March 7, 2025 • 26 mins
Consumers need to be able to count on restaurant brands for a great value proposition, Denny’s CEO Kelli Valade tells Bloomberg Intelligence. In this episode of the Choppin’ It Up podcast, Valade sits down with BI’s senior restaurant and foodservice analyst Michael Halen to discuss the importance of everyday value amid some US consumer weakness to start the year. She also comments on Denny’s remodels and loyalty program changes as well as growth plans for Keke’s Breakfast Café.
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Speaker 1 (00:13):
Welcome to Chopping it Up.
Speaker 2 (00:15):
I'm your host, Mike Hallon, the senior restaurant and food
Service analyst at Bloomberg Intelligence. Today we're joined by Kelly Valaid,
CEO of Denny's. It's good to see you, Kelly.
Speaker 3 (00:24):
Good to see you, Good to see you, good to
be here.
Speaker 2 (00:27):
So I saw on LinkedIn that you recently spoke at
the Women's Food Service Forum. You're a fantastic public speaker.
I will always remember your address you did at the
Hot Schedules user conference like years ago.
Speaker 1 (00:40):
Fan of your public speaking skills. Would you discuss at WFF.
Speaker 3 (00:45):
Yeah, thank you for that. That was a long time ago, Michael.
What it feels like a decade ago?
Speaker 4 (00:50):
It might be about six seven years ago at a
Hot Schedules event.
Speaker 3 (00:54):
Yeah.
Speaker 4 (00:55):
At WFAFT they asked me to speak about leadership lessons
I have learned along the way.
Speaker 3 (01:01):
So and it was a full hour.
Speaker 4 (01:03):
So the funny part about it was a real fun
part about it was I thought, a whole hour, Okay,
I'll get audience participation, There'll be hopefully a good crowd
in the room. I can feed off that I do
well when I can really look at people and feed
off of their energy and there's amazing energy in the room.
Speaker 3 (01:19):
And I talked for fifty seven and a half minutes.
There was actually no time for Q and A left
and it's but it really went well. It was streaming
at the same time.
Speaker 4 (01:26):
WFF had an amazing turnout, like they always do. And
it's just really an honor actually to be able to
speak to men and women about things I've learned along
the way, which if you know me, there's you know,
the intersection between life and work.
Speaker 3 (01:40):
You know, they're one and the same.
Speaker 4 (01:41):
And I told a lot of personal stories and they
said share leadership mistakes too, so I said, no problem,
many of those to share.
Speaker 3 (01:51):
So we had a great, great conversation.
Speaker 1 (01:54):
Very cool. Is there a link to see a replay?
Speaker 4 (01:57):
You know, I'm asked about that because I've had some
people that couldn't make it ask and I'm waiting to
get that from the team at WFF. I think they're
probably on a much needed vacation, a few of them
after that.
Speaker 1 (02:07):
Side, I'm sure. All right, Well, if you get it, please.
Speaker 3 (02:11):
Share it, happy to share it, happy to all.
Speaker 2 (02:14):
Right, let's address the six hundred pound gorilla in the
room or eight hundred pund what is it? Eight hundred
pound goerilla? Yeah, the US consumer. So you know, you
talked about consumer weakness in January and February on the call.
Company owned units outperformed by one hundred and eighty basis
points in January four hundred basis points in February due
to less exposure to Midwest mid Atlantic, which were hit
(02:36):
ordered by the crummy weather. Right, it was the oldest
January fourteen years. We had some snow in February. So
there's been a lot of consternation about the consumer, mostly
stemming from these sentiment surveys, and I look at them,
and surveys aren't always the best indicator moving forward, you know.
Speaker 1 (02:55):
That's kind of where we sit.
Speaker 2 (02:56):
We think this year is going to be a better
year for restaurant spending, but it's clearly off to a
slower start than you expected.
Speaker 1 (03:02):
What are you seeing in the numbers?
Speaker 2 (03:04):
In your numbers that would suggest a weaker consumer beyond
just staying home under a pile of blankets until it
warms up.
Speaker 4 (03:12):
Sure, I think you've articulated it well, right, I think
you do have a skittish consumer, if you will. Consumer
sentiment numbers, you know, sometimes they follow the hype and
they follow the conversation, you know, self fulfilling or not.
Speaker 3 (03:25):
There's a lot going on. So you mentioned the worst weather.
Speaker 4 (03:28):
I grew up in Upstate New York and got pictures
from my brother who lives up there. Still worse in
a decade in terms of the snow, and worst around
the country in terms of even even the fourth quarter,
right with Helen with the fires.
Speaker 3 (03:40):
So it's been just crazy time for those reasons.
Speaker 4 (03:43):
And one of the things you didn't mention was the
flu season, right, which keeps people at home.
Speaker 3 (03:47):
Our off premise business. Actually, we can see the hard
work we're.
Speaker 4 (03:50):
Doing in digital and in that space actually pay off
a little bit at this time. So what I can
say and what we've shared, you know, obviously it's inner
quarter for us. What I can and share is that
that consumer does you know everything I think we're seeing.
We too had a had optimism even at ICR in
January where we're able to kind of talk about and
(04:10):
pre release and share our fourth quarter earnings, and then
we just quickly saw some changes like everyone else is
quoting and like everybody else is seeing, right, both retail
restaurants and just really concerns over tariffs, concerns over what
does that mean for our business? And then you have
eggs for us, right, so you have flu weather, tariffs.
You know, consumer just just feeling a little bit overwhelmed perhaps,
(04:31):
And now I think it's just because it's not clear, right,
things just aren't clear where they're going to settle out right.
Is it going to sound really aggressive on tariffs and
it's going to call it'll dial back all politics aside?
You just can't you can't tell yet where it'll land.
And that just causes confusion for a lot of people,
confusion for consumers.
Speaker 3 (04:48):
You add eggs to it, and you just get a
really you just get.
Speaker 4 (04:51):
A whole bunch of things that are headwinds for us
and again for the industry because we can see it.
Speaker 3 (04:56):
We can see it everywhere like I know you see it.
So yeah, that's exactly what we are seeing.
Speaker 4 (05:02):
We're still for us, it's still Look, we've got our playbook,
We've got a fiyer strategy we put out for both brands.
I love talking about that because we really just feel
like heads down pivot where you need to with the
consumer and with what we're seeing. And that's what we're doing,
but also we've got a great playbook with some great
strategies and initiatives that we still think can pay.
Speaker 3 (05:20):
Often, Like you, we think it'll get better throughout the year.
Speaker 4 (05:23):
It's just about kind of everybody settling down and really
being able to understand what's going to happen.
Speaker 1 (05:29):
Yeah, for sure.
Speaker 2 (05:30):
Something interesting I heard today on the Cracker Barrel call
was that it was more broad based as opposed to
just the low income consumer.
Speaker 3 (05:39):
I think it is broad based.
Speaker 4 (05:40):
Obviously, everyone knows as a brand and in family dining
we all skew, no matter which big brand, we skew
a little more towards the lower end end consumers. That's
true for us, although we have a very wide, wide
swath of consumer demographics when we talk about it, but
I do think it's a little more widespread. So what
we're seeing is, you know, attachment rates. We talked about
(06:02):
this on our call. We see attachment rates down, and
yet the check there's still premium items that we merchandise
in the restaurant. So are Barbell strategy intact and yet
you see attachment rates move a little bit.
Speaker 3 (06:14):
I think there were others.
Speaker 4 (06:15):
That quoted that as well, and I think that's a
way of just managing your check in a time of
this kind of uncertainty, like we've mentioned already.
Speaker 1 (06:23):
Yeah, for sure.
Speaker 2 (06:24):
And I guess last one on this and then we'll
get more into into your plans. You know, I'm trying
to do a little homework for myself here, so it's
good to have you here to pick your brain. But
you mentioned on the fourth quarter call, Texas, Arizona we're
seeing the biggest pullback. Some cell side analysts, from what
I've heard, surmised it could be due to the new
administration's policy on immigration. But how did those states fare
(06:46):
in November and December?
Speaker 4 (06:49):
So they they were they were probably still the weaker.
They were a little bit weaker. Again, you've got to
peel out hurricanes, peel out whether you know in the
other the other the East Coast and the West coast,
as we already discussed two.
Speaker 3 (07:02):
But I think they were a little bit weaker.
Speaker 4 (07:03):
But the gap widens pretty big starting in the new year.
It started in twenty five, we really started to see
that gap widening. And I've said this before, We've said
it on the calls, but honestly, California has responded pretty well.
To two four six eight and the value offerings there
and everything we've been doing, we still see some strength there.
And then we're finally talking about strength in a market
like Florida again, which that wasn't the case even a
(07:26):
year ago. Right, So we're starting to see a bit
more of a bifurcation with those two states showing a
little bit more momentum.
Speaker 2 (07:35):
Okay, great, and that actually is a great segue into
the two four to sixty eight value menu. It did
really well for Denny's, you know, going back coming out
of the great recession, you know. And it's an example
I point to point to a lot just when I
talk historically about the business and everyday value versus discounting,
and I talked about Denny's versus Bob Evans at the
(07:57):
time and a huge difference in perform Rmans, right, And
so I thought it was a great idea of bringing
it back. How's it doing so far?
Speaker 4 (08:05):
Yeah, it's doing well. So lots of noise, but what
we can see when we launched it, and we tested
before we launched it, we re engineered it.
Speaker 3 (08:11):
We've talked about this. We basically just really looked and
worked hard to make it work.
Speaker 4 (08:16):
For today, right, It was a promotion to your point
that started and think two thousand and ten, right twenty ten.
Speaker 3 (08:22):
So it's a decade long promotion that at the.
Speaker 4 (08:25):
Beginning of the pandemic was changed and kind of pulled
off of the menu. And I firmly believe that people
need to count on count on brands for great a
great value proposition. But when you're Denny's, right, and we
are America's diner for today's America, we really got to
meet consumers where they are.
Speaker 3 (08:41):
And for us, it was critical we.
Speaker 4 (08:43):
Bring back a fan favorite like two four, six eight
put concept sort, you know, put all sorts of ideas
in a concept sort. And clearly that one in our research,
you know, still was at the top. So we went
to our franchisees, talked long and hard about it, tested it.
So how do we make this relevant for today a
decade later? And we re engineered to in a way
that really does help protect profitability and adding we had
(09:05):
the two in the four dollar categories that are add on,
so you've got to you've got to order an entree
to get that add on that is protecting things as well.
And then we've added a ten dollar category also and
that lots of people were quoting back two for six
eight ten.
Speaker 3 (09:17):
I'm like, no, just two four six eight two four
six eight.
Speaker 4 (09:20):
But there are some ten dollars options that come with
that menu when that menu is dropped in front of you.
Speaker 3 (09:24):
So we feel really good about what we're seeing.
Speaker 4 (09:27):
We can see, you know, the biggest preference is in
the six and the ten dollars category, interestingly enough, and
then we see a lot of those add ons in
the two and the four dollars category as well. Again,
I mentioned doing well in California for us, and then
barring any of this other kind of external noise, it's
been working really well for us. So I think you'll
see us continue to kind of re engineer that think
about what the consumer might need in this moment, and
(09:49):
yet still keep that everyday value platform front and center
for our guests that want to count on us.
Speaker 1 (09:55):
Yeah, the two and the four making those add ons
I thought was a heady move. Those good.
Speaker 2 (10:00):
Have you talked about what percentage of sales value items
represent and if there's been any change since the menu
is relaunched.
Speaker 4 (10:06):
Since we relaunched it, yeah, I'd say we were in
the mid to high teens in terms of mix or
incidents or preference, whichever word you want to use. And
I think right now we're at about twenty. So we
do see we have seen that grow and we feel
really good about where we're seeing. You know, like I said,
the six and the ten dollar dollar categories being the
really over indexing there and satisfaction scores, excitement around bringing
(10:29):
it back, and we know it's got legs and momentum.
You'll see us continue to innovate around what it looks
like right what kind of new things we might bring
in that platform?
Speaker 1 (10:37):
Great, what kind of lift do you see in with
the remodels.
Speaker 3 (10:40):
Remodels are doing really well.
Speaker 4 (10:42):
It's called Diner two point zero, so it's this kind
of modern version of America's diner. And we took the
best of the previous remodel that wasn't very old. Actually
I've only been in place for a year or so.
That was called Heritage two point zero, and we took
that and then we put in a few more went
to guests, went to consumers, does it feel when you're here?
And we lightened it up, brightened it up a little bit,
(11:03):
and actually put a few more diner esque cues in it.
We are America's diners, so we put a few more
diner sques in place to really resonate and even just
brighten up the image. So six and a half percent lift,
we're seeing traffic sales six four I mean it's roughly
the same.
Speaker 3 (11:19):
But over six percent. We're thrilled about that.
Speaker 4 (11:21):
And actually we're really excited about the conversations we've been
having with franchisees and a stimulus package kind of leveraging
our balance sheet and leveraging you know, what we can
do our strength in terms of what we can do
to help them. So we've reintroduced different stimulus programs. We've
often done that, and historically I've always tried to say,
we understand, we want the investment in our and improving
(11:42):
our assets, and yet we understand, we understand, you know
what it looks like for profitability and strengthening those franchisees
business models.
Speaker 3 (11:50):
So the stimulus package and the.
Speaker 4 (11:51):
Things we're doing for them, we really are pretty excited
about the momentum and how many remodels we can do
this year. We're really excited about that.
Speaker 2 (11:59):
Great. You're making some changes to the loyalty program as well.
Speaker 3 (12:02):
Correct absolutely so. You know I've said this before.
Speaker 4 (12:05):
We have a decent database with a good amount of
people in our database, but making it a best in
class consumer friendly, really one to one marketing personalized journeys
and really moving it from where it is today with
a database and a lot of offers going into the
database and lots of consumers that response, moving it to
truly a CRM loyalty program with rewards.
Speaker 3 (12:28):
We're amping it up.
Speaker 4 (12:29):
We've invested heavily in a team, a team that has
done this before, a team that's created these best in
class class programs rather.
Speaker 3 (12:36):
And it's coming to fruition. It'll be right now.
Speaker 4 (12:39):
Back half of the year is when we know that
that full scale launch will happen. But lots of work
going on and lots of things that we're able to
do right now just to kind of kick the tires
on this new approach to it, and we're absolutely thrilled
about what we'll be able to do soon.
Speaker 2 (12:53):
Okay, cool, you closed a bunch of units. I think
it was eighty eight and twenty twenty four.
Speaker 1 (12:59):
Exploct to close some more or Dick year is this
going to be?
Speaker 4 (13:02):
You know?
Speaker 2 (13:02):
I saw they were very low volume stores. Now one
point one million AUVs. Is this going to be the
last year of the outside store closures.
Speaker 3 (13:10):
So that the outside store closures.
Speaker 4 (13:12):
I love how you said that, right, because this is
a brand that and like any other brand, you're always
kind of working to call working to you know, prune,
and that had always been the case prior to the
pandemic for the brand one to two percent, right, and
usually in a net positive position. Pandemic for everybody kind
of reset things, and I called a reset.
Speaker 3 (13:30):
I haven't necessarily though.
Speaker 4 (13:31):
We talked about transformative thinking at Denny's in our strategy
Rise of a New Day. When we brought that to
investors in our five year roadmap, we were very clear
about this is what it's going to take to just
reset and get us back to net growth.
Speaker 3 (13:44):
That's the goal, get us back.
Speaker 4 (13:45):
To growing the Denny's brand like we had been doing historically.
And so for us, that fife fifty is total. It
was about last year in twenty four it was eighty seven.
You might have eighty eight, right, I think it was
eighty seven, but you're so closed. And then this year
we've guided to arrange that is about the same, and
that guidance is about saying yes, we will rip that
(14:06):
band aid off if you will, to strengthen the rest
of the portfolio and help strengthen our franchise. These models,
and we know what this can do for us. We've
also talked about and have been very overt about saying
for us, it's a path to creating greater AUVs and
a stronger portfolio for the whole brand. Right now, one
eight we open new is the average unitt bonds. One
(14:27):
eight we open new locations, Michael, and they're two two,
two three and sometimes even higher. So culling that bottom
and then again really working the strength of portfolio. We've
said we want to go from one eight to two
two in a five year timeframe, and that's what we
laid out in our model, in our long term roadmap.
Speaker 3 (14:45):
And that's that's a quarter of it.
Speaker 4 (14:47):
It's twenty five percent of it really because of what
it will do to increase sales and increase the AUVs,
because of those under you know, just under their lower volume,
and it makes some changes there. This was a long
path to get there and to announce it well underway,
you know, earlier in the twenty three into twenty twenty
(15:07):
three and conversations with franchisees about what does this do
for the health of your business? No one likes doing closures.
It's the only thing talked about when we talk. And
I can't wait till we get to the other side,
because we will, and we'll show the strength of the
Denny's brand again and getting to modest growth, but getting
to growth, net growth by twenty six. So will there
be some after twenty five, sure, but it will. It
(15:30):
is about you will see us in a net growth
environment by twenty twenty six.
Speaker 3 (15:33):
DESTI goal.
Speaker 2 (15:35):
Yeah, it's been ten years since I covered Denny's, almost
eleven now, but yeah, I remember John Miller telling me that, like,
you know, for a brand of that's been around as
long as Denny's, two percent a year was pretty much
standard operating rights seizure.
Speaker 1 (15:50):
Right, Okay, cool. Do you expect to get a seam
store sales boosts to share from the closures?
Speaker 3 (15:57):
Oh, that's a that's a good question.
Speaker 4 (16:01):
I do expect it. Where it really depends on where
those end up happening. And we obviously have that roadmap
in front of us and have that physical map, but.
Speaker 3 (16:08):
There's still probably still too soon to.
Speaker 4 (16:10):
Tell that immediate in twenty five, you know, change or
delta there just given. Is it a high density market,
is it not? Is it closing because the trade area
moved on us?
Speaker 3 (16:21):
Or is it a least situation? So it's all those things, right.
Speaker 4 (16:24):
The analysis shows us that it's one of four or
five different things that could be a reason, so hard
to say.
Speaker 2 (16:31):
Hard to say yet, Kiki's expansion is pretty robust.
Speaker 1 (16:35):
Can you talk about AUV.
Speaker 2 (16:36):
Restaurant level margin, cash on cash returns, any other unit
economic data you can share there.
Speaker 4 (16:41):
Yeah, So we've been talking a little bit more, you know,
as of late about some of those things, and we
are really excited. So to capsize the growth, the aggressive
growth gone from one to seven states. They did that
almost overnight. I'm super proud of the Kiki's team led
by Dave Schmidt, formerly of Bloomin Brands, so he's got
great experience from the portfolio perspective. I worked with them
(17:02):
for a brief stint and bringing them over. He's the
right leader for this brand and they've done amazing things.
So that one to one to six happened in about
seven weeks in the fourth quarter. They are now soon
going to be taking vacations late late March April, but
they going from one.
Speaker 3 (17:17):
The seventh state was Georgia, was an existing Kiki's franchise.
So it's been rapid growth.
Speaker 4 (17:23):
Spent a lot of time integrating a bit of time
early on integrating it into our systems, making sure that
we really understood the brand because it's a unique brand
that had never gotten outside of Florida. Founder led so
in that case really had to put a lot of
you had to put some place, if you will. And
having done that now we've been really.
Speaker 3 (17:42):
Really focused on the growth and really really pleased.
Speaker 4 (17:45):
So the AAVs they're greater outside of Florida than actually
what they were.
Speaker 3 (17:50):
When we purchased it.
Speaker 4 (17:51):
So we're really excited about that for Tennessee, Vegas, California,
and Colorado. Dallas is now open and there's lots of
locations Dell so two million AUVs on average, and excited
about that trajectory.
Speaker 3 (18:05):
It's got a great ramp up period.
Speaker 4 (18:06):
All my experience in the industry with openings was they open,
especially if you have a well known brand, they open
and it trails off twenty eight percent or so.
Speaker 3 (18:14):
Maybe thirty. It just depends.
Speaker 4 (18:16):
This brand grows because it's seen as still I think
that unique. I don't know if I don't know necessarily
who Kiki's is. A lot of people will stop me
when I'm in the locations. A lot of people stop
me and say, I've never heard of this, right, likely
that you haven't, but they rave about what they got.
We've obviously got a brand new design and lots of
new elements, so it's really pretty cool. Mid teens margins
(18:38):
is what we're targeting after the ramp up period. The
build out costs a million and a half. They're inline
and almost all cases they're inline, so that's exciting because there's.
Speaker 3 (18:47):
A four to five year cash on cash return. So
thrilled about it. Seven and a half.
Speaker 4 (18:51):
Hours, very different from our mostly twenty four hour brand
at Denny's. We've had lots of excitement from Denny's franchisees.
Kiki's franchisees are awesome because this was a franchise brand.
That was what was attractive about it and why this
really from a strategic standpoint, made a lot of sense.
So excited about the growth of Kiki's, excited about going
to new markets. I would also have to add that
(19:12):
we stole share in the fourth quorter in the Florida market,
but we absolutely did. We were positive three percent and
created some momentum in that fourth quorter doing things like
new marketing and local store marketing, but having presence and
working on the website that didn't exist before. I'm working
on and having off premise and OLO in our locations
(19:34):
right which is nearly complete. But those things weren't in place,
and there was really no off premise business. Now it's
a good part of what we're doing. So really thrilled
that all those things were put in place in the
last year and a half and then solidified in that fourth.
Speaker 3 (19:48):
Quarter and then we started to see the momentum three percent.
Speaker 4 (19:50):
If it had not been for the hurricane, the hurricane
attributed we think one hundred and ten basis points drag,
so could do the math and that would have been
a really st out order for the Kiki's brand.
Speaker 2 (20:03):
That's great, and I love that one shift model. I mean,
I'm sure turnover is much cheaper, much better. It's uh,
you don't have to worry about, you know, spending more
on late shift employees and all that kind of stuff.
How many of the twenty twenty five units are going
to be developed in new markets versus you know, in
field of existing ones.
Speaker 3 (20:25):
We've got a couple other states lined up.
Speaker 4 (20:28):
We haven't put them on the website and haven't announced
them yet, but there's definitely a few more states you'll
see us expand too, and probably be out with that soon.
Speaker 1 (20:39):
Okay, cool?
Speaker 2 (20:39):
And what percentage of the new units are opened by
existing kikiS franchisees.
Speaker 3 (20:44):
Good question.
Speaker 4 (20:46):
So we've got some being opened, some were opening ourselves,
seeding feach strategy, working to refranchise them as soon as possible.
But in this environment, what we've learned and talking to
our franchisees for both brands, the build out costs and
the things, if there's if there's a scale that we
can leverage to get them open and then turn the
keys over, that's what we'll do. So you'll also see
us pretty quickly work to refranchise some markets. Dallas is
(21:08):
a company will market as we speak today, and so
so's Tennessee.
Speaker 3 (21:13):
Right.
Speaker 4 (21:13):
So we've been pretty overt about kind of leveraging our
balance sheet to do that as well in our cash
but you'll see us you'll move that. So what our
Keiky's franchises would be a small percentage because the percentages
are you know, the amount of locations is getting bigger.
Speaker 3 (21:25):
So a handful of Kiki's franchises will open.
Speaker 4 (21:28):
We'll do a couple more company markets and open up
a company market only to hopefully flip them and have
people lined up to.
Speaker 3 (21:35):
Do that.
Speaker 4 (21:36):
We're having conversations with right now. So and then Denny's franchisees.
There's a small handful of Denny's franchise is ready to
go this year.
Speaker 2 (21:42):
Also, Okay, great, and you mentioned the seed and feed strategy.
You know, long term, what do you think the right
mix of company versus franchise?
Speaker 3 (21:50):
Yeah, great question, Michael.
Speaker 4 (21:51):
We talked about it a lot right when we when
we acquire the brand, talking about eighty five fifteen and
right now, obviously it's a little greater company.
Speaker 3 (22:00):
We still want to be eighty five fifteen ninety ten.
Speaker 4 (22:03):
We want to keep them as many asset light you know,
brands would say heavily franchised. You want to keep a
handful to be smart and still be in the game.
I'm an operator and hearts and by trade. So you
want to be in there and in it with them
and have skin in the game. And you want to
be able to have a place where you can test
crazy stuff. So we'll have a handful, but the goal
(22:24):
is really to get it to be just like Denny's,
you know, as many franchise locations be asset light leverage
our approach to franchising, you know. So we'll get back
to that, and we'll get back to it as soon
as we can. We just we really wanted to get
some markets open and establish that presence and that's really
working for us right now.
Speaker 2 (22:41):
All right, good stuff, and where's that cash going to go?
Is that going to go back to buying shares already
that yeah.
Speaker 4 (22:47):
Yes, yes, So back to buying shares back to again,
whether it's stimulus package or things that we're able to
do to help our franchise ease, get that flyweel turning,
get those remodels going, and because we know the lift
that comes with that. We're still in the sting in
technology with both I mentioned our CRM loyalty program, but
also Xenial. You know, our company operations have the new
(23:08):
POS platform, cloud based handheld order taking things like that,
so that rollout's happening as well, so we'll leverage it
to be great stewards of our business. We'll leverage it
to continue investing in media, marketing, food. But also, yes,
buying back shares is a critical part of our It's
an important part of our strategy to be consistently in
the market buying back shares, and we are not precluded
(23:30):
from doing that while we do the seed and feed strategy.
Speaker 3 (23:32):
That's the good news.
Speaker 2 (23:34):
Okay, great, And recently there were two permanent closures. You know,
when were those stores opened? And and have you been
making refinements to your site selection tools since then?
Speaker 4 (23:45):
Are you're referring to the Kikey's locations chacki Keys?
Speaker 3 (23:49):
Yeah, Yeah, So that was.
Speaker 4 (23:50):
An it's an interesting situation where we were able to
exercise our rights and go in and help out with
a franchisea that was struggling. So we've pretty much what
we've said about that. It really wasn't so it wasn't
something we had opened. It was something that existed long before.
But we also know we'll be able to we'll be
able to flip that, we'll be able to to to
be able to really work with with what we've got
(24:11):
and then they're good locations, they were good performing locations.
Really was just about exercising our rights, do the best
thing for the brand, the team, that location, those locations,
et cetera. So you'll see more from us on that
going forward.
Speaker 1 (24:24):
Okay, great, So what's your favorite Denny's order?
Speaker 3 (24:28):
Oh?
Speaker 4 (24:29):
My Denny's order since I was you know, I don't
know ten Moon's over Miammi.
Speaker 3 (24:34):
Superbirds a close second for me. And uh and then
when I'm being really good, you know, I do the
Fit Slam, So how many times.
Speaker 4 (24:42):
That week or how much travel I'm doing, But Moon's
over Miami can't go wrong with that.
Speaker 3 (24:45):
It's just fabulous.
Speaker 4 (24:47):
Yeah.
Speaker 2 (24:48):
Yeah, I've gone with the Moons over Miami omelet before
the Grand Slam's great Santa Fe skill.
Speaker 1 (24:53):
It's great.
Speaker 2 (24:54):
I think next time I show up, I think I'm
going to try that Philly cheese cheese steak ommelet.
Speaker 1 (24:58):
I don't think I've had that one yet.
Speaker 3 (24:59):
We've got some great skillets out. Sounds like you had
that one, But there's some really great skillets out right now.
They're they're they're they're awesome. Our burgers shakes, unbelievable quality
and just craveable.
Speaker 4 (25:10):
We launched a with the Beatle Juice August September time
frame when that came out.
Speaker 3 (25:16):
That movie came out and we launched a Beatle Juicy Burger.
Speaker 4 (25:18):
So we created this Triple Patty Burger and it went crazy,
right Beatle Juicy Burger launched it with the integration of
the movie.
Speaker 3 (25:24):
And that's now permanently on the menu.
Speaker 4 (25:26):
So the next time you go, you got to look
at the the the triple Patty Burger that's on the
menu now.
Speaker 3 (25:32):
It's phenomenon Triple Patty Bakerberger.
Speaker 1 (25:35):
Yeah, good stuff. You're making me hungry.
Speaker 2 (25:39):
All right, thanks for doing this. Where can our listeners
go to find their closest Denny's And which social.
Speaker 1 (25:43):
Media channel should we be following the chain on?
Speaker 4 (25:46):
You should follow us wherever you can ye Denny's dot
com to find your local Denny's, Denny's on demand to.
Speaker 3 (25:53):
Find your off premise order and order your your.
Speaker 4 (25:55):
Denny's online and then yeah, social pages all though usual
on Twitter, Facebook, Big can follow me on LinkedIn. I'm
always talking about the great things that we're doing and
really proud of the fact that when needed, we're out
there across the country helping guests, helping consumers with our
mobile relief diner and just trying to do good wherever
we can. So yeah, you can find us doing good
things in the world at the same time. So come
(26:17):
see us, come see us anywhere.
Speaker 1 (26:19):
Love it.
Speaker 2 (26:20):
I want to thank the audience for tuning in. If
you liked our discussion, please leave us a review. Check
back soon for an interview with Noah Glass, the founder
and CEO of OLO
Welcome to Chopping it Up.
Speaker 2 (00:15):
I'm your host, Mike Hallon, the senior restaurant and food
Service analyst at Bloomberg Intelligence. Today we're joined by Kelly Valaid,
CEO of Denny's. It's good to see you, Kelly.
Speaker 3 (00:24):
Good to see you, Good to see you, good to
be here.
Speaker 2 (00:27):
So I saw on LinkedIn that you recently spoke at
the Women's Food Service Forum. You're a fantastic public speaker.
I will always remember your address you did at the
Hot Schedules user conference like years ago.
Speaker 1 (00:40):
Fan of your public speaking skills. Would you discuss at WFF.
Speaker 3 (00:45):
Yeah, thank you for that. That was a long time ago, Michael.
What it feels like a decade ago?
Speaker 4 (00:50):
It might be about six seven years ago at a
Hot Schedules event.
Speaker 3 (00:54):
Yeah.
Speaker 4 (00:55):
At WFAFT they asked me to speak about leadership lessons
I have learned along the way.
Speaker 3 (01:01):
So and it was a full hour.
Speaker 4 (01:03):
So the funny part about it was a real fun
part about it was I thought, a whole hour, Okay,
I'll get audience participation, There'll be hopefully a good crowd
in the room. I can feed off that I do
well when I can really look at people and feed
off of their energy and there's amazing energy in the room.
Speaker 3 (01:19):
And I talked for fifty seven and a half minutes.
There was actually no time for Q and A left
and it's but it really went well. It was streaming
at the same time.
Speaker 4 (01:26):
WFF had an amazing turnout, like they always do. And
it's just really an honor actually to be able to
speak to men and women about things I've learned along
the way, which if you know me, there's you know,
the intersection between life and work.
Speaker 3 (01:40):
You know, they're one and the same.
Speaker 4 (01:41):
And I told a lot of personal stories and they
said share leadership mistakes too, so I said, no problem,
many of those to share.
Speaker 3 (01:51):
So we had a great, great conversation.
Speaker 1 (01:54):
Very cool. Is there a link to see a replay?
Speaker 4 (01:57):
You know, I'm asked about that because I've had some
people that couldn't make it ask and I'm waiting to
get that from the team at WFF. I think they're
probably on a much needed vacation, a few of them
after that.
Speaker 1 (02:07):
Side, I'm sure. All right, Well, if you get it, please.
Speaker 3 (02:11):
Share it, happy to share it, happy to all.
Speaker 2 (02:14):
Right, let's address the six hundred pound gorilla in the
room or eight hundred pund what is it? Eight hundred
pound goerilla? Yeah, the US consumer. So you know, you
talked about consumer weakness in January and February on the call.
Company owned units outperformed by one hundred and eighty basis
points in January four hundred basis points in February due
to less exposure to Midwest mid Atlantic, which were hit
(02:36):
ordered by the crummy weather. Right, it was the oldest
January fourteen years. We had some snow in February. So
there's been a lot of consternation about the consumer, mostly
stemming from these sentiment surveys, and I look at them,
and surveys aren't always the best indicator moving forward, you know.
Speaker 1 (02:55):
That's kind of where we sit.
Speaker 2 (02:56):
We think this year is going to be a better
year for restaurant spending, but it's clearly off to a
slower start than you expected.
Speaker 1 (03:02):
What are you seeing in the numbers?
Speaker 2 (03:04):
In your numbers that would suggest a weaker consumer beyond
just staying home under a pile of blankets until it
warms up.
Speaker 4 (03:12):
Sure, I think you've articulated it well, right, I think
you do have a skittish consumer, if you will. Consumer
sentiment numbers, you know, sometimes they follow the hype and
they follow the conversation, you know, self fulfilling or not.
Speaker 3 (03:25):
There's a lot going on. So you mentioned the worst weather.
Speaker 4 (03:28):
I grew up in Upstate New York and got pictures
from my brother who lives up there. Still worse in
a decade in terms of the snow, and worst around
the country in terms of even even the fourth quarter,
right with Helen with the fires.
Speaker 3 (03:40):
So it's been just crazy time for those reasons.
Speaker 4 (03:43):
And one of the things you didn't mention was the
flu season, right, which keeps people at home.
Speaker 3 (03:47):
Our off premise business. Actually, we can see the hard
work we're.
Speaker 4 (03:50):
Doing in digital and in that space actually pay off
a little bit at this time. So what I can
say and what we've shared, you know, obviously it's inner
quarter for us. What I can and share is that
that consumer does you know everything I think we're seeing.
We too had a had optimism even at ICR in
January where we're able to kind of talk about and
(04:10):
pre release and share our fourth quarter earnings, and then
we just quickly saw some changes like everyone else is
quoting and like everybody else is seeing, right, both retail
restaurants and just really concerns over tariffs, concerns over what
does that mean for our business? And then you have
eggs for us, right, so you have flu weather, tariffs.
You know, consumer just just feeling a little bit overwhelmed perhaps,
(04:31):
And now I think it's just because it's not clear, right,
things just aren't clear where they're going to settle out right.
Is it going to sound really aggressive on tariffs and
it's going to call it'll dial back all politics aside?
You just can't you can't tell yet where it'll land.
And that just causes confusion for a lot of people,
confusion for consumers.
Speaker 3 (04:48):
You add eggs to it, and you just get a
really you just get.
Speaker 4 (04:51):
A whole bunch of things that are headwinds for us
and again for the industry because we can see it.
Speaker 3 (04:56):
We can see it everywhere like I know you see it.
So yeah, that's exactly what we are seeing.
Speaker 4 (05:02):
We're still for us, it's still Look, we've got our playbook,
We've got a fiyer strategy we put out for both brands.
I love talking about that because we really just feel
like heads down pivot where you need to with the
consumer and with what we're seeing. And that's what we're doing,
but also we've got a great playbook with some great
strategies and initiatives that we still think can pay.
Speaker 3 (05:20):
Often, Like you, we think it'll get better throughout the year.
Speaker 4 (05:23):
It's just about kind of everybody settling down and really
being able to understand what's going to happen.
Speaker 1 (05:29):
Yeah, for sure.
Speaker 2 (05:30):
Something interesting I heard today on the Cracker Barrel call
was that it was more broad based as opposed to
just the low income consumer.
Speaker 3 (05:39):
I think it is broad based.
Speaker 4 (05:40):
Obviously, everyone knows as a brand and in family dining
we all skew, no matter which big brand, we skew
a little more towards the lower end end consumers. That's
true for us, although we have a very wide, wide
swath of consumer demographics when we talk about it, but
I do think it's a little more widespread. So what
we're seeing is, you know, attachment rates. We talked about
(06:02):
this on our call. We see attachment rates down, and
yet the check there's still premium items that we merchandise
in the restaurant. So are Barbell strategy intact and yet
you see attachment rates move a little bit.
Speaker 3 (06:14):
I think there were others.
Speaker 4 (06:15):
That quoted that as well, and I think that's a
way of just managing your check in a time of
this kind of uncertainty, like we've mentioned already.
Speaker 1 (06:23):
Yeah, for sure.
Speaker 2 (06:24):
And I guess last one on this and then we'll
get more into into your plans. You know, I'm trying
to do a little homework for myself here, so it's
good to have you here to pick your brain. But
you mentioned on the fourth quarter call, Texas, Arizona we're
seeing the biggest pullback. Some cell side analysts, from what
I've heard, surmised it could be due to the new
administration's policy on immigration. But how did those states fare
(06:46):
in November and December?
Speaker 4 (06:49):
So they they were they were probably still the weaker.
They were a little bit weaker. Again, you've got to
peel out hurricanes, peel out whether you know in the
other the other the East Coast and the West coast,
as we already discussed two.
Speaker 3 (07:02):
But I think they were a little bit weaker.
Speaker 4 (07:03):
But the gap widens pretty big starting in the new year.
It started in twenty five, we really started to see
that gap widening. And I've said this before, We've said
it on the calls, but honestly, California has responded pretty well.
To two four six eight and the value offerings there
and everything we've been doing, we still see some strength there.
And then we're finally talking about strength in a market
like Florida again, which that wasn't the case even a
(07:26):
year ago. Right, So we're starting to see a bit
more of a bifurcation with those two states showing a
little bit more momentum.
Speaker 2 (07:35):
Okay, great, and that actually is a great segue into
the two four to sixty eight value menu. It did
really well for Denny's, you know, going back coming out
of the great recession, you know. And it's an example
I point to point to a lot just when I
talk historically about the business and everyday value versus discounting,
and I talked about Denny's versus Bob Evans at the
(07:57):
time and a huge difference in perform Rmans, right, And
so I thought it was a great idea of bringing
it back. How's it doing so far?
Speaker 4 (08:05):
Yeah, it's doing well. So lots of noise, but what
we can see when we launched it, and we tested
before we launched it, we re engineered it.
Speaker 3 (08:11):
We've talked about this. We basically just really looked and
worked hard to make it work.
Speaker 4 (08:16):
For today, right, It was a promotion to your point
that started and think two thousand and ten, right twenty ten.
Speaker 3 (08:22):
So it's a decade long promotion that at the.
Speaker 4 (08:25):
Beginning of the pandemic was changed and kind of pulled
off of the menu. And I firmly believe that people
need to count on count on brands for great a
great value proposition. But when you're Denny's, right, and we
are America's diner for today's America, we really got to
meet consumers where they are.
Speaker 3 (08:41):
And for us, it was critical we.
Speaker 4 (08:43):
Bring back a fan favorite like two four, six eight
put concept sort, you know, put all sorts of ideas
in a concept sort. And clearly that one in our research,
you know, still was at the top. So we went
to our franchisees, talked long and hard about it, tested it.
So how do we make this relevant for today a
decade later? And we re engineered to in a way
that really does help protect profitability and adding we had
(09:05):
the two in the four dollar categories that are add on,
so you've got to you've got to order an entree
to get that add on that is protecting things as well.
And then we've added a ten dollar category also and
that lots of people were quoting back two for six
eight ten.
Speaker 3 (09:17):
I'm like, no, just two four six eight two four
six eight.
Speaker 4 (09:20):
But there are some ten dollars options that come with
that menu when that menu is dropped in front of you.
Speaker 3 (09:24):
So we feel really good about what we're seeing.
Speaker 4 (09:27):
We can see, you know, the biggest preference is in
the six and the ten dollars category, interestingly enough, and
then we see a lot of those add ons in
the two and the four dollars category as well. Again,
I mentioned doing well in California for us, and then
barring any of this other kind of external noise, it's
been working really well for us. So I think you'll
see us continue to kind of re engineer that think
about what the consumer might need in this moment, and
(09:49):
yet still keep that everyday value platform front and center
for our guests that want to count on us.
Speaker 1 (09:55):
Yeah, the two and the four making those add ons
I thought was a heady move. Those good.
Speaker 2 (10:00):
Have you talked about what percentage of sales value items
represent and if there's been any change since the menu
is relaunched.
Speaker 4 (10:06):
Since we relaunched it, yeah, I'd say we were in
the mid to high teens in terms of mix or
incidents or preference, whichever word you want to use. And
I think right now we're at about twenty. So we
do see we have seen that grow and we feel
really good about where we're seeing. You know, like I said,
the six and the ten dollar dollar categories being the
really over indexing there and satisfaction scores, excitement around bringing
(10:29):
it back, and we know it's got legs and momentum.
You'll see us continue to innovate around what it looks
like right what kind of new things we might bring
in that platform?
Speaker 1 (10:37):
Great, what kind of lift do you see in with
the remodels.
Speaker 3 (10:40):
Remodels are doing really well.
Speaker 4 (10:42):
It's called Diner two point zero, so it's this kind
of modern version of America's diner. And we took the
best of the previous remodel that wasn't very old. Actually
I've only been in place for a year or so.
That was called Heritage two point zero, and we took
that and then we put in a few more went
to guests, went to consumers, does it feel when you're here?
And we lightened it up, brightened it up a little bit,
(11:03):
and actually put a few more diner esque cues in it.
We are America's diners, so we put a few more
diner sques in place to really resonate and even just
brighten up the image. So six and a half percent lift,
we're seeing traffic sales six four I mean it's roughly
the same.
Speaker 3 (11:19):
But over six percent. We're thrilled about that.
Speaker 4 (11:21):
And actually we're really excited about the conversations we've been
having with franchisees and a stimulus package kind of leveraging
our balance sheet and leveraging you know, what we can
do our strength in terms of what we can do
to help them. So we've reintroduced different stimulus programs. We've
often done that, and historically I've always tried to say,
we understand, we want the investment in our and improving
(11:42):
our assets, and yet we understand, we understand, you know
what it looks like for profitability and strengthening those franchisees
business models.
Speaker 3 (11:50):
So the stimulus package and the.
Speaker 4 (11:51):
Things we're doing for them, we really are pretty excited
about the momentum and how many remodels we can do
this year. We're really excited about that.
Speaker 2 (11:59):
Great. You're making some changes to the loyalty program as well.
Speaker 3 (12:02):
Correct absolutely so. You know I've said this before.
Speaker 4 (12:05):
We have a decent database with a good amount of
people in our database, but making it a best in
class consumer friendly, really one to one marketing personalized journeys
and really moving it from where it is today with
a database and a lot of offers going into the
database and lots of consumers that response, moving it to
truly a CRM loyalty program with rewards.
Speaker 3 (12:28):
We're amping it up.
Speaker 4 (12:29):
We've invested heavily in a team, a team that has
done this before, a team that's created these best in
class class programs rather.
Speaker 3 (12:36):
And it's coming to fruition. It'll be right now.
Speaker 4 (12:39):
Back half of the year is when we know that
that full scale launch will happen. But lots of work
going on and lots of things that we're able to
do right now just to kind of kick the tires
on this new approach to it, and we're absolutely thrilled
about what we'll be able to do soon.
Speaker 2 (12:53):
Okay, cool, you closed a bunch of units. I think
it was eighty eight and twenty twenty four.
Speaker 1 (12:59):
Exploct to close some more or Dick year is this
going to be?
Speaker 4 (13:02):
You know?
Speaker 2 (13:02):
I saw they were very low volume stores. Now one
point one million AUVs. Is this going to be the
last year of the outside store closures.
Speaker 3 (13:10):
So that the outside store closures.
Speaker 4 (13:12):
I love how you said that, right, because this is
a brand that and like any other brand, you're always
kind of working to call working to you know, prune,
and that had always been the case prior to the
pandemic for the brand one to two percent, right, and
usually in a net positive position. Pandemic for everybody kind
of reset things, and I called a reset.
Speaker 3 (13:30):
I haven't necessarily though.
Speaker 4 (13:31):
We talked about transformative thinking at Denny's in our strategy
Rise of a New Day. When we brought that to
investors in our five year roadmap, we were very clear
about this is what it's going to take to just
reset and get us back to net growth.
Speaker 3 (13:44):
That's the goal, get us back.
Speaker 4 (13:45):
To growing the Denny's brand like we had been doing historically.
And so for us, that fife fifty is total. It
was about last year in twenty four it was eighty seven.
You might have eighty eight, right, I think it was
eighty seven, but you're so closed. And then this year
we've guided to arrange that is about the same, and
that guidance is about saying yes, we will rip that
(14:06):
band aid off if you will, to strengthen the rest
of the portfolio and help strengthen our franchise. These models,
and we know what this can do for us. We've
also talked about and have been very overt about saying
for us, it's a path to creating greater AUVs and
a stronger portfolio for the whole brand. Right now, one
eight we open new is the average unitt bonds. One
(14:27):
eight we open new locations, Michael, and they're two two,
two three and sometimes even higher. So culling that bottom
and then again really working the strength of portfolio. We've
said we want to go from one eight to two
two in a five year timeframe, and that's what we
laid out in our model, in our long term roadmap.
Speaker 3 (14:45):
And that's that's a quarter of it.
Speaker 4 (14:47):
It's twenty five percent of it really because of what
it will do to increase sales and increase the AUVs,
because of those under you know, just under their lower volume,
and it makes some changes there. This was a long
path to get there and to announce it well underway,
you know, earlier in the twenty three into twenty twenty
(15:07):
three and conversations with franchisees about what does this do
for the health of your business? No one likes doing closures.
It's the only thing talked about when we talk. And
I can't wait till we get to the other side,
because we will, and we'll show the strength of the
Denny's brand again and getting to modest growth, but getting
to growth, net growth by twenty six. So will there
be some after twenty five, sure, but it will. It
(15:30):
is about you will see us in a net growth
environment by twenty twenty six.
Speaker 3 (15:33):
DESTI goal.
Speaker 2 (15:35):
Yeah, it's been ten years since I covered Denny's, almost
eleven now, but yeah, I remember John Miller telling me that, like,
you know, for a brand of that's been around as
long as Denny's, two percent a year was pretty much
standard operating rights seizure.
Speaker 1 (15:50):
Right, Okay, cool. Do you expect to get a seam
store sales boosts to share from the closures?
Speaker 3 (15:57):
Oh, that's a that's a good question.
Speaker 4 (16:01):
I do expect it. Where it really depends on where
those end up happening. And we obviously have that roadmap
in front of us and have that physical map, but.
Speaker 3 (16:08):
There's still probably still too soon to.
Speaker 4 (16:10):
Tell that immediate in twenty five, you know, change or
delta there just given. Is it a high density market,
is it not? Is it closing because the trade area
moved on us?
Speaker 3 (16:21):
Or is it a least situation? So it's all those things, right.
Speaker 4 (16:24):
The analysis shows us that it's one of four or
five different things that could be a reason, so hard
to say.
Speaker 2 (16:31):
Hard to say yet, Kiki's expansion is pretty robust.
Speaker 1 (16:35):
Can you talk about AUV.
Speaker 2 (16:36):
Restaurant level margin, cash on cash returns, any other unit
economic data you can share there.
Speaker 4 (16:41):
Yeah, So we've been talking a little bit more, you know,
as of late about some of those things, and we
are really excited. So to capsize the growth, the aggressive
growth gone from one to seven states. They did that
almost overnight. I'm super proud of the Kiki's team led
by Dave Schmidt, formerly of Bloomin Brands, so he's got
great experience from the portfolio perspective. I worked with them
(17:02):
for a brief stint and bringing them over. He's the
right leader for this brand and they've done amazing things.
So that one to one to six happened in about
seven weeks in the fourth quarter. They are now soon
going to be taking vacations late late March April, but
they going from one.
Speaker 3 (17:17):
The seventh state was Georgia, was an existing Kiki's franchise.
So it's been rapid growth.
Speaker 4 (17:23):
Spent a lot of time integrating a bit of time
early on integrating it into our systems, making sure that
we really understood the brand because it's a unique brand
that had never gotten outside of Florida. Founder led so
in that case really had to put a lot of
you had to put some place, if you will. And
having done that now we've been really.
Speaker 3 (17:42):
Really focused on the growth and really really pleased.
Speaker 4 (17:45):
So the AAVs they're greater outside of Florida than actually
what they were.
Speaker 3 (17:50):
When we purchased it.
Speaker 4 (17:51):
So we're really excited about that for Tennessee, Vegas, California,
and Colorado. Dallas is now open and there's lots of
locations Dell so two million AUVs on average, and excited
about that trajectory.
Speaker 3 (18:05):
It's got a great ramp up period.
Speaker 4 (18:06):
All my experience in the industry with openings was they open,
especially if you have a well known brand, they open
and it trails off twenty eight percent or so.
Speaker 3 (18:14):
Maybe thirty. It just depends.
Speaker 4 (18:16):
This brand grows because it's seen as still I think
that unique. I don't know if I don't know necessarily
who Kiki's is. A lot of people will stop me
when I'm in the locations. A lot of people stop
me and say, I've never heard of this, right, likely
that you haven't, but they rave about what they got.
We've obviously got a brand new design and lots of
new elements, so it's really pretty cool. Mid teens margins
(18:38):
is what we're targeting after the ramp up period. The
build out costs a million and a half. They're inline
and almost all cases they're inline, so that's exciting because there's.
Speaker 3 (18:47):
A four to five year cash on cash return. So
thrilled about it. Seven and a half.
Speaker 4 (18:51):
Hours, very different from our mostly twenty four hour brand
at Denny's. We've had lots of excitement from Denny's franchisees.
Kiki's franchisees are awesome because this was a franchise brand.
That was what was attractive about it and why this
really from a strategic standpoint, made a lot of sense.
So excited about the growth of Kiki's, excited about going
to new markets. I would also have to add that
(19:12):
we stole share in the fourth quorter in the Florida market,
but we absolutely did. We were positive three percent and
created some momentum in that fourth quorter doing things like
new marketing and local store marketing, but having presence and
working on the website that didn't exist before. I'm working
on and having off premise and OLO in our locations
(19:34):
right which is nearly complete. But those things weren't in place,
and there was really no off premise business. Now it's
a good part of what we're doing. So really thrilled
that all those things were put in place in the
last year and a half and then solidified in that fourth.
Speaker 3 (19:48):
Quarter and then we started to see the momentum three percent.
Speaker 4 (19:50):
If it had not been for the hurricane, the hurricane
attributed we think one hundred and ten basis points drag,
so could do the math and that would have been
a really st out order for the Kiki's brand.
Speaker 2 (20:03):
That's great, and I love that one shift model. I mean,
I'm sure turnover is much cheaper, much better. It's uh,
you don't have to worry about, you know, spending more
on late shift employees and all that kind of stuff.
How many of the twenty twenty five units are going
to be developed in new markets versus you know, in
field of existing ones.
Speaker 3 (20:25):
We've got a couple other states lined up.
Speaker 4 (20:28):
We haven't put them on the website and haven't announced
them yet, but there's definitely a few more states you'll
see us expand too, and probably be out with that soon.
Speaker 1 (20:39):
Okay, cool?
Speaker 2 (20:39):
And what percentage of the new units are opened by
existing kikiS franchisees.
Speaker 3 (20:44):
Good question.
Speaker 4 (20:46):
So we've got some being opened, some were opening ourselves,
seeding feach strategy, working to refranchise them as soon as possible.
But in this environment, what we've learned and talking to
our franchisees for both brands, the build out costs and
the things, if there's if there's a scale that we
can leverage to get them open and then turn the
keys over, that's what we'll do. So you'll also see
us pretty quickly work to refranchise some markets. Dallas is
(21:08):
a company will market as we speak today, and so
so's Tennessee.
Speaker 3 (21:13):
Right.
Speaker 4 (21:13):
So we've been pretty overt about kind of leveraging our
balance sheet to do that as well in our cash
but you'll see us you'll move that. So what our
Keiky's franchises would be a small percentage because the percentages
are you know, the amount of locations is getting bigger.
Speaker 3 (21:25):
So a handful of Kiki's franchises will open.
Speaker 4 (21:28):
We'll do a couple more company markets and open up
a company market only to hopefully flip them and have
people lined up to.
Speaker 3 (21:35):
Do that.
Speaker 4 (21:36):
We're having conversations with right now. So and then Denny's franchisees.
There's a small handful of Denny's franchise is ready to
go this year.
Speaker 2 (21:42):
Also, Okay, great, and you mentioned the seed and feed strategy.
You know, long term, what do you think the right
mix of company versus franchise?
Speaker 3 (21:50):
Yeah, great question, Michael.
Speaker 4 (21:51):
We talked about it a lot right when we when
we acquire the brand, talking about eighty five fifteen and
right now, obviously it's a little greater company.
Speaker 3 (22:00):
We still want to be eighty five fifteen ninety ten.
Speaker 4 (22:03):
We want to keep them as many asset light you know,
brands would say heavily franchised. You want to keep a
handful to be smart and still be in the game.
I'm an operator and hearts and by trade. So you
want to be in there and in it with them
and have skin in the game. And you want to
be able to have a place where you can test
crazy stuff. So we'll have a handful, but the goal
(22:24):
is really to get it to be just like Denny's,
you know, as many franchise locations be asset light leverage
our approach to franchising, you know. So we'll get back
to that, and we'll get back to it as soon
as we can. We just we really wanted to get
some markets open and establish that presence and that's really
working for us right now.
Speaker 2 (22:41):
All right, good stuff, and where's that cash going to go?
Is that going to go back to buying shares already
that yeah.
Speaker 4 (22:47):
Yes, yes, So back to buying shares back to again,
whether it's stimulus package or things that we're able to
do to help our franchise ease, get that flyweel turning,
get those remodels going, and because we know the lift
that comes with that. We're still in the sting in
technology with both I mentioned our CRM loyalty program, but
also Xenial. You know, our company operations have the new
(23:08):
POS platform, cloud based handheld order taking things like that,
so that rollout's happening as well, so we'll leverage it
to be great stewards of our business. We'll leverage it
to continue investing in media, marketing, food. But also, yes,
buying back shares is a critical part of our It's
an important part of our strategy to be consistently in
the market buying back shares, and we are not precluded
(23:30):
from doing that while we do the seed and feed strategy.
Speaker 3 (23:32):
That's the good news.
Speaker 2 (23:34):
Okay, great, And recently there were two permanent closures. You know,
when were those stores opened? And and have you been
making refinements to your site selection tools since then?
Speaker 4 (23:45):
Are you're referring to the Kikey's locations chacki Keys?
Speaker 3 (23:49):
Yeah, Yeah, So that was.
Speaker 4 (23:50):
An it's an interesting situation where we were able to
exercise our rights and go in and help out with
a franchisea that was struggling. So we've pretty much what
we've said about that. It really wasn't so it wasn't
something we had opened. It was something that existed long before.
But we also know we'll be able to we'll be
able to flip that, we'll be able to to to
be able to really work with with what we've got
(24:11):
and then they're good locations, they were good performing locations.
Really was just about exercising our rights, do the best
thing for the brand, the team, that location, those locations,
et cetera. So you'll see more from us on that
going forward.
Speaker 1 (24:24):
Okay, great, So what's your favorite Denny's order?
Speaker 3 (24:28):
Oh?
Speaker 4 (24:29):
My Denny's order since I was you know, I don't
know ten Moon's over Miammi.
Speaker 3 (24:34):
Superbirds a close second for me. And uh and then
when I'm being really good, you know, I do the
Fit Slam, So how many times.
Speaker 4 (24:42):
That week or how much travel I'm doing, But Moon's
over Miami can't go wrong with that.
Speaker 3 (24:45):
It's just fabulous.
Speaker 4 (24:47):
Yeah.
Speaker 2 (24:48):
Yeah, I've gone with the Moons over Miami omelet before
the Grand Slam's great Santa Fe skill.
Speaker 1 (24:53):
It's great.
Speaker 2 (24:54):
I think next time I show up, I think I'm
going to try that Philly cheese cheese steak ommelet.
Speaker 1 (24:58):
I don't think I've had that one yet.
Speaker 3 (24:59):
We've got some great skillets out. Sounds like you had
that one, But there's some really great skillets out right now.
They're they're they're they're awesome. Our burgers shakes, unbelievable quality
and just craveable.
Speaker 4 (25:10):
We launched a with the Beatle Juice August September time
frame when that came out.
Speaker 3 (25:16):
That movie came out and we launched a Beatle Juicy Burger.
Speaker 4 (25:18):
So we created this Triple Patty Burger and it went crazy,
right Beatle Juicy Burger launched it with the integration of
the movie.
Speaker 3 (25:24):
And that's now permanently on the menu.
Speaker 4 (25:26):
So the next time you go, you got to look
at the the the triple Patty Burger that's on the
menu now.
Speaker 3 (25:32):
It's phenomenon Triple Patty Bakerberger.
Speaker 1 (25:35):
Yeah, good stuff. You're making me hungry.
Speaker 2 (25:39):
All right, thanks for doing this. Where can our listeners
go to find their closest Denny's And which social.
Speaker 1 (25:43):
Media channel should we be following the chain on?
Speaker 4 (25:46):
You should follow us wherever you can ye Denny's dot
com to find your local Denny's, Denny's on demand to.
Speaker 3 (25:53):
Find your off premise order and order your your.
Speaker 4 (25:55):
Denny's online and then yeah, social pages all though usual
on Twitter, Facebook, Big can follow me on LinkedIn. I'm
always talking about the great things that we're doing and
really proud of the fact that when needed, we're out
there across the country helping guests, helping consumers with our
mobile relief diner and just trying to do good wherever
we can. So yeah, you can find us doing good
things in the world at the same time. So come
(26:17):
see us, come see us anywhere.
Speaker 1 (26:19):
Love it.
Speaker 2 (26:20):
I want to thank the audience for tuning in. If
you liked our discussion, please leave us a review. Check
back soon for an interview with Noah Glass, the founder
and CEO of OLO
Host
Michael Halen
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