Q3 2024 Denny's Corp Earnings Call and Investor Day Part 2
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Great everyone.
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Great everyone, we're going to get started with the rest of the presentation. Today. My name is Raphael gross I'm a partner at ICR and together with my ICR colleagues, we've been working with Denny's for more than a decade on all things related to Investor relations and as part of that work as many of you know some of you in the room and I've spoken to we conducted a formal process.
<unk> study this past summer as a lead up to today's Investor day, one of the key findings from those discussions that there was a lot of interest in hearing directly from franchisees about their experience with the denny's system and their thoughts on the future with respect to both the Denny's and Kiki's, France that led us to assemble a group of franchisees to share their store.
<unk> with you directly.
Speaker Change: I'm pleased to introduce our franchisee panel beginning with Roland Roland joined the Denny's franchise system 20 years ago in 2004, he has the largest denny's franchisee.
Operates 108 restaurants nationwide.
Speaker Change: Quarter of his portfolio is in non traditional travel center location.
Speaker Change: It's also been an early adopter of the new remodel design and the POS rollout and we'll talk about that shortly but he also has a diversified portfolio consisting of Denny's will play a loco krispy kreme and Blaze pizza.
Speaker Change: Clyde joined the Denny's system back in 2017, and he has expanded its portfolio through Denny's Refranchising and development program is the ninth largest.
Speaker Change: Franchisee with 36 restaurants across Texas and Florida. It was also an early adopter of the new remodel program and invested to convert over 35% of its portfolio already and also an earlier adopter of the new Pos rollout and will be something that's too. He also has a diversified portfolio which include Jack in the box.
Speaker Change: <unk>.
Speaker Change: John Erhard opened his first Kiki's cafe in 2017, and yet now on six Kiki cafes in the Orlando and Fort Myers areas. He also has two additional kiki's cafes under construction has the second largest AOE cafe and the <unk> system.
Speaker Change: And finally.
Speaker Change: I've been in wife team, Jordan and actually Swan. They opened their first Kiki's cafe in 2014. They currently operate seven kiki's cafes in the Tampa, St. Pete DMA and they plan to expand into Georgia very soon.
Speaker Change: With that let me ask the question of all the franchisees and I'll begin with.
Speaker Change: Rowan what do you see as a unique advantage for your brands today and into the future and what do you see as the biggest challenge as well.
Speaker Change: Chart with you.
Rowan: I think Dennis.
Rowan: As an iconic brand and I think I know nine out of 10 people in America.
Rowan: <unk> been in one.
Rowan: And it's a so.
Rowan: A huge huge advantage America's diner.
Rowan: If you've been traveling.
Rowan: I'll probably stop at AR.
Rowan: Denny and so we have that iconic brand that brings people in.
Rowan: Our biggest challenge I would say is we got to get more.
Rowan: More people back in things.
Rowan: Since COVID-19 have changed.
Rowan: Have more price unless people and.
Rowan: And we need you need more people.
Speaker Change: Yeah, I would say the biggest advantage for that I see is going through the remodel program I think the box economics are very very strong.
Speaker Change: I'm really big on return on and return on capital.
Speaker Change: And I will tell you that I will continue to.
Speaker Change: Invested reinvested.
Speaker Change: To put this putting my capital into Denny's.
Speaker Change: Because the IRR is just.
Speaker Change: Beyond amazing in my view.
Speaker Change: I'd say the challenge.
Speaker Change: It's really more of an industry challenge and as I see it I think it's more.
Got the labor model that that we're looking at just like all the other brands out there.
Whether it be <unk>, all the way to fast casual or.
Speaker Change: Or even family dining as we are in.
Speaker Change: So I think the challenge will be be there, but we showed that challenge with the rest of the industry.
Speaker Change: Chuck.
Chuck: Let's see.
Chuck: Probably the product on our site is the thing that is one of the strengths I think when you when you're inside of keys and you see the reactions of faces when the server brings to place the table is.
Speaker Change: Is truly a very cool experience and.
Chuck: And so I think.
Chuck: Being in the Florida market, and knowing who we're competing against.
Chuck: It's just the thing you hear constantly from customers is just the quality of the menu and that moment when it hits. The table is really special on the challenge side definitely I think what Roland said I agree with it's traffic. It's the macroeconomic phase we're in and just getting through to this other side.
And that's pretty much it.
Chuck: Jordan.
Sure.
Jordan Swan: TPS has just continued to evolve.
Jordan Swan: Such a staple as far as in Florida.
Jordan Swan: In that spot that people love to come to.
Jordan Swan: Have business meetings have family gatherings.
Jordan Swan: And it's that local spot they just people love to come to.
Jordan Swan: Big boost privacy.
Jordan Swan: <unk>.
Jordan Swan: It's amazing because what Dennis has brought to it is that continued just encouragement and growth and all that kind of stuff that we haven't had as a smaller company and so there's just a lot of big things that are coming for keys that we're just very excited about.
Jordan Swan: Excuse me, but in regards to anything.
Jordan Swan: From the other spectrum.
Jordan Swan: Yes, economics, all those kind of things, but is how quickly we can even in advance with the technology with some of these things that are coming forth that prior ownership did not give us.
Jordan Swan: All of those things are coming that are just going to continue to be great things for the brand.
Speaker Change: I want to talk about the two brands, specifically and your beliefs about the strategies and investments that are taking place. It will start with client enrolling because they've been longtime franchisees. How would you describe your the evolution of the franchise or franchisee relationship both yours and in general since you entered the Denny's system, how do you feel.
Speaker Change: About the leadership refresh over the past few years and then just a final question. What makes you confident in the future and what are you. Most excited about maybe we'll start with you yes.
Speaker Change: Yes.
Speaker Change: I was I.
Speaker Change: I have been trying to get into the Denny's system.
Probably since 2011, even though I got in 2017, so I've always admired the brands from afar.
Speaker Change: And always admired it because I felt like it was in a very iconic brand.
Speaker Change: Much like you've heard today, but then also a staple within within the household I feel like it's it's a global brand.
Speaker Change: We have 400 restaurants in the U S 167 abroad, I feel like I can go anywhere in the entire world and somebody is going to know a.
Speaker Change: Did these brands so.
Speaker Change: Being a legacy brand like that.
Speaker Change: It's one that.
Speaker Change: I had always wanted to be a part of and I think the evolution of the.
The leadership team and the whole management franchise or franchisee relations.
Speaker Change: I think thats continue to evolve I think that you started out.
Speaker Change: When I was when I joined in 2017.
Speaker Change: Great interaction with the franchise or and I think where we are today is that it's just bill is just continued to build so the quality of the team.
Speaker Change: Their vision. This strategy continues to excite me when it comes to reinvesting back in the brand because I invested in the leadership along with the fact that the brand is an iconic brand. So I'm extremely excited about it so.
Speaker Change: I look forward to the future.
Speaker Change:
Speaker Change: I'm going to put my money, where the mouth, where our mouths.
Speaker Change: Fair enough.
Speaker Change: Roland.
Roland Roland: So 20 years ago, when I came into the system.
Speaker Change: Villa Beretta franchise documents.
Speaker Change: What we saw.
Speaker Change: Yes.
Speaker Change: I call it the most one sided agreement in the history.
And put it away and hopefully you never have to look at it again.
Speaker Change: But there was a great contention amongst the franchisee community and the franchise or.
Speaker Change: It's just.
Speaker Change: You know it was a second brand I came to us from others.
Speaker Change: Ones here and then two years later entered John Miller, and John did a great job kind of.
Speaker Change: Fixing that.
Speaker Change: There's a lot of great things and he was there for like 11 years I thought Okay go.
Speaker Change: When I retire who could they possibly higher.
Speaker Change: His place and.
Speaker Change: And I don't know how they did it but they found the perfect person.
Speaker Change: Kelly has been great I mean, our restaurant background.
Speaker Change: I believe if you're going to.
Speaker Change: In the restaurant business, you've got to operate good restaurants, so I personally see an operator someone's kind of come through the operations side and.
Speaker Change: And Kelly has done that operate great brands, great analytics with black box since he's been perfect in.
Speaker Change: So she comes in she introduced a new team Theres, new ideas, it's fresh and invigorating.
Speaker Change: Ben.
Very good.
Speaker Change: John.
Ben: You have an interesting background, what made you decide to become a franchisee.
John: So I was a customer of <unk> first for a long time, my wife and I.
We've been a franchisee for about seven years now.
John: He used to have a production company in the television World for 25 years had offices in Florida in La.
John: And we're winding that down retiring looking for the next chapter never in a million years did I ever think we've done it but restaurants by if you've talked I would've told you. The last thing on my list.
John: And we had a friend that was a franchisee of keys.
And we're exploring a ton of different.
John: <unk> for us and the more we dug into that we already were huge fans of the brand when we started seeing the model.
John: Total even thing so we started off with one restaurant seven years ago, absolutely fell in love with it will the culture single shift the hours of the return was fantastic and so we just sort of fall in love with it would love the culture of the team and everything behind it. So yeah never thought we would be here, but we're having a great time.
John: <unk>.
Speaker Change: With a lot of excitement right and to ask this question is for Rolling implied you were both early adopters in the new Xenial Pos rollout, which for everyone's clarification includes server tablets kitchen video systems and QR pay can you tell us how those investments are paying off in your restaurants and the benefits you're seeing.
Speaker Change: Roland will start with you.
Roland Roland: So in the restaurant business, we operate about 385 restaurants in 20 states.
Speaker Change: And the technology is.
Critical to get it right and that many restaurants.
Speaker Change: We love to buy restaurants, where people haven't used the technology, because we think we see 345 point savings.
Speaker Change: And so this new system is long overdue Denny has been very very helpful. I mean, it's still new we have three systems and so far.
Speaker Change: Anytime you can pay more attention to.
Speaker Change: Labor and food cost two prime costs extremely extremely beneficial, especially up.
Speaker Change: Great group of restaurants.
Speaker Change: Yes, I agree with I agree with Roland I should have about five systems in by the end of the year.
Speaker Change: And I sort of look at Daniel.
Speaker Change: Technology is a huge technology upgrades and it's also something that is in.
Speaker Change: Great in front of this is customer facing when you start talking about.
Speaker Change: Working with a tablet versus a pad and pencil.
Speaker Change: When you're dealing with orders and that sort of thing I mean, it's just really more of a sophisticated look it makes your business seem more contemporary.
Speaker Change: And so to me I I I.
Speaker Change: Like that I haven't really tracked so far the with this.
Speaker Change: Savings I'm sure the savings is there, but what I am interested in is how I.
Speaker Change: I look to the consumer.
Speaker Change: And is this something that the consumer can see that there is a change and it's an upgraded feel touch and feel from a contemporary standpoint, I really do see denny's.
Speaker Change: Really lever level levering up in that in that area.
I wanted to stick with you both and discuss the remodel image. Both of you have been early adopters and big fans of this initiatives, maybe you could talk to us about your experience with the new image. How guests are responding how the teams are responding how many have you done and what are the returns that youre seeing.
Speaker Change: We'll start with you yeah, I've done about 10 of them so far.
Speaker Change: As it is.
Speaker Change: As I mentioned earlier.
Speaker Change: About 35% of the portfolio is completed and I continue to do it and I'll tell you why because.
Speaker Change: I'm actually getting.
Speaker Change: Double digit.
Speaker Change: Returns on an investment.
Speaker Change: And I believe that.
Speaker Change: The more we do that the more we show the guests.
Speaker Change: That we are a different look we have that different look.
Speaker Change: We are lit up.
Speaker Change: Especially when you think about 'twenty 'twenty four seven.
Speaker Change: Business, which case.
Speaker Change: I have only one store that's not 24 seven.
Speaker Change: Out of the 36, and I think that that is where we're going to win the game.
Speaker Change: Is that $24 seven.
Speaker Change: Because that's where I'm winning the game.
Speaker Change: I know that bolus, winning the game that way so I'm very very enthusiastic about 2.0 customers see it.
Speaker Change: From the curb they understand exactly what we're trying what we're trying to do and we are getting more and more instrumentality.
Speaker Change: As a result of that so I'm excited I'm extremely excited.
Speaker Change: Hum.
I brought you some good information this is not forward looking this is factual.
Speaker Change: And helpful.
Speaker Change: Yes.
Speaker Change: The industry you got a remodel of this to stay up but what you really hope is when you remodel you get a return on investment we've done five of the new Denny's, we feel a little different and Dennis we look at the outside we look at the dining room and then we go to the back of the house people, sometimes forget tobacco houses where.
Speaker Change: Our people work.
Speaker Change: And some of the Denny's are.
Speaker Change: Okay.
Speaker Change: So they need to be redone.
Speaker Change: The T bar sealing the whites the FRP the equipment I mean, we try to touch at all.
Speaker Change: What we've done five and we've seen.
Seven 2%.
Speaker Change: Increase in sales to 25, 3%.
Speaker Change: Increase in sales, we had a restaurant Prescott, Arizona.
Speaker Change:
Speaker Change: Everything around it was beautiful, but this old penny sitting I was a beautiful Walmart brand, new Burger King and here's this all Dennis.
Speaker Change: And we remodeled that I think we spent about $600000 inside outside and we took it from <unk>.
Speaker Change: The ones that were closing a one 3% to almost $2 million and so this is really resonate I think with the consumer they like to see the difference and some guards Denny.
Speaker Change: Remodel it.
Speaker Change: And it's been very beneficial to beautiful remodel looks really good and it's been.
Speaker Change: Very helpful actually.
Speaker Change: You'll see a return on investment.
Speaker Change: I wanted to take a good I'm sorry, I wanted to just to take a step back and talk about all these initiatives that are rolling out across the system, obviously, they require some sizable investments in well.
Speaker Change: Might be able to invest are there are ample options and support coming from the franchise or <unk>.
Speaker Change: These investments in a tough lending environment are climbing I'll start with yes, I know the brand has recently come out with a very very strong.
Speaker Change: Program, where.
Speaker Change: You put franchisees if they wanted to take advantage of that.
Speaker Change: And it's it's basically.
Speaker Change: Kind of a.
Speaker Change: And upfront.
Speaker Change: Payment.
Speaker Change: To the franchisee.
Speaker Change: And then it's a little bit of a payback, it's a payback over a certain period of time, but.
Speaker Change: If you, but it is definitely something that.
Speaker Change: In my view.
Speaker Change: If you're looking to do a remodel a 2.0 is probably the best program I've seen.
Speaker Change: In terms of support from the franchise or it.
Speaker Change: I think there's also been a.
Speaker Change: An opportunity when you start talking about the technology upgrade and that sort of thing where theres a leasing program that.
Speaker Change: Debt.
Speaker Change: Franchise or has introduced to the franchisees.
Speaker Change: And I think Youll see we will see a lot of franchisees take advantage of that but it goes back to the franchise or franchisee.
Speaker Change: <unk> system.
Speaker Change: Each case.
When you have a carrying franchise or.
Speaker Change: Such as such as Dennis It really motivates you and as a franchisee.
Speaker Change: It makes you feel like you're both were at the table together.
Speaker Change: That trend looking at having a common view.
Speaker Change: <unk>.
Speaker Change: Working together collaboratively.
Speaker Change: To to really take the brand forward.
Yes.
Speaker Change: I would just say they've done two things that are kind of unusual in the industry.
Speaker Change: If you needed to finance the new Zinio.
Speaker Change: Basically 100%, though the lender that they wind up we'll go behind your primary lender. So if somebody needs a 100% financing to do the new system. They can and they also.
Speaker Change: Again innovative I don't know if this is Steve done probably.
Speaker Change: Uh huh.
Speaker Change: But on the remodel I give you a $100000.
Speaker Change: And build that payment back into the to the franchise fee.
Speaker Change: So at their cost of money, which is.
Speaker Change: Attractive and unusual.
Speaker Change: Helpful.
Speaker Change: The People's presses, maybe at the smaller franchisees don't have access to capital.
Speaker Change: Very helpful.
I'll now turn to <unk> for a second and ask Ashley a question.
Speaker Change: A little different spin on investments you've been in the system about 10 years. If you can tell us how the <unk> brand has evolved since being acquired by Denny's two years ago and has a shift in ownership changed trajectory.
Speaker Change: Of the brand and what's changed.
Speaker Change: There has been obviously.
Speaker Change: For us a huge change so we were one of the founding franchisees.
Speaker Change: 2014.
Speaker Change: So we have been with the original franchise noise for quite some time.
Speaker Change:
Speaker Change: And now they're denny's is taking over it has been.
Speaker Change: We are able to grow revel tap support we're able to have.
Speaker Change: Even our culture as far as like franchisees and being able to talk and really help build.
Speaker Change: Build our sales build.
Speaker Change: Brand recognition.
Speaker Change: And he has done an amazing job, we could not have been where we are even today with the current franchise doors.
Speaker Change: We probably won't even be in cookies.
Speaker Change: With that the bathroom guys always.
Speaker Change: So you know we.
Speaker Change: We plan to grow it plan to expand in.
Speaker Change: He just made that possible.
Speaker Change: China.
Speaker Change: There's a long long list.
Speaker Change: Also the better.
Speaker Change: The access to.
Speaker Change: The services to the shared services has been tremendous.
Speaker Change: From development and our development team to help assess the access to the data that there was no data prior it'd be very little data, but if you think about the <unk> brand was very much shape.
Successful branch regional brand that was very static in analog if you will and I think it's been tremendous molasses.
Speaker Change: Here's what what's already happened menu innovation optimization to David's point, we've shrunk the menu down to really streamline that.
Speaker Change: Inside of the stores, where the same. So then you look at the stores is updated.
Speaker Change: Technology is everybody's, saying very little technology.
Speaker Change: Very old school way of running the store. So a lot of these things are just helping improve so tough.
Speaker Change: Top to bottom it's been huge off Prem two so prior to the acquisition there was virtually no off the old printers or sort of against the offline.
Speaker Change: Covid shifted out a tiny bit, but then when they came on so we see huge growth, Matt catering channels lauded for opportunities.
Speaker Change: At the beginning of a lot of great things to come but it's been 90 day.
Speaker Change: I'm going to shift a little towards.
Speaker Change: Marketing and sales.
Speaker Change: And Ron I'll start with you can you speak to the incremental marketing investments from a co op and the shifts back to the 2468, especially given the breadth of your portfolio as you have restaurants in 16 states.
Speaker Change: I'm a huge fan of the 2468.
Speaker Change: As opposed to taking it away.
Speaker Change: So you know.
Speaker Change: And anyway I was delighted to see brought back and we went to <unk>.
Speaker Change: For four weeks, we went to instant positive traffic, which is huge.
Speaker Change: It's a value proposition that I think people recognize and know.
Speaker Change: And that is the value brands.
Speaker Change: <unk>.
Speaker Change: The incremental spending is critical to let people know.
Speaker Change: Back in the average person comes in.
Speaker Change: 2.3 times I mean their own quick serve they may come in twice a week, but Dennis it's two five times, a year or something like that so it takes some money.
Speaker Change: No that the 246 days back in.
Speaker Change: That initiative has been.
Speaker Change: Very very helpful to us so I think we'll continue to be helpful.
Speaker Change: We have to spend the money to.
Speaker Change: Have the word out there that is back.
Speaker Change: I wanted to ask you about the virtual brands and your experience with them.
Speaker Change: Most larger change as you probably know have moved away from virtual brands over the past few years and Denny's has leaned into its virtual brands.
Speaker Change: <unk> rolled out a third vertical recently has launched an existence of these virtual brands improved your own four wall economics, and maybe discuss also the incremental costs.
Speaker Change: Supporting these perpetual brands.
Speaker Change: Glad that they are moving away because the next year that I can say.
I actually feel good about the fact that we have meltdown Burger Dan also recently band it's Brito.
Speaker Change: The layered into this new channel of distribution of our food.
Speaker Change: Actually allows for us to be able to have that layer is layered sales incremental sales.
I think were somewhere in the neighborhood, if I had to consolidate I mean, maybe.
Speaker Change: First our restaurant I mean that makes a difference.
Speaker Change: I don't necessarily.
Speaker Change: Look at the.
Speaker Change: Cost as much as I looked at look at the fact that it builds variety.
Speaker Change: Under one roof and to me I think that that improves overall I look at that as a pool of my overall box economics.
Speaker Change: From a brand standpoint, so I'm very much enthusiastic about <unk>.
Speaker Change: Providing a new channel.
Speaker Change: When it comes to virtual brands. So it's been very very effective for us.
I also believe that.
Speaker Change: It allows our teams.
Speaker Change:
Speaker Change: <unk> also be excited about new new things in variety and that sort of thing.
Speaker Change: To me I think it.
Speaker Change: It's just an overall added value.
Speaker Change: Versus looking at it from gosh, how much money is at stake is this going to cost me.
Speaker Change: And I tend to new.
Speaker Change: New initiatives that tend to new initiatives like virtual brands I tend to lean into those.
Speaker Change: As opportunities not so much and I don't look at it costs first I looked at it from the standpoint of what's what's my opportunity.
Speaker Change: To really gain more guests.
Speaker Change: Within the within the portfolio, Okay can I add something to it. So so a lot of brands are moving away from what we're doing and I think I do.
Speaker Change: No.
Speaker Change: Large percentage of the.
Speaker Change: These brands it comes at late night.
Speaker Change: On the other restaurants are closed.
Speaker Change: I have a 108 denny's 102 of them are open 24 seven.
Speaker Change: So a lot of these.
Speaker Change: Three brands. So we're talking about it comes late night and so it really works well for our for us at Denny's.
Speaker Change: Now, let me shift back to <unk> for a second.
Speaker Change: I want to talk about the rollout of the new beverage program and how that program has been received in your cafes.
Speaker Change: Jordan will start with you.
Jordan Swan: Yes, no I think it was something over 10 years that we were actually behind in that segment, we really work because we're premium breakfast.
Jordan Swan: Serve the freshest, most amazing food and so many customers would say hey, I, just one of them or most or hey, I just want to complement it with a lawsuit or something of that degree.
Jordan Swan: And so with the new ownership and Denny's coming on and saying Hey, This is a no brainer right. This can make you more money.
Jordan Swan: We have absolutely heard nothing but great feedback.
And it's one of those things that beer and wine is the.
Jordan Swan: The start of it but even if it can evolve even more beyond that.
Jordan Swan: All alcohol with flickr or like we were talking about specialty coffees that are coming.
Jordan Swan: Those are just absolute big revenue streams that are going to continue to add.
Jordan Swan: Add to that profitability that.
Jordan Swan: We're very excited to offer to our guests and.
Create those new drinks and all that kind of stuff as far as marketing and all that.
Jordan Swan: John.
I think we were.
Jordan Swan: Missing out on some of those customers that where the Saturday Sunday Sunday brunch kind of customers that they wanted to go to a place that they could have.
Jordan Swan: Cocktail.
Jordan Swan: With that.
Jordan Swan: So it really unlocked.
Jordan Swan: A huge growing.
Jordan Swan: Comments were getting for customers that wanted it so yes, it's been nothing but positive we've rolled on all cafes. They loved it I think everybody is craving for more expansion to it but it was great adoption in really really good feedback.
Speaker Change: Final topic.
Speaker Change: Question around development and unit growth and I'll start with Rowan.
Speaker Change: Being the largest attendees franchisee and having multiple other brands how do you balance your investments to grow your brand and what makes you excited about growing any specific one.
Rowan: So the way we do it is we operate basically for brands and with Jeep each one in a silo and we try to reinvest in that brand you heard me talk about the.
Speaker Change: Remodels success, when you invest in that brand.
Rowan: Gold sales and.
Rowan: Not every brand that jewelry model.
Rowan: Chips increases sometimes it's just part of the business and Denny's has been different it's Ben.
Rowan: Invest in the remodel and <unk>.
Fairly substantial increase in sales and so that's the way we do it.
Rowan: We constantly look we love the by Dennis We look at anything that comes our way.
Rowan: We love to buy things, where people are not using the technology, because we think we can find.
Rowan: 2345 points, which is which is huge.
Rowan:
Rowan: When you have clients.
Speaker Change: Do you have plans to build additional denny's locations or acquire additional and these restaurants and then I'll ask you a separate question on <unk>.
Speaker Change: Yes, it is yes to both.
Speaker Change: So I'm looking forward to in fact I've got.
Speaker Change: A couple of Denny's in the pipeline now to to be built.
Speaker Change: And should have should have the next one open around February I think right.
Speaker Change: So about February and then.
But then also consistently or continuing to do the remodels as well.
Speaker Change: Next remodel done by the end of the year.
Speaker Change: And when I think about it.
Speaker Change: As I think about the.
Speaker Change: <unk>.
Speaker Change: Mike the two concepts I have.
Speaker Change: Jack in the box and then as they both stand on their own.
Speaker Change: <unk>.
Speaker Change: Dennis funds its own future.
Speaker Change: And in my portfolio.
Speaker Change: And we are growing profitably.
Speaker Change: So it's not a situation where we are.
Speaker Change: <unk>.
Speaker Change: We're having difficulty from a standpoint of economics as you've heard me say on a non the box economics for.
Speaker Change: For Denny's is very strong probably one of the strongest in the industry is especially when I think about EBITDAR.
Speaker Change: As I think about EBITDAR is one of the strongest in the entire industry.
Speaker Change: And so it's to me.
Speaker Change: It keeps it exciting for me.
Speaker Change: And I am actually.
Speaker Change: Joining what I need to do from the standpoint of managing top line in the middle of the P&L.
And and and investing appropriately and doing what's.
Speaker Change: What's right for the business.
Speaker Change: Including.
Speaker Change: Hey.
Speaker Change: Compensating our team as well.
Speaker Change: Sure.
Having well trained teams and well staffed.
Speaker Change: In order to maximize the potential of the model.
So it's really really.
It's been rewarding for me, but not only for me, but for our teams.
Speaker Change: So I'm excited about.
Speaker Change: Wanted to ask you just quickly on Kiki's as well I know you're watching the brand and you would consider being a franchisee of the brand.
Speaker Change: We've heard about the seating and feed strategy, that's something you'd be interested in exploring and really what would you need to see before you were to step back.
Speaker Change: I think I am continuing to watch T keys I think.
Speaker Change: Talk I spent some time with John.
Speaker Change: And learning.
Speaker Change: Because I think for me.
Speaker Change: I tend to Ah.
Speaker Change: Study a brand a bit.
Speaker Change: Before before I jump in I think.
Speaker Change: To do that but kiki's is proving proving itself out.
Speaker Change: And it's really really checking the boxes that I tend to.
Speaker Change: How it helped where it helps me make the decision so is checking those boxes for me so.
The answer is that I used to what you said earlier I am still watching.
Speaker Change: And <unk>.
Speaker Change: Once I get started I want.
Speaker Change: Stuff.
Speaker Change: I'm looking I'm looking forward to continuing to watch but.
Speaker Change: If you talk to you again in a few months or so.
Speaker Change: Yes.
Speaker Change: Maybe I'll tell you what I'm doing.
Speaker Change: Yes.
Speaker Change: John start with you.
Speaker Change: We know you are under construction.
Speaker Change: In terms of building <unk> cafes, and even some outside of Florida. What keeps you excited about growing this brand further.
John: I think the opportunity.
The upside because it was.
John: Already a really successful model.
John: In.
John: In the pre Denny's.
John: Acquisition, and so to see what's being unlocked now is really exciting. So we've really accelerated we're gonna have nine nine cafes.
John: January so like we're already there we've got more lined up for next year.
So and talking to clients some of the other denny's franchisees I think there is such a family environment. So I was already bullish on it pre Denny's and then when you got this robust team that you get to tap into and as a young franchisee to build a lean on them and also it's such a collaborative environment with the season Denny's franchisees that help I can.
John: Help you fast track and not make mistakes that every franchise. He goes through as you go through those gross so I think that's been really great. So just more bullish.
John: Haven't even barely touched the catering and the technology piece I mean, it's already great in knowing what's coming down the line still.
John: It's really really exciting so.
John: <unk> insight.
John: That's about it.
John: Ashley.
Speaker Change: I mean, we are extremely excited to introduce <unk> to.
Speaker Change: Other states and not be in Florida, and Florida is well recognized if you know anyone in Florida, and you ask where to go for breakfast. They want to go there everyone wants to go there it is.
Speaker Change: It's one of the best places so for US it's going to Georgia.
Speaker Change: We cannot wait for our neighbors on the border.
Speaker Change: And to give them that same lot, but you know the great family breakfast.
Speaker Change: Yeah, we just we.
Speaker Change: We're just thrilled to take to get it out there we feel that there is so much underserved areas.
<unk> is just going to sell it.
Speaker Change: The reality is is that premium breakfast, where you want to take it to that step above is our category, that's where we succeed so well we capitalize on customer service.
A lot of people reference us is like five Star Hotel.
Speaker Change: Literally you created at the door you redid within 30 seconds. There's all of these parameters that we base our service on and our food quality that it's.
Speaker Change: Something that I'm very passionate about big breakfast person myself and over the 10 years of people coming to Florida, and vacation always youre, saying I wish I had this here or wished I had it there.
Speaker Change: Georgia is one that we know personally has got a lot of request for it and so we're very excited to get across that border and breakeven.
Speaker Change: Thank you Sir.
Speaker Change: Right.
Speaker Change: We're going to just wrap up real quick just wanted to give everyone an opportunity to share any final thoughts if you have.
Speaker Change: And I'll start with Rowan.
Rowan: Great to be here.
Rowan:
Speaker Change: I'm, a great lover of Denny's.
Rowan: With one restaurant 37 years ago and.
Rowan: I pay attention to invested capital or return on investment capital and Dennis has been a great place to be able to do that.
Rowan: Yeah.
Rowan: Yes.
Rowan: Sorry out.
Rowan: With seven restaurants.
Rowan: I wish that could've been in Denny's.
Rowan: 10, 15 years ago.
Rowan: <unk> is a very proven well proven model.
Rowan: Out there and I think it's I think it's not I don't know if people really know the strength of the Denny's model.
Rowan: As well as they probably could.
Rowan: Once they dig into it but it is a good model and it's one that.
Rowan: Allows you to two <unk>.
Rowan: Big rewards if you if you run it well.
Rowan: So we're very very I'll make very I'm very very excited about the future I am excited about this leadership team.
Rowan: Led by Kelly.
Rowan: Just the overall.
Rowan: Really what's to come.
Rowan: I think we're on the verge of something big.
Rowan: And I'm excited about that one of the things that I wanted to mention is that two things.
Rowan: Is that <unk> got to me I think you get three brands within Dennis you've got Dennis you've got Grand Slam and then you've got 2468, and if you ask customers.
Rowan: Grand Slam 2468.
Rowan: They're going to say Oh Dennis.
Rowan: So that's the strength of the brand.
Rowan: So I think that a lot of brands don't have that.
Rowan: In terms of those being known for those kinds of things.
Rowan: So that makes me even more excited so you can bring folks in some of the curve.
Rowan: By just whispering 2468, or a grand Slam.
Rowan: And I know Dennis for those for those iconic.
Rowan: OSA inside brands underneath the Denny's brand.
Rowan: I'm excited looking forward to the future Jonathan.
Rowan: My answer change if you're listening to what you just said.
Speaker Change: I think I'm, probably most excited about feeling here at the beginning of something and with the team that created those brands and knowing what we have going for us.
Speaker Change: Just sort of be at the beginning of creating all of this brand on a national level and the sub brands underneath of the things that are sort of coming out so just real specialty part of it and what's coming.
Speaker Change: Ashley maybe wrap it up.
Ashley: The Big thing on a closing statement is just the excitement of keys.
Speaker Change: And the opportunities that are there going.
Speaker Change: Going back to the technology.
Speaker Change: Things that we don't have in our stores that are going to make us that much better.
And we're just so happy I mean to get a precedent like Dave onboard and Kelly I know seem both brands that that's all that new energy that new passion drive for both brands.
Speaker Change: But.
Speaker Change: Having that legacy of Denny's, but then the use of <unk> I think is a really cool combo. So.
Speaker Change: Alright, well. Thank you all for joining us, saying for making the trip to be your chair. We all really appreciate it and now we're going to turn things over to Robert to discuss financials.
Speaker Change: Yeah.
Speaker Change: Yeah.
Speaker Change: Yes.
Speaker Change: So that was pretty cool.
Speaker Change: Particularly for us sitting over there we've known these people and long time, they are very very busy.
Speaker Change: I was just with client enrollment in Colorado for the franchise. The Denny's franchise Convention a week later, we're here had the pleasure of meeting John Jordan and Ashley personally for the first time here in New York, just last evening, but as you can imagine they're.
Speaker Change: Very very busy people and so to make time to come here.
Speaker Change: Don't even side now right.
Speaker Change: <unk> had a little family emergency, we didnt healthy we're going to make it.
Speaker Change: So Dave cone, Jordan and Ashley just a few days ago.
Speaker Change: They hopped up here, just just to be with us so.
Speaker Change: Thank you guys enough really excited to be here with you.
Speaker Change: Sure.
Speaker Change: I'd like to do is going to do four things for you here before we kind of ramp up and get to another Q&A session. So I'm going to I'm going to recap a little bit.
Speaker Change: <unk> growth the restaurant growth margin growth and the kind of the cash flow and capital structure, that's kind of in the bouncing ball throughout each of these presentations kind of remind you what those are because they actually really formed the foundation.
Speaker Change: B the kind of the longer term outlook that will be the fourth.
Speaker Change: The longer term outlook in between I'll touch a little bit on G&A and some clarity to some of the things that were posted earlier.
Speaker Change: And then the third point will be again that interplay of how we will allocate capital you heard about our seed and feed strategy today, the interplay of what that might mean to.
Speaker Change: To share repurchases and debt leverage so those are the really kind of a four things I look to accomplish here in the next 30 minutes from this point forward. So if you go to.
Speaker Change: B groh.
Speaker Change: We talked about getting to $2 $2 million, both on the <unk> side, and the Denny side, but $2 2 million from $1 9 million down.
Speaker Change: <unk> to date on the dental side, it really <unk> spoke really eloquently towards that.
Speaker Change: In her how we win right. So it's a breakfast breakfast value offering breakfast value off premise in the home office like talk about that quite a bit really kind of getting back to that focus right to drive.
Speaker Change: Drive traffic through those three thank you for that I appreciate that Caitlin pooling right up through those.
Speaker Change: Those three how we win strategies to drive traffic.
Speaker Change: Beyond that we will also increase <unk> through what Steve talked about portfolio optimization.
Speaker Change: And we did a lot of clarity I'll get to that but the reality is is we had a a quintile five.
Speaker Change: Debt.
Speaker Change: 60% as we identify today may or may not be long standing with the brand and that is 150 or so restaurants, 50% Tom Thank you for bringing that up again.
Speaker Change: Are reflected in the current year guidance already so another part that I'll speak to in the longer term guidance.
Speaker Change: We also with the portfolio optimization now that we have in Dave's world.
Speaker Change: Right infrastructure with regard to development and training, we will continue to accelerate that growth within the <unk> brand. So for 12 to 16 midpoint of 14. This year that was off of four of last year, that's double any other year in the history.
Speaker Change: Quadruple anything we've done with it since acquisition, but we needed that infrastructure in.
Speaker Change: In place I think that was probably me.
Speaker Change: Hindsight being 2020 back from when we acquired it the things we probably didn't understand as well is that we didn't have that infrastructure grow I think you heard both ear hartson Swans talk a little bit about that and we are really.
Speaker Change: Put that in place and are poised to grow much more quickly from this point forward.
Speaker Change: And then ensuring from another point of the portfolio optimization, ensuring that the portfolio is.
Speaker Change: As representative of the way, we want our restaurants and cafes to look through through highly accretive remodel programs. That's another critical point to the portfolio optimization, so driving traffic through the how we win strategies breakfast value off Prem and then the portfolio optimization.
Speaker Change: If you look at our restaurant growth again really robust growth on going to give you an outlook of that in a minute, but we have 140 development commitments.
Speaker Change: Can speak for a moment you as to why they may not be at 200 at this point is that people want to see us in.
Speaker Change: Tennessee, they want to see us in Colorado, and California. So those 140 won't be the end of our development commitments.
Speaker Change: They will come further and it will really fill out that pipeline needed to get to the number of.
Speaker Change: Cafes that Mike mentioned earlier.
And then the seed to feed strategy talk.
Speaker Change: That will be somewhat capital.
Speaker Change: Intensive for the next couple of years right, but we will get that back it's not intended to be that we want to run 50% <unk>.
Speaker Change: <unk> cafes corporate cafes going forward, you will I E in the near to midterm invest in those to then re franchise those out to ensure that this pipeline of development that I'll speak to really comes to fruition because it is a critical component of our longer term outlook.
Margin margin growth <unk> growth really will support broader margin expansion. We will also talk about investing in technology, you heard Clyde enrollment.
And I would love to get the the returns Roman has seen 234% at one 1% one margin point actually has a nice return on that but it's ready to go that will those will improve margins and then the G&A.
Speaker Change: Again, it's.
Speaker Change: An opportunity for us too.
Speaker Change: Really take a deep hard look at that year.
Speaker Change: Cash flow and capital allocation again that bouncing ball <unk> restaurant growth margin growth, and then cash flow and capital allocation.
Speaker Change: We will in the short term invest to grow EBITDA, we will invest to grow the corporate Kiki's cafes to then re franchise, we will over index to Remodels, particularly on the Denny side in the near term.
Speaker Change: And I.
Speaker Change: I mentioned in the seat and feed strategy.
We will though that does not mean that we will not return value to shareholders. We have the ability to do both.
Speaker Change: Although likely albeit on a lower level until we begin refranchising.
Speaker Change: Kiki's cafes back out that has been a consistent part of our strategy and one that we will as you will see have seen consistently even within the 2024 number is something that we would do so let's talk a moment about G&A and what we and.
Speaker Change: What we put forward.
Speaker Change: Earlier today, it's not lost on us that our G&A both in dollar terms and as a percentage has increased as a percentage of overall system sales have increased over the last few years.
Speaker Change: Also not a surprise to us internally and hopefully not too much of a surprise to you given what I said about building out infrastructure development training infrastructures for keys that we had to over index to get to this point that we can accelerate that growth.
Speaker Change: The other part of the story, though to be perfectly transparent is as we've shared and will continue to shed.
Speaker Change: A good number of Denny's restaurants. So if you look at that one of our benchmark is as a percentage of system total system sales.
That has increased its north of two.
Speaker Change: Our number that we said prior to the pandemic was $1 seven so we have taken a quite a hard look at our G&A and whats represented on this slide let me.
Speaker Change: Just for clarity illustrate this we have $72 million that we define as kind of core G&A spending $63 million of it would be reflected with our G&A on our external financials. There is another $9 million that is encapsulated within our franchise margins those are individuals.
Speaker Change: Such as our franchise business consultants that really focus on our franchise operations. So when you aggregate those two together.
Speaker Change: Bucket of 72 million you see it on the slide right roughly seven slightly over 70.
Speaker Change: So we have committed and you will see this beginning in 2025 to reduce that by 5% to 6%.
Speaker Change: So the other piece that you need to incorporate in that is otherwise ranked in a normal year. This number would have grown by 2% to 3% that's the normal rate of inflation.
Speaker Change: And our G&A bucket just from labor, 80% of what's in our.
Speaker Change: Which what is contained within our G&A.
Our labor dollars. So you can do it you've seen what's happened to labor inflation over the last four five years, so that would've inflated otherwise 2% to 3% in total so the delta between where what we would have guided next year and where we will guide is a delta of more like 7% to 9% with that with that five.
Speaker Change: 6% reduction.
Speaker Change: Across clearly theyre about two thirds of it you will see within the core G&A that $63 million bucket of about the other third will be within that franchise operating margin kind of sums in the air with that.
Speaker Change: Give you a broad sense of what that is.
Speaker Change: One other piece to note.
Speaker Change: Is that within 2025.
Speaker Change: 53 week year for us so that will vision.
Speaker Change: Visually eat into that savings, but we get that right back in 2026. So we again, it's just that there's a 50 <unk> week of payroll that we have to account for them.
Speaker Change: As we grow both Kiki's and Denny's in net terms pulling this back.
Speaker Change: Growing at a much slower rate into the future and then growing restaurants, we will get back our goal in the futures to get back to that one 7% of system sales.
That we've talked about previously we benchmark that we think that that is a rare.
Speaker Change: Relevant benchmark and one that works Barry.
In terms of that works very well for us and one that.
Speaker Change: Hi.
Speaker Change: We will have us somewhat industry, leading with regard to that I will tell you that despite the reduction that I'm talking about here, we will be able to confidently accomplish everything we shared today.
Speaker Change: We're not compromising anything we've talked about with regard to our strategies with this pullback.
Speaker Change: The other topic I'll briefly touch on before I get to the long term goals.
Speaker Change: Is capital allocation I've talked pretty extensively about going deeper more deeply into ge's corporate Cafe development you should expect that for the next couple of years at least at 50% of the new builds on the on the corporate Cafe side the keys corporate.
Speaker Change: <unk> side will be Denny's development, we will begin refranchising those are.
Speaker Change: Likely as soon as some point in 2025, but getting back to that 85% to 90% franchise level won't be accomplished and it really until the kind of the back half of this longer term outlook. So in context here pretty much everything I am speaking to us about it should be viewed.
Speaker Change: On a five year horizon.
Speaker Change: Again, we'll get back to that 85% to 90%.
Speaker Change: But we will over index in the early years against Kiki's Corporate Cafe development. We again I told you we will invest into shareholder returns, we still have cash to do that.
Speaker Change: Our debt leverage we talked about this since the pandemic is at two and a half to three and half times debt leverage target that still is the target we floated up above that here in the last couple of quarters largely due to.
Speaker Change: Several different one time legal and franchisee expenses that begin to Peel off as soon as Q4, So we will trend back down within within that range as soon as Q4.
Speaker Change: Into 2025, so no real change there no real desire to pay down debt either.
Speaker Change: Being in a highly franchise brand.
Speaker Change: This is actually somewhat of a moderate to lower level.
Speaker Change: Level of leverage so we don't intend to pay down we'll grow EBITDA to get back to where we need to be.
Speaker Change: So last but not least let's talk a little bit.
Speaker Change: The kind of a longer term guidance that we have put out here on this slide.
Speaker Change: The outlook for the for the for the coming years.
Speaker Change: So when you.
Speaker Change: Again, one of the other things that I'll point out here is that we don't really expect the macro environment to change we don't expect.
Speaker Change: The restful service restaurant industry to change or the family dining environment, we work within that that will be the environment. We worked that we live in for the foreseeable future.
Speaker Change: But regardless of that regardless of the challenges everything that can we spoke about earlier today, we're putting forth these targets.
With confidence that we will deliver them.
Speaker Change: We expect.
Speaker Change: You're kind of working down I'm going to start in the positive same store sales, we expect low a flattish to low single digit same store sales with traffic Thats approaching flat that's the health of the brand we all of the things that that.
Speaker Change: Have you talked about really need to drive traffic that would be industry.
Speaker Change: That would buck industry trends at least in the near term with what we're hearing from.
Speaker Change: From all of our different insights to that but that's where it will go on this one is new right and this is one that we wanted to get out as a result of this conversation today we.
Speaker Change: We will drive towards net net 3% net unit CAGR growth. So thats, while next year given the additional closures the other half of the closures that Steve talked about in the optimization over the next five years, we got a 3% CAGR. So that's growing once we get beyond 2025.
Speaker Change: That's growing 45 to 50, net new restaurants, and cafes, a year on average and so that's something frankly.
Speaker Change: Haven't seen since the Pan pandemic, we havent seen positive restaurant growth since the pandemic ensued and even prior to that that would that growth was fairly muted it was somewhere between flat and 1%.
Speaker Change: Prior to the pandemic. So we are putting a stake in the ground largely fueled by the <unk> growth.
Speaker Change: That debt, we intend to have 3% net unit growth.
Speaker Change: For the foreseeable future.
Speaker Change: G&A reductions, we talked about we've talked about balancing the seed and feed with share repurchases and the debt leverage and that ultimately needs to compounded annual adjusted EBITDA growth of 5% to 7%. So again a rate well beyond what we delivered.
Speaker Change: Since the pandemic in very confident we can do this one other point that I will make in this was a little bit of an AD lib comment here going off script, one of the one of the things I wanted to point out is that.
Speaker Change: Even with the closures that we represented here the 150 in that in that bottom quintile half of which are contained here.
Speaker Change: Half of which we talk about in 2025, we will grow adjusted EBITDA into next year is not something where we're going to step back to two to make a tremendous vault forward in 2026 and beyond that we would be all of that 5% to 7% adjusted EBITDA CAGR was contemplated.
Speaker Change: With those additional closures.
Speaker Change: <unk> noted.
Speaker Change: So I think I'm out of time, I think I'm out of guidance points to talk about we will bring the Kelly comes back to kind of close this out before we get to the final Q&A of the day.
Speaker Change: Yes.
Thank you Robert.
So we will move into Q&A I actually only have really have just a quick wrap up and the closing thoughts are really about recapping that.
Speaker Change: The compelling business case for both brands and how we will make sure that we are leveraging both mines appropriately right that there's the right amount of attention paid to stabilizing getting to net growth for Danny the levers that we've talked about that will pull forward are ones that are ready, they're not ones that are in early and we're not in early innings and early innings.
Speaker Change: Daniel and the investments in technology.
Speaker Change: In early innings on the remodel program, we shared that the lift and then really clear about what we know we can get it is now about getting the flywheel, turning and putting those investments into action.
Speaker Change: And putting those those plays into it into action and so we know with doing that that youll see growth in traffic from us, but you'll see it growing those margins all the things you just heard Robert speak to in terms of long term guidance.
Speaker Change: There's a huge opportunity when I look to the right side of this line huge opportunity again measured being very measured everything that we're bringing you here today to unveil more specifics more detailed that long range guidance that we talked about but also just being really smart about how were leveraging both of these brands to create a really compelling case and stronger business model. So.
Speaker Change: That's really just a quick recap of the things that you heard you will see more growth from traffic for us, it's not going to be about price as.
Speaker Change: As much as it has been in the past we've got strong plans to grow traffic and sales media creative new teams in place new renewed teams that I hope you've been able to see and thank you to our franchisees that we're able to speak to what we've been able to do so far and then the bright future ahead, so with that being one of them are still up and then I'll.
Speaker Change: And by the leadership team for both brands to join me up here and we are going to take some questions.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Yeah.
Speaker Change: Let them get settled and then we'll get started.
Speaker Change: Okay.
Speaker Change: Yes.
Speaker Change: Okay. Thank you all for today it was very helpful.
Speaker Change: <unk>.
Speaker Change: Robert going back to your presentation, you talked about kind of restaurant level profitability goals.
Speaker Change: Vehicles can you give us some framework if you look at the 150 closures how much of that Delta between where we are now in those eventual goals are just based on cleaning up.
Speaker Change: As part of that lower Quintile, and then any assumptions that's going to help other existing units to <unk>.
Speaker Change: If their volumes as well.
Speaker Change: Excellent question, Tom Thank you for the opportunity to speak on that so when you think about the $2 2 million excuse me $2 2 million <unk>.
Speaker Change: With regard to Denny's, we are about $1 9 million today about a third of that will be accomplished through cleaning up the the that lower end of the portfolio. So $192 million the balance of that Todd will become coming through that positive system wide same store sales that I referenced.
Speaker Change: Also with regard to opening the additional openings that are achieving two three right now versus the one nine so it really kind of a three pronged approach to get to that $2 $2 million with regard to the kind of the mid teens mid teens denny's margins that really will be more of a function.
Speaker Change: <unk>.
Speaker Change: Just the <unk> growth kind of compounded juxtaposed against the technology enhancements and what we can do with regard to that.
Speaker Change: <unk> will be 17 or upper teens, right. So think about what an upper teens might mean, you can define that but.
Speaker Change: That largely will come that's the that's the business model that that we're in with regard to that it does take into account.
Speaker Change: We do scope out the pre opening costs related to that with regard to that and it does take three to six months to get fully fully loaded to get to that level of performance.
Speaker Change: Hi.
Speaker Change: I wanted to ask about Kiki's in regard to the season feed strategy.
Speaker Change: Our financial strategy.
Speaker Change: So five are going to open in Dallas pretty soon in other new markets.
Speaker Change: What is it.
Possibility that.
Speaker Change: There is quite successful let's say.
Speaker Change: And therefore the season feet. It is no longer really desired by the franchisees because they want all the action right away.
Speaker Change: What.
Speaker Change: Or that it would become less of a use of your free cash flow and your capital Secondly, if that's the case what would you would how would you allocate that free cash flow if it were to come to be sooner than expected.
Yeah. Thanks, Andy So with regard to that we will I do believe that you will see us begin to re franchise kiki's cafes into 2025 as early as 2025.
The commentary to get to that 85% to 90% in the out years that suggest it may take a.
Speaker Change: A minute to get that we all building to get those markets built out but to the extent that.
Speaker Change: That come sooner to the extent that that capital is not required earlier I think youll see exactly what we have done for since 2010 is return that value to shareholders. Now historically that has come with regard to share repurchases in that there was a chart in my presentation.
That spoke to that in 2010 was the first time, we were able to do that.
Speaker Change: We continue to ask the question. There was a question asked within the perception study that we did in advance of this.
Speaker Change: Today on whether that was preferred against dividends for the first time that we previously.
Speaker Change: Previously it was fairly agnostic every time, we asked the question.
Speaker Change: Said, we don't care just to return value to shareholders.
Speaker Change: There was I wouldn't say that there was a bias towards the dividend, but there is an openness towards that so I think we would.
Speaker Change: Consider all mechanisms returning value to shareholders, but that's what this model is Andy you. Yeah. You know that this is it should be a highly cash generative model as we have shown historically returns a lot of value to shareholders.
Speaker Change: Reiterate the question about yes, sorry, maybe I didn't make sense, maybe articulated is there.
Speaker Change: What do you expect would happen if the returns are really good would you expect there would be less desire for the seed capital from from Danny's or or.
Speaker Change: Or would you expect the five year plan is just hey, this is what it's going to be that's what these franchisees are asking for now.
Whether it needs of markets, hoping well or not I think the I think the expectations are the returns will be really good bet, but with each new market that we move into it. It may take a second like in Tennessee right. Now we are building the impetus striped it too.
Speaker Change: Two two open there I think one or two more opening expected through the end of the year. So youll see that market and then we will likely flip that market, but I think that mechanism you will see perpetuating, Colorado, and California than Texas. So I don't think that there's all of a sudden going to be somebody in California, going Hey look it worked in Tennessee I'm going to go.
Speaker Change: Build a bunch in California, I think we're going to this is going to work market by market. So so the light we were very thoughtful with what we said in the five years. So I think it will likely more play out like that than than otherwise.
Speaker Change: Okay.
Speaker Change: Thanks.
Speaker Change: Robert can you clarify the comment about 2025, EBITDA relative to that 5% to 7% longer term model does that apply here or is it going to be a little bit lower than that because of the closures and then you talked about the investments that youre going to be making to grow kgs on the company side remodeled denny's, but I don't think you gave any actual numbers around that is there anything you can help with that in terms of what the cap.
Speaker Change: Ex might look like annually over the next five years within that plan.
Speaker Change: As Keith Youre going to grow 25% to 30% starting next year.
Speaker Change: Thanks, Jim.
Speaker Change: A lot in there Michael So let me see how to clarify that as best as possible so the 5% to 7%.
Speaker Change: Compounded annual EBITDA growth.
Speaker Change: It really was intended to be what we looked at over the five years that my clarifying comment with.
Speaker Change: Despite the number of closures we will grow.
Speaker Change: Within there.
Speaker Change: I think we offered that range for a reason, but again I do expect positive EBITDA growth into 2025.
Speaker Change: With regard to cap ex E. On average I think the best way to think about a new <unk> development is somewhere between right around 1 million five.
When you think about that so if it's half of what we were doing let's say so let's just do the math right I always love doing math. So we're at midpoint 14, let's say next year, we grow that 30%. It would approach 20, so you would be.
<unk> 20th restaurants half of those we would say would be that would be corporate cafe developments, so maybe $15 million there.
Speaker Change: I do believe we will accelerate our company Denny's Remodels on average.
Speaker Change: For the system. They are about $2 50 ours are a little bit more expensive just given the volume of our restaurants.
Speaker Change: On any one year, you would expect us to be doing H, which would be $2. Four so I could see us that that number potentially doubling if not more.
Speaker Change: So I think you would see this year, we have a 20 by some somewhere in 'twenty number four our capital Michael.
Speaker Change: We'll be beyond that because we will be opening more <unk> next year.
Speaker Change: Did I Miss the third party okay. Thank you.
Speaker Change: Hi, Eric Gonzalez with Keybanc.
Eric Gonzalez: One of your competitors in casual dining is having a lot of success, bringing people in with a high low strategy and then getting them to trade up to other parts of the menu you have this compelling value with the 2468.
Speaker Change: What are you doing maybe on the premium and to get people to trade up and how do you you talked about marrying that to the 2468 or having it not be as big of a leap to get people trade up. So you took just maybe unpack that a little bit more for us. So we can understand share. The most recent one was we had a beetle juice promotional menu and that actually worked extremely well for us. So.
Speaker Change: We were able to it it's about the compelling offer. So it was just speaking to some I think it was Victoria that I was speaking to earlier about one of the surprises.
Farmers with this triple Burger.
Speaker Change: That we introduced on the menu it again.
Speaker Change: Is.
Speaker Change: It is something that was enticing it looks craveable and it got people to again come in with the value 2468 message and then trade up but one thing that I did talk about during my update wise the relationship pricing right between the entry price point and the trade up at Cagny, so that that relationship can be.
Speaker Change: So wide that it doesn't work so it's not only making sure that the message and the product is compelling, but making sure that that pricing relationship works as well.
Speaker Change: Other thing I would offer and that has shifted in the last couple of years frankly is just how we leverage everybody does this so this isn't everyone talks about a barbell strategy ours is truly in print what we now do and how prescriptive in surgical we are with what is in the restaurant in terms of merchandising what's on the table what's off the table so far lumberjack slant.
Speaker Change: Not a new item not at all a new item not a new offering and with one of our promotions I think it was the original Grand Slam promotion, we did for $5 99 in most markets 799 in high wage states.
And market endpoint that that lumberjack Slam, we've tripled the incident rates I mean by all by say 30 to 90 I think it was so triple that it's just it's just featured on the table. It was just an offering on the table and the other thing you see us doing a lot and saying with our slams are equity with plans of quiet, so eloquently pointed out and we will.
Speaker Change: A slam and just upgrade to the strawberry stuffed French toast that strawberries stuffed French toast sold like crazy as well and that was a premium offering to let's say upgrade your slam with this offering so that's how we continue to balance that and bringing them in or a 2468 or an original grand slam whatever whatever value, we're leading with our you'll see us do at around 2%.
Speaker Change: And you'll see us continue to both innovate in that platform and then take the offering and suggest what either goes well with it and where do you upgrade the last thing I would say about the upgrades or the things that we're seeing the two and the $4 category for those that have covered us for a long time and those that have been around for a while that two and $4 category, where simply for $2 and you can get this for for you.
Speaker Change: To get these offerings and when we did this time was made those add ons only so you had to purchase something else so that in and of itself and there's the guess aren't coming in and saying what happens now.
Speaker Change: We're not upset about it when we test it we were very clear and looking for anything we would get from the guests and we didn't get we didn't get hey, wait a minute, it's not really two and four its really an add on it didn't bother them one bit and we still had people coming in for it the results still show a positive result, but that's an add on categories. So that's helping that check right now as well.
Speaker Change: Jake Bartlett from Truest Securities you. One is just wondering on them before was 2468 10 and I'm not hearing the 10 parts. So just wanted to clarify yeah I absolutely can clarify that 2468 is what you would remember right 2468. So do we appreciate Theres a nice chair that goes with it.
Speaker Change: 2468 was the equity we added the 10 just much like we did listen to the feedback from our franchisees. The tune of four became a hey, we love this but given today and given this offer was over 10 years old.
Speaker Change: We wanted to refresh it we wanted to be mindful of the economics of the business model, so adding that $10 category is helping in certain areas of course, California being one of them, but the two and the four also has it changed so we just dropped it so well.
We had some that's at two to 10 as the offer it's like no. It's 2468.
Speaker Change: Because that's the catch and that's the case he rhythm of it and that's what everybody knows so when you see the equities around it and Patty slides and all of our sites and I got to say the 10, there, but again theres nobody kind of Theres no guests, saying wait a minute is it 10 is it that we think that's a bit sometimes inside baseball, but to the guests 2468 as our equity.
Speaker Change: And then my real question is about the trajectory of the business and this is very near term, but just what what happened throughout the third quarter and then into October and Robert You. You gave good detail about how you gave great detail about the monthly cadence. My question is you got a two to two 5% lift from the 2468 when it came in mid.
Speaker Change: August I think 6000 stores for the band band Brito was at the end of July So that would have helped it feels like if I kind of take those two out and especially with the deceleration.
Speaker Change: And what you've reported for October there's some deceleration in the underlying demand without those promotions without those additions maybe you can clarify that because I also thought that last October was an easier compare so you're unique among lot of concepts were last October which was.
Speaker Change: Was lighter so there's some deceleration miss up tour, but I'm just trying to get the.
Speaker Change: The cadence of the business and how you feel about the macro what that says about really underlying demand.
Speaker Change: Yeah, Jay Thank you.
Speaker Change: With regard to that I think Kelly spoke to that in her setup slide <unk> talking about the macro environment right. There so.
Speaker Change: Whether it's the personal savings rates.
Speaker Change: Fighting against food at home.
Speaker Change: There is an underlying drag we get updates from Coke all the time and it says.
Speaker Change: Is that the expectation would be to in full service. The traffic is going to be a challenge going forward. So everything we're doing everything that you saw on the slides today fights against that 2468 value menu CRM platform is loyalty programs remodel programs everything we're doing is to fight to get that back to.
Speaker Change: Positive traffic because there is an underlying drag in the economy right now to be just be plain as day.
And just a question on just the two valuation for the company, it's roughly been cut in half.
Speaker Change: Pre COVID-19.
Speaker Change: Do you think it is just that macro pressure or I mean, what do you hear from investors in terms of what's really driving the valuation so much lower we have a macro environment right now that by Reits should be temporary but anything else that you hear from investors that you think accounts for that but no.
Speaker Change: Disconnect.
<unk>.
Speaker Change: As you would expect it's pretty painful for us up here to see that valuation in that decline over time right.
Speaker Change: We benefited from something significantly higher prior to pandemic and we just have not returned to that to that level I think it's our responsibility as this management team.
Speaker Change: Put forth.
Strategies. These targets and then to hit those targets consistently with regard to that.
Speaker Change: From investors I think the question that preceded this one is the exact question.
Speaker Change: Gives many immigrant Pos is like where is traffic what is full service what is family dining.
Speaker Change: That is the underlying consciousness of the restaurants that we run we want to be here today, putting schwartz the confidence that these strategies.
Speaker Change: We will deliver in the face of that deliver beyond.
Speaker Change: What we have experienced since the pandemic in particularly the one I'm excited about all of them right, but I have not personally I've been here and comps have been positive for nine years in a row right ive been here for a lot of I've not been with Denny's Corporation, where we grew system net units 3%.
Speaker Change: Or more right I've seen flat to plus one so I'm super excited about that I am excited about all of them, but that's one I haven't seen and I am shupert confident in the two gentlemen at the end of these chairs right now and to being able to deliver that.
Speaker Change: Okay.
Mixed that Tim from Wedbush.
Speaker Change: One of the constant.
Speaker Change: Questions, we get from investors as a refrain is.
Speaker Change: Danny's owns the best stores in their company owned portfolio.
Speaker Change: Their highest volume stores.
Speaker Change: The four wall margins are 12%.
The franchisees have Laura <unk>, and they're paying a royalty.
Speaker Change: So are they really is healthy.
Speaker Change: As they need to be for the system to grow right at the same time, we hear from our franchisees today a couple of franchises today that have said Hey, you know what the returns on <unk> are actually under appreciated and people don't actually appreciate the profitability on the unit economics for these stores. So maybe one way to address that if you can today is.
Speaker Change: So actually talk about some franchisee profitability metrics. So franchisee unit economics, if you have that.
Speaker Change: Yes, I think that's a great point in terms of just talking about there in the middle of the P&L for all the balance of Fairpoint on company company margins in company.
Speaker Change: Just back right. So just back a few weeks, but hitting the ground running so Chris you want to make I. Appreciate your question. So first I was hoping that somebody would ask me a question I get the chance to talk today. So I'm three weeks back on the job So 11 years with Denny's.
Speaker Change: In my career I spent 20 plus years at Dunkin' brands.
Speaker Change: Seven years here in the last two years I've been with CK restaurants, Carl's Junior and Hardie is particularly focused on the artist brand as the president.
Speaker Change: It was really a big opportunity there because as you know within the four wall margins. So there we had a deep level of focus on that managing the middle of the P&L. We both would increase it by two points. It was through things like menu optimization. It was thinking about labor scheduling managing utility costs, managing repairs and maintenance.
Speaker Change: For me as I ran through the brand our focus on the corporate P&L, there's going to be really important because my job is to lead the way with that fleet to demonstrate to the rest of the world. This is how we can get done with traditional tools like <unk> I think <unk> is going to be really important sort of a productivity efficiency, how food gets sent to the kitchen, So think about it.
Tablet tableside for us right to the kitchen, so I'm able to turn those tables, a little bit faster that should help with labor.
Speaker Change: The things that was asked a question during the break around.
Speaker Change: Back of the house and maybe some robotics type stuff is there's things we can do to take labor out we're actually testing things right now from a dishwasher perspective, so there's a whole host of the triggers that we can pull we just got to get laser focused on it I do believe there's a lot of strategies that the brand has in place today that I'm really excited about.
Speaker Change: Culinary start Kelly and I started talking about my introduction to the brand I chose this job right what are they trying to choose it because I believe in this legacy brand more than probably anybody in this from my 11 years of my life.
Speaker Change: Put towards it and I'm really excited to get to exactly what you're looking for it so, let's let's tighten that up a little bit.
Speaker Change: With.
Speaker Change: <unk> to franchisee profitability, if we talk about this fairly routinely.
Speaker Change: And interestingly when we look at kind of quarter over quarter, we gentlemen that reports into Chris and kind of data to me you think Gallagher you saw his picture earlier it looks at this very routinely we just took a look at it on a quarterly basis.
Speaker Change: And the numbers tend to be and this is an average rate we have 600 plus restaurants within the system that we collect data upon.
Speaker Change: And the average tends to be an upper single digit kind of bottom line number that they're delivering and that has not really dramatically changed year over year in that environment, we kind of look at it and cut it multiple different ways I will tell you that there is a large variation I would imagine if you ask the people sitting next to you.
Speaker Change: Their margins, where they would probably be hiring I think one of the opportunities to improve that for all.
Speaker Change: What we talked about with regard to this portfolio optimization.
Speaker Change: We have routinely had conversations now Kelly alluded to it in the first part of this year, where we went to franchisees and said look if you close these restaurants your overall profitability improves and that's important not only for profitability a everybody would understand that but also for what can be invested back to the balance of their poor.
Speaker Change: Folios right. So if you are losing a million dollars on these 10 restaurants in all of the sudden we can help you get out of those that that cash flow drain can then be put into the EBITDA traffic growth initiatives that we're describing and then it's the representation of the entire portfolio improve.
Speaker Change: Because of that so this is a.
Speaker Change: E.
Speaker Change: A shock to the system to see a bigger number I did allude to this on our Q1 call that that half of that that quintile was likely compromise we updated that to 60% in saying. We are we are actively going into to try to get those close it will it will be.
Speaker Change: The near to mid term benefit no doubt.
Speaker Change: And just one follow up on the <unk> side, we opened three units earlier. This year. So maybe you could talk about the performance of those three years.
<unk> and.
Speaker Change: Of those three units.
Speaker Change: Particularly on just the unit economics side of those three units because now we have almost four quarters.
Speaker Change: There are behind us.
Speaker Change: And then you know.
Speaker Change: We have a pretty small company owned portfolio right. So we're opening this many not just many kiki's if they are less profitable that we all hope.
Speaker Change: They should be we should actually be driving much higher EBITDA growth.
Speaker Change: And we were hoping to see that with these three units. For example, this year. So maybe you can kind of talk about what's going on is it new unit inefficiencies are they not profitable in the first six months, how we should how should we think about sort of that build over time as we add those those units and does that actually pressure.
Speaker Change: And in the near term before we start to see Oh.
Speaker Change: A pickup in maybe 2006, and so we shouldnt expect that in 'twenty five.
Speaker Change: Great question, and you kind of answered your own question. So the three units I assume you are talking about of the two in Tennessee and the one that we just opened in Highlands Ranch, Colorado, which it's been less than two weeks and that one is a franchise partner that opened in Highlands ranch. The two in Tennessee, one in January and one in May.
Speaker Change: We do have a pretty detailed plan that says by the six month, Mark we need to get to those margins that we expect and that we model out when we made the decision to make the investments. So we feel confident that by the six month Mark we can hit those margins I will tell you we hired a great area leader in Tennessee.
Speaker Change: Because we knew we were going to grow in that market. We're very excited to get unit three and four the doors open. So we can leverage some of those above cafe costs by having that area leader. So theres, a little leveraging that has to happen pretty quickly, but the way that we model it out and what we model at pro forma to get approval for new units was based on.
Speaker Change: Once that unit gets to sort of the six month Mark is what we target for sort of the optimum margin outperformance.
If I understood your comments correctly.
Speaker Change: So if you left off there.
Speaker Change: Bottom quintile of underperforming stores.
Speaker Change: 2% same store sales.
Speaker Change: So just to clarify so with that with the restaurants that were in that portfolio optimization to $1 50 that were that was on the slide the 50% that will be closed this year with those gone the $1 $9 million <unk>. The annual unit volumes would be $2 million just from that move.
Speaker Change: So they are decreasing the overall.
Speaker Change: Overall annual unit volumes by $100000 themselves I guess, because there are a million $3 million or less restaurants on average I guess like when you complete that portfolio optimization or if there's just like an inflection point that you can map for us on a timeline, where we would see a.
Speaker Change: Same store sales.
Speaker Change: Pick up appreciably, because youre not having that drag. So is there. Some timeline you can kind of map for us on that.
Speaker Change: Generally I would go back to what I had said earlier it will take us through 2025 to complete this portfolio optimization.
Speaker Change: But despite that you should expect.
Speaker Change: Back to target positive.
The positive system wide same store sales growth on average for the coming future.
Speaker Change: So it could it would it could it be more once we finalize that optimization potentially but again within within that range. I think you should see see us target at least flat or above with same store sales and the completion of that optimization by the end of 2025 and I think the other thing you'll see from last quarter for us on all released the full year guidance for.
Speaker Change: 2025, although we're not gonna here. So we've shown you a lot and I hope you feel and a way of long term guidance, it's probably gonna still kept talking about it over that five year timeframe until we get to annual guidance for 25, and as Robert said are closer to.
Speaker Change: Having those closures and if I may just one other question.
Speaker Change: Yeah, you have the headwind of the industry with your category, but it also seems like a great opportunity to grab the trade down customer. So do you see like an opportunity or is there something you're kind of targeting for that and.
Could there be maybe.
Speaker Change: Same store sales lift.
Speaker Change: Sooner than anticipated because of an effort at first that capturing that trade down or is it significant enough to make enough of a difference and I think it's on both sides right are we capturing trade down in six out of seven last quarter.
Speaker Change: Handedly in some cases, the casual dining and theres. Some good casual dining players as we've talked about and then at the same time, we do have a lower income consumer. These are just the facts so you've got them both.
Speaker Change: They almost fight against each other what you might be getting and we think we're getting a trade down 2468 is a value proposition that helps that person that does need to see value from us at the same time until things loosened up just a bit in the environment.
Speaker Change: Especially for those lower income consumers suggest we're being again balanced initiatives you add them all up initiatives out of the way more than what you are saying, it's just we're balancing that for the reality of demands.
Speaker Change: Well demand equation that says until we see this come back and it's been a long time for the industry are having not seen consistent traffic games for the industry full service hampered.
Speaker Change: Hampered away more than quick and we all we all kind of know how that works out.
Speaker Change: Maybe just to follow up on the franchisee cash flows that are pre or post royalty number of the high single digits got it and then I had two questions.
Speaker Change: Post royalty.
And then just just I had two questions. The first one is just you guys put out guest satisfaction numbers for both brands that were improving I guess as you think about operational metrics that are the best leading indicator of comps.
Speaker Change: Do you think those are and how have those trended more recently, maybe even for the Denny's brand specifically, yes. So I appreciate the question so.
Speaker Change: Net sediment score is what we track for those that don't know wasn't that sentiment is positive comments left on the internet minus negative comments gives you a score the highest score the better the bands performing so food or beverage service ambiance hospitality all of those things that we track guest complaints. So we're staying laser focused on that for a legacy brand like <unk>.
Speaker Change: When you look at our Google rating the performance of the brand over the past several years is outperforming the interest industry as far as it's moving because those are lifetime ratings. So for as long as people have been leaving comments on the internet.
Speaker Change: So if you just look at some of our restaurants, you'll see 2003 thousand common set of lepton over a period of time. It takes a long time and it's very difficult to change that so the movement that we're making there is really huge we have to lean into ambience. So.
Speaker Change: We have to lean into our image. So you heard a lot about that and our strategies today Joey talked about the variability the variability in denny's from top to bottom performers is pretty significant and thats, our achilles' heels as exactly how she framed it it's a 30 point spread from the top 20% of the bottom 20% in the system. So.
Speaker Change: I have to lean in with the operations teams to make sure we're focused on that the bottom 20%, 25% of the system and how do we get those folks up and performing better.
Speaker Change: Got it and then maybe my other my last question is.
Speaker Change: I thought the investment slide you put up was interesting I mean, you guys are basically made almost $800 million of investments over 10 years and the way you guys frame. It up is $650 million has gone into repurchases at a $150 million has gone into capex like $65 15, how do you identify the $15 million of Capex as the <unk>.
Speaker Change: Number versus 35 or $40 million like where do you think you may be ahead, where do you think you are behind in terms of capital investments. Thank you.
Speaker Change: Yes, that's a great question. So when you look at that slide.
Speaker Change: Had it again it goes back to the model that we're in we're in a highly cash generative model that's franchise focused and that's that's been Denny's. It was night. We went to 90 10 in 2017, we went to 96 four in 2019. So we we really have existed in a low Cal.
Speaker Change: Cash flow requirement model. So again with regard to that we are we are leaders when it comes to these investments that drive returns for example, with our Xenial rollout the new technology platform, we completely implemented that in 2024, so that's done within that.
Speaker Change: The company portfolio now, we just need to to leverage that investment.
Speaker Change #100: To drive the returns that Chris was describing.
Speaker Change #100: Also with Remodels you heard me allude to the fact that that program is now ready to go we will accelerate those.
Speaker Change #100: This is not intended to be guidance, but to give you. This is a factual statement from the last time, we did a remodel cycle. We completed all of the company Remodels within three years. So when we have a high returning.
Speaker Change #100: Initiatives, we invest into that initiative, but that being said, we don't look to be a kiki's brand, that's 50% corporate cafes, and 50% franchise cafes, that's not.
Speaker Change #100: That's not our sweet spot we bought this brand intentionally two and a half years ago to be another to be leveraged into the franchise focused model that we know how to run very effectively as a denny so it kind of answer your question. If we have a high returning asset, particularly on the corporate side, we will invest in debt that as quickly as possible.
Speaker Change #100: Yeah.
Speaker Change #101: And we have time for one last question from Todd.
Todd: Thanks, Kevin.
Speaker Change #103: Obviously right now the street's not respecting from valuation standpoint, the cash flow generating power of the business.
Speaker Change #103: And the growth opportunity with key use going forward.
Speaker Change #103: Could ask the question, one or two ways, but the best way is probably to frame it.
Speaker Change #103: If this was a situation where <unk> was operating as a private entity how much faster could you get through the work that you are trying to do around the repositioning here of the base.
Speaker Change #103: And then I guess any thoughts you'd want to add if the market's not going to reward you for your cash flow in the future growth opportunity.
Speaker Change #103: Any thoughts on how to handle that going forward.
Speaker Change #104: That's a fair question Todd.
Speaker Change #105: Candid right. If you look at our valuations. It clearly is not where anyone up here would want them to be right and in practically speaking being a public company and this is not intended to be flippant were not intended to be a solicitation. We're for sale every single day.
Speaker Change #104: To be what it is now we don't have an actavis. We don't have we don't have offers on the table right now.
Speaker Change #104: But our job is to execute against the strategies that we put forward today with regard to speed of execution that you.
Speaker Change #104: If you look across the various data points that I provided G&A, we will but we will execute getting that in 2025. So that's that's coming fairly quickly.
In relative terms, if you think about the portfolio optimization in large part that's that's not US These are franchise owned restaurants.
Speaker Change #104: We are partnering with them to point out where they have opportunity and to provide them with the necessary tools consultants insights to potentially get out of these restaurants more quickly but that is ultimately a franchise decision. There is nothing that technically we could do there not in default, we couldn't default them through that so.
We will work through that and frankly to steves earlier comment the closing restaurants. It is actually not that easy when it comes right down to it they are getting through that in the next five quarters is frankly pretty pretty quick, but what I would add to that I think Todd. It's a it is a fair question the things that we consistently here and we can when we can.
Speaker Change #104: Certainly talk to whether two or others and that are that are interested in understanding this valuation or why it's the way. It is we here.
Speaker Change #104: Really consistently three things right, we hear about our G&A right with where we are addressing that we can have when they will get to that and we will get through it with urgency and accountability, we hear about closures and we hear from for many that have watched us over the years that hate coming out of the pandemic with a different model with the escalation of costs that everyone is burdened with now.
It has put pressure on the lower volume restaurants, right. That's just a simple fact, but one we hear about so is this gonna be a continued slow burn when do you get back to net grow we unveiled that today, we could not valid before today, but we unveiled it today, having a significant amount of those closures already happened right. So again it was strategic in terms of how we've gone about it the last year.
Speaker Change #104: And the and working up to today to be able to say this is our long term guidance and that's what you're going to see from US last one our sales and traffic and sales cares a lot else traffic here is a lot of ill and this has been a difficult environment and yet we still to be flat to talk.
Speaker Change #104: Talk about our results today are flat and scaling sure.
Speaker Change #104: Feel good about it not great and that those are the three things that I think changed or us and we've laid them out today in terms of how we're going to change that.
Speaker Change #106: Yeah. Thank you.
Speaker Change #107: Okay lets go on like this.
Speaker Change #106: Neither.
Speaker Change #106: Young Guy.
Speaker Change #108: Yeah, Hey, we appreciate all of you being here. Thank you for the question and thank you for attention hopefully it wasn't as good event for all of you. We are going to be here to talk to you over lunch and we're happy to take any further questions any of us, including our franchisee. So thank you very much I appreciate it. Thank you.
Speaker Change #108: [music].