Denny's 3Q profit dips as consumers eat in more

SPARTANBURG — Denny's Corp. said its third-quarter profit slipped as consumers continued to eat at home more often amid the recession.

Consumers also often spend less when they eat out as they try to conserve cash.

President and CEO Nelson Marchioli said in a statement that the restaurant operator will try to boost its sales by creating new products at affordable prices.

Denny's said late Thursday that its earnings dropped 6 percent to $10 million, or 10 cents per share, compared with $10.6 million, or 11 cents per share, a year ago.

The performance managed to top the 7 cents-per-share estimate of analysts surveyed by Thomson Reuters. Analysts' estimates typically exclude one-time items.

While Denny's profit was better than expected, its sales came up short.

Operating revenue for the period ended Sept. 30 fell 23 percent to $146.1 million from $189.3 million on a decline in company restaurant sales.

The results missed Wall Street's estimate of $152.7 million.

Sales at restaurants open at least a year declined 6.6 percent at company locations and 7.3 percent at those run by franchisees.

This figure is a key indicator of restaurant operator's performance since it measures growth at existing stores rather than newly opened ones.

Denny's now anticipates a bigger decline for 2009 sales at company-run restaurants open at least a year. It expects a drop-off of 3 percent to 3.75 percent, compared with an earlier forecast for a decline of 1 percent to 3 percent.

The restaurant operator also said it now expects 2009 sales at franchise restaurants open at least a year to come in at the low end of its outlook for a 3 percent to 5 percent decline.

Denny's has 1,289 franchised and licensed restaurants and 256 company-owned restaurants.

The company's stock fell 32 cents, or 12 percent, to $2.34 in midday trading. Over the past year, the shares have traded in a range of $1.15 to $3.10.