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Segment Information | 3 Months Ended
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Mar. 26, 2025
Segment Reporting [Abstract] |
Segment Information | Segment Information We manage our business by brand and as a result have identified two operating segments, Denny’s and Keke’s. In addition, we have identified Denny’s as a reportable segment. The Denny’s reportable segment includes the results of all company and franchised and licensed Denny’s restaurants. Our Keke’s operating segment, which includes the results of all company and franchised Keke's restaurants, is included in Other. The primary sources of revenues for all operating segments are the sale of food and beverages at our company restaurants and the collection of royalties, advertising revenue, initial and other fees, including occupancy revenue, from restaurants operated by our franchisees. We do not rely on any major customer as a source of sales and the customers and assets of all operating segments are located predominantly in the United States. There are no material transactions between segments. Management’s measure of segment income is restaurant-level operating margin. The Company defines restaurant-level operating margin as operating income excluding the following four items: general and administrative expenses, depreciation and amortization, goodwill impairment charges and operating (gains), losses and other charges, net. The Company excludes general and administrative expenses, which include primarily non restaurant-level costs associated with the 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 goodwill impairment charges and operating (gains), losses and other charges, net, to provide a clearer perspective of its ongoing operating performance and more relevant comparison to prior period results. The Company's chief operating decision maker (“CODM”) is our Chief Executive Officer. Restaurant-level operating margin is used by our CODM to evaluate restaurant-level operating efficiency and performance and make key operating decisions. The following tables present revenues by segment and a reconciliation of restaurant-level operating margin to net income:
|  |  | Quarter Ended March 26, 2025
|  |  |  |  |  |  | Denny's |  | Other |  | Total
Revenues |  |  | (In thousands)
Company restaurant sales |  |  |  |  |  |  | $ | 45,706 |  |  | $ | 8,194 |  |  | $ | 53,900 |
Franchise and license revenue: |  |  |  |  |  |  |  |  |  |  |
Royalties |  |  |  |  |  |  | $ | 26,592 |  |  | $ | 1,245 |  |  | $ | 27,837 |
Advertising revenue |  |  |  |  |  |  | $ | 18,620 |  |  | $ | 453 |  |  | $ | 19,073 |
Initial and other fees |  |  |  |  |  |  | $ | 2,729 |  |  | $ | 145 |  |  | $ | 2,874 |
Occupancy revenue |  |  |  |  |  |  | $ | 7,920 |  |  | $ | 33 |  |  | $ | 7,953 |
Total franchise and license revenue |  |  |  |  |  |  | 55,861 |  |  | 1,876 |  |  | 57,737 |
Total operating revenue |  |  |  |  |  |  | $ | 101,567 |  |  | $ | 10,070 |  |  | $ | 111,637 |
Cost and expenses |  |  |  |  |  |  |  |  |  |  |
Costs of company restaurant sales, excluding depreciation and amortization: |  |  |  |  |  |  |  |  |  |  |
Product costs |  |  |  |  |  |  | $ | 11,719 |  |  | $ | 2,492 |  |  | $ | 14,211 |
Payroll and benefits |  |  |  |  |  |  | 17,693 |  |  | 3,403 |  |  | 21,096 |
Occupancy costs |  |  |  |  |  |  | 3,997 |  |  | 1,062 |  |  | 5,059 |
Other operating expenses: |  |  |  |  |  |  |  |  |  |  |
Utilities |  |  |  |  |  |  | 1,459 |  |  | 235 |  |  | 1,694 |
Repairs and maintenance |  |  |  |  |  |  | 764 |  |  | 72 |  |  | 836 |
Marketing |  |  |  |  |  |  | 1,813 |  |  | 215 |  |  | 2,028 |
Legal settlements |  |  |  |  |  |  | 425 |  |  | (20) |  |  | 405 |
Pre-opening costs |  |  |  |  |  |  | — |  |  | 709 |  |  | 709 |
Other direct costs |  |  |  |  |  |  | 3,310 |  |  | 677 |  |  | 3,987 |
Total costs of company restaurant sales, excluding depreciation and amortization |  |  |  |  |  |  | 41,180 |  |  | 8,845 |  |  | 50,025 |
Costs of franchise and license revenue, excluding depreciation and amortization: |  |  |  |  |  |  |  |  |  |  |
Advertising costs |  |  |  |  |  |  | 18,620 |  |  | 453 |  |  | 19,073 |
Occupancy costs |  |  |  |  |  |  | 4,900 |  |  | 33 |  |  | 4,933 |
Other direct costs |  |  |  |  |  |  | 3,940 |  |  | 408 |  |  | 4,348 |
Total costs of franchise and license revenue, excluding depreciation and amortization |  |  |  |  |  |  | 27,460 |  |  | 894 |  |  | 28,354 |
Total restaurant-level operating margin |  |  |  |  |  |  | 32,927 |  |  | 331 |  |  | 33,258 |
Reconciliation of restaurant-level operating margin to net income |  |  |  |  |  |  |  |  |  |  |
General and administrative expenses |  |  |  |  |  |  |  |  |  |  | 20,030 |
Depreciation and amortization |  |  |  |  |  |  |  |  |  |  | 4,107 |
Operating (gains), losses and other charges, net |  |  |  |  |  |  |  |  |  |  | 3,911 |
Total other operating expenses |  |  |  |  |  |  |  |  |  |  | 28,048 |
Operating income |  |  |  |  |  |  |  |  |  |  | 5,210 |
Interest expense, net |  |  |  |  |  |  |  |  |  |  | 4,428 |
Other nonoperating expense, net |  |  |  |  |  |  |  |  |  |  | 162 |
Income before income taxes |  |  |  |  |  |  |  |  |  |  | 620 |
Provision for income taxes |  |  |  |  |  |  |  |  |  |  | 294 |
Net income |  |  |  |  |  |  |  |  |  |  | $ | 326 |
|  |  | Quarter Ended March 27, 2024
|  |  |  |  |  |  | Denny's |  | Other |  | Total
Revenues |  |  | (In thousands)
Company restaurant sales |  |  |  |  |  |  | $ | 48,168 |  |  | $ | 4,174 |  |  | $ | 52,342 |
Franchise and license revenue: |  |  |  |  |  |  |  |  |  |  |
Royalties |  |  |  |  |  |  | $ | 28,049 |  |  | $ | 1,257 |  |  | $ | 29,306 |
Advertising revenue |  |  |  |  |  |  | $ | 17,680 |  |  | $ | 458 |  |  | $ | 18,138 |
Initial and other fees |  |  |  |  |  |  | $ | 1,743 |  |  | $ | 73 |  |  | $ | 1,816 |
Occupancy revenue |  |  |  |  |  |  | $ | 8,372 |  |  | $ | — |  |  | $ | 8,372 |
Total franchise and license revenue |  |  |  |  |  |  | 55,844 |  |  | 1,788 |  |  | 57,632 |
Total operating revenue |  |  |  |  |  |  | $ | 104,012 |  |  | $ | 5,962 |  |  | $ | 109,974 |
Cost and expenses |  |  |  |  |  |  |  |  |  |  |
Costs of company restaurant sales, excluding depreciation and amortization: |  |  |  |  |  |  |  |  |  |  |
Product costs |  |  |  |  |  |  | $ | 12,204 |  |  | $ | 1,107 |  |  | $ | 13,311 |
Payroll and benefits |  |  |  |  |  |  | 18,657 |  |  | 1,817 |  |  | 20,474 |
Occupancy costs |  |  |  |  |  |  | 4,013 |  |  | 560 |  |  | 4,573 |
Other operating expenses: |  |  |  |  |  |  |  |  |  |  |
Utilities |  |  |  |  |  |  | 1,547 |  |  | 108 |  |  | 1,655 |
Repairs and maintenance |  |  |  |  |  |  | 977 |  |  | 28 |  |  | 1,005 |
Marketing |  |  |  |  |  |  | 1,481 |  |  | 123 |  |  | 1,604 |
Legal settlements |  |  |  |  |  |  | 1,449 |  |  | — |  |  | 1,449 |
Pre-opening costs |  |  |  |  |  |  | — |  |  | 366 |  |  | 366 |
Other direct costs |  |  |  |  |  |  | 3,230 |  |  | 451 |  |  | 3,681 |
Total costs of company restaurant sales, excluding depreciation and amortization |  |  |  |  |  |  | 43,558 |  |  | 4,560 |  |  | 48,118 |
Costs of franchise and license revenue, excluding depreciation and amortization: |  |  |  |  |  |  |  |  |  |  |
Advertising costs |  |  |  |  |  |  | 17,680 |  |  | 458 |  |  | 18,138 |
Occupancy costs |  |  |  |  |  |  | 5,132 |  |  | — |  |  | 5,132 |
Other direct costs |  |  |  |  |  |  | 3,981 |  |  | 123 |  |  | 4,104 |
Total costs of franchise and license revenue, excluding depreciation and amortization |  |  |  |  |  |  | 26,793 |  |  | 581 |  |  | 27,374 |
Total restaurant-level operating margin |  |  |  |  |  |  | 33,661 |  |  | 821 |  |  | 34,482 |
Reconciliation of restaurant-level operating margin to net income |  |  |  |  |  |  |  |  |  |  |
General and administrative expenses |  |  |  |  |  |  |  |  |  |  | 21,222 |
Depreciation and amortization |  |  |  |  |  |  |  |  |  |  | 3,581 |
Operating (gains), losses and other charges, net |  |  |  |  |  |  |  |  |  |  | (327) |
Total other operating expenses |  |  |  |  |  |  |  |  |  |  | 24,476 |
Operating income |  |  |  |  |  |  |  |  |  |  | 10,006 |
Interest expense, net |  |  |  |  |  |  |  |  |  |  | 4,420 |
Other nonoperating income, net |  |  |  |  |  |  |  |  |  |  | (637) |
Income before income taxes |  |  |  |  |  |  |  |  |  |  | 6,223 |
Provision for income taxes |  |  |  |  |  |  |  |  |  |  | 1,532 |
Net income |  |  |  |  |  |  |  |  |  |  | $ | 4,691 |
| March 26, 2025 |  | December 25, 2024
Segment assets: | (In thousands)
Denny’s | $ | 329,988 |  |  | $ | 344,986 |
Other | 158,087 |  |  | 151,288 |
Total assets | $ | 488,075 |  |  | $ | 496,274 |

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