Denny’s sales soft in 1st quarter but income up slightly

Denny’s 1st quarter income up on margins

SPARTANSBURG, S.C. — Denny’s Corp. reported Monday that its first-quarter net income grew slightly as margins improved, while revenue fell.

Denny’s net income rose to $4.6 million, or 5 cents per share for the quarter, versus $4.3 million, or 4 cents per share, in the same quarter of last year.

Revenue dropped to $137.6 million from $165.8 million as it had had fewer company restaurants than in the prior year.

Analysts surveyed by Thomson Reuters expected the company to earn 4 cents per share on revenue of $135.8 million.

Sales at stores open at least a year — considered a key measure of a retailer’s performance — fell 5.5 percent.

The company, however, saw strong growth ahead as it tested a new promotion in the quarter and reached a key partnership deal with Flying J Travel Centers.

Denny’s leaders said that during the quarter the company was selected to be the full-service restaurant operator at up to 140 Flying J Travel Centers. The company expects to begin converting these locations into Denny’s in the second quarter after the Federal Trade Commission completes its review of the Pilot Travel Center and Flying J merger.

The company also completed testing of a new everyday value menu during the quarter, which it said has demonstrated a strong impact on guest traffic trends. The company plans to roll it out systemwide in the second quarter.

Denny’s reaffirmed its financial guidance for the full year but said it does not include the impact of Flying J Travel Centers. The company said it expects to update its guidance pending the FTC’s approval of the Pilot and Flying J Merger.

Shares of Denny’s rose 27 cents, more than 8 percent, to close at $3.50.