Q4 2024 Denny's Corp Earnings Call
[music].
Greetings and welcome to the Denny's Corporation fourth quarter 2024 earnings Conference call. At this time all participants are in a listen only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance. Please press star zero I, it's always lumpy bad.
Speaker Change: As a reminder, this conference is being recorded it is now my pleasure to introduce your host Kay the money senior director of Investor Relations. Thank you you may begin.
Speaker Change: Good morning, Thank you for joining us for Denny's fourth quarter 'twenty 'twenty four earnings conference call.
Kelly Blade: With me today from management are Kelly Blade, Denny's, Chief Executive Officer, and Robert Cirrhotic, Denny's Executive Vice President and Chief Financial Officer. Please.
Kelly Blade: Please refer to our website at Investor Dot Denny's Dot com to find our fourth quarter earnings press release, along with a reconciliation of any non-GAAP financial measures mentioned on the call. Today. This call is being webcast and an archive of the webcast will be available on our website later today.
Kelly Blade: Kelly will begin today's call with a business update then Robert will provide a recap of our fourth quarter financial results and a development update before commenting on guidance. After that we will open it up for questions before.
Kelly Blade: Before we begin let me remind you that in accordance with the Safe Harbor provisions of the private Securities Litigation Reform Act of 1995, the company knows that certain matters to be discussed by members of management. During this call may constitute forward looking statements.
Kelly Blade: Management urges caution in considering its current trends and any outlook on earnings provided during this call.
Kelly Blade: Such statements are subject to risk uncertainties and other factors that may cause the actual performance of denny's to be materially different from the performance indicated or implied by such statements such.
Kelly Blade: Such risks and factors are set forth in the company's most recent annual report on Form 10-K for the year ended December 27th 2023, and in any subsequent forms 8-K and quarterly reports on Form 10-Q.
Kelly Blade: With that I will now turn the call over to Kelly delayed Denny's Chief Executive Officer.
Kelly Blade: Thank you Kayla and good morning, everyone and thank you for joining US today's discussion will focus on the continued progress we've made to execute profitable traffic driving initiatives and our flagship Denny's restaurants will also discuss our continued confidence in our growth brands Kiki's breakfast cathie after that well review, our fourth quarter financial results and full year 2025 guidance expectations with that let's see.
Kelly Blade: It started the fourth quarter marked our strongest quarter of 'twenty 'twenty four for both brands, specifically denny's maintained positive quarter over quarter same restaurant sales of positive one 1%, while kiki's generated same restaurant sales of positive 3%. Additionally, we are very pleased that Dennis outperformed the BVI family dining sales index for the fourth consecutive quarter.
Kelly Blade: As we continue to steal share from our peer set.
Kelly Blade: <unk> also outperformed the BVI family dining sales index in Florida for the second consecutive quarter.
Kelly Blade: Overall, both brands benefited in the back half of the year from consumer stabilization is optimism rose and spending normalized well we are a bit disappointed that trends have since often to start 2025, our continued focus on executing our strategic initiatives and winning with our guests will serve us well in restoring momentum.
Kelly Blade: Wanted to express my gratitude to our teams and our franchisees for their continued dedication focus and execution for Denny several of our key initiatives in 2024 have been in the works for quite some time, we saw those initiatives come to fruition in the back half of the year, including launching our 2468 value play expanding our virtual brand Banda burrito and enhancing our digital presence.
Kelly Blade: First experience.
Kelly Blade: We launched our 2468 value play in August, which was engineered as a consumer friendly traffic driving platform. That's also profitable for our franchisees and our system. This brand differentiator was an instant hit and continues to perform well because our guests recognize and appreciate the great value, we are providing to them.
Kelly Blade: We continue to believe strongly in our off premise strategies are leaning into our three virtual brands. The Burger then the meltdown and Banda Brito, which we nationally expanded in the back half of the year and was a significant contributor and Danny same restaurant sales growth.
Kelly Blade: Then he says uniquely positioned to build a sizable virtual brand business, given our labor structure and these transactions over indexing of dinner and late night, when we can leverage our labor line to generate incremental profitability for the system plus we see less than 1% overlap between guests that use our virtual brands and those that are in our dining rooms. So these brands are delivering incremental sales volumes and margins.
Kelly Blade: Our investments in digital enhancements are also working things like improving the digital guest experience optimizing our email creative and improving search engine optimization led to increased website traffic and conversion rates. Additionally, we reignited our diner 2.0 remodel program completing six remodels during the fourth quarter, bringing the total to 23 during 'twenty.
Kelly Blade: 24, the program was tested prior to the pandemic and it's been tweaked to meet how guests expectations have since evolved in test we saw six 5% lift in traffic and remodeled restaurants. This program as a catalyst to increasing same restaurant sales generating incremental traffic and driving profitability to our system and is a key component of achieving our long term goal of $2 two.
Kelly Blade: Million system Avs for the Denny's brand and so we are living our values and executing our strategic initiatives leaning into our brand strengths winning in key occasions like breakfast with a renewed value emphasis and engaging the next generation of fans to drive meaningful results for our business.
Kelly Blade: I'd also like to say that we extend our heartfelt thoughts and prayers to the southern California community in the wake of the devastating wildfires, we deployed our mobile relief to honor to the area and serve nearly 5800 meals. In addition to donating food and nonfood items to those affected. Additionally, we offered a free original Grand Slam and coffee to all uniform first responders as of <unk>.
Kelly Blade: All token of gratitude to those that have worked tirelessly to support the fire and recovery efforts.
Kelly Blade: As America's Diner, we are at the center of our communities feeding People's bodies minds, and souls, and providing comfort and weighs only a diner Ken.
Kelly Blade: Now, let's talk about the Kiki's brand and how we're building momentum and unlocking its growth potential liked.
Kelly Blade: Like Denny's Kiki's had several initiatives in the final testing stages. During the first half of 'twenty 'twenty four and now we're starting to see those results. These included the beverage program rollout incremental marketing investments and the expansion of their off premise business and while we're pleased with same restaurant sales of positive 3%. It's important to note that this would have been four 1% pause.
Kelly Blade: Absent the impact of Hurricane Helene, and Milton and Florida as many of our cafes were in the path of these back to back Hurricanes are.
A big focus area for Kiki's is development in 2024 was a record breaking year for growth Robert will talk more about the specifics, but we are incredibly encouraged by this momentum. We also now have over 140 development commitments as we work towards the goal of becoming one of the largest competitors in the fast growing daytime eatery segment.
Kelly Blade: That growth will come under our new design, which has received incredible guest feedback and three company test cafes were targeting a 6% to 8% sales lift that we are confident can be delivered.
Kelly Blade: Now, let's turn to 2025 and what we've seen in the first six weeks of the year as we sat at the ICR Conference a few weeks ago. There was a feeling of consumer stabilization of normalcy. However, since then we've observed evolving consumer sentiment driven by macro events as a result over the last few weeks in particular, we've seen a decline in system wide same restaurant sales Robert will speak in greater.
Robert: Or detail about how this impacts our 2025 guidance, which is intentionally conservative.
Robert: We believe this is a temporary shift in consumer behavior, and we remain confident in our strategies and the long term fundamentals are being America's diner.
Robert: We are a great value leader and we know how to leverage that strength to drive traffic and support our guests' needs with many sales levers at our disposal, including a full year of renewed focus on value a full year of bond, a burrito and ongoing and expanding remodel program driving a six 5% sales lift and new digital enhancements, including an improved digital guest experience and a new loyalty.
Robert: Crem programs set to launch in the back half of the year.
Robert: In closing we continue to be proud of all the progress we've made while there is some near term choppiness. We are confident that the steps, we're taking will enable us to continue to meet the guests where they are and create shareholder value. We have a lot to look forward to and I'm incredibly proud of our teams our franchise partners and all those leading these amazing brands executing our strategies and taking great care of our guests every.
Robert: Today, I'll now turn the call over to Robert any CFO for further comments on the quarter performance and our 2025 guidance.
Robert: Thank you Kelly and good morning, everyone.
Robert: <unk> reported fourth quarter domestic system wide same restaurant sales of positive one, 1% and outperformed the BVI family dining index for the fourth consecutive quarter.
Robert: This included strong performance in both California and Florida.
Robert: Domestic franchise restaurants delivered same restaurant sales of positive one 2% while company same restaurant sales were flat compared to the prior year quarter as they lapped a more challenging comparison.
Robert: Average guest check increased approximately six 5% compared to the prior year quarter, which was a step up from previous quarters of approximately 5%.
Robert: This change was solely due to shifting the two dollar for dollar categories on the 2468 value menu from guest entrees to add ons, which increases check, but it is simply a categorization change and not an increase in pure price.
Robert: This will continue to be the case until we roll over the relaunch of 2468 later in 2025.
Robert: Denny's off premises sales remained strong at 21% in the fourth quarter boosted by a 70 basis point increase in same restaurant sales from the launch of our third virtual brand Banda Burrito.
Robert: Value incidence mixed at approximately 19% during the fourth quarter with strong performance in the six dollar in 10 dollar categories, specifically the value placed guests know and love us for the everyday value Slam and the Super Slam Denny's opened four franchise restaurants during the quarter and <unk> 14 for the full year and it's.
Robert: Part of our previously communicated strategy to accelerate the closure of lower volume restaurants, Denny's close 30 restaurants during the fourth quarter and 88 for the full year.
Robert: These closures had an average unit volume of slightly under $1 $1 million and we're open on average for nearly 30 years.
Robert: In any mature brand when restaurants have been open that long it is natural that trade areas can shift over time.
Robert: Accelerating the closure of lower volume restaurants will improve franchisee cash flow and allow them to reinvest into traffic driving initiatives like are tested and proven remodel program.
Robert: Twenty-three Denny's Remodels were completed during 2024, including seven company restaurants, which represents over 11% of our company fleet.
Robert: This program delivered a six 5% sales lift during testing and is a key component of growing our <unk> and enhancing the guest experience.
Robert: Now moving to Kiki's.
Robert: Kiki's delivered system wide same restaurant sales of positive 3% for the quarter and outperformed the BVI family dining index in Florida for the second consecutive quarter.
Robert: With all of <unk> comp base concentrated in Florida Systemwide same restaurant sales were impacted by approximately 110 basis points related to Hurricanes Helene and Milton.
Robert: Same restaurant sales performance was soft drink company cafes compared to franchise illustrating the law of small numbers.
Robert: There are only seven company cafes included in the company comp base for Kiki's any one outsized impact good or bad can swing numbers dramatically, which is exactly what happened in the fourth quarter.
Robert: The franchise comp base consists of 49, kiki's, providing a broader dataset for comparison.
Robert: <unk> opened eight new cafes during the fourth quarter, which is more than they have opened in any year since their founding almost 19 years ago and a total of 12 for the full year.
Robert: These openings expanded our footprint from being solely in Florida at the beginning of 2024 to being in six different states by the end of 2024.
Robert: <unk> expanded its new remodel test two additional company cafes during the quarter and we continue to be impressed with the results we are receiving.
Robert: Thus far in 2025, we have opened three new cafes and expanded to our seventh state Georgia.
Robert: Additionally, subsequent to year end, we terminated two keys franchise agreement impacting 11 cafes.
Robert: <unk> corporate has assumed operation of five locations with the intention of keeping three to maximize oversight efficiencies in the Orlando market and re franchise too.
Robert: We expect this transaction to close in the near term.
Robert: Four cafes had been temporarily closed and we anticipate those to reopen in the near term.
Robert: And two were permanently closed due to trade area shifts and low volume sales.
Robert: Now moving onto fourth quarter financial details.
Robert: Total operating revenue was $114 $7 million compared to $115 $4 million for the prior year quarter.
Robert: This change was primarily driven by the Refranchising of free Denny's company restaurants during the third quarter and the strategic closure of lower volume Denny's franchise restaurants in order to enhance the broader portfolio.
Robert: This was partially offset by an increase in local advertising co op contributions for the current quarter and positive system wide same restaurant sales.
Robert: Adjusted franchise operating margin was $31 9 million or 51, 2% of franchise and license revenue compared to $31 5 million or 51, 4% for the prior year quarter.
Robert: The margin dollar increase was primarily due to positive franchise same restaurant sales at both brands, partially offset by the closures I mentioned before.
Robert: Adjusted Company restaurant operating margin was $5 $9 million or 11, 3% of company restaurant sales compared to $6 1 million or 11, 4% for the prior year quarter.
Robert: This margin change was primarily due to investments in marketing and expected new Tiki cafe opening inefficiencies, partially offset by lower legal settlement expense.
Robert: I want to briefly discuss the financial performance of Kiki's new openings.
Robert: As we expand into new markets. It is expected that margins will take time to reach our long term goal of upper teens.
Robert: There are inherent inefficiencies in the early months, but we have a structured and disciplined approach to ensure new cafes meet our expectations. After this initial period. Furthermore, as we set our seating feed strategy up for long term success. There are also initial oversight inefficiencies related to hiring dedicated area leaders with extensive knowledge of the new.
Robert: Market, despite only having a few cafes operational.
Robert: This investment is intended to establish a solid foundation for future franchisees to build upon.
Robert: We estimate these new cafe operational and oversight inefficiencies impacted the overall adjusted company margin in the fourth quarter by approximately 70 basis points to.
Robert: To conclude on the fourth quarter adjusted company margins commodity inflation was approximately 3% during the quarter driven by increases in pork orange juice and eggs.
And team labor inflation was approximately 3%.
Robert: General and administrative expenses for the fourth quarter totaled $18 $7 million compared to $19 $3 million for the prior year quarter, primarily due to lower deferred compensation valuation adjustments corporate administrative expenses and incentive compensation.
Robert: These results collectively contributed to our strongest quarter of adjusted EBITDA during 2024, increasing 11, 1% year over year to $22 $2 million.
Robert: The effective income tax rate was 33, 8% compared to 36, 9% for the prior year quarter.
Robert: This change in rate was primarily due to discrete items relating to share based compensation.
Robert: Adjusted net income per share was <unk> 14 cents in the current year quarter and our quarter end total debt leverage ratio was 385 times and we had approximately $272 million of total debt outstanding including approximately $261 million borrowed under our credit facility.
Robert: Let me now discuss our business outlook.
Robert: As Kelly mentioned when we enter 2025, there was a feeling of the consumer stabilizing and a sense of normalcy ahead.
Robert: This was even in the face of horrific wildfires and snowstorms spanning across the U S and even into the deep south.
Robert: Yet there has been a shift in consumer sentiment and a slowing that persisted through the remainder of January and has seemingly accelerated in the last few weeks given the evolving macro environment.
Dan: Given this shift we want to provide an update on our results through the first six fiscal weeks of the year Dan.
Dan: Denny has delivered domestic systemwide same restaurant sales of negative <unk>, 7% in fiscal January which ended on January 22nd.
Dan: This was comprised of a <unk>, 8% decline at domestic franchise restaurants, and a 1% increase at company restaurants.
Dan: The variation between the two was driven by company restaurants, having less exposure to the Midwest and mid Atlantic which were impacted by weather.
Dan: Additionally January had fewer weeks of media compared to the prior year, which also impacted results.
Dan: Through the first two fiscal weeks of February trends shifted and Denny's domestic system wide same restaurant sales, thus far are down approximately 5%, but starting to see some relief in the last few days.
Dan: Again, we are experiencing variation between company and domestic franchise restaurants with company down approximately 1% and franchise down approximately 5%.
Speaker Change: Kiki's delivered strong January same restaurant sales at positive six 2%.
Speaker Change: Similar to Denny's Kiki's experienced a shift in fiscal February and is now approximately flat.
Speaker Change: As we navigate this environment, we are providing intentionally conservative guidance for full year 2025.
Speaker Change: We expect domestic system wide same restaurant sales of between negative, 2% and positive 1%.
Speaker Change: While we believe the consumer sentiments ship is temporary it will clearly impact first quarter results as we will likely be at or below the low end of this range for the quarter.
Speaker Change: However, as trends stabilize and our second half sales initiatives are implemented, including Remodels and our new loyalty program, we anticipate comps will rise throughout the year and places more firmly within the range.
Speaker Change: We anticipate opening 25 to 40 restaurants on a consolidated basis with half expected to come from Denny's and half from keys.
Speaker Change: We expect the kiki's openings to be approximately 60% company and 40% franchised.
Speaker Change: As previously discussed we plan to intentionally accelerate the closure of lower volume Denny's restaurants to improve the cash flow of our franchisees, allowing them to reinvest in our remaining portfolio and enhance the overall health of the brand.
Speaker Change: As such we expect to close between 70, and 90 restaurants, which includes some closures related to lease explorations.
Speaker Change: We are projecting 2025 commodity inflation to be between 2% and 4%.
Speaker Change: This does not contemplate any outsized impacts related to tariffs and while concerns about eggs and the avian flu or valid we are working closely with our suppliers to ensure minimal disruptions.
Speaker Change: Labor inflation at company restaurants is expected to be between two and a half and three 5%.
Speaker Change: Our expectations for consolidated total general and administrative expenses are between $80 million and $85 million.
Speaker Change: This includes three components.
Speaker Change: The first is corporate and administrative expenses between $60 million and $62 million inclusive of approximately $1 million related to the 50 <unk> week excluding.
Speaker Change: Excluding the impact of the 50 <unk> week the midpoint of this range suggests a reduction of approximately 3.5% to 4% moving towards our long term goal of 5% to 6%.
Speaker Change: This reduction is attributable to recent head count reductions and the consolidation of our support centers.
Speaker Change: The second component is our annual incentive compensation, which is expected to be between $6 million and $9 million as we reload our bonus pool.
Speaker Change: And the third component is approximately $14 million related to share based compensation expense, which does not impact adjusted EBITDA.
Speaker Change: As a result, we expect consolidated adjusted EBITDA to be between $80 million and $85 million inclusive of approximately $2 million related to the 50 <unk> week.
Speaker Change: We understand these ranges are wider than normal. However, we will aim to tightened these throughout the year as the consumer environment stabilizes. We are confident in the actions we are taking to provide relevant messaging to our guests and invest in the business through remodels and our new loyalty program as well as delivering G&A savings, which are within our control.
Speaker Change: We also remain committed to returning capital and creating value for our shareholders. In 2025, we will balance investing in Kiki's growth further expanding company remodels at both brands and capitalizing I'm price dislocations in the market.
Speaker Change: Accordingly, we plan to deploy between 15 million and $25 million towards share repurchases, which includes proceeds from the anticipated sale of 1% to two kiki's markets as we initiate our seed and feed strategy.
Speaker Change: I would like to thank our dedicated franchise partners restaurant operators and results driven brand teams, who have remained focused on delivering our best in class guest experience, while continuing to drive our strategic priorities.
Speaker Change: The support of our teams and partners gives me great confidence in our path forward.
Speaker Change: That wraps up our prepared remarks, I will now turn the call over to the operator to begin the Q&A portion of our call.
Speaker Change: Okay. Thank you we will now be conducting a question and answer session.
Speaker Change: If you would like to ask a question. Please press star one on your telephone.
Speaker Change: A confirmation tone will indicate your line is in the question queue.
You may start to move yourself from the queue for participants using speaker equipment, it may be necessary to pick up the handset before pressing the star.
Speaker Change: One moment, please while we poll for questions.
Speaker Change: And our first question comes from the line of C. J.
Speaker Change: <unk> Securities. Please proceed with your question.
Speaker Change: Thank you.
Speaker Change: I think at ICR, you were relatively confident you'd be able to.
Speaker Change: Expand.
Speaker Change: Both company module the franchise margins can we just kind of.
Speaker Change: Revisit your confidence there and kind of go over what you.
Speaker Change: Think about.
Speaker Change: 2025, I guess a month from from.
Speaker Change: What's changed thank you.
Speaker Change: Hey, Nick this is Robert good to hear you I I still would characterize that we have some pretty high confidence that we will be able to expand company margins.
Chris: With Chris <unk>, our President who joined US again, just late last year.
Chris: That with his direction and oversight of that we are maniacally focused on the things that we can control in that environment. Despite the softness that we've seen a little bit here in February.
Chris: So with regard to margins the company margin, specifically that that mid teens number that we did quote is something that we are still really quite confident in despite the consumer uncertainty that we're seeing at the moment.
Chris: And you will with regard to the TPS margins, specifically the the cafes that we've owned.
Chris: For more than 12 months those are.
Chris: Improving with every single month in our heading towards that the high teens margins the ones that the newer ones frankly take a minute to get under control.
Chris: Always anticipated that that they grow into those margins, but the ones that we've owned for a period of time are accelerating towards that the guidance that we offered so again Nick.
Chris: This uncertainty that we've run into here in February we're confident in our margins.
Chris: They're able to grow our margins like we talked about at ICR.
Speaker Change: Thank you.
Chris: Yeah.
Chris: Thanks, David.
Chris: Thank you.
Speaker Change: Our next question comes from the line of Mike <unk> with Oppenheimer <unk> Company. Please proceed with your question.
Speaker Change: Hi, Good morning. Thank you can you unpack the commentary about the shift that you saw in your sales trends starting in late January and what do you believe those macro factors are that are changing consumer behaviors and then just maybe related to that what do you think changes.
Speaker Change: It causes headwinds to fade, that's giving you the confidence of our sales on accelerated after this first quarter.
Speaker Change: Yes.
Speaker Change: That's an excellent question.
Speaker Change: So we did kind of detailed what we thought we saw in January the weather impacting there.
Speaker Change: Just a lot of uncertainty.
Speaker Change: You and I are both reading.
Speaker Change: Every day within there I think the BLS just talked about inflation going up just that just came out again this morning.
Speaker Change: So we have seen some a lot of volatility here in February as I did remark it is coming back to us.
Speaker Change: As we move through further February so so not nearly the numbers that we were quoting in that script.
Speaker Change: It was really the impetus for us to give that really ultra conservative guidance, they're bad debt.
Speaker Change: With that down too because we just don't know we are going to control the things that we can control and we are highly confident in.
Speaker Change: Our initiatives and that includes the CRM loyalty that I talked about the remodels that I talked about.
Speaker Change: We'll maintain our value leadership position so as we grow through this year, where we are confident as I said that we will get into the to that guidance range and hopefully towards the top end.
Speaker Change: And Michael We also this is Kelly. We also can see you know just as Robert mentioned the reports that just came out as of this morning, Alright, really referencing inflation and then consumer prices rising 3% and much more accelerated rate. So I think we would just characterize it as uncertainty as you've heard from Robert and even from again whether to fluids.
Speaker Change: Lots of other things happening, we still see some of our some strong markets for us, California, and Florida remaining strong in 25. So despite some of that that we spoken to Texas and Arizona have the most pull back so we're really in it.
Speaker Change: Licensing and Dyson, that's I'm looking at what we can do to lift up those DMA is are those states that we're seeing the most pullback as Robert also mentioned we've done some things to.
Speaker Change: First of all kind of weather that storm if you will.
Speaker Change: Recently and just recently in these past few days, we've seen a little bit of positive momentum as we switch to the everyday value messaging on TV now that everyday value signed was right in the middle of our 2468 platform. So its still part of our value play. It will remain part of what we are doing this year. So there's no pulling back on that but we did decide to just.
Speaker Change: Thats hero pulled that hero plate and slam out and put it out front at a 699 starting points starting at price points. So we adjusted that and again just to come back any uncertainty in the consumer may be failing and just meet them where they are in addition to all the things Robert mentioned the initiatives that are still in play for us. So we're still incredibly comp.
Speaker Change: And that just got you know just saw some of that slippage in the first first.
Speaker Change: A few weeks of the year.
Speaker Change: Thanks that makes sense and if I could just follow up on that you know is there any way that you can talk about what your performance versus the industry. It looks like maybe in 'twenty five obviously you outperformed.
Speaker Change: In the fourth quarter there in 'twenty four is that still the case here or do you think theres been any shift in that that dynamic. Thanks.
Speaker Change: I think in January for Us. So we watch it it's really early and because of all of the holiday slips, especially in a you've got a lot of things going on in between January the way those things line up so really early for us to tell.
Speaker Change: Just just exactly what's happening in family dining or casual dining.
Speaker Change: More more as we go on in the quarter, obviously, we will look at it all the time.
Speaker Change: Thank you.
Speaker Change: Mhm.
Speaker Change: Mike.
Speaker Change: Thank you.
Speaker Change: And as a reminder, if anyone has any questions you May press star one on your telephone keypad to join the queue.
Speaker Change: Our next question comes from the line of Jake Bartlett with true of Securities. Please proceed with your question.
Jake Bartlett: Great. Thanks for taking the questions I was on the marketing strategy for 2005, and Kelly I think you just mentioned a little bit of a question, but it was on the value side I understand youre going to be continuing to push the 2468.
Jake Bartlett: What else are you going to do or are you going to be very active outside of that platform.
Jake Bartlett: Emphasizing the value side and then on the other side of the menu. How confident are you in your innovation pipeline. How excited are you there.
Jake Bartlett: The other side of the barbell is going to be effective in 'twenty five.
Jake Bartlett: Yeah, absolutely, Hey, Hey, Jake it's great to hear from you and great question appreciate that yeah. So I think we so the 2468 platform you'll see us throughout the year, we're going to absolutely and.
Jake Bartlett: The balance that with the barbell strategy as you already mentioned so as of right. Now we are still seeing the check is actually up so.
Jake Bartlett: Even aside from that there's pricing in there obviously, but the check is still up slightly.
Jake Bartlett: And so we know where were seeing still those premium items and restaurants attachment rates are a little different. This last this early into 2025 with a few less desserts and app. So we again back to seeing that consumer kind of really manage their spend although again, our check is still up so 2468 mm that's everyday value slam that I talked about being the hero is that that 60.
Jake Bartlett: <unk> 99 price point is on the 2468 menu so youre going to just see if it really created throughout the year to the exact kind of point you are making we're going to we're going to still be emphasizing that value play, but we'll pull in innovation throughout the year, we'll have a hero that if maybe new innovation or quality that we want to talk about so the pipeline is very robust.
Jake Bartlett: Just there are some there are lots of things and tests that were working on theres lots of things that our franchisees are brought to us that are pretty exciting that we know well that will help us out in the coming months and then the back half of the year, especially so the pipeline. We've got an 18 month pipeline of food and again, we're balancing that with how do you create these heroes within the 2468 platform.
Jake Bartlett: I'll emphasize innovation and then inside the restaurants still have a barbell strategy, where guests can find exactly what they're looking for our service to have an opportunity to upsell or does it meet the guests where they are in that case as well.
Jake Bartlett: So really what we've got.
Jake Bartlett: Great Great. Thanks, and just building on kind of the drivers from some incremental same store sales drivers in 'twenty five we'll get.
Jake Bartlett: The first half of the year a band will continue are you expanding bandwidth more stores as one question and then the second part is how significant a driver does the change in the loyalty program.
Speaker Change: In your mind, how much is that how big a deal is that I'm trying to think about what drives that.
Jake Bartlett: Accelerating sales from from here.
Jake Bartlett: Yeah, great. Thank you Jake you've got it you got it.
Jake Bartlett: I did pretty well in terms of the drivers that we have talked about and one of the things you mentioned so as I go into CRM. One of the things. We have spent a lot of invest time and money and resources investing in digital.
Jake Bartlett: Digital enhancements overall weather at CRM or whether it's what we're doing in off premise with our denny's on demand. Some of those things are are up this year and are helping to kind of offset some of the other uncertainty so with often talked about our off premise strategy and while others may be they are getting worse lagging because it is absolutely right for us given the lack of.
Jake Bartlett: Overlap between the consumer given our virtual brands index at night, all the things that we've said over and over again, we also use the time when we see people. If there is no that there are higher flu cases, we're emphasizing off premise and we are seeing some of those things really work for us at a time when we need it and so that will continue so specifically.
Jake Bartlett: You mentioned Banda, we don't I don't know that we think you won't see us in a lot of locations today that was a big impact in Q4 of 2024 as you mentioned 70 basis points, we attributed to it in 2024, it's in about 1000 locations. Today. So we don't necessarily in fact part of our strategy around our virtual <unk>.
Jake Bartlett: So as to optimize throughout the country and really lean in to where their strength for those those brands.
Speaker Change: You are co op rollover, you mentioned as a lever in our.
Speaker Change: 25, absolutely right and then the CRM program I don't know if we've gotten really specific about what it's worth to us in 'twenty five but it will launch in the second half of the year and again with the momentum we're already seeing with the digital enhancements and the investments. We've made we can already see just some of those basics are improving as we gear up to launch that in the second half.
Speaker Change: Of the year.
Speaker Change: Great and then last question is on <unk>, and maybe just a little more detail on the franchise agreements that were canceled due to permanent closures.
Speaker Change: The four things that are temporary close not something I think you typically see at this stage of our growth brands. So just maybe help us understand and feel confident that this isn't.
Speaker Change: A negative sign and then also just in terms of the sales drivers.
Speaker Change: Thank you you talked about a 6% same store sales in January but then flat in.
Speaker Change: The last couple of weeks yet you also mentioned that Florida was wasn't was wound market. So it wasn't so bad.
Speaker Change: And more recently, so maybe just.
Speaker Change: What's going on with the system.
Speaker Change: And then some of the sales trends and drivers in 'twenty five.
Speaker Change: Yes, Jake that's an excellent question I'll take the first part of that and I'll, let Kelly speak to the sales.
Speaker Change: With regard to the two franchisees in the 11th cafes that were talking about that it was actually a really a function of the balance sheets of those two franchisees.
Speaker Change: So, we'll let that sit to the side for a minute, but we are actually really kind of excited about this transaction and believe it or not we it gives us the opportunity to.
Speaker Change: Capture several additional corporate cafes in the Orlando market Buildout overstate efficiency in that market. These are good. These are good restaurants. They are a good cafes that are that we took over that we're running the floors that are temporarily closed we'll get back up in the to the close.
Speaker Change: Frankly.
Speaker Change: They were just lower volume performing cafes than it needed to close but nine of the 11 are really good cafes and we.
Speaker Change: Ah.
Speaker Change: And we look forward to to actually.
Speaker Change: Running running those.
Speaker Change: Oh.
Speaker Change: Note that that I'm being told it's all of the restaurants all of the cafes that remain open are 2 million plus.
Speaker Change: With regard to that.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Yeah.
Speaker Change: Great. Thank you.
Speaker Change: Take on the same store a great question on the same store sales or the optimism we have for <unk>, it's actually.
Speaker Change: Just a bit of a story around the momentum gained in the back half of 'twenty four for <unk> and we still see that continue.
Speaker Change: The levers and the drivers that we spoke to at.
Speaker Change: At ICR that we spoke to that really strengthen remembering again that 3% comp and definitely stealing share in family dining in in Florida in that quarter, we continued to see that momentum into 'twenty into 'twenty and it's really things that we've spoken to in terms of the alcohol program and now and again just momentum throughout the year by building two Uh huh.
Speaker Change: Having that all in place the alcohol program things or things, we talked about remodels, a little bit as a things that we will pull forward more than 25, but having excitement around that is.
Speaker Change: The off premise business.
Speaker Change: Well, just solidifying solidifying that off price business with really didn't exist. When we took over and acquired the brand, but Dave Smith and the team have done a tremendous job there just shoring up that off premise business and then finally, there's marketing there's local marketing it's definitely grassroots efforts, it's not national anything because this is about going to new markets, telling people who keep.
Is and then exposing them to just the Fabulous little brands. So those things were the contributors and we've just seen that momentum continue in 'twenty five as we mentioned in February we did see a little again back to that just macro those macro headwinds in that consumer sentiment, we saw it tapered a little bit in February as well, but.
Speaker Change: We remain really confident that we've got the right levers to pull and the right things within our control for the Casey's brand.
Speaker Change: Great I appreciate it thank you.
Jake Bartlett: Thanks Jake.
Speaker Change: Yeah.
Speaker Change: Thank you.
Speaker Change: We have reached the end of the question and answer session I'll now turn the call back over to pay the money for closing remarks.
Speaker Change: Thank you and I'd like to thank everyone for joining us on today's call. We look forward to our next conference call in April when we will discuss our first quarter 2025 results. Thank you and have a great day.
Speaker Change: Ladies and gentlemen. This concludes today's conference you may disconnect. Your lines at this time. Thank you for your participation.
Speaker Change: Okay.
Speaker Change: [music].
Speaker Change: Yeah.
Speaker Change: [music].
Speaker Change: Yeah.