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FDD Talk 2017: What You Need to Know About the Denny’s Franchise Opportunity (Financial Performance Analysis, Costs and Fees)

by Franchise Chatter on July 16, 2017

in Casual-Dining Restaurant Franchise, FDD Talk 2017: Food Franchises, Franchise Earnings

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Denny's Franchise Photo by AnnaleeBlysse

In this FDD Talk 2017 post, you’ll learn the following:

  • Section I – Background information on the Denny’s franchise opportunity, including relevant news updates
  • Section II – Estimated initial investment for a Denny’s franchise, based on Item 7 of the company’s 2017 FDD
  • Section III – Initial franchise fee, royalty fee, marketing fee, and other fees for a Denny’s franchise, based on Items 5 and 6 of the company’s 2017 FDD
  • Section IV – Presentation and analysis of Denny’s financial performance representations, based on Item 19 of the company’s 2017 FDD, including information on the:
  • 2016 average net sales; food costs; crew labor; management labor; gross profit; taxes/fringe benefits; utilities; repairs and maintenance; other expenses; and EBITDA before royalties, advertising, occupancy cost, and management fees for the Top Third, Middle Third, and Bottom Third of the 156 Denny’s restaurants owned and operated by the company in the United States during the twelve month period beginning December 31, 2015 and ending December 28, 2016, excluding only those restaurants which were open for only part of such period
  • 2016 average sales for the 156 company-owned and 1,381 franchised Denny’s restaurants that were open the entire calendar year

Section I – Background Information

15 Things You Need to Know About the Denny’s Franchise

Denny’s on Demand

1.  At the end of May, Denny’s announced that it would start offering online ordering with “Denny’s on Demand.” Guests now have a quick and easy way to place a mobile or online order for takeout or delivery (where available).

2.  John Dillon, Chief Marketing Officer for Denny’s, says that Denny’s on Demand is the result of the brand’s “commitment to leveraging new technology to reach a wider audience and make it even more convenient for today’s virtually-connected guests to enjoy their favorite diner dishes.”

3.  To make Denny’s on Demand happen, Denny’s partnered with digital ordering provider Olo to revamp the brand’s mobile app to make it easier for customers to find their local Denny’s restaurant, customize and place an order, and pay for takeout or delivery (where available) through Olo’s Dispatch delivery network. The app also allows customers to schedule a pickup or delivery time, track their order, and view their order history. Online ordering is available 24/7.

4.  In addition to the new app and online platform, Denny’s will be one of the first brand’s to utilize a new online ordering functionality through Twitter, which customers can use to select and order their food all from within a Direct Message. Customers will also be able to place orders on Facebook at any time through Denny’s branded Chatbot and other on-page options.

5.  To celebrate the release of Denny’s on Demand, new and unique Snapchat filters are now available so customers can share their ordering experiences.

6.  Denny’s has also released new, custom-designed takeout packaging that is microwaveable and made from sustainable materials, including recyclable plastics and papers. The new boxes have a variety of Denny’s tweets printed on them.

New Chief Information Officer

7.  In late May, Denny’s announced that the company had appointed Michael Furlow as Senior Vice President of Information Technology and Chief Information Officer. Furlow comes to Denny’s with more than 30 years of restaurant and technology experience. He most recently served as Chief Information Officer at Red Robin Gourmet Burgers.

8.  In his new role, Furlow will be responsible for leading all aspects of Denny’s IT functions, influencing the company’s business performance through the implementation of technology.

$1 Million Donation to Help End Childhood Hunger

9.  At the beginning of 2017, Denny’s announced that it would be donating $1 million this year to No Kid Hungry in an effort to end childhood hunger in the U.S. This is the largest contribution Denny’s has made to No Kid Hungry and the donation will help serve 10 million meals to children in need. Since partnering with No Kid Hungry six years ago, Denny’s has donated over $4.3 million to the organization.

10.  Denny’s raised the money for this year’s donation from September through mid-December of 2016, through $1 in-store donations from its guests and also through a social media campaign in which Denny’s donated $1 every time a customer shared a food picture with the hashtag #ShareMySlam on Twitter and Instagram. Denny’s also asked customers to donate online through a branded No Kid Hungry link.

Latest Limited-Time Offerings

11.  Denny’s most recent limited-time menu was the “Big Burger Show,” which ran from March 21 to May 29. The new menu featured six craft burgers, each hand-pressed and made to order with premium ingredients and served with a choice of wavy-cut French fries, hash browns, seasonal fruit, or dippable veggies.

12.  There were two new burger options, the Bacon Gouda Burger and the Honey Jalapeno Bacon Sriracha Burger, as well as four Denny’s classics, the Slamburger, Bacon Avocado Cheeseburger, Bourbon Bacon Burger, and Double Cheeseburger.

Company History

13.  Harold Butler and Richard Jezak opened Danny’s Donuts in Lakewood, California in 1953. A year after Jezak left the company in 1955, Butler changed the concept from a donut shop to a 24-hour coffee shop and rebranded the business to Danny’s Coffee Shops. In 1959, to avoid confusion with Los Angeles restaurant chain Coffee Dan’s, Butler changed the name once again, this time to Denny’s Coffee Shops. Eventually, Butler dropped the rest of the name and simply started calling the restaurants Denny’s.

14.  Franchising began in 1963 and by the beginning of the 1980s, there were over 1,000 locations in all 50 states. Today, there are over 1,700 Denny’s restaurants around the world.

Entrepreneur’s Franchise 500

15.  Denny’s has appeared on Entrepreneur’s annual Franchise 500 list every year in the last decade. The company’s highest rank was No. 7 in 2012, while its lowest rank was No. 57 in 2017.

Section II – Estimated Costs

  • Please click here for detailed estimates of Denny’s franchise costs, based on Item 7 of the company’s 2017 FDD (updated).

Section III – Initial Franchise Fee, Royalty Fee, Marketing Fee, and Other Fees

  • Please click here for detailed information on Denny’s initial franchise fee, royalty fee, marketing fee, and other fees, based on Items 5 and 6 of the company’s 2017 FDD.

Section IV – Financial Performance Representations (Item 19, 2017 FDD) and Analysis

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