The casual operator implemented work-reduction furloughs for employees.
In an update, Denny’s said Tuesday that U.S. same-store sales fell 19 percent in March and that it’s implemented salary cuts and work-reduction furloughs to limit spending.
Denny’s reported that U.S. same-store sales are expected to decrease 6 percent in Q1 year-over-year. The brand began the quarter on a positive note, with comps growing more than 2 percent through February—higher than the company’s projection. But the pandemic stifled growth in March, and sales began to decline.
The chain said the “overwhelming majority” of restaurants are still operating via takeout and delivery. Some have reduced menus and hours. There have been no issues with the supply chain, the brand noted.
Base salaries have been reduced for CEO John Miller, President Mark Wolfinger, CFO Robert Verostek, and other executives, officers, and director level employees. Compensation has also been reduced for non-employee board members.
Denny’s is thinking about reducing weekly work hours from 40 to 32 and applying for federal tax credits or forgivable loans as outlined in the stimulus package, or CARES Act. The package provides $349 billion in forgivable loans to small businesses. Companies with 500 or fewer employees qualify. Since the provision is based on the amount of employees at one location, not overall, franchisees and corporate stores of major chains are eligible. The other option is payroll tax credits for companies who have been fully or partially suspended due to the virus or can prove a 50 percent or more decline in revenue compared to the prior year period
To support franchisees, the company deferred remodels and provided other “temporary limited relief.” Denny’s has spoken with vendors, landlords, and lenders about other cost-saving options. The brand suspended all travel, placed a hold on all open positions, and converted in-person team meetings to video conferences.
“The company remains focused on the safety and wellbeing of its guests, restaurant teams, franchisees, employees and suppliers,” Denny’s said in a filing. “Additional retraining materials and communications have been distributed to the entire system of restaurants reinforcing strict food safety procedures, handwashing and personal hygiene standards, and enhanced daily deep cleaning protocols. The company has remained in close contact with public health officials and government agencies to ensure all public health concerns are appropriately addressed.”