FDD Talk: Forecasted Operating Results for Denny’s Cafe (A New Concept with Limited Hours of Operation)

Highlights of Denny’s Item 19 Financial Performance Representations (2011 FDD) – Part 2

Section III – Forecasted Operating Results for Denny’s Cafe

• The forecasted and estimated net sales for Denny’s Cafe utilizes, as an initiation point, the $1,431,000 average 2010 sales of franchised and company-owned restaurants. The existing Denny’s franchised and company-owned restaurants which make up this average are generally open 24 hours a day. The forecast assumes that the net sales performance of Denny’s Cafe would be the same as that of the average restaurant but adjusted for the limited hours of operation at Denny’s Cafe, expected to be:  Sunday – Thursday 7 am to 10 pm, and Friday – Saturday 7 am to 12 midnight.

• Sales at Denny’s restaurants are broken down into four dayparts – breakfast, lunch, dinner, and late night. The forecasted net sales for Denny’s Cafe assumes that, as a result of the limited hours, the net sales for late night will be 85% less.  The $1,200,000 net sales is the result.

• Food costs were estimated by utilizing the food cost, food waste, and indirect food cost averages of all company-owned Denny’s restaurants, which carry the entire Denny’s menu. These averages were then adjusted and reduced through the utilization of estimated incidence rates for the limited menu designated for Dennys’ Cafe. The detailed calculations will be made available to a prospective franchisee upon reasonable request.