an accordion feature that would allow us to increase the size of the facility to $450 million. Borrowings bear a tiered interest rate, which is based on the Company's consolidated leverage ratio. The maturity date for the credit facility is August 26, 2026.

The credit facility is available for working capital, capital expenditures and other general corporate purposes. The credit facility is guaranteed by the Company and its material subsidiaries and is secured by assets of the Company and its subsidiaries, including the stock of its subsidiaries (other than its insurance captive subsidiary). It includes negative covenants that are usual for facilities and transactions of this type. The credit facility also includes certain financial covenants, including a maximum consolidated leverage ratio of 4.0 times and a minimum consolidated fixed charge coverage ratio of 1.5 times. As of June 25, 2025, our consolidated leverage ratio was 3.98 times and our consolidated fixed charge coverage ratio was 2.05 times. We were in compliance with all financial covenants as of June 25, 2025, and we expect to remain in compliance throughout the remainder of 2025.

As of June 25, 2025, we had outstanding revolver loans of $268.6 million and outstanding letters of credit under the credit facility of $15.9 million. These balances resulted in unused commitments of $115.5 million as of June 25, 2025 under the credit facility.

As of June 25, 2025, borrowings under the credit facility bore interest at a rate of Adjusted Daily Simple SOFR plus 2.25%. Letters of credit under the credit facility bore interest at a rate of 2.38%. The commitment fee, paid on the unused portion of the credit facility, was set to 0.35%.

Prior to considering the impact of our interest rate swaps, described below, the weighted-average interest rate on outstanding revolver loans was 6.67% and 6.98% as of June 25, 2025 and December 25, 2024, respectively. Taking into consideration our interest rate swaps that are designated as cash flow hedges, the weighted-average interest rate of outstanding revolver loans was 5.36% and 5.01% as of June 25, 2025 and December 25, 2024, respectively.

Interest Rate Hedges

We have receive-variable, pay-fixed interest rate swaps to hedge the forecasted cash flows of our floating rate debt. A summary of our interest rate swaps designated as cash flow hedges as of June 25, 2025 is as follows:


Trade Date	Effective Date	Maturity Date	Notional Amount			Fair Value		Fixed Rate
			(In thousands)
October 1, 2015	March 29, 2018	March 31, 2026	$	50,000		$	614	2.37	%
February 15, 2018	March 31, 2020	December 31, 2033	$	189,000	(1)	$	11,131	3.09	%
Total			$	239,000		$	11,745

(1) The notional amounts of the swaps entered into on February 15, 2018 increase periodically until they reach the maximum notional amount of $335 million on August 31, 2033.

Changes in Fair Value of Interest Rate Swaps

To the extent the swaps are highly effective in offsetting the variability of the hedged cash flows, changes in the fair value of the swaps are not included in the Consolidated Statements of Income but are reported as a component of other comprehensive income (loss). Our interest rate swaps are designated as cash flow hedges with unrealized gains and losses recorded as a component of accumulated other comprehensive loss, net.

As of June 25, 2025, the fair value of the swaps designated as cash flow hedges was an asset of $11.7 million, recorded as a component of other noncurrent assets. The designated swaps have an offsetting amount (before taxes) recorded as a component of accumulated other comprehensive loss, net in our Consolidated Balance Sheets. See Note 13 for amounts recorded in accumulated other comprehensive loss related to interest rate swaps. During the year-to-date period ended June 25, 2025, we reclassified $1.9 million from accumulated other comprehensive loss, net as a reduction to interest expense, net. We expect to reclassify $3.6 million from accumulated other comprehensive loss, net as a reduction to interest expense, net in our Consolidated Statements of Income related to swaps designated as cash flow hedges during the next 12 months.

Amortization of Certain Amounts Included in Accumulated Other Comprehensive Loss, Net

At June 25, 2025, we had a total of $62.3 million (before taxes) included in accumulated other comprehensive loss, net related to (i) the discontinuance of hedge accounting treatment related to certain cash flow hedges in prior years and (ii) the fair value of certain swaps at the date of designation as cash flow hedges that are being amortized into our Consolidated Statements of Income as a component of interest expense, net over the remaining term of the related swap.

For the quarter and year-to-date periods ended June 25, 2025, we recorded unrealized losses of $0.9 million and $1.1 million to interest expense, net, respectively. For the quarter and year-to-date periods ended June 26, 2024, we recorded unrealized losses of $0.2 million and $0.3 million to interest expense, net, respectively. We expect to amortize $4.2 million from accumulated other comprehensive loss, net to interest expense, net in our Consolidated Statements of Income related to dedesignated interest rate swaps during the next 12 months.

Note 8. Revenues

The following table disaggregates our revenue by sales channel and type of good or service:


	Quarter Ended				Two Quarters Ended
	June 25, 2025		June 26, 2024		June 25, 2025		June 26, 2024
	(In thousands)
Company restaurant sales	$	58,395	$	54,348	$	112,295	$	106,690
Franchise and license revenue:
Royalties	29,091		30,014		56,928		59,320
Advertising revenue	19,490		20,788		38,563		38,926
Initial and other fees	2,804		2,448		5,678		4,264
Occupancy revenue	7,877		8,329		15,830		16,701
Franchise and license revenue	59,262		61,579		116,999		119,211
Total operating revenue	$	117,657	$	115,927	$	229,294	$	225,901

Franchise occupancy revenue consisted of the following:


	Quarter Ended				Two Quarters Ended
	June 25, 2025		June 26, 2024		June 25, 2025		June 26, 2024
	(In thousands)
Operating lease revenue	$	5,848	$	6,071	$	11,834	$	12,199
Variable lease revenue	2,029		2,258		3,996		4,502
Total occupancy revenue	$	7,877	$	8,329	$	15,830	$	16,701

Balances related to contracts with customers consist of receivables, contract assets, deferred franchise revenue and deferred gift card revenue. See Note 3 for details on our receivables.

Deferred franchise revenue consists primarily of the unamortized portion of initial franchise fees that are currently being amortized into revenue and amounts related to development agreements and unopened restaurants that will begin amortizing into revenue when the related restaurants are opened. Deferred franchise revenue represents our remaining performance obligations to our franchisees, excluding amounts of variable consideration related to sales-based royalties and advertising.

The components of the change in deferred franchise revenue are as follows:


	(In thousands)
Balance, December 25, 2024	$	16,968
Fees received from franchisees	589

Revenue recognized (1)	(1,654)
Balance, June 25, 2025	15,903
Less current portion included in other current liabilities	1,985
Deferred franchise revenue included in other noncurrent liabilities	$	13,918

(1) Of this amount $1.4 million was included in the deferred franchise revenue balance as of December 25, 2024.

We record contract assets related to incentives and subsidies provided to franchisees related to new unit openings and/or equipment upgrades. These amounts will be recognized as a component of franchise and license revenue over the remaining term of the related franchise agreements.

The components of the change in contract assets are as follows:


	(In thousands)
Balance, December 25, 2024	$	6,706
Franchisee deferred costs	4,604
Contract asset amortization	(712)
Balance, June 25, 2025	10,598
Less current portion included in other current assets	1,264
Contract assets included in other noncurrent assets	$	9,334

The Company purchases equipment related to various programs for franchise restaurants. We bill our franchisees and recognize revenue when the related equipment is installed, less amounts contributed from the Company, which have been deferred as contract assets in the table above. We recognized $0.4 million and $1.0 million of revenue, recorded as a component of initial and other fees, related to the sale of equipment to franchisees during the quarter and year-to-date periods ended June 25, 2025, respectively. We recognized $0.2 million and $0.5 million of revenue, recorded as a component of initial and other fees, related to the sale of equipment to franchisees during the quarter and year-to-date periods ended June 26, 2024, respectively. As of June 25, 2025, we had $0.5 million in inventory and $0.4 million in receivables related to the purchased equipment. As of December 25, 2024, we had $0.2 million in inventory and $0.4 million in receivables related to the purchased equipment.

As of June 25, 2025, deferred franchise revenue, net of contract asset amortization, expected to be recognized in the future is as follows:


	(In thousands)
Remainder of 2025	$	301
2026	833
2027	808
2028	687
2029	589
Thereafter	2,087
Deferred franchise revenue, net	$	5,305

Deferred gift card liabilities consist of the unredeemed portion of gift cards sold in company restaurants and at third party locations. The balance of deferred gift card liabilities represents our remaining performance obligations to our customers. The balance of deferred gift card liabilities as of June 25, 2025 and December 25, 2024 was $6.8 million and $8.4 million, respectively. During the year-to-date period ended June 25, 2025, we recognized revenue of $0.4 million from gift card redemptions at company restaurants.

Note 9. Operating (Gains), Losses and Other Charges, Net

Operating (gains), losses and other charges, net consisted of the following:


	Quarter Ended				Two Quarters Ended
	June 25, 2025		June 26, 2024		June 25, 2025		June 26, 2024
	(In thousands)
(Gains) losses on sales of assets and other, net	$	425	$	526	$	(1,317)	$	(94)
Impairment charges	49		619		3,265		714
Restructuring charges and exit costs	1,226		420		3,663		618
Operating (gains), losses and other charges, net	$	1,700	$	1,565	$	5,611	$	1,238

During the quarters and year-to-date periods ended June 25, 2025 and June 26, 2024, (gains) losses on sales of assets and other, net were primarily related to the sales of real estate and restaurants.

As of June 25, 2025, we had recorded assets held for sale at their carrying amount of $1.1 million (consisting of property of $0.7 million and goodwill of $0.4 million) related to one parcel of real estate and two restaurants. As of December 25, 2024, we

had recorded assets held for sale at their carrying amount of $0.4 million (consisting of property) related to two parcels of real estate.

We recorded impairment charges of less than $0.1 million and $3.3 million for the quarter and year-to-date periods ended June 25, 2025, respectively. The impairment charge for the quarter related to an operating lease right-of-use asset. The $3.3 million charge for the year-to-date period ended June 25, 2025 included $2.0 million related to franchise agreements for closed units. Additionally, $0.4 million of property and $0.9 million of operating lease right-of-use assets were impaired related to the relocation of certain support functions.

Restructuring charges and exit costs consisted of the following:


	Quarter Ended				Two Quarters Ended
	June 25, 2025		June 26, 2024		June 25, 2025		June 26, 2024
	(In thousands)
Exit costs	$	9	$	49	$	49	$	91
Severance and other restructuring charges	1,217		371		3,614		527
Total restructuring charges and exit costs	$	1,226	$	420	$	3,663	$	618

Exit costs primarily consist of costs related to closed restaurants. Exit cost liabilities related to lease costs are included as a component of operating lease liabilities in our Consolidated Balance Sheets.

Severance and other restructuring charges for the quarter and year-to-date periods ended June 25, 2025 primarily consisted of severance costs resulting from the elimination of 26 positions during the quarter and 66 positions year-to-date, as part of a cost savings initiative. As of June 25, 2025 and December 25, 2024, we had accrued severance and other restructuring charges of $2.0 million and $0.3 million, respectively. The balance as of June 25, 2025 is expected to be paid during the next 12 months.

Note 10. Share-Based Compensation

Total share-based compensation included as a component of general and administrative expenses was as follows:


	Quarter Ended				Two Quarters Ended
	June 25, 2025		June 26, 2024		June 25, 2025		June 26, 2024
	(In thousands)
Employee share awards	$	2,772	$	2,409	$	5,324	$	4,980
Restricted stock units for board members	210		215		443		420
Total share-based compensation	$	2,982	$	2,624	$	5,767	$	5,400

Employee Share Awards

During the year-to-date period ended June 25, 2025, we granted certain employees 0.9 million performance share units (“PSUs”) with a weighted average grant date fair value of $6.73 per share that vest based on the total shareholder return (“TSR”) of our common stock compared to the TSRs of a group of peer companies. Half of these PSUs will be settled in cash, net of taxes (liability-classified awards) and half will be settled in shares of stock, net of shares withheld for taxes (equity-classified awards). As the TSR based PSUs contain a market condition, a Monte Carlo valuation was used to determine the grant date fair value. The performance period for these PSUs is the three-year fiscal period beginning December 26, 2024 and ending December 29, 2027. The PSUs will vest and be earned at the end of the performance period at which point the relative TSR achievement percentages will be applied to the vested units (from 0% to 150% of the target award).

During the year-to-date period ended June 25, 2025, we also granted certain employees 1.4 million restricted stock units ("RSUs") with a weighted average grant date fair value of $6.08 per share. These RSUs generally vest evenly over the three-year fiscal period beginning December 26, 2024 and ending December 29, 2027. We recognize compensation cost associated with these RSU awards on a straight-line basis over the entire performance period of the award.

During the year-to-date period ended June 25, 2025, we issued 0.3 million shares of common stock related to vested PSUs and RSUs for employees. In addition, 0.2 million shares of common stock were withheld in lieu of taxes related to vested PSUs and RSUs.

As of June 25, 2025, we had $19.2 million of unrecognized compensation cost related to unvested PSU awards and RSU awards outstanding, which have a weighted average remaining contractual term of 2.0 years.

Restricted Stock Units for Board Members

During the quarter and year-to-date periods ended June 25, 2025, we granted 0.2 million RSUs (which are equity classified) with a weighted average grant date fair value of $4.44 per unit to non-employee members of our Board of Directors. The RSUs vest after a one-year service period. A director may elect to convert these awards to shares of common stock either on a specific date in the future (while still serving as a member of our Board of Directors), upon termination as a member of our Board of Directors, or in three equal annual installments commencing after termination of service as a member of our Board of Directors.

During the quarter and year-to-date periods ended June 25, 2025, 0.2 million RSUs were converted into shares of common stock and fewer than 0.1 million RSUs were converted to cash.

As of June 25, 2025, we had $0.6 million of unrecognized compensation cost related to unvested RSU awards outstanding, which have a weighted average remaining contractual term of 0.9 years.

Note 11. Income Taxes

The effective income tax rate was 34.3% for the quarter and 36.2% for the year-to-date period ended June 25, 2025, compared to 25.1% and 24.8% for the prior year periods, respectively. The effective income tax rate for the quarter and year-to-date periods ended June 25, 2025 included discrete items relating to share-based compensation of 9.0% and 11.5%, respectively. We did not have similar discrete items for the quarter and year-to-date periods ended June 26, 2024.

On July 4, 2025, H.R. 1, the budget bill known as the One Big Beautiful Bill Act ("OBBBA") was enacted. The OBBBA includes significant provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, modifications to the international tax framework, and the restoration of favorable tax treatment for certain business provisions. The legislation has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. We are currently assessing its impact on our consolidated financial statements.

Note 12. Net Income Per Share

The amounts used for the basic and diluted net income per share calculations are summarized below:


	Quarter Ended				Two Quarters Ended
	June 25, 2025		June 26, 2024		June 25, 2025		June 26, 2024
	(In thousands, except per share amounts)
Net income	$	2,470	$	3,568	$	2,796	$	8,259

Weighted average shares outstanding - basic	52,059		52,689		52,191		52,879
Effect of dilutive share-based compensation awards	72		98		103		123
Weighted average shares outstanding - diluted	52,131		52,787		52,294		53,002

Net income per share - basic	$	0.05	$	0.07	$	0.05	$	0.16
Net income per share - diluted	$	0.05	$	0.07	$	0.05	$	0.16

Anti-dilutive share-based compensation awards	1,133		686		1,225		828

Note 13. Shareholders' Deficit

Share Repurchases

Our credit facility permits the repurchase of the Company's stock and the payment of cash dividends subject to certain limitations. Our Board of Directors approves share repurchases of our common stock. Under these authorizations, we may, from time to time, purchase shares in the open market (including pre-arranged stock trading plans in accordance with the guidelines specified in Rule 10b5-1 under the Securities Exchange Act of 1934, as amended) or in privately negotiated transactions, subject to market and business conditions. Currently, we are operating under a $250 million share repurchase authorization approved by the Board of Directors in December 2019.

During the year-to-date period ended June 25, 2025, we repurchased a total of 0.4 million shares of our common stock for $1.6 million, including excise taxes. This brings the total amount repurchased under the current authorization to $162.4 million, including excise taxes, leaving $87.6 million that can be used to repurchase our common stock under this authorization as of June 25, 2025. Repurchased shares are included as treasury stock in our Consolidated Balance Sheets and our Consolidated Statements of Shareholders' Deficit.

In the fourth quarter of fiscal 2024, the Board approved the retirement of 2.0 million shares of treasury stock at a weighted average share price of $8.78, including excise taxes. As of June 25, 2025, 0.4 million shares were held in treasury stock.

Accumulated Other Comprehensive Loss, Net

The components of the change in accumulated other comprehensive loss, net were as follows:


	Defined Benefit Plans		Derivatives		Accumulated Other Comprehensive Loss, Net
	(In thousands)
Balance as of December 25, 2024	$	(209)	$	(31,830)	$	(32,039)

Amortization of net loss (1)	21		—		21
Settlement loss recognized (1)	1		—		1
Changes in the fair value of cash flow hedges	—		(7,182)		(7,182)
Reclassification of cash flow hedges to interest expense, net (2)	—		(1,915)		(1,915)

Amortization of unrealized losses related to interest rate swaps to interest expense, net	—		1,138		1,138
Income tax expense related to items of other comprehensive income (loss)	(5)		2,006		2,001
Balance as of June 25, 2025	$	(192)	$	(37,783)	$	(37,975)

(1) Before-tax amount related to our defined benefit plans that was reclassified from accumulated other comprehensive loss, net and included as a component of pension expense within general and administrative expenses in our Consolidated Statements of Income during the quarter ended June 25, 2025.

(2) Amounts reclassified from accumulated other comprehensive loss, net into interest expense, net in our Consolidated Statements of Income represent payments either (received from) or made to the counterparty for the interest rate hedges. See Note 7 for additional details.

Note 14. Commitments and Contingencies

Legal Proceedings

There are various claims and pending legal actions against or indirectly involving us, incidental to and arising out of the ordinary course of the business. In the opinion of management, based upon information currently available, the ultimate liability with respect to these proceedings and claims will not materially affect our consolidated results of operations or financial position.

Note 15. Supplemental Cash Flow Information


	Two Quarters Ended
	June 25, 2025		June 26, 2024
	(In thousands)
Income taxes paid, net	$	2,250	$	3,668
Interest paid	$	8,411	$	8,185

Noncash investing and financing activities:
Restaurant acquisition payable	$	300	$	—

Accrued purchase of property	$	549	$	229
Issuance of common stock, pursuant to share-based compensation plans	$	2,385	$	3,793

Execution of finance leases	$	191	$	119
Treasury stock payable	$	—	$	137
Treasury stock excise tax payable	$	—	$	511
Receivables included in acquisition of restaurants	$	224	$	—

Note 16. 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 franchised Keke's 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 the 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 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:


	Quarter Ended June 25, 2025						Two Quarters Ended June 25, 2025
	Denny's		Other		Total		Denny's		Other		Total
Revenues	(In thousands)						(In thousands)
Company restaurant sales	$	48,474	$	9,921	$	58,395	$	94,180	$	18,115	$	112,295
Franchise and license revenue:
Royalties	27,912		1,179		29,091		54,504		2,424		56,928
Advertising revenue	19,047		443		19,490		37,667		896		38,563
Initial and other fees	2,742		62		2,804		5,471		207		5,678
Occupancy revenue	7,844		33		7,877		15,764		66		15,830
Total franchise and license revenue	57,545		1,717		59,262		113,406		3,593		116,999
Total operating revenue	106,019		11,638		117,657		207,586		21,708		229,294
Cost and expenses
Costs of company restaurant sales, excluding depreciation and amortization:
Product costs	12,301		2,785		15,086		24,020		5,277		29,297
Payroll and benefits	17,971		3,898		21,869		35,664		7,301		42,965
Occupancy costs	3,909		1,272		5,181		7,906		2,334		10,240
Other operating expenses:
Utilities	1,516		313		1,829		2,975		548		3,523
Repairs and maintenance	742		105		847		1,506		177		1,683
Marketing	2,085		301		2,386		3,898		516		4,414
Legal settlements	382		9		391		807		(11)		796
Pre-opening costs	—		645		645		—		1,354		1,354
Other direct costs	3,258		853		4,111		6,568		1,530		8,098
Total costs of company restaurant sales, excluding depreciation and amortization	42,164		10,181		52,345		83,344		19,026		102,370
Costs of franchise and license revenue, excluding depreciation and amortization:
Advertising costs	19,047		443		19,490		37,667		896		38,563
Occupancy costs	4,839		33		4,872		9,739		66		9,805
Other direct costs	4,580		275		4,855		8,520		683		9,203
Total costs of franchise and license revenue, excluding depreciation and amortization	28,466		751		29,217		55,926		1,645		57,571
Total restaurant-level operating margin	35,389		706		36,095		68,316		1,037		69,353
Reconciliation of restaurant-level operating margin to net income
General and administrative expenses					21,445						41,475
Depreciation and amortization					4,378						8,485

Operating (gains), losses and other charges, net					1,700						5,611
Total other operating expenses					27,523						55,571
Operating income					8,572						13,782
Interest expense, net					5,374						9,802
Other nonoperating income, net					(563)						(401)
Income before income taxes					3,761						4,381
Provision for income taxes					1,291						1,585
Net income					$	2,470					$	2,796


	Quarter Ended June 26, 2024						Two Quarters Ended June 26, 2024
	Denny's		Other		Total		Denny's		Other		Total
Revenues	(In thousands)						(In thousands)
Company restaurant sales	$	49,557	$	4,791	$	54,348	$	97,724	$	8,966	$	106,690
Franchise and license revenue:
Royalties	28,781		1,233		30,014		56,830		2,490		59,320
Advertising revenue	20,339		449		20,788		38,019		907		38,926
Initial and other fees	2,369		79		2,448		4,112		152		4,264
Occupancy revenue	8,306		23		8,329		16,678		23		16,701
Total franchise and license revenue	59,795		1,784		61,579		115,639		3,572		119,211
Total operating revenue	109,352		6,575		115,927		213,363		12,538		225,901
Cost and expenses
Costs of company restaurant sales, excluding depreciation and amortization:
Product costs	12,340		1,292		13,632		24,544		2,399		26,943
Payroll and benefits	18,374		2,119		20,493		37,031		3,936		40,967
Occupancy costs	4,031		640		4,671		8,044		1,200		9,244
Other operating expenses:
Utilities	1,550		145		1,695		3,097		253		3,350
Repairs and maintenance	947		61		1,008		1,924		89		2,013
Marketing	1,758		118		1,876		3,239		241		3,480
Legal settlements	197		11		208		1,646		11		1,657
Pre-opening costs	—		191		191		—		557		557
Other direct costs	3,418		386		3,804		6,648		837		7,485
Total costs of company restaurant sales, excluding depreciation and amortization	42,615		4,963		47,578		86,173		9,523		95,696
Costs of franchise and license revenue, excluding depreciation and amortization:
Advertising costs	20,339		449		20,788		38,019		907		38,926
Occupancy costs	5,072		22		5,094		10,204		22		10,226
Other direct costs	7,251		295		7,546		11,232		418		11,650
Total costs of franchise and license revenue, excluding depreciation and amortization	32,662		766		33,428		59,455		1,347		60,802
Total restaurant-level operating margin	34,075		846		34,921		67,735		1,668		69,403
Reconciliation of restaurant-level operating margin to net income
General and administrative expenses					20,486						41,708
Depreciation and amortization					3,735						7,316
Goodwill impairment charges					20						20
Operating (gains), losses and other charges, net					1,565						1,238
Total other operating expenses					25,806						50,282
Operating income					9,115						19,121
Interest expense, net					4,573						8,993
Other nonoperating income, net					(224)						(861)
Income before income taxes					4,766						10,989
Provision for income taxes					1,198						2,730
Net income					$	3,568					$	8,259


	June 25, 2025		December 25, 2024
Segment assets:	(In thousands)
Denny’s	$	325,492	$	344,986
Other	165,658		151,288
Total assets	$	491,150	$	496,274

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") should be read in conjunction with our consolidated financial statements and the notes thereto that appear elsewhere in this report and the MD&A contained in our Annual Report on Form 10-K for the fiscal year ended December 25, 2024.

Forward-Looking Statements

This report includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, as codified in Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). The Company urges caution in considering its current trends and any outlook on its operations and financial results disclosed in this report. In addition, certain matters discussed in this report may constitute forward-looking statements. These forward-looking statements, which reflect management's best judgment based on factors currently known, are intended to speak only as of the date such statements are made and involve risks, uncertainties, and other factors that may cause the actual performance of Denny’s Corporation, its subsidiaries, and underlying restaurants to be materially different from the performance indicated or implied by such statements. Words such as “expect”, “anticipate”, “believe”, “intend”, “plan”, “hope”, "will" and variations of such words and similar expressions are intended to identify such forward-looking statements. Except as may be required by law, the Company expressly disclaims any obligation to update these forward-looking statements to reflect events or circumstances after the date of this report or to reflect the occurrence of unanticipated events. Factors that could cause actual performance to differ materially from the performance indicated by these forward-looking statements include, among others: economic, public health and political conditions that impact consumer confidence and spending; commodity and labor inflation; the potential impacts of tariffs; the ability to effectively staff restaurants and support personnel; our ability to maintain adequate levels of liquidity for our cash needs, including debt obligations, payment of dividends, planned share repurchases and capital expenditures as well as the ability of our customers, suppliers, franchisees and lenders to access sources of liquidity to provide for their own cash needs; competitive pressures from within the restaurant industry; the level of success of our operating initiatives and advertising and promotional efforts; adverse publicity; health concerns arising from food-related pandemics, outbreaks of flu viruses, or other diseases; changes in business strategy or development plans; terms and availability of capital; regional weather conditions; overall changes in the general economy (including with regard to energy costs), particularly at the retail level; political environment and geopolitical events (including acts of war and terrorism); and other factors from time to time set forth in the Company’s SEC reports and other filings, including but not limited to the discussion in Management’s Discussion and Analysis and the risks identified in Item 1A. Risk Factors contained in the Company’s Annual Report on Form 10-K for the fiscal year ended December 25, 2024 and in the Company's subsequent quarterly reports on Form 10-Q.

Overview

We manage our business by brand and as a result have identified two operating segments, Denny’s and Keke’s. As of June 25, 2025, the Denny's brand consisted of 1,484 restaurants, 1,422 of which were franchised/licensed restaurants and 62 of which were company operated. At June 25, 2025, the Keke's brand consisted of 74 restaurants, 52 of which were franchised restaurants and 22 of which were company operated.

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. Total revenues at Keke’s for the quarter and year-to-date periods ended June 25, 2025 represented less than 10% of total consolidated revenues. Therefore, the Keke’s operating segment is included in Other for segment reporting purposes.

Statements of Income

The following table contains information derived from our Consolidated Statements of Income expressed as a percentage of total operating revenue, except as noted below. Percentages may not add due to rounding.


	Quarter Ended								Two Quarters Ended
	June 25, 2025				June 26, 2024				June 25, 2025				June 26, 2024
	(In thousands)
Revenue:
Company restaurant sales	$	58,395	49.6	%	$	54,348	46.9	%	$	112,295	49.0	%	$	106,690	47.2	%
Franchise and license revenue	59,262		50.4	%	61,579		53.1	%	116,999		51.0	%	119,211		52.8	%
Total operating revenue	117,657		100.0	%	115,927		100.0	%	229,294		100.0	%	225,901		100.0	%
Costs of company restaurant sales, excluding depreciation and amortization (a):
Product costs	15,086		25.8	%	13,632		25.1	%	29,297		26.1	%	26,943		25.3	%
Payroll and benefits	21,869		37.5	%	20,493		37.7	%	42,965		38.3	%	40,967		38.4	%
Occupancy	5,181		8.9	%	4,671		8.6	%	10,240		9.1	%	9,244		8.7	%
Other operating expenses	10,209		17.5	%	8,782		16.2	%	19,868		17.7	%	18,542		17.4	%
Total costs of company restaurant sales, excluding depreciation and amortization	52,345		89.6	%	47,578		87.5	%	102,370		91.2	%	95,696		89.7	%
Costs of franchise and license revenue, excluding depreciation and amortization (a)	29,217		49.3	%	33,428		54.3	%	57,571		49.2	%	60,802		51.0	%
General and administrative expenses	21,445		18.2	%	20,486		17.7	%	41,475		18.1	%	41,708		18.5	%
Depreciation and amortization	4,378		3.7	%	3,735		3.2	%	8,485		3.7	%	7,316		3.2	%
Goodwill impairment charges	—		0.0	%	20		0.0	%	—		0.0	%	20		0.0	%
Operating (gains), losses and other charges, net	1,700		1.4	%	1,565		1.3	%	5,611		2.4	%	1,238		0.5	%
Total operating costs and expenses, net	109,085		92.7	%	106,812		92.1	%	215,512		94.0	%	206,780		91.5	%
Operating income	8,572		7.3	%	9,115		7.9	%	13,782		6.0	%	19,121		8.5	%
Interest expense, net	5,374		4.6	%	4,573		3.9	%	9,802		4.3	%	8,993		4.0	%
Other nonoperating income, net	(563)		(0.5)	%	(224)		(0.2)	%	(401)		(0.2)	%	(861)		(0.4)	%
Income before income taxes	3,761		3.2	%	4,766		4.1	%	4,381		1.9	%	10,989		4.9	%
Provision for income taxes	1,291		1.1	%	1,198		1.0	%	1,585		0.7	%	2,730		1.2	%
Net income	$	2,470	2.1	%	$	3,568	3.1	%	$	2,796	1.2	%	$	8,259	3.7	%

(a)Costs of company restaurant sales percentages are as a percentage of company restaurant sales. Costs of franchise and license revenue percentages are as a percentage of franchise and license revenue. All other percentages are as a percentage of total operating revenue.


Statistical Data	Quarter Ended		Two Quarters Ended
	June 25, 2025	June 26, 2024	June 25, 2025	June 26, 2024
	(Dollars in thousands)
Denny's
Company average unit sales	$789	$774	$1,547	$1,517
Franchise average unit sales	$479	$473	$930	$930
Company equivalent units (a)	61	64	61	64
Franchise equivalent units (a)	1,426	1,485	1,430	1,493
Company same-store sales decrease vs. prior year (b)(c)	0.0%	(2.6)%	(0.4)%	(2.8)%
Domestic franchise same-store sales decrease vs. prior year (b)(c)	(1.4)%	(0.4)%	(2.3)%	(0.8)%

Keke's
Company average unit sales	$433	$447	$845	$902
Franchise average unit sales	$484	$457	$996	$929
Company equivalent units (a)	23	11	21	10
Franchise equivalent units (a)	48	51	47	50
Company same-store sales increase (decrease) vs. prior year (b)(c)	3.4%	(4.4)%	2.0%	(2.7)%
Franchise same-store sales increase (decrease) vs. prior year (b)(c)	4.2%	(4.6)%	4.2%	(4.3)%

(a)Equivalent units are calculated as the weighted average number of units in operation during a defined time period.

(b)Same-restaurant sales include sales from company restaurants or non-consolidated franchised and licensed restaurants that were open during the comparable periods noted.

(c)Prior year amounts have not been restated for 2025 comparable units.


Unit Activity	Quarter Ended		Two Quarters Ended
	June 25, 2025	June 26, 2024	June 25, 2025	June 26, 2024
Denny's
Company restaurants, beginning of period	61	64	61	65

Units acquired from franchisees	1	—	1	—

Units closed	—	—	—	(1)
End of period	62	64	62	64

Franchised and licensed restaurants, beginning of period	1,430	1,489	1,438	1,508
Units opened	3	3	9	8

Units acquired by Company	(1)	—	(1)	—
Units closed	(10)	(15)	(24)	(39)
End of period	1,422	1,477	1,422	1,477
Total restaurants, end of period	1,484	1,541	1,484	1,541


	Quarter Ended		Two Quarters Ended
	June 25, 2025	June 26, 2024	June 25, 2025	June 26, 2024
Keke's
Company restaurants, beginning of period	21	11	14	8
Units opened	4	1	6	4

Units acquired from franchisees	—	—	5	—
Units sold to franchisees	(3)	(1)	(3)	(1)

End of period	22	11	22	11

Franchised restaurants, beginning of period	45	50	55	50
Units opened	4	—	5	—

Units purchased from Company	3	1	3	1
Units acquired by Company	—	—	(5)	—
Units closed	—	—	(6)	—
End of period	52	51	52	51
Total restaurants, end of period	74	62	74	62

Company Restaurant Operations

Company restaurant sales increased $4.0 million, or 7.4%, for the quarter ended June 25, 2025 and $5.6 million, or 5.3%, year-to-date compared to the prior year periods, primarily resulting from a Keke's 12 equivalent unit increase for the current quarter and a Keke's 11 equivalent unit increase year-to-date compared to the prior year periods and an increase in Keke's same-store sales of 3.4% for the current quarter and 2.0% year-to-date compared to the prior year periods. The increases in company restaurant sales were partially offset by a Denny's three equivalent unit decrease for the current quarter and year-to-date periods compared to the prior year periods.

Total costs of company restaurant sales as a percentage of company restaurant sales were 89.6% for the quarter ended June 25, 2025 and 91.2% year-to-date compared to 87.5% and 89.7% for the prior year periods, respectively.

Product costs as a percentage of company restaurant sales were 25.8% for the quarter ended June 25, 2025 and 26.1% year-to-date compared to 25.1% and 25.3% for the prior year periods, respectively. The current quarter and year-to-date period increases as a percentage of company restaurant sales were primarily due to higher commodity costs heavily impacted by higher egg prices, partially offset by increased pricing.

Payroll and benefits as a percentage of company restaurant sales were 37.5% for the quarter ended June 25, 2025 and 38.3% year-to-date compared to 37.7% and 38.4% for the prior year periods, respectively.

Occupancy costs as a percentage of company restaurant sales were 8.9% for the quarter ended June 25, 2025 and 9.1% year-to-date compared to 8.6% and 8.7%, respectively, for the prior year periods. The current quarter increase as a percentage of company restaurant sales was primarily due to a 0.7 percentage point increase in rent and property taxes, offset by a 0.4 percentage point decrease in general liability insurance costs resulting from favorable claims development. The year-to-date increase as a percentage of company restaurant sales was primarily due to a 0.8 percentage point increase in rent and property taxes, offset by a 0.4 percentage point decrease in general liability insurance costs resulting from favorable claims development.

Other operating expenses consist of the following amounts and percentages of company restaurant sales:


	Quarter Ended								Two Quarters Ended
	June 25, 2025				June 26, 2024				June 25, 2025				June 26, 2024
	(In thousands)
Utilities	$	1,829	3.1	%	$	1,695	3.1	%	$	3,523	3.1	%	$	3,350	3.1	%
Repairs and maintenance	847		1.5	%	1,008		1.9	%	1,683		1.5	%	2,013		1.9	%
Marketing	2,386		4.1	%	1,876		3.5	%	4,414		3.9	%	3,480		3.3	%
Legal settlements	391		0.7	%	208		0.4	%	796		0.7	%	1,657		1.6	%
Pre-opening costs	645		1.1	%	191		0.4	%	1,354		1.2	%	557		0.5	%
Other direct costs	4,111		7.0	%	3,804		7.0	%	8,098		7.2	%	7,485		7.0	%
Other operating expenses	$	10,209	17.5	%	$	8,782	16.2	%	$	19,868	17.7	%	$	18,542	17.4	%

The current quarter and year-to-date period increases in other operating expenses were primarily due to increased marketing and higher pre-opening costs at Keke's related to new unit openings. The year-to-date period also benefited from favorable legal settlement costs related to unfavorable developments in certain claims during the prior period.

Franchise Operations

Franchise and license revenue and costs of franchise and license revenue consisted of the following amounts and percentages of franchise and license revenue for the periods indicated:


	Quarter Ended								Two Quarters Ended
	June 25, 2025				June 26, 2024				June 25, 2025				June 26, 2024
	(In thousands)
Royalties	$	29,091	49.1	%	$	30,014	48.7	%	$	56,928	48.7	%	$	59,320	49.7	%
Advertising revenue	19,490		32.9	%	20,788		33.8	%	38,563		33.0	%	38,926		32.7	%
Initial and other fees	2,804		4.7	%	2,448		4.0	%	5,678		4.9	%	4,264		3.6	%
Occupancy revenue	7,877		13.3	%	8,329		13.5	%	15,830		13.5	%	16,701		14.0	%
Franchise and license revenue	$	59,262	100.0	%	$	61,579	100.0	%	$	116,999	100.0	%	$	119,211	100.0	%

Advertising costs	$	19,490	32.9	%	$	20,788	33.8	%	$	38,563	33.0	%	$	38,926	32.7	%
Occupancy costs	4,872		8.2	%	5,094		8.3	%	9,805		8.4	%	10,226		8.6	%
Other direct franchise costs	4,855		8.2	%	7,546		12.3	%	9,203		7.9	%	11,650		9.8	%
Costs of franchise and license revenue	$	29,217	49.3	%	$	33,428	54.3	%	$	57,571	49.2	%	$	60,802	51.0	%

Franchise and license revenue decreased $2.3 million, or 3.8%, for the quarter ended June 25, 2025 and $2.2 million, or 1.9%, year-to-date compared to the prior year periods. Royalties decreased $0.9 million, or 3.1%, and $2.4 million, or 4.0%, for the current quarter and year-to-date periods, respectively, compared to the prior year periods. The decreases in royalties primarily resulted from a decrease of 59 Denny's franchise equivalent units for the current quarter and 63 franchise equivalent units year-to-date compared to the prior year periods, and a decrease in Denny's domestic franchise same-store sales of 1.4% for the current quarter and 2.3% year-to-date as compared to the prior year periods. The decreases also include Keke's franchise equivalent unit decreases of three units for the current quarter and year-to-date periods, respectively. These decreases were partially offset by an increase in Keke's franchise same-store sales of 4.2% for the current quarter and 4.2% year-to-date as compared to the prior year periods.

Advertising revenue decreased $1.3 million, or 6.2%, for the quarter ended June 25, 2025 and $0.4 million, or 0.9%, year-to-date compared to the prior year periods. The decrease in advertising revenue for the current quarter and year-to-date periods primarily resulted from the decrease in Denny's franchise equivalent units and same-store sales noted above. In addition, local advertising co-op contributions decreased by $0.7 million and increased by $1.1 million for the current quarter and year-to-date periods, respectively.

Initial and other fees increased $0.4 million, or 14.6%, for the quarter ended June 25, 2025 and $1.4 million, or 33.2%, year-to-date compared to the prior year periods. These increases in initial and other fees were driven by increased revenue of $0.2

million and $0.5 million from sales of equipment to franchisees for the current quarter and year-to-date periods, respectively. The year-to-date period ended June 25, 2025 also included the collection of a $0.6 million early franchise termination fee.

Occupancy revenue decreased $0.5 million, or 5.4%, for the current quarter and $0.9 million, or 5.2%, year-to-date compared to the prior year periods, primarily due to lease terminations and modifications.

Costs of franchise and license revenue decreased $4.2 million, or 12.6%, for the quarter ended June 25, 2025 and $3.2 million, or 5.3%, year-to-date compared to the prior year periods. Advertising costs decreased $1.3 million, or 6.2%, for the current quarter and decreased $0.4 million, or 0.9%, year-to-date, which corresponds to the related advertising revenue decreases for the current quarter and year-to-date periods noted above. Occupancy costs decreased $0.2 million, or 4.3%, for the current quarter and $0.4 million, or 4.1%, year-to-date compared to the prior year periods, primarily due to lease terminations. Other direct franchise costs decreased $2.7 million, or 35.7%, for the current quarter and $2.4 million, or 21.0%, year-to-date compared to the prior year periods. The decrease in other direct franchise costs for the current quarter and the year-to-date period was primarily due to a $2.6 million distribution to franchisees related to a review of advertising costs in the prior year periods. As a result of the changes in franchise and license revenue discussed above, costs of franchise and license revenue decreased to 49.3% and 49.2% of franchise and license revenue for the quarter and year-to-date periods ended June 25, 2025, respectively, from 54.3% and 51.0% for the prior year periods, respectively.

Other Operating Costs and Expenses

Other operating costs and expenses such as general and administrative expenses and depreciation and amortization expense relate to both company and franchise operations.

General and administrative expenses consisted of the following:


	Quarter Ended				Two Quarters Ended
	June 25, 2025		June 26, 2024		June 25, 2025		June 26, 2024
	(In thousands)
Corporate administrative expenses	$	15,226	$	15,776	$	30,470	$	30,968
Share-based compensation	2,982		2,624		5,767		5,400
Incentive compensation	2,759		1,898		5,016		4,421
Deferred compensation valuation adjustments	478		188		222		919
Total general and administrative expenses	$	21,445	$	20,486	$	41,475	$	41,708

Total general and administrative expenses increased $1.0 million, or 4.7%, for the quarter ended June 25, 2025 and decreased $0.2 million, or 0.6%, year-to-date compared to the prior year periods.

Corporate administrative expenses decreased $0.6 million for the quarter and $0.5 million for the year-to-date period, primarily due to the elimination of positions during each period. Share-based compensation increased by $0.4 million for the quarter and the year-to-date period. The increases for both periods were primarily due to plan performance adjustments in the prior year. Incentive compensation increased by $0.9 million for the quarter and $0.6 million for the year-to-date period. The changes in incentive compensation for both periods primarily resulted from our performance against plan metrics. Changes in deferred compensation valuation adjustments have offsetting gains or losses on the underlying nonqualified deferred plan investments included as a component of other nonoperating income, net, for the corresponding periods.

Depreciation and amortization consisted of the following:


	Quarter Ended				Two Quarters Ended
	June 25, 2025		June 26, 2024		June 25, 2025		June 26, 2024
	(In thousands)
Depreciation of property and equipment	$	3,545	$	2,823	$	6,815	$	5,478
Amortization of finance lease ROU assets	299		348		607		700
Amortization of intangible and other assets	534		564		1,063		1,138
Total depreciation and amortization expense	$	4,378	$	3,735	$	8,485	$	7,316

The increases in total depreciation and amortization expense for the quarter and year-to-date periods ended June 25, 2025 were primarily due to new Keke's units.

Operating (gains), losses and other charges, net consisted of the following:


	Quarter Ended				Two Quarters Ended
	June 25, 2025		June 26, 2024		June 25, 2025		June 26, 2024
	(In thousands)
(Gains) losses on sales of assets and other, net	$	425	$	526	$	(1,317)	$	(94)
Impairment charges	49		619		3,265		714
Restructuring charges and exit costs	1,226		420		3,663		618
Operating (gains), losses and other charges, net	$	1,700	$	1,565	$	5,611	$	1,238

(Gains) losses on sales of assets and other, net for the quarter and year-to-date periods ended June 25, 2025 and June 26, 2024 were primarily related to the sales of real estate and restaurants.

We recorded impairment charges of less than $0.1 million and $3.3 million for the quarter and year-to-date periods ended June 25, 2025, primarily related to closed franchise restaurants and the relocation of certain support functions.

Restructuring charges and exit costs consisted of the following:


	Quarter Ended				Two Quarters Ended
	June 25, 2025		June 26, 2024		June 25, 2025		June 26, 2024
	(In thousands)
Exit costs	$	9	$	49	$	49	$	91
Severance and other restructuring charges	1,217		371		3,614		527
Total restructuring and exit costs	$	1,226	$	420	$	3,663	$	618

Operating income was $8.6 million for the quarter ended June 25, 2025 and $13.8 million year-to-date compared to $9.1 million and $19.1 million, respectively, for the prior year periods.

Interest expense, net consisted of the following:


	Quarter Ended				Two Quarters Ended
	June 25, 2025		June 26, 2024		June 25, 2025		June 26, 2024
	(In thousands)
Interest on credit facility	$	4,666	$	5,167	$	9,213	$	10,224
Interest income on interest rate swaps	(840)		(1,536)		(1,915)		(3,044)
Interest on finance lease liabilities	463		497		933		1,006
Letters of credit and other fees	102		179		214		311
Interest income	(56)		(61)		(100)		(132)
Total cash interest, net	4,335		4,246		8,345		8,365
Amortization of deferred financing costs	159		159		318		318
Amortization of interest rate swap losses	879		167		1,138		309
Interest accretion on other liabilities	1		1		1		1
Total interest expense, net	$	5,374	$	4,573	$	9,802	$	8,993

Interest expense, net increased $0.8 million for both the quarter and year-to-date periods ended June 25, 2025, respectively, primarily due to increases in amortization of interest rate swap losses. We expect to amortize $4.2 million from accumulated other comprehensive loss, net to interest expense, net related to dedesignated interest rate swaps during the next 12 months.

Other nonoperating income, net increased $0.3 million and decreased $0.5 million for the quarter and year-to-date periods ended June 25, 2025, respectively, compared to the prior year periods. These changes were primarily due to market value changes of deferred compensation plan investments.

Provision for income taxes was $1.3 million for the quarter ended June 25, 2025 and $1.6 million year-to-date compared to $1.2 million and $2.7 million, respectively, for the prior year periods. The effective tax rate was 34.3% for the current quarter and 36.2% year-to-date, compared to 25.1% and 24.8% for the prior year periods, respectively. The effective income tax rate for the quarter and year-to-date periods ended June 25, 2025 included discrete items relating to share-based compensation of 9.0% and 11.5%, respectively. We did not have similar discrete items for the quarter and year-to-date periods ended June 26, 2024. We expect the 2025 fiscal year effective tax rate to be between 23% and 27%. The annual effective tax rate cannot be determined until the end of the fiscal year; therefore, the actual rate could differ from our current estimates.

Net income was $2.5 million for the quarter ended June 25, 2025 and $2.8 million year-to-date compared to $3.6 million and $8.3 million for the prior year periods, respectively.

Liquidity and Capital Resources

Our primary sources of liquidity and capital resources are cash generated from operations and borrowings under our credit facility (as described below). Principal uses of cash are operating expenses, capital expenditures, and the repurchase of shares of our common stock.

The following table presents a summary of our sources and uses of cash and cash equivalents for the periods indicated:


	Two Quarters Ended
	June 25, 2025		June 26, 2024
	(In thousands)
Net cash provided by operating activities	$	14,368	$	14,396
Net cash used in investing activities	(17,536)		(10,349)
Net cash provided by (used in) financing activities	2,636		(7,774)
Decrease in cash and cash equivalents	$	(532)	$	(3,727)

Net cash flows provided by operating activities were $14.4 million for the year-to-date period ended June 25, 2025 and the year-to-date period ended June 26, 2024, respectively. We believe that our estimated cash flows from operations, combined with our capacity for additional borrowings under our credit facility and cash on hand, will enable us to meet our anticipated cash requirements and fund capital expenditures over the next 12 months.

Net cash flows used in investing activities were $17.5 million for the year-to-date period ended June 25, 2025. These cash flows included capital expenditures of $16.4 million and acquisitions of restaurants of $4.1 million, partially offset by net proceeds from asset sales of $1.9 million and investment sales of $1.1 million. Net cash flows used in investing activities were $10.3 million for the year-to-date period ended June 26, 2024. These cash flows included capital expenditures of $9.9 million and investment purchases of $1.5 million, partially offset by net proceeds from asset sales of $1.0 million.

Our principal capital requirements have been largely associated with the following:


	Two Quarters Ended
	June 25, 2025		June 26, 2024
	(In thousands)
Facilities	$	3,365	$	2,182
New construction	9,044		5,427
Remodeling	3,128		510
Information technology	297		861
Other	550		968
Capital expenditures	$	16,384	$	9,948

Net cash flows provided by financing activities were $2.6 million for the year-to-date period ended June 25, 2025, including net long-term debt borrowings of $6.7 million, partially offset by cash payments of tax withholding on share-based compensation of $1.0 million, payments for stock repurchases of $1.7 million and net bank overdraft payments of $1.4 million. Net cash flows used in financing activities were $7.8 million for the year-to-date period ended June 26, 2024, which included net long-term debt borrowings of $1.3 million and net bank overdraft borrowings of $2.2 million, partially offset by cash payments for stock repurchases of $9.4 million and payments of tax withholding on share-based compensation of $1.9 million.

Our working capital deficit was $55.7 million at June 25, 2025 compared to $55.6 million at December 25, 2024. We are able to operate with a substantial working capital deficit because (1) restaurant operations and most food service operations are conducted primarily on a cash (and cash equivalent) basis with a low level of accounts receivable, (2) rapid turnover allows for a limited investment in inventories, and (3) accounts payable for food, beverages and supplies usually becomes due after the receipt of cash from the related sales.

Credit Facility

Technology Transformation Initiatives

The Company has committed to investing approximately $4 million toward a new cloud-based restaurant technology platform in domestic franchise restaurants, which will lay the foundation for future technology initiatives to further enhance the guest experience. The rollout is in progress and is expected to continue through 2026.

Critical Accounting Policies and Estimates

For information regarding our Critical Accounting Policies and Estimates, see the "Critical Accounting Policies and Estimates" section in Part II, Item 7, "Management’s Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the fiscal year ended December 25, 2024.

Implementation of New Accounting Standards

Information regarding the implementation of new accounting standards is incorporated by reference from Note 2 to our unaudited consolidated financial statements set forth in Part I, Item 1 of this report.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Interest Rate Risk

We have exposure to interest rate risk related to certain instruments entered into for other than trading purposes. Specifically, as of June 25, 2025, borrowings under our credit facility bore interest at variable rates based on Adjusted Daily Simple SOFR plus 2.25% per annum.


Trade Date	Effective Date	Maturity Date	Notional Amount			Fair Value		Fixed Rate
			(In thousands)
October 1, 2015	March 29, 2018	March 31, 2026	$	50,000		$	614	2.37	%
February 15, 2018	March 31, 2020	December 31, 2033	$	189,000	(1)	$	11,131	3.09	%
Total			$	239,000		$	11,745

(1) The notional amounts of the swaps entered into on February 15, 2018 increase periodically until they reach the maximum notional amount of $335 million on August 31, 2033.

As of June 25, 2025, our swaps effectively increased our ratio of fixed rate debt from 4% of total debt to 89% of total debt. Based on the levels of borrowings under the credit facility at June 25, 2025, if interest rates changed by 100 basis points, our annual cash flow and income before taxes would change by $0.2 million. This computation is determined by considering the impact of hypothetical interest rates on the credit facility at June 25, 2025, taking into consideration the interest rate swaps that will be in effect during the next 12 months. However, the nature and amount of our borrowings may vary as a result of future business requirements, market conditions and other factors.

Depending on market considerations, fluctuations in the fair values of our interest rate swaps could be significant. With the exception of these changes in the fair value of our interest rate swaps and in the levels of borrowings under our credit facility, there have been no material changes in our quantitative and qualitative market risks since the end of the preceding fiscal year. For additional information related to our interest rate swaps, including changes in the fair value, refer to Note 6, Note 7 and Note 13 to our unaudited consolidated financial statements in Part I, Item 1 of this report.

Item 4. Controls and Procedures

As required by Rule 13a-15(b) under the Exchange Act, our management conducted an evaluation (under the supervision and with the participation of our Chief Executive Officer, Kelli F. Valade, and our Executive Vice President and Chief Financial Officer, Robert P. Verostek) as of the end of the period covered by this Quarterly Report on Form 10-Q, of the effectiveness of our disclosure controls and procedures as defined in Rule 13a-15(e) under the Exchange Act. Based on that evaluation, Ms. Valade and Mr. Verostek each concluded that our disclosure controls and procedures are effective to provide reasonable assurance that information required to be disclosed in the reports that we file or submit under the Exchange Act (i) is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms and (ii) is accumulated and communicated to our management, including Ms. Valade and Mr. Verostek, as appropriate to allow timely decisions regarding required disclosure.

There were no changes in our internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) of the Exchange Act that occurred during our fiscal quarter ended June 25, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

Information regarding legal proceedings is incorporated by reference from Note 14 to our unaudited consolidated financial statements set forth in Part I, Item 1 of this report.

Item 1A. Risk Factors

There have been no material changes in the risk factors set forth in Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 25, 2024.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Purchases of Equity Securities by the Issuer

The table below provides information concerning repurchases of shares of our common stock during the quarter ended June 25, 2025.


Period	Total Number of Shares Purchased	Average Price Paid Per Share (1)		Total Number of Shares Purchased as Part of Publicly Announced Programs (2)	Dollar Value of Shares that May Yet be Purchased Under the Programs (2)
	(In thousands, except per share amounts)
March 27, 2025 - April 23, 2025	143	$	3.34	143	$	87,736
April 24, 2025 - May 21, 2025	37	3.56		37	$	87,602
May 22, 2025 - June 25, 2025	—	—		—	$	87,602
Total	180	$	3.39	180

(1)Average price paid per share excludes commissions and any excise taxes paid.

(2)On December 2, 2019, we announced that our Board of Directors approved a share repurchase program, authorizing us to repurchase up to an additional $250 million of our common stock (in addition to prior authorizations). Such repurchases may take place from time to time in the open market (including pre-arranged stock trading plans in accordance with the guidelines specified in Rule 10b5-1 under the Exchange Act) or in privately negotiated transactions, subject to market and business conditions. During the quarter ended June 25, 2025, we purchased 0.2 million shares of our common stock for an aggregate consideration of $0.6 million pursuant to the share repurchase program.

Item 5. Other Information

Rule 10b5-1 Trading Plans

During the quarter ended June 25, 2025, none of the Company’s directors or officers adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as those terms are defined in Regulation S-K, Item 408.

Item 6. Exhibits

The following are included as exhibits to this report:


Exhibit No.						Description
10.1						Denny's Corporation Amended and Restated 2021 Omnibus Incentive Plan (incorporated by reference to Appendix B to the Company's Definitive Proxy Statement filed with the Securities and Exchange Commission on April 3, 2025).

31.1						Certification of Kelli F. Valade, Chief Executive Officer of Denny's Corporation, pursuant to Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2						Certification of Robert P. Verostek, Executive Vice President and Chief Financial Officer of Denny's Corporation, pursuant to Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1						Certification of Kelli F. Valade, Chief Executive Officer of Denny's Corporation, and Robert P. Verostek, Executive Vice President and Chief Financial Officer of Denny's Corporation, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS						Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document)

101.SCH						Inline XBRL Taxonomy Extension Schema Document

101.CAL						Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.LAB						Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE						Inline XBRL Taxonomy Extension Presentation Linkbase Document

101.DEF						Inline XBRL Taxonomy Extension Definition Linkbase Document

104						Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

DENNY'S CORPORATION

Date:

August 4, 2025

By:

/s/ Robert P. Verostek

Robert P. Verostek

Executive Vice President and
Chief Financial Officer

Date:

August 4, 2025

By:

/s/ Jay C. Gilmore

Jay C. Gilmore

Senior Vice President,
Chief Accounting Officer and
Corporate Controller

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Date	Price Target	Rating	Analyst
2/7/2025	$6.00 → $10.00	Neutral → Outperform	Wedbush
10/25/2024	$7.00 → $7.50	Neutral → Buy	Citigroup
7/18/2023	$12.00	Neutral	Piper Sandler
12/21/2022	$12.50 → $10.00	Outperform → Neutral	Wedbush
8/29/2022	$14.00	Buy	CL King
8/23/2022	$10.00 → $12.50	Neutral → Outperform	Wedbush
6/24/2022	$19.00 → $10.00	Outperform → Neutral	Wedbush
4/12/2022	$15.00	Neutral	Citigroup

SEC Form 10-Q filed by Denny's Corporation

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