Denny's Corporation ( NASDAQ: DENN ) stock wavered on Tuesday after the company narrowly beat out earnings estimates on Monday evening.
The South Carolina-based restaurant chain notched $0.18 in adjusted earnings per share on $120.8M in revenue for the fourth quarter, exceeding consensus expectations . US system-wide same-restaurant sales grew 2% as compared to the prior year period, also edging out the 1.96% expectation. Restaurant operating margin contracted 220 basis points from 2021 “primarily due to commodity and labor inflation.”
“We were pleased to deliver adjusted EBITDA that was slightly above the high-end of our previously guided range for the fourth quarter given the persistent choppy operating environment,” CEO Kelli Valade commented. “With an evolved leadership structure, the addition of a complementary brand, and refined strategic priorities, we enter 2023 with renewed energy and focus on brand revitalization efforts at Denny’s and plans for accelerated growth at Keke’s.”
Moving forward in 2023, the chain anticipates domestic system-wide same-restaurant sales growth between 3% and 6%. Management anticipates the opening of 35 to 45 new locations this year, including 8 to 12 new Keke's restaurants, with a consolidated net decline of 15 to 25.
Commodity inflation is expected to be between 4% and 6% for 2023. Labor inflation is expected to trend at approximately 5%.
Shares of Denny’s Corporation ( DENN ) rose nearly 6% at the market open before retreating as Tuesday’s trading progressed.
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Denny’s edges past earnings expectations, eyes persistent inflation ahead