WEBVTT - Denny’s Valade on Value, Keke’s Strong Growth 0:00:13.800 --> 0:00:14.920 Welcome to Chopping it Up. 0:00:15.120 --> 0:00:17.400 I'm your host, Mike Hallon, the senior restaurant and food 0:00:17.400 --> 0:00:21.480 Service analyst at Bloomberg Intelligence. Today we're joined by Kelly Valaid, 0:00:21.600 --> 0:00:23.840 CEO of Denny's. It's good to see you, Kelly. 0:00:24.079 --> 0:00:25.720 Good to see you, Good to see you, good to 0:00:25.720 --> 0:00:26.000 be here. 0:00:27.040 --> 0:00:29.560 So I saw on LinkedIn that you recently spoke at 0:00:29.560 --> 0:00:33.040 the Women's Food Service Forum. You're a fantastic public speaker. 0:00:33.120 --> 0:00:36.879 I will always remember your address you did at the 0:00:36.920 --> 0:00:40.400 Hot Schedules user conference like years ago. 0:00:40.800 --> 0:00:45.120 Fan of your public speaking skills. Would you discuss at WFF. 0:00:45.440 --> 0:00:47.960 Yeah, thank you for that. That was a long time ago, Michael. 0:00:48.000 --> 0:00:50.440 What it feels like a decade ago? 0:00:50.440 --> 0:00:53.280 It might be about six seven years ago at a 0:00:53.320 --> 0:00:54.200 Hot Schedules event. 0:00:54.320 --> 0:00:55.120 Yeah. 0:00:55.320 --> 0:01:00.000 At WFAFT they asked me to speak about leadership lessons 0:01:00.080 --> 0:01:01.320 I have learned along the way. 0:01:01.920 --> 0:01:03.480 So and it was a full hour. 0:01:03.560 --> 0:01:05.560 So the funny part about it was a real fun 0:01:05.560 --> 0:01:08.160 part about it was I thought, a whole hour, Okay, 0:01:08.680 --> 0:01:11.640 I'll get audience participation, There'll be hopefully a good crowd 0:01:11.640 --> 0:01:13.720 in the room. I can feed off that I do 0:01:13.800 --> 0:01:15.600 well when I can really look at people and feed 0:01:15.600 --> 0:01:18.160 off of their energy and there's amazing energy in the room. 0:01:19.080 --> 0:01:20.959 And I talked for fifty seven and a half minutes. 0:01:21.000 --> 0:01:23.120 There was actually no time for Q and A left 0:01:23.160 --> 0:01:25.680 and it's but it really went well. It was streaming 0:01:25.760 --> 0:01:26.479 at the same time. 0:01:26.680 --> 0:01:30.240 WFF had an amazing turnout, like they always do. And 0:01:30.280 --> 0:01:32.680 it's just really an honor actually to be able to 0:01:33.240 --> 0:01:36.200 speak to men and women about things I've learned along 0:01:36.240 --> 0:01:38.600 the way, which if you know me, there's you know, 0:01:38.760 --> 0:01:40.360 the intersection between life and work. 0:01:40.480 --> 0:01:41.479 You know, they're one and the same. 0:01:41.560 --> 0:01:45.240 And I told a lot of personal stories and they 0:01:45.240 --> 0:01:49.480 said share leadership mistakes too, so I said, no problem, 0:01:49.960 --> 0:01:51.080 many of those to share. 0:01:51.280 --> 0:01:53.200 So we had a great, great conversation. 0:01:54.560 --> 0:01:57.040 Very cool. Is there a link to see a replay? 0:01:57.400 --> 0:01:58.960 You know, I'm asked about that because I've had some 0:01:58.960 --> 0:02:01.040 people that couldn't make it ask and I'm waiting to 0:02:01.080 --> 0:02:03.400 get that from the team at WFF. I think they're 0:02:03.400 --> 0:02:05.520 probably on a much needed vacation, a few of them 0:02:05.920 --> 0:02:06.400 after that. 0:02:07.080 --> 0:02:11.560 Side, I'm sure. All right, Well, if you get it, please. 0:02:11.280 --> 0:02:14.120 Share it, happy to share it, happy to all. 0:02:14.080 --> 0:02:16.519 Right, let's address the six hundred pound gorilla in the 0:02:16.600 --> 0:02:18.360 room or eight hundred pund what is it? Eight hundred 0:02:18.360 --> 0:02:22.800 pound goerilla? Yeah, the US consumer. So you know, you 0:02:22.880 --> 0:02:25.880 talked about consumer weakness in January and February on the call. 0:02:27.600 --> 0:02:30.840 Company owned units outperformed by one hundred and eighty basis 0:02:30.840 --> 0:02:33.480 points in January four hundred basis points in February due 0:02:33.480 --> 0:02:36.280 to less exposure to Midwest mid Atlantic, which were hit 0:02:36.840 --> 0:02:39.240 ordered by the crummy weather. Right, it was the oldest 0:02:39.320 --> 0:02:43.920 January fourteen years. We had some snow in February. So 0:02:44.080 --> 0:02:46.960 there's been a lot of consternation about the consumer, mostly 0:02:47.000 --> 0:02:49.919 stemming from these sentiment surveys, and I look at them, 0:02:49.960 --> 0:02:54.920 and surveys aren't always the best indicator moving forward, you know. 0:02:55.000 --> 0:02:55.959 That's kind of where we sit. 0:02:56.000 --> 0:02:57.200 We think this year is going to be a better 0:02:57.280 --> 0:03:00.200 year for restaurant spending, but it's clearly off to a 0:03:00.240 --> 0:03:01.760 slower start than you expected. 0:03:02.880 --> 0:03:04.240 What are you seeing in the numbers? 0:03:04.919 --> 0:03:07.880 In your numbers that would suggest a weaker consumer beyond 0:03:08.240 --> 0:03:11.040 just staying home under a pile of blankets until it 0:03:11.080 --> 0:03:11.639 warms up. 0:03:12.720 --> 0:03:16.160 Sure, I think you've articulated it well, right, I think 0:03:16.520 --> 0:03:19.640 you do have a skittish consumer, if you will. Consumer 0:03:19.639 --> 0:03:22.240 sentiment numbers, you know, sometimes they follow the hype and 0:03:22.240 --> 0:03:25.200 they follow the conversation, you know, self fulfilling or not. 0:03:25.280 --> 0:03:28.040 There's a lot going on. So you mentioned the worst weather. 0:03:28.080 --> 0:03:30.160 I grew up in Upstate New York and got pictures 0:03:30.240 --> 0:03:32.760 from my brother who lives up there. Still worse in 0:03:32.840 --> 0:03:36.400 a decade in terms of the snow, and worst around 0:03:36.440 --> 0:03:38.520 the country in terms of even even the fourth quarter, 0:03:38.600 --> 0:03:40.280 right with Helen with the fires. 0:03:40.280 --> 0:03:43.280 So it's been just crazy time for those reasons. 0:03:43.480 --> 0:03:44.960 And one of the things you didn't mention was the 0:03:44.960 --> 0:03:47.080 flu season, right, which keeps people at home. 0:03:47.080 --> 0:03:49.760 Our off premise business. Actually, we can see the hard 0:03:49.760 --> 0:03:50.200 work we're. 0:03:50.120 --> 0:03:53.000 Doing in digital and in that space actually pay off 0:03:53.000 --> 0:03:56.200 a little bit at this time. So what I can 0:03:56.240 --> 0:03:58.760 say and what we've shared, you know, obviously it's inner 0:03:58.840 --> 0:04:01.000 quarter for us. What I can and share is that 0:04:01.000 --> 0:04:03.680 that consumer does you know everything I think we're seeing. 0:04:04.360 --> 0:04:08.800 We too had a had optimism even at ICR in 0:04:08.880 --> 0:04:10.640 January where we're able to kind of talk about and 0:04:10.680 --> 0:04:13.120 pre release and share our fourth quarter earnings, and then 0:04:13.160 --> 0:04:16.440 we just quickly saw some changes like everyone else is 0:04:16.560 --> 0:04:19.360 quoting and like everybody else is seeing, right, both retail 0:04:19.440 --> 0:04:22.560 restaurants and just really concerns over tariffs, concerns over what 0:04:22.600 --> 0:04:24.560 does that mean for our business? And then you have 0:04:24.640 --> 0:04:27.880 eggs for us, right, so you have flu weather, tariffs. 0:04:28.080 --> 0:04:30.919 You know, consumer just just feeling a little bit overwhelmed perhaps, 0:04:31.360 --> 0:04:33.840 And now I think it's just because it's not clear, right, 0:04:33.880 --> 0:04:36.000 things just aren't clear where they're going to settle out right. 0:04:36.080 --> 0:04:38.279 Is it going to sound really aggressive on tariffs and 0:04:38.279 --> 0:04:41.560 it's going to call it'll dial back all politics aside? 0:04:41.640 --> 0:04:43.600 You just can't you can't tell yet where it'll land. 0:04:43.680 --> 0:04:46.800 And that just causes confusion for a lot of people, 0:04:46.920 --> 0:04:48.200 confusion for consumers. 0:04:48.200 --> 0:04:49.880 You add eggs to it, and you just get a 0:04:49.920 --> 0:04:51.480 really you just get. 0:04:51.360 --> 0:04:54.360 A whole bunch of things that are headwinds for us 0:04:54.400 --> 0:04:56.400 and again for the industry because we can see it. 0:04:56.560 --> 0:04:58.440 We can see it everywhere like I know you see it. 0:04:58.520 --> 0:05:02.320 So yeah, that's exactly what we are seeing. 0:05:02.320 --> 0:05:05.040 We're still for us, it's still Look, we've got our playbook, 0:05:05.040 --> 0:05:07.479 We've got a fiyer strategy we put out for both brands. 0:05:08.360 --> 0:05:10.480 I love talking about that because we really just feel 0:05:10.520 --> 0:05:13.000 like heads down pivot where you need to with the 0:05:13.000 --> 0:05:15.559 consumer and with what we're seeing. And that's what we're doing, 0:05:15.800 --> 0:05:18.000 but also we've got a great playbook with some great 0:05:18.080 --> 0:05:20.400 strategies and initiatives that we still think can pay. 0:05:20.400 --> 0:05:23.320 Often, Like you, we think it'll get better throughout the year. 0:05:23.640 --> 0:05:26.080 It's just about kind of everybody settling down and really 0:05:26.240 --> 0:05:28.239 being able to understand what's going to happen. 0:05:29.440 --> 0:05:30.119 Yeah, for sure. 0:05:30.960 --> 0:05:34.159 Something interesting I heard today on the Cracker Barrel call 0:05:34.920 --> 0:05:37.400 was that it was more broad based as opposed to 0:05:37.600 --> 0:05:38.920 just the low income consumer. 0:05:39.279 --> 0:05:40.880 I think it is broad based. 0:05:40.880 --> 0:05:43.599 Obviously, everyone knows as a brand and in family dining 0:05:43.680 --> 0:05:46.679 we all skew, no matter which big brand, we skew 0:05:47.400 --> 0:05:50.520 a little more towards the lower end end consumers. That's 0:05:50.520 --> 0:05:53.599 true for us, although we have a very wide, wide 0:05:53.600 --> 0:05:56.640 swath of consumer demographics when we talk about it, but 0:05:57.279 --> 0:05:58.880 I do think it's a little more widespread. So what 0:05:58.960 --> 0:06:02.240 we're seeing is, you know, attachment rates. We talked about 0:06:02.240 --> 0:06:04.760 this on our call. We see attachment rates down, and 0:06:04.839 --> 0:06:08.960 yet the check there's still premium items that we merchandise 0:06:09.000 --> 0:06:12.040 in the restaurant. So are Barbell strategy intact and yet 0:06:12.080 --> 0:06:14.040 you see attachment rates move a little bit. 0:06:14.120 --> 0:06:15.320 I think there were others. 0:06:15.040 --> 0:06:16.719 That quoted that as well, and I think that's a 0:06:16.720 --> 0:06:20.320 way of just managing your check in a time of 0:06:20.360 --> 0:06:22.360 this kind of uncertainty, like we've mentioned already. 0:06:23.320 --> 0:06:24.159 Yeah, for sure. 0:06:24.680 --> 0:06:26.200 And I guess last one on this and then we'll 0:06:26.200 --> 0:06:29.120 get more into into your plans. You know, I'm trying 0:06:29.120 --> 0:06:32.200 to do a little homework for myself here, so it's 0:06:32.240 --> 0:06:34.240 good to have you here to pick your brain. But 0:06:34.640 --> 0:06:37.400 you mentioned on the fourth quarter call, Texas, Arizona we're 0:06:37.400 --> 0:06:40.320 seeing the biggest pullback. Some cell side analysts, from what 0:06:40.360 --> 0:06:42.760 I've heard, surmised it could be due to the new 0:06:42.800 --> 0:06:46.680 administration's policy on immigration. But how did those states fare 0:06:46.800 --> 0:06:48.440 in November and December? 0:06:49.680 --> 0:06:52.800 So they they were they were probably still the weaker. 0:06:52.920 --> 0:06:55.440 They were a little bit weaker. Again, you've got to 0:06:55.480 --> 0:06:58.960 peel out hurricanes, peel out whether you know in the 0:06:59.000 --> 0:07:01.159 other the other the East Coast and the West coast, 0:07:01.200 --> 0:07:02.279 as we already discussed two. 0:07:02.320 --> 0:07:03.799 But I think they were a little bit weaker. 0:07:03.800 --> 0:07:06.600 But the gap widens pretty big starting in the new year. 0:07:06.600 --> 0:07:08.400 It started in twenty five, we really started to see 0:07:08.400 --> 0:07:11.800 that gap widening. And I've said this before, We've said 0:07:11.800 --> 0:07:14.520 it on the calls, but honestly, California has responded pretty well. 0:07:14.560 --> 0:07:17.360 To two four six eight and the value offerings there 0:07:17.400 --> 0:07:20.680 and everything we've been doing, we still see some strength there. 0:07:21.080 --> 0:07:23.200 And then we're finally talking about strength in a market 0:07:23.320 --> 0:07:26.040 like Florida again, which that wasn't the case even a 0:07:26.120 --> 0:07:28.800 year ago. Right, So we're starting to see a bit 0:07:28.840 --> 0:07:32.800 more of a bifurcation with those two states showing a 0:07:32.840 --> 0:07:33.880 little bit more momentum. 0:07:35.480 --> 0:07:38.520 Okay, great, and that actually is a great segue into 0:07:38.560 --> 0:07:41.960 the two four to sixty eight value menu. It did 0:07:42.040 --> 0:07:45.160 really well for Denny's, you know, going back coming out 0:07:45.160 --> 0:07:49.120 of the great recession, you know. And it's an example 0:07:49.160 --> 0:07:52.000 I point to point to a lot just when I 0:07:52.000 --> 0:07:55.360 talk historically about the business and everyday value versus discounting, 0:07:55.360 --> 0:07:57.520 and I talked about Denny's versus Bob Evans at the 0:07:57.560 --> 0:08:00.760 time and a huge difference in perform Rmans, right, And 0:08:00.840 --> 0:08:03.440 so I thought it was a great idea of bringing 0:08:03.440 --> 0:08:05.160 it back. How's it doing so far? 0:08:05.520 --> 0:08:08.160 Yeah, it's doing well. So lots of noise, but what 0:08:08.200 --> 0:08:09.720 we can see when we launched it, and we tested 0:08:09.800 --> 0:08:11.440 before we launched it, we re engineered it. 0:08:11.440 --> 0:08:14.200 We've talked about this. We basically just really looked and 0:08:14.720 --> 0:08:16.360 worked hard to make it work. 0:08:16.400 --> 0:08:18.840 For today, right, It was a promotion to your point 0:08:18.880 --> 0:08:22.640 that started and think two thousand and ten, right twenty ten. 0:08:22.760 --> 0:08:25.240 So it's a decade long promotion that at the. 0:08:25.120 --> 0:08:28.239 Beginning of the pandemic was changed and kind of pulled 0:08:28.240 --> 0:08:31.800 off of the menu. And I firmly believe that people 0:08:31.840 --> 0:08:34.319 need to count on count on brands for great a 0:08:34.360 --> 0:08:37.120 great value proposition. But when you're Denny's, right, and we 0:08:37.160 --> 0:08:40.439 are America's diner for today's America, we really got to 0:08:40.440 --> 0:08:41.520 meet consumers where they are. 0:08:41.520 --> 0:08:43.199 And for us, it was critical we. 0:08:43.280 --> 0:08:45.880 Bring back a fan favorite like two four, six eight 0:08:46.160 --> 0:08:48.480 put concept sort, you know, put all sorts of ideas 0:08:48.520 --> 0:08:51.240 in a concept sort. And clearly that one in our research, 0:08:51.360 --> 0:08:53.319 you know, still was at the top. So we went 0:08:53.320 --> 0:08:56.160 to our franchisees, talked long and hard about it, tested it. 0:08:56.400 --> 0:08:58.280 So how do we make this relevant for today a 0:08:58.320 --> 0:09:01.600 decade later? And we re engineered to in a way 0:09:01.640 --> 0:09:05.160 that really does help protect profitability and adding we had 0:09:05.160 --> 0:09:07.600 the two in the four dollar categories that are add on, 0:09:07.640 --> 0:09:09.360 so you've got to you've got to order an entree 0:09:09.400 --> 0:09:11.880 to get that add on that is protecting things as well. 0:09:11.920 --> 0:09:15.080 And then we've added a ten dollar category also and 0:09:15.120 --> 0:09:17.320 that lots of people were quoting back two for six 0:09:17.400 --> 0:09:17.720 eight ten. 0:09:17.760 --> 0:09:20.000 I'm like, no, just two four six eight two four 0:09:20.040 --> 0:09:20.480 six eight. 0:09:20.640 --> 0:09:22.480 But there are some ten dollars options that come with 0:09:22.559 --> 0:09:24.560 that menu when that menu is dropped in front of you. 0:09:24.640 --> 0:09:26.760 So we feel really good about what we're seeing. 0:09:27.000 --> 0:09:29.040 We can see, you know, the biggest preference is in 0:09:29.080 --> 0:09:32.440 the six and the ten dollars category, interestingly enough, and 0:09:32.440 --> 0:09:33.760 then we see a lot of those add ons in 0:09:33.800 --> 0:09:36.400 the two and the four dollars category as well. Again, 0:09:36.400 --> 0:09:38.800 I mentioned doing well in California for us, and then 0:09:38.840 --> 0:09:42.560 barring any of this other kind of external noise, it's 0:09:42.600 --> 0:09:44.360 been working really well for us. So I think you'll 0:09:44.400 --> 0:09:46.880 see us continue to kind of re engineer that think 0:09:46.880 --> 0:09:49.320 about what the consumer might need in this moment, and 0:09:49.440 --> 0:09:53.760 yet still keep that everyday value platform front and center 0:09:53.880 --> 0:09:55.800 for our guests that want to count on us. 0:09:55.880 --> 0:09:57.839 Yeah, the two and the four making those add ons 0:09:57.840 --> 0:10:00.440 I thought was a heady move. Those good. 0:10:00.440 --> 0:10:03.640 Have you talked about what percentage of sales value items 0:10:03.679 --> 0:10:06.000 represent and if there's been any change since the menu 0:10:06.080 --> 0:10:07.120 is relaunched. 0:10:06.800 --> 0:10:08.640 Since we relaunched it, yeah, I'd say we were in 0:10:08.679 --> 0:10:11.439 the mid to high teens in terms of mix or 0:10:11.480 --> 0:10:13.600 incidents or preference, whichever word you want to use. And 0:10:13.640 --> 0:10:15.880 I think right now we're at about twenty. So we 0:10:15.920 --> 0:10:19.480 do see we have seen that grow and we feel 0:10:19.559 --> 0:10:22.000 really good about where we're seeing. You know, like I said, 0:10:22.040 --> 0:10:24.040 the six and the ten dollar dollar categories being the 0:10:24.440 --> 0:10:29.480 really over indexing there and satisfaction scores, excitement around bringing 0:10:29.520 --> 0:10:31.400 it back, and we know it's got legs and momentum. 0:10:31.520 --> 0:10:33.760 You'll see us continue to innovate around what it looks 0:10:33.840 --> 0:10:35.760 like right what kind of new things we might bring 0:10:35.840 --> 0:10:36.760 in that platform? 0:10:37.760 --> 0:10:39.400 Great, what kind of lift do you see in with 0:10:39.440 --> 0:10:40.240 the remodels. 0:10:40.800 --> 0:10:42.120 Remodels are doing really well. 0:10:42.160 --> 0:10:44.400 It's called Diner two point zero, so it's this kind 0:10:44.400 --> 0:10:47.400 of modern version of America's diner. And we took the 0:10:47.440 --> 0:10:51.000 best of the previous remodel that wasn't very old. Actually 0:10:51.080 --> 0:10:52.800 I've only been in place for a year or so. 0:10:53.320 --> 0:10:55.679 That was called Heritage two point zero, and we took 0:10:55.720 --> 0:10:58.280 that and then we put in a few more went 0:10:58.320 --> 0:11:01.079 to guests, went to consumers, does it feel when you're here? 0:11:01.400 --> 0:11:03.320 And we lightened it up, brightened it up a little bit, 0:11:03.400 --> 0:11:06.240 and actually put a few more diner esque cues in it. 0:11:06.320 --> 0:11:08.800 We are America's diners, so we put a few more 0:11:09.040 --> 0:11:12.680 diner sques in place to really resonate and even just 0:11:12.720 --> 0:11:15.120 brighten up the image. So six and a half percent lift, 0:11:15.400 --> 0:11:18.920 we're seeing traffic sales six four I mean it's roughly 0:11:18.920 --> 0:11:19.599 the same. 0:11:19.320 --> 0:11:21.600 But over six percent. We're thrilled about that. 0:11:21.920 --> 0:11:24.480 And actually we're really excited about the conversations we've been 0:11:24.520 --> 0:11:27.720 having with franchisees and a stimulus package kind of leveraging 0:11:27.920 --> 0:11:30.199 our balance sheet and leveraging you know, what we can 0:11:30.200 --> 0:11:32.000 do our strength in terms of what we can do 0:11:32.040 --> 0:11:36.439 to help them. So we've reintroduced different stimulus programs. We've 0:11:36.480 --> 0:11:38.800 often done that, and historically I've always tried to say, 0:11:38.800 --> 0:11:42.360 we understand, we want the investment in our and improving 0:11:42.400 --> 0:11:45.160 our assets, and yet we understand, we understand, you know 0:11:45.280 --> 0:11:48.640 what it looks like for profitability and strengthening those franchisees 0:11:49.160 --> 0:11:50.160 business models. 0:11:50.160 --> 0:11:51.839 So the stimulus package and the. 0:11:51.760 --> 0:11:54.160 Things we're doing for them, we really are pretty excited 0:11:54.200 --> 0:11:56.320 about the momentum and how many remodels we can do 0:11:56.360 --> 0:11:59.040 this year. We're really excited about that. 0:11:59.160 --> 0:12:02.720 Great. You're making some changes to the loyalty program as well. 0:12:02.720 --> 0:12:05.720 Correct absolutely so. You know I've said this before. 0:12:05.720 --> 0:12:08.640 We have a decent database with a good amount of 0:12:08.640 --> 0:12:11.080 people in our database, but making it a best in 0:12:11.120 --> 0:12:17.319 class consumer friendly, really one to one marketing personalized journeys 0:12:17.520 --> 0:12:20.280 and really moving it from where it is today with 0:12:20.360 --> 0:12:22.480 a database and a lot of offers going into the 0:12:22.559 --> 0:12:25.480 database and lots of consumers that response, moving it to 0:12:25.640 --> 0:12:28.120 truly a CRM loyalty program with rewards. 0:12:28.559 --> 0:12:29.360 We're amping it up. 0:12:29.400 --> 0:12:32.880 We've invested heavily in a team, a team that has 0:12:32.920 --> 0:12:34.800 done this before, a team that's created these best in 0:12:34.840 --> 0:12:36.760 class class programs rather. 0:12:36.880 --> 0:12:39.360 And it's coming to fruition. It'll be right now. 0:12:39.800 --> 0:12:41.560 Back half of the year is when we know that 0:12:41.559 --> 0:12:44.360 that full scale launch will happen. But lots of work 0:12:44.360 --> 0:12:46.080 going on and lots of things that we're able to 0:12:46.120 --> 0:12:48.680 do right now just to kind of kick the tires 0:12:48.720 --> 0:12:51.720 on this new approach to it, and we're absolutely thrilled 0:12:51.720 --> 0:12:52.880 about what we'll be able to do soon. 0:12:53.880 --> 0:12:56.959 Okay, cool, you closed a bunch of units. I think 0:12:56.960 --> 0:12:58.880 it was eighty eight and twenty twenty four. 0:12:59.000 --> 0:13:00.920 Exploct to close some more or Dick year is this 0:13:01.000 --> 0:13:01.360 going to be? 0:13:02.200 --> 0:13:02.400 You know? 0:13:02.440 --> 0:13:04.880 I saw they were very low volume stores. Now one 0:13:04.880 --> 0:13:07.480 point one million AUVs. Is this going to be the 0:13:07.559 --> 0:13:10.120 last year of the outside store closures. 0:13:10.240 --> 0:13:12.240 So that the outside store closures. 0:13:12.240 --> 0:13:14.280 I love how you said that, right, because this is 0:13:14.280 --> 0:13:17.160 a brand that and like any other brand, you're always 0:13:17.240 --> 0:13:20.160 kind of working to call working to you know, prune, 0:13:20.520 --> 0:13:22.160 and that had always been the case prior to the 0:13:22.160 --> 0:13:24.719 pandemic for the brand one to two percent, right, and 0:13:25.160 --> 0:13:28.760 usually in a net positive position. Pandemic for everybody kind 0:13:28.760 --> 0:13:30.480 of reset things, and I called a reset. 0:13:30.600 --> 0:13:31.800 I haven't necessarily though. 0:13:31.840 --> 0:13:35.000 We talked about transformative thinking at Denny's in our strategy 0:13:35.400 --> 0:13:37.160 Rise of a New Day. When we brought that to 0:13:37.320 --> 0:13:40.000 investors in our five year roadmap, we were very clear 0:13:40.040 --> 0:13:41.800 about this is what it's going to take to just 0:13:41.880 --> 0:13:44.320 reset and get us back to net growth. 0:13:44.520 --> 0:13:46.080 That's the goal, get us back. 0:13:45.960 --> 0:13:48.560 To growing the Denny's brand like we had been doing historically. 0:13:48.920 --> 0:13:52.080 And so for us, that fife fifty is total. It 0:13:52.160 --> 0:13:54.760 was about last year in twenty four it was eighty seven. 0:13:55.559 --> 0:13:56.880 You might have eighty eight, right, I think it was 0:13:56.920 --> 0:13:59.720 eighty seven, but you're so closed. And then this year 0:13:59.760 --> 0:14:03.120 we've guided to arrange that is about the same, and 0:14:03.160 --> 0:14:06.240 that guidance is about saying yes, we will rip that 0:14:06.280 --> 0:14:08.720 band aid off if you will, to strengthen the rest 0:14:08.720 --> 0:14:11.440 of the portfolio and help strengthen our franchise. These models, 0:14:11.800 --> 0:14:13.920 and we know what this can do for us. We've 0:14:13.920 --> 0:14:16.959 also talked about and have been very overt about saying 0:14:17.240 --> 0:14:20.160 for us, it's a path to creating greater AUVs and 0:14:20.200 --> 0:14:23.840 a stronger portfolio for the whole brand. Right now, one 0:14:23.920 --> 0:14:27.240 eight we open new is the average unitt bonds. One 0:14:27.280 --> 0:14:30.280 eight we open new locations, Michael, and they're two two, 0:14:30.400 --> 0:14:34.680 two three and sometimes even higher. So culling that bottom 0:14:34.760 --> 0:14:38.040 and then again really working the strength of portfolio. We've 0:14:38.040 --> 0:14:39.960 said we want to go from one eight to two 0:14:40.040 --> 0:14:42.160 two in a five year timeframe, and that's what we 0:14:42.280 --> 0:14:45.200 laid out in our model, in our long term roadmap. 0:14:45.520 --> 0:14:47.240 And that's that's a quarter of it. 0:14:47.320 --> 0:14:49.400 It's twenty five percent of it really because of what 0:14:49.440 --> 0:14:53.480 it will do to increase sales and increase the AUVs, 0:14:53.680 --> 0:14:56.600 because of those under you know, just under their lower volume, 0:14:56.640 --> 0:14:59.720 and it makes some changes there. This was a long 0:15:00.440 --> 0:15:03.800 path to get there and to announce it well underway, 0:15:04.000 --> 0:15:07.920 you know, earlier in the twenty three into twenty twenty 0:15:07.960 --> 0:15:10.560 three and conversations with franchisees about what does this do 0:15:10.640 --> 0:15:14.040 for the health of your business? No one likes doing closures. 0:15:14.320 --> 0:15:17.440 It's the only thing talked about when we talk. And 0:15:17.480 --> 0:15:18.920 I can't wait till we get to the other side, 0:15:18.960 --> 0:15:21.280 because we will, and we'll show the strength of the 0:15:21.320 --> 0:15:24.800 Denny's brand again and getting to modest growth, but getting 0:15:24.840 --> 0:15:27.640 to growth, net growth by twenty six. So will there 0:15:27.680 --> 0:15:30.200 be some after twenty five, sure, but it will. It 0:15:30.280 --> 0:15:32.240 is about you will see us in a net growth 0:15:32.400 --> 0:15:33.720 environment by twenty twenty six. 0:15:33.800 --> 0:15:34.280 DESTI goal. 0:15:35.800 --> 0:15:39.360 Yeah, it's been ten years since I covered Denny's, almost 0:15:39.360 --> 0:15:42.640 eleven now, but yeah, I remember John Miller telling me that, like, 0:15:42.760 --> 0:15:45.320 you know, for a brand of that's been around as 0:15:45.320 --> 0:15:47.920 long as Denny's, two percent a year was pretty much 0:15:47.960 --> 0:15:50.120 standard operating rights seizure. 0:15:50.320 --> 0:15:54.360 Right, Okay, cool. Do you expect to get a seam 0:15:54.360 --> 0:15:56.800 store sales boosts to share from the closures? 0:15:57.720 --> 0:16:00.000 Oh, that's a that's a good question. 0:16:01.120 --> 0:16:03.720 I do expect it. Where it really depends on where 0:16:03.720 --> 0:16:06.400 those end up happening. And we obviously have that roadmap 0:16:06.400 --> 0:16:08.760 in front of us and have that physical map, but. 0:16:08.720 --> 0:16:10.480 There's still probably still too soon to. 0:16:10.440 --> 0:16:13.760 Tell that immediate in twenty five, you know, change or 0:16:13.760 --> 0:16:16.920 delta there just given. Is it a high density market, 0:16:16.960 --> 0:16:20.280 is it not? Is it closing because the trade area 0:16:20.360 --> 0:16:21.120 moved on us? 0:16:21.280 --> 0:16:23.960 Or is it a least situation? So it's all those things, right. 0:16:24.600 --> 0:16:27.840 The analysis shows us that it's one of four or 0:16:27.880 --> 0:16:30.800 five different things that could be a reason, so hard 0:16:30.800 --> 0:16:31.120 to say. 0:16:31.200 --> 0:16:34.920 Hard to say yet, Kiki's expansion is pretty robust. 0:16:35.440 --> 0:16:36.920 Can you talk about AUV. 0:16:36.760 --> 0:16:40.080 Restaurant level margin, cash on cash returns, any other unit 0:16:40.120 --> 0:16:41.600 economic data you can share there. 0:16:41.720 --> 0:16:44.080 Yeah, So we've been talking a little bit more, you know, 0:16:44.160 --> 0:16:46.160 as of late about some of those things, and we 0:16:46.200 --> 0:16:49.440 are really excited. So to capsize the growth, the aggressive 0:16:49.440 --> 0:16:52.040 growth gone from one to seven states. They did that 0:16:52.120 --> 0:16:56.360 almost overnight. I'm super proud of the Kiki's team led 0:16:56.360 --> 0:16:59.120 by Dave Schmidt, formerly of Bloomin Brands, so he's got 0:16:59.120 --> 0:17:02.360 great experience from the portfolio perspective. I worked with them 0:17:02.360 --> 0:17:04.639 for a brief stint and bringing them over. He's the 0:17:04.680 --> 0:17:06.720 right leader for this brand and they've done amazing things. 0:17:06.760 --> 0:17:09.160 So that one to one to six happened in about 0:17:09.160 --> 0:17:12.080 seven weeks in the fourth quarter. They are now soon 0:17:12.200 --> 0:17:14.879 going to be taking vacations late late March April, but 0:17:15.600 --> 0:17:17.240 they going from one. 0:17:17.840 --> 0:17:21.400 The seventh state was Georgia, was an existing Kiki's franchise. 0:17:21.440 --> 0:17:22.879 So it's been rapid growth. 0:17:23.160 --> 0:17:25.200 Spent a lot of time integrating a bit of time 0:17:25.320 --> 0:17:28.199 early on integrating it into our systems, making sure that 0:17:28.240 --> 0:17:30.560 we really understood the brand because it's a unique brand 0:17:30.600 --> 0:17:33.679 that had never gotten outside of Florida. Founder led so 0:17:33.720 --> 0:17:35.520 in that case really had to put a lot of 0:17:36.320 --> 0:17:39.240 you had to put some place, if you will. And 0:17:39.440 --> 0:17:42.360 having done that now we've been really. 0:17:42.960 --> 0:17:45.480 Really focused on the growth and really really pleased. 0:17:45.520 --> 0:17:50.040 So the AAVs they're greater outside of Florida than actually 0:17:50.040 --> 0:17:50.639 what they were. 0:17:50.560 --> 0:17:51.399