DENNY’S CORPORATION REPORTS RESULTS FOR FOURTH QUARTER AND FULL YEAR 2021

SPARTANBURG, S.C., February 15, 2022 - Denny’s Corporation (NASDAQ: DENN), franchisor and operator of one of America's largest franchised full-service restaurant chains, today reported results for its fourth quarter and full year ended December 29, 2021 and provided a business update on the Company’s operations.

John Miller, Chief Executive Officer, stated, "We have entered 2022 with a sense of renewed energy and excitement as several of our recently announced transformational brand initiatives are progressing. While the spread of the Omicron variant has caused some near-term volatility, our progress through the recovery curve validates our confidence for the ongoing success of this brand. Our dedicated franchisees and team continue to deliver a great experience to our guests in addition to sharing in our long-term vision to further propel this iconic brand forward."

Fourth Quarter 2021 Highlights

•Total operating revenue increased 34.4% to $107.6 million, primarily due to the COVID-19 recovery as compared to the prior year quarter.

•Domestic system-wide same-store sales** increased 0.7% compared to the equivalent fiscal period in 2019, including a 0.4% increase at domestic franchised restaurants and a 5.1% increase at company restaurants.

•Domestic system-wide same-store sales** increased 49.0% compared to the equivalent fiscal period in 2020.

•Opened seven franchised restaurants, including one international location.

•Completed seven remodels, including four franchised restaurants.

•Operating income (loss) was $62.6 million compared to ($1.1) million in the prior year quarter.

•Franchise Operating Margin* was $31.1 million, or 51.6% of franchise and license revenue, and Company Restaurant Operating Margin* was $7.0 million, or 14.8% of company restaurant sales.

•Net income was $43.5 million, or $0.67 per diluted share.

•Adjusted Net Income* and Adjusted Net Income Per Share* were $10.5 million and $0.16, respectively.

•Adjusted EBITDA* was $24.1 million compared to $8.0 million in the prior year quarter.

•Cash provided by (used in) operating, investing, and financing activities was $12.9 million, $31.9 million, and ($24.4) million, respectively.

•Adjusted Free Cash Flow* was $3.4 million compared to $2.1 million in the prior year quarter.

1

Full Year 2021 Highlights

•Total operating revenue increased 38.0% to $398.2 million, primarily due to the COVID-19 recovery as compared to the prior year.

•Domestic system-wide same-store sales** decreased 4.7% compared to 2019, including decreases of 4.8% at domestic franchised restaurants and 3.5% at company restaurants.

•Domestic system-wide same-store sales** increased 41.1% compared to 2020.

•Opened 20 franchised restaurants, including eight international locations.

•Completed nine remodels, including five franchised restaurants.

•Operating income was $104.1 million compared to $6.7 million in the prior year.

•Franchise Operating Margin* was $114.0 million, or 51.1% of franchise and license revenue, and Company Restaurant Operating Margin* was $28.1 million, or 16.0% of company restaurant sales.

•Net income was $78.1 million, or $1.19 per diluted share.

•Adjusted Net Income* and Adjusted Net Income Per Share* were $33.1 million and $0.50, respectively.

•Adjusted EBITDA* was $85.6 million compared to $26.6 million in the prior year.

•Cash provided by (used in) operating, investing, and financing activities was $76.2 million, $29.0 million, and ($78.5) million, respectively.

•Adjusted Free Cash Flow* was $40.8 million compared to $1.6 million in the prior year.

2021 Sales and Operating Hours

During the fourth quarter, October and November domestic system-wide same-store sales** returned to above pre-pandemic levels, with sales softening in December due to both holiday shifts and the increase in Omicron variant cases. The domestic system experienced improvement in restaurants operating 24/7 from the end of the third quarter to the end of the fourth quarter; however, labor availability continues to challenge effective operating hours.

In an effort to provide greater transparency due to the COVID-19 pandemic, Denny's is providing the following tables that present monthly results for 2021:

			Domestic System-Wide Same-Store Sales** Compared to 2019 Fiscal Periods
			Fiscal Year 2021: (5%)
			Q1: (20%)									Q2: (1%)									Q3: (0%)									Q4: 1%
			Jan			Feb			Mar			Apr			May			Jun			Jul			Aug			Sep			Oct			Nov			Dec
System			(31%)			(25%)			(9%)			(2%)			(3%)			1%			3%			(2%)			(1%)			1%			4%			(2%)
24/7 Units			(20%)			(16%)			2%			11%			11%			14%			15%			9%			9%			10%			13%			7%
Limited Hour Units			(38%)			(32%)			(16%)			(11%)			(12%)			(8%)			(7%)			(10%)			(10%)			(9%)			(6%)			(11%)

			Domestic Units Hours of Operations
			Jan			Feb			Mar			Apr			May			Jun			Jul			Aug			Sep			Oct			Nov			Dec
24/7 Hours			35%			35%			38%			38%			37%			38%			39%			40%			42%			45%			46%			48%
18 - 23 Hours			10%			12%			14%			14%			16%			16%			17%			18%			20%			26%			24%			24%
< than 18 Hours			55%			53%			48%			48%			47%			46%			44%			42%			38%			29%			30%			28%

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Fourth Quarter Results

Denny’s total operating revenue increased 34.4% to $107.6 million compared to $80.1 million in the prior year quarter. Franchise and license revenue was $60.2 million compared to $47.2 million in the prior year quarter. Company restaurant sales were $47.4 million compared to $32.9 million in the prior year quarter. These changes were primarily due to dine-in restrictions related to the COVID-19 pandemic in the prior year quarter.

Franchise Operating Margin* was $31.1 million, or 51.6% of franchise and license revenue, compared to $21.4 million, or 45.2%, in the prior year quarter. This margin increase was primarily due to the improvement in sales performance at franchised restaurants.

Company Restaurant Operating Margin* was $7.0 million, or 14.8% of company restaurant sales, compared to $1.4 million, or 4.3%, in the prior year quarter. This margin increase was primarily due to the improvement in sales performance at company restaurants.

Total general and administrative expenses were $17.7 million, compared to $20.5 million in the prior year quarter. This change was primarily due to decreases in performance-based incentive compensation, share-based compensation expense and market valuation changes in the Company's deferred compensation plan liabilities compared to the prior year quarter. These decreases were partially offset by prior year quarter benefits of approximately $1.0 million in tax credits related to the CARES Act in addition to temporary cost reductions.

The provision for (benefit from) income taxes was $15.0 million, reflecting an effective tax rate of 25.7%, compared to ($0.1) million in the prior year quarter. Approximately $4.3 million in cash taxes were paid during the quarter.

Net income was $43.5 million, or $0.67 per diluted share, compared to $2.4 million, or $0.04 per diluted share, in the prior year quarter. This change in net income was primarily related to the sale of two parcels of real estate in the current year quarter. Adjusted Net Income (Loss)* per share was $0.16 compared to ($0.05) in the prior year quarter.

Denny’s ended the quarter with $182.7 million of total debt outstanding, including $170.0 million of borrowings under its credit facility.

Adjusted Free Cash Flow* and Capital Allocation

Denny’s generated $3.4 million of Adjusted Free Cash Flow* after investing $12.4 million in cash capital expenditures. The Company sold two parcels of real estate for approximately $49 million in December 2021 and approximately $10.4 million of those proceeds were used to acquire three parcels of real estate through a like-kind exchange transaction which is included in the Company's cash capital expenditures along with maintenance and remodel capital. The proceeds from these sales are excluded from Adjusted Free Cash Flow*.

In the fourth quarter, the Company allocated $24.0 million to share repurchases, resulting in $30.6 million allocated to share repurchases for the full year. Between the end of the fourth quarter and February 11, 2022, the Company allocated an additional $10.7 million to share repurchases resulting in approximately $207 million remaining under its existing repurchase authorization.

3

Strategic Brand Initiatives

The Company has recently begun implementing new strategic brand initiatives:

•The Company is progressing on its rollout of a new cloud-based restaurant technology platform and starting a new kitchen modernization initiative across the domestic system which is expected to enhance the guest experience and drive operational efficiencies.

•The Company has extended its remodel cycle from seven years to eight years and has rationalized the due dates to more equally distribute franchisee capital investments over this next remodel cycle.

•The Company has entered into a new development agreement with Reef Technology, the ghost-kitchen operator, that is designed to enable Denny's to penetrate markets in which the brand is currently underrepresented, especially dense metropolitan locations.

•Finally, the Company is creating additional opportunities for franchisees to capitalize on market rationalization opportunities with a new cash development incentive program.

Business Outlook

The following expectations for the fiscal first quarter of 2022 ending March 30, 2022 reflect management's expectations that the current economic environment will not change materially:

•Domestic system-wide same-store sales** increasing between 26% and 28% compared to 2021.

•Total general and administrative expenses between $17 million and $18 million, including approximately $4.0 million related to share-based compensation expense.

•Adjusted EBITDA* between $17 million and $19 million, including approximately $2.5 million related to cash payments for share-based compensation.

* Please refer to the Reconciliation of Net Income (Loss), and Net Cash Provided by (Used In) Operating Activities to Non-GAAP Financial Measures, as well as the Reconciliation of Operating Income (Loss) to Non-GAAP Financial Measures included in the following tables. The Company is not able to reconcile the forward-looking non-GAAP estimates set forth above to their most directly comparable GAAP estimates without unreasonable efforts because it is unable to predict, forecast or determine the probable significance of the items impacting these estimates, including gains, losses and other charges, with a reasonable degree of accuracy. Accordingly, the most directly comparable forward-looking GAAP estimates are not provided.

** Same-store sales include sales at company restaurants and non-consolidated franchised and licensed restaurants that were open during the comparable periods noted. Total operating revenue is limited to company restaurant sales and royalties, advertising revenue, fees and occupancy revenue from non-consolidated franchised and licensed restaurants. Accordingly, domestic franchise same-store sales and domestic system-wide same-store sales should be considered as a supplement to, not a substitute for, the Company's results as reported under GAAP.

Conference Call and Webcast Information

Denny’s will provide further commentary on the results for the fourth quarter ended December 29, 2021 on its quarterly investor conference call today, Tuesday, February 15, 2022 at 4:30 p.m. Eastern Time. Interested parties are invited to listen to a live broadcast of the conference call accessible through the investor relations section of Denny’s website at investor.dennys.com.

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About Denny’s

Denny's Corporation is the franchisor and operator of one of America's largest franchised full-service restaurant chains, based on the number of restaurants. As of December 29, 2021, Denny’s had 1,640 franchised, licensed, and company restaurants around the world including 153 restaurants in Canada, Puerto Rico, Mexico, the Philippines, New Zealand, Honduras, the United Arab Emirates, Costa Rica, Guam, Guatemala, El Salvador, Indonesia, and the United Kingdom. For further information on Denny's, including news releases, links to SEC filings, and other financial information, please visit the Denny's investor relations website at investor.dennys.com.

Cautionary Language Regarding Forward-Looking Statements

The Company urges caution in considering its current trends and any outlook on earnings disclosed in this press release. In addition, certain matters discussed in this release may constitute forward-looking statements. These forward-looking statements, which reflect management's best judgment based on factors currently known, are intended to speak only as of the date such statements are made and involve risks, uncertainties, and other factors that may cause the actual performance of Denny’s Corporation, its subsidiaries, and underlying restaurants to be materially different from the performance indicated or implied by such statements. Words such as “expect”, “anticipate”, “believe”, “intend”, “plan”, “hope”, "will", and variations of such words and similar expressions are intended to identify such forward-looking statements. Except as may be required by law, the Company expressly disclaims any obligation to update these forward-looking statements to reflect events or circumstances after the date of this release or to reflect the occurrence of unanticipated events. Factors that could cause actual performance to differ materially from the performance indicated by these forward-looking statements include, among others: the rapidly evolving COVID-19 pandemic and related containment measures, including the potential for further operational disruption from government mandates affecting restaurants; economic, public health, social and political conditions that impact consumer confidence and spending with respect to social unrest and the COVID-19 pandemic; competitive pressures from within the restaurant industry; the level of success of the Company’s operating initiatives and advertising and promotional efforts; adverse publicity; health concerns arising from food-related pandemics, outbreaks of flu viruses or other diseases; changes in business strategy or development plans; terms and availability of capital; regional weather conditions; overall changes in the general economy (including with regard to energy costs), particularly at the retail level; political environment (including acts of war and terrorism); and other factors from time to time set forth in the Company’s SEC reports and other filings, including but not limited to the discussion in Management’s Discussion and Analysis and the risks identified in Item 1A. Risk Factors contained in the Company’s Annual Report on Form 10-K for the year ended December 30, 2020 (and in the Company’s subsequent Quarterly Reports on Form 10-Q and Current Reports on Form 8-K).

Investor Contact:

Curt Nichols

877-784-7167

Media Contact:

Hadas Streit, Allison+Partners

646-428-0629

5

DENNY’S CORPORATION
Condensed Consolidated Balance Sheets
(Unaudited)
($ in thousands)												12/29/21						12/30/20
Assets
			Current assets
						Cash and cash equivalents						$	30,624					$	3,892
						Investments						2,551						2,272
						Receivables, net						19,621						21,349
						Inventories						5,060						1,181
						Assets held for sale						—						1,125
						Prepaid and other current assets						11,393						18,847
									Total current assets			69,249						48,666
			Property, net									91,176						86,154
			Financing lease right-of-use assets, net									7,709						9,830
			Operating lease right-of-use assets, net									128,727						139,534
			Goodwill									36,884						36,884
			Intangible assets, net									50,226						51,559
			Deferred financing costs, net									2,971						2,414
			Deferred income taxes, net									11,502						23,210
			Other noncurrent assets									37,083						32,698
									Total assets			$	435,527					$	430,949
Liabilities
			Current liabilities
						Current finance lease liabilities						$	1,952					$	1,839
						Current operating lease liabilities						15,829						16,856
						Accounts payable						15,595						12,021
						Other current liabilities						64,146						46,462
									Total current liabilities			97,522						77,178
			Long-term liabilities
						Long-term debt						170,000						210,000
						Noncurrent finance lease liabilities						10,744						13,530
						Noncurrent operating lease liabilities						126,296						137,534
						Liability for insurance claims, less current portion						8,438						10,309
						Other noncurrent liabilities						87,792						112,844
									Total long-term liabilities			403,270						484,217
									Total liabilities			500,792						561,395
Shareholders' deficit
						Common stock						642						640
						Paid-in capital						135,596						123,833
						Deficit						(116,441)						(194,514)
						Accumulated other comprehensive loss, net						(54,470)						(60,405)
						Treasury stock						(30,592)						—
									Total shareholders' deficit			(65,265)						(130,446)
									Total liabilities and shareholders' deficit			$	435,527					$	430,949
Debt Balances
			Credit facility revolver due 2026									$	170,000					$	210,000
			Finance lease liabilities									12,696						15,369
						Total debt						$	182,696					$	225,369

6

DENNY’S CORPORATION
Condensed Consolidated Statements of Operations
(Unaudited)
									Quarter Ended
($ in thousands, except per share amounts)									12/29/21						12/30/20
Revenue:
			Company restaurant sales						$	47,406					$	32,892
			Franchise and license revenue						60,233						47,213
						Total operating revenue			107,639						80,105
Costs of company restaurant sales, excluding depreciation and amortization									40,386						31,475
Costs of franchise and license revenue, excluding depreciation and amortization									29,178						25,861
General and administrative expenses									17,694						20,451
Depreciation and amortization									4,066						3,909
Operating (gains), losses and other charges, net									(46,309)						(511)
						Total operating costs and expenses, net			45,015						81,185
Operating income (loss)									62,624						(1,080)
Interest expense, net									3,134						4,645
Other nonoperating expense (income), net									989						(8,022)
Income before income taxes									58,501						2,297
Provision for (benefit from) income taxes									15,046						(62)
Net income									$	43,455					$	2,359
Net income per share - basic									$	0.67					$	0.04
Net income per share - diluted									$	0.67					$	0.04
Basic weighted average shares outstanding									64,449						64,898
Diluted weighted average shares outstanding									64,870						65,467
Comprehensive income									$	45,241					$	3,159
General and Administrative Expenses
			Corporate administrative expenses						$	11,993					$	9,833
			Share-based compensation						3,390						5,976
			Incentive compensation						1,617						3,046
			Deferred compensation valuation adjustments						694						1,596
						Total general and administrative expenses			$	17,694					$	20,451

7

DENNY’S CORPORATION
Condensed Consolidated Statements of Operations
(Unaudited)
									Fiscal Year Ended
($ in thousands, except per share amounts)									12/29/21						12/30/20
Revenue:
			Company restaurant sales						$	175,017					$	118,160
			Franchise and license revenue						223,157						170,445
						Total operating revenue			398,174						288,605
Costs of company restaurant sales, excluding depreciation and amortization									146,932						114,569
Costs of franchise and license revenue, excluding depreciation and amortization									109,140						94,348
General and administrative expenses									68,686						55,040
Depreciation and amortization									15,446						16,161
Operating (gains), losses and other charges, net									(46,105)						1,808
						Total operating costs and expenses, net			294,099						281,926
Operating income									104,075						6,679
Interest expense, net									15,148						17,965
Other nonoperating income, net									(15,176)						(4,171)
Income (loss) before income taxes									104,103						(7,115)
Provision for (benefit from) income taxes									26,030						(1,999)
Net income (loss)									$	78,073					$	(5,116)
Net income (loss) per share - basic									$	1.20					$	(0.08)
Net income (loss) per share - diluted									$	1.19					$	(0.08)
Basic weighted average shares outstanding									65,171						60,812
Diluted weighted average shares outstanding									65,573						60,812
Comprehensive income (loss)									$	84,008					$	(31,561)
General and Administrative Expenses
			Corporate administrative expenses						$	44,367					$	41,135
			Share-based compensation						13,602						7,948
			Incentive compensation						8,628						4,351
			Deferred compensation valuation adjustments						2,089						1,606
						Total general and administrative expenses			$	68,686					$	55,040

8

DENNY’S CORPORATION

Reconciliation of Net Income (Loss) and Net Cash Provided by (Used in) Operating Activities to Non-GAAP Financial Measures

(Unaudited)

The Company believes that, in addition to U.S. generally accepted accounting principles (GAAP) measures, certain non-GAAP financial measures are appropriate indicators to assist in the evaluation of operating performance and liquidity on a period-to-period basis. The Company uses Adjusted EBITDA, Adjusted Free Cash Flow, Adjusted Net Income (Loss) and Adjusted Net Income (Loss) Per Share internally as performance measures for planning purposes, including the preparation of annual operating budgets, and for compensation purposes, including incentive compensation for certain employees. Adjusted EBITDA is also used in the calculation of financial covenant ratios in accordance with the Company’s credit facility. Adjusted Free Cash Flow is also used as a non-GAAP liquidity measure by Management to assess the Company’s ability to generate cash and plan for future operating and capital actions. Management believes that the presentation of Adjusted EBITDA, Adjusted Net Income (Loss), Adjusted Net Income (Loss) Per Share and Adjusted Free Cash Flow provide useful information to investors and analysts about the Company’s operating results, financial condition or cash flows. However, each of these non-GAAP financial measures should be considered as a supplement to, not a substitute for, operating income (loss), net income (loss), net income (loss) per share, net cash provided by (used in) operating activities, or other financial performance and liquidity measures prepared in accordance with GAAP.

									Quarter Ended												Fiscal Year Ended
($ in thousands)									12/29/21						12/30/20						12/29/21						12/30/20
Net income (loss)									$	43,455					$	2,359					$	78,073					$	(5,116)
Provision for (benefit from) income taxes									15,046						(62)						26,030						(1,999)
Operating (gains), losses and other charges, net									(46,309)						(511)						(46,105)						1,808
Other nonoperating expense (income), net									989						(8,022)						(15,176)						(4,171)
Share-based compensation expense									3,390						5,976						13,602						7,948
Deferred compensation plan valuation adjustments									694						1,596						2,089						1,606
Interest expense, net									3,134						4,645						15,148						17,965
Depreciation and amortization									4,066						3,909						15,446						16,161
Cash payments for restructuring charges and exit costs									(219)						(575)						(1,767)						(2,981)
Cash payments for share-based compensation									(193)						(1,354)						(1,758)						(4,578)
Adjusted EBITDA									$	24,053					$	7,961					$	85,582					$	26,643

9

DENNY’S CORPORATION
Reconciliation of Net Income (Loss) and Net Cash Provided by (Used in) Operating Activities to Non-GAAP Financial Measures Continued
(Unaudited)
									Quarter Ended												Fiscal Year Ended
($ in thousands)									12/29/21						12/30/20						12/29/21						12/30/20
Net cash provided by (used in) operating activities									$	12,944					$	8,473					$	76,173					$	(3,137)
Capital expenditures									(2,034)						(1,486)						(7,355)						(6,962)
Acquisitions of real estate									(10,369)						—						(10,369)						—
Cash payments for restructuring charges and exit costs									(219)						(575)						(1,767)						(2,981)
Cash payments for share-based compensation									(193)						(1,354)						(1,758)						(4,578)
Deferred compensation plan valuation adjustments									694						1,596						2,089						1,606
Other nonoperating expense (income), net									989						(8,022)						(15,176)						(4,171)
Gains (losses) on investments									(32)						6						(21)						123
Gains (losses) on early termination of debt and leases									471						(181)						523						(224)
Amortization of deferred financing costs									(159)						(285)						(1,105)						(876)
Gains (losses) and amortization on interest rate swap derivatives, net									(2,142)						6,349						12,629						2,164
Interest expense, net									3,134						4,645						15,148						17,965
Cash interest expense, net (1)									(3,916)						(4,912)						(17,152)						(18,047)
Deferred income tax expense									(10,384)						(6,486)						(14,097)						(3,981)
Decrease in tax valuation allowance									5,031						3,041						5,031						3,041
Provision for (benefit from) income taxes									15,046						(62)						26,030						(1,999)
Income taxes (paid) received, net									(4,304)						539						(9,942)						(6)
Changes in operating assets and liabilities
Receivables									2,809						1,087						(1,373)						(6,378)
Inventories									3,830						164						3,879						(101)
Other current assets									(3,158)						7						(7,454)						3,872
Other noncurrent assets									860						2,290						1,881						1,816
Operating lease assets and liabilities									371						387						1,521						(844)
Accounts payable									(248)						2,142						(6,608)						10,682
Accrued payroll									(1,651)						(5,904)						(3,113)						2,835
Accrued taxes									1,570						1,745						317						774
Other accrued liabilities									(6,794)						(987)						(12,684)						5,525
Other noncurrent liabilities									1,284						(115)						5,517						5,510
Adjusted Free Cash Flow									$	3,430					$	2,102					$	40,764					$	1,628

(1) Includes cash interest expense, net and cash payments of approximately $0.9 million and $3.3 million for dedesignated interest rate swap derivatives for the quarter and year ended December 29, 2021, respectively. Includes cash interest expense, net and cash payments of approximately $0.8 million and $1.9 million for dedesignated interest rate swap derivatives for the quarter and year ended December 30, 2020, respectively.

10

DENNY’S CORPORATION
Reconciliation of Net Income (Loss) and Net Cash Provided by (Used in) Operating Activities to Non-GAAP Financial Measures Continued
(Unaudited)
									Quarter Ended												Fiscal Year Ended
($ in thousands, except per share amounts)									12/29/21						12/30/20						12/29/21						12/30/20
Adjusted EBITDA									$	24,053					$	7,961					$	85,582					$	26,643
Cash interest expense, net (1)									(3,916)						(4,912)						(17,152)						(18,047)
Cash (paid) received for income taxes, net									(4,304)						539						(9,942)						(6)
Cash paid for capital expenditures and real estate acquisitions									(12,403)						(1,486)						(17,724)						(6,962)
Adjusted Free Cash Flow									$	3,430					$	2,102					$	40,764					$	1,628
Net income (loss)									$	43,455					$	2,359					$	78,073					$	(5,116)
(Gains) losses and amortization on interest rate swap derivatives, net									2,142						(6,349)						(12,629)						(2,164)
Gains on sales of assets and other, net									(46,722)						(2,418)						(47,822)						(4,678)
Impairment charges									442						1,564						442						4,083
Tax effect (2)									11,177						1,848						15,002						706
Adjusted Net Income (Loss)									$	10,494					$	(2,996)					$	33,066					$	(7,169)
Diluted weighted average shares outstanding									64,870						64,898						65,573						60,812
Net Income (Loss) Per Share - Diluted									$	0.67					$	0.04					$	1.19					$	(0.08)
Adjustments Per Share									$	(0.51)					$	(0.09)					$	(0.69)					$	(0.04)
Adjusted Net Income (Loss) Per Share									$	0.16					$	(0.05)					$	0.50					$	(0.12)

(1)			Includes cash interest expense, net and cash payments of approximately $0.9 million and $3.3 million for dedesignated interest rate swap derivatives for the quarter and year ended December 29, 2021, respectively. Includes cash interest expense, net and cash payments of approximately $0.8 million and $1.9 million for dedesignated interest rate swap derivatives for the quarter and year ended December 30, 2020, respectively.
(2)			Tax adjustments for the quarter and year ended December 29, 2021 reflect an effective tax rate of 25.3% and 25.0%, respectively. Tax adjustments for the quarter and year ended December 30, 2020 reflect an effective tax rate of 25.7% and 25.6%, respectively.

11

DENNY’S CORPORATION

Reconciliation of Operating Income to Non-GAAP Financial Measures

(Unaudited)

The Company believes that, in addition to GAAP measures, certain other non-GAAP financial measures are appropriate indicators to assist in the evaluation of restaurant-level operating efficiency and performance of ongoing restaurant-level operations. The Company uses Restaurant-level Operating Margin, Company Restaurant Operating Margin and Franchise Operating Margin internally as performance measures for planning purposes, including the preparation of annual operating budgets, and these three non-GAAP measures are used to evaluate operating effectiveness.

The Company defines Restaurant-level Operating Margin as operating income (loss) excluding the following three items: general and administrative expenses, depreciation and amortization, and operating (gains), losses and other charges, net. Restaurant-level Operating Margin is presented as a percent of total operating revenue. The Company excludes general and administrative expenses, which include primarily non-restaurant-level costs associated with support of company and franchised restaurants and other activities at their corporate office. The Company excludes depreciation and amortization expense, substantially all of which is related to company restaurant-level assets, because such expenses represent historical sunk costs which do not reflect current cash outlays for the restaurants. The Company excludes special items, included within operating (gains), losses and other charges, net, to provide investors with a clearer perspective of its ongoing operating performance and a more relevant comparison to prior period results.

Restaurant-level Operating Margin is the total of Company Restaurant Operating Margin and Franchise Operating Margin. The Company defines Company Restaurant Operating Margin as company restaurant sales less costs of company restaurant sales (which include product costs, company restaurant level payroll and benefits, occupancy costs, and other operating costs including utilities, repairs and maintenance, marketing and other expenses) and presents it as a percent of company restaurant sales. The Company defines Franchise Operating Margin as franchise and license revenue (which includes franchise royalties and other non-food and beverage revenue streams such as initial franchise fees, advertising revenue and occupancy revenue) less costs of franchise and license revenue and presents it as a percent of franchise and license revenue.

These non-GAAP financial measures provide a meaningful comparison between periods and enable investors to focus on the performance of restaurant-level operations by excluding revenues and costs unrelated to food and beverage sales in addition to corporate general and administrative expense, depreciation and amortization, and operating (gains), losses and other charges, net. However, each of these non-GAAP financial measures should be considered as a supplement to, not a substitute for, operating income (loss), net income (loss) or other financial performance measures prepared in accordance with U.S. generally accepted accounting principles. Restaurant-level Operating Margin, Company Restaurant Operating Margin and Franchise Operating Margin do not accrue directly to the benefit of shareholders because of the aforementioned excluded items, and are not indicative of the overall results for the Company.

			Quarter Ended												Fiscal Year Ended
($ in thousands)			12/29/21						12/30/20						12/29/21						12/30/20
Operating income (loss)			$	62,624					$	(1,080)					$	104,075					$	6,679
General and administrative expenses			17,694						20,451						68,686						55,040
Depreciation and amortization			4,066						3,909						15,446						16,161
Operating (gains), losses and other charges, net			(46,309)						(511)						(46,105)						1,808
Restaurant-level Operating Margin			$	38,075					$	22,769					$	142,102					$	79,688
Restaurant-level Operating Margin consists of:
Company Restaurant Operating Margin (1)			$	7,020					$	1,417					$	28,085					$	3,591
Franchise Operating Margin (2)			31,055						21,352						114,017						76,097
Restaurant-level Operating Margin			$	38,075					$	22,769					$	142,102					$	79,688

(1)			Company Restaurant Operating Margin is calculated as operating income plus general and administrative expenses; depreciation and amortization; operating (gains), losses and other charges, net; and costs of franchise and license revenue; less franchise and license revenue.
(2)			Franchise Operating Margin is calculated as operating income plus general and administrative expenses; depreciation and amortization; operating (gains), losses and other charges, net; and costs of company restaurant sales; less company restaurant sales.

12

DENNY’S CORPORATION
Operating Margins
(Unaudited)
												Quarter Ended
($ in thousands)												12/29/21									12/30/20
Company restaurant operations: (1)
			Company restaurant sales									$	47,406		100.0		%				$	32,892		100.0		%
			Costs of company restaurant sales:
						Product costs						11,833			25.0		%				8,275			25.2		%
						Payroll and benefits						17,998			38.0		%				14,614			44.4		%
						Occupancy						2,955			6.2		%				2,712			8.2		%
						Other operating costs:
									Utilities			1,539			3.2		%				1,333			4.1		%
									Repairs and maintenance			853			1.8		%				680			2.1		%
									Marketing			1,023			2.2		%				1,133			3.4		%
									Other direct costs			4,185			8.8		%				2,728			8.3		%
			Total costs of company restaurant sales									$	40,386		85.2		%				$	31,475		95.7		%
			Company restaurant operating margin (non-GAAP) (2)									$	7,020		14.8		%				$	1,417		4.3		%
Franchise operations: (3)
			Franchise and license revenue:
			Royalties									$	28,128		46.7		%				$	19,039		40.3		%
			Advertising revenue									19,031			31.6		%				15,060			31.9		%
			Initial and other fees									2,663			4.4		%				2,399			5.1		%
			Occupancy revenue									10,411			17.3		%				10,715			22.7		%
			Total franchise and license revenue									$	60,233		100.0		%				$	47,213		100.0		%
			Costs of franchise and license revenue:
			Advertising costs									$	19,030		31.6		%				$	15,060		31.9		%
			Occupancy costs									6,374			10.6		%				6,636			14.1		%
			Other direct costs									3,774			6.3		%				4,165			8.8		%
			Total costs of franchise and license revenue									$	29,178		48.4		%				$	25,861		54.8		%
			Franchise operating margin (non-GAAP) (2)									$	31,055		51.6		%				$	21,352		45.2		%
Total operating revenue (4)												$	107,639		100.0		%				$	80,105		100.0		%
Total costs of operating revenue (4)												69,564			64.6		%				57,336			71.6		%
Restaurant-level operating margin (non-GAAP) (4)(2)												$	38,075		35.4		%				$	22,769		28.4		%
Other operating expenses: (4)(2)
			General and administrative expenses									$	17,694		16.4		%				$	20,451		25.5		%
			Depreciation and amortization									4,066			3.8		%				3,909			4.9		%
			Operating (gains), losses and other charges, net									(46,309)			(43.0)		%				(511)			(0.6)		%
			Total other operating expenses (income)									$	(24,549)		(22.8)		%				$	23,849		29.8		%
Operating income (loss) (4)												$	62,624		58.2		%				$	(1,080)		(1.3)		%
(1)						As a percentage of company restaurant sales.
(2)						Other operating expenses such as general and administrative expenses and depreciation and amortization relate to both company and franchise operations and are not allocated to costs of company restaurant sales and costs of franchise and license revenue. As such, operating margin is considered a non-GAAP financial measure. Operating margins should be considered as a supplement to, not as a substitute for, operating income (loss), net income (loss) or other financial measures prepared in accordance with U.S. generally accepted accounting principles.
(3)						As a percentage of franchise and license revenue.
(4)						As a percentage of total operating revenue.

13

DENNY’S CORPORATION
Operating Margins
(Unaudited)
												Fiscal Year Ended
($ in thousands)												12/29/21									12/30/20
Company restaurant operations: (1)
			Company restaurant sales									$	175,017		100.0		%				$	118,160		100.0		%
			Costs of company restaurant sales:
						Product costs						42,982			24.6		%				29,816			25.2		%
						Payroll and benefits						65,337			37.3		%				51,684			43.7		%
						Occupancy						11,662			6.7		%				11,241			9.5		%
						Other operating costs:
									Utilities			5,814			3.3		%				5,148			4.4		%
									Repairs and maintenance			2,743			1.6		%				2,608			2.2		%
									Marketing			4,594			2.6		%				3,904			3.3		%
									Other direct costs			13,800			7.9		%				10,168			8.6		%
			Total costs of company restaurant sales									$	146,932		84.0		%				$	114,569		97.0		%
			Company restaurant operating margin (non-GAAP) (2)									$	28,085		16.0		%				$	3,591		3.0		%
Franchise operations: (3)
			Franchise and license revenue:
			Royalties									$	103,425		46.4		%				$	67,501		39.6		%
			Advertising revenue									69,957			31.3		%				53,745			31.5		%
			Initial and other fees									8,009			3.6		%				7,332			4.3		%
			Occupancy revenue									41,766			18.7		%				41,867			24.6		%
			Total franchise and license revenue									$	223,157		100.0		%				$	170,445		100.0		%
			Costs of franchise and license revenue:
			Advertising costs									$	69,957		31.3		%				$	53,745		31.5		%
			Occupancy costs									26,237			11.8		%				26,732			15.7		%
			Other direct costs									12,946			5.8		%				13,871			8.1		%
			Total costs of franchise and license revenue									$	109,140		48.9		%				$	94,348		55.4		%
			Franchise operating margin (non-GAAP) (2)									$	114,017		51.1		%				$	76,097		44.6		%
Total operating revenue (4)												$	398,174		100.0		%				$	288,605		100.0		%
Total costs of operating revenue (4)												256,072			64.3		%				208,917			72.4		%
Restaurant-level operating margin (non-GAAP) (4)(2)												$	142,102		35.7		%				$	79,688		27.6		%
Other operating expenses: (4)(2)
			General and administrative expenses									$	68,686		17.3		%				$	55,040		19.1		%
			Depreciation and amortization									15,446			3.9		%				16,161			5.6		%
			Operating (gains), losses and other charges, net									(46,105)			(11.6)		%				1,808			0.6		%
			Total other operating expenses									$	38,027		9.6		%				$	73,009		25.3		%
Operating income (4)												$	104,075		26.1		%				$	6,679		2.3		%
(1)						As a percentage of company restaurant sales.
(2)						Other operating expenses such as general and administrative expenses and depreciation and amortization relate to both company and franchise operations and are not allocated to costs of company restaurant sales and costs of franchise and license revenue. As such, operating margin is considered a non-GAAP financial measure. Operating margin should be considered as a supplement to, not as a substitute for, operating income (loss), net income (loss) or other financial measures prepared in accordance with U.S. generally accepted accounting principles.
(3)						As a percentage of franchise and license revenue.
(4)						As a percentage of total operating revenue.

14

DENNY’S CORPORATION
Statistical Data
(Unaudited)
Changes in Same-Store Sales (1) vs. 2019									Quarter Ended															Fiscal Year Ended
(Increase (decrease))									12/29/21															12/29/21
			Company Restaurants						5.1		%													(3.5)		%
			Domestic Franchised Restaurants						0.4		%													(4.8)		%
			Domestic System-wide Restaurants						0.7		%													(4.7)		%
Changes in Same-Store Sales (1) vs. Prior Year									Quarter Ended															Fiscal Year Ended
(Increase (decrease))									12/29/21						12/30/20									12/29/21						12/30/20
			Company Restaurants						58.6		%				(34.9)		%							55.3		%				(36.7)		%
			Domestic Franchised Restaurants						48.3		%				(32.8)		%							40.1		%				(30.9)		%
			Domestic System-wide Restaurants						49.0		%				(32.9)		%							41.1		%				(31.4)		%
Average Unit Sales									Quarter Ended															Fiscal Year Ended
($ in thousands)									12/29/21						12/30/20									12/29/21						12/30/20
			Company Restaurants						$	735					$	499								$	2,709					$	1,812
			Franchised Restaurants						$	431					$	314								$	1,597					$	1,181
															Franchised
Restaurant Unit Activity									Company						& Licensed									Total
Ending Units September 29, 2021									65						1,582									1,647
			Units Opened						—						7									7
			Units Closed						—						(14)									(14)
						Net Change			—						(7)									(7)
Ending Units December 29, 2021									65						1,575									1,640
Equivalent Units
			Fourth Quarter 2021						64						1,580									1,644
			Fourth Quarter 2020						66						1,594									1,660
						Net Change			(2)						(14)									(16)
															Franchised
Restaurant Unit Activity									Company						& Licensed									Total
Ending Units December 30, 2020									65						1,585									1,650
			Units Opened						—						20									20
			Units Closed						—						(30)									(30)
						Net Change			—						(10)									(10)
Ending Units December 29, 2021									65						1,575									1,640
Equivalent Units
			Year-to-Date 2021						65						1,581									1,646
			Year-to-Date 2020						65						1,614									1,679
						Net Change			—						(33)									(33)
(1)						Same-store sales include sales at company restaurants and non-consolidated franchised and licensed restaurants that were open during the comparable periods noted. Total operating revenue is limited to company restaurant sales and royalties, advertising revenue, fees and occupancy revenue from non-consolidated franchised and licensed restaurants. Accordingly, domestic franchise same-store sales and domestic system-wide same-store sales should be considered as a supplement to, not a substitute for, the Company's results as reported under GAAP.

15