Denny's Corp (DENN) 2011 Q2 法說會逐字稿

Good afternoon. My name is Patrick, and I will be your Conference Operator today. At this time, I would like to welcome everyone to the second quarter 2011 earnings release. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. (Operator Instructions)

I would now like to turn the call over to Director of Investor Relations, Whit Kincaid to begin, sir.

Thank you, Patrick. Good afternoon, and thank you for joining us for Denny's second quarter 2011 investor conference call. This call is being broadcast simultaneously over the Internet. With me today from Management are John Miller, Denny's President and Chief Executive Officer, and Mark Wolfinger, Denny's Executive Vice President, Chief Administrative Officer and Chief Financial Officer. John will begin today's call with his introductory comments. After that, Mark will provide a financial review of our second-quarter results, and I will provide an update to Denny's 2011 full-year guidance. As a reminder, the 10-Q will be filed by Monday, August 8.

Before we begin, let me remind you that in accordance with the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995, the Company knows that certain matters to be discussed by members of Management during this call may constitute forward-looking statements. Management urges caution when considering it's current trends and any outlook on earnings provided on this call. Such statements are subject to risk, uncertainties and other factors that may cause the actual performance of Denny's to be materially different from the performance indicated or implied by such statements. Such risk and factors are set forth in the Company's annual report on Form 10-K for the year ended December 29, 2010, and in any subsequent quarterly reports on Form 10-Q.

With that, I will now turn the call over to John Miller, Denny's President and CEO.

Thank you, Whit. Well our quarter results represent our ongoing success as America's favorite diner. We're achieving this through consistent brand execution leveraging our 3 primary marketing strategies, these are delivering everyday affordability, creating compelling limited time only product offerings and driving sales beyond breakfast. Denny's delivered positive sales, guest counts, increased profitability and cash flow in the second quarter. In addition, along with our new unit development and debt reduction activities, we have continued to return value to our shareholders through our stock repurchase program. Our intention is to continue this momentum despite the challenging economic environment with inflationary pressures that continue to be a drag on our business and the disposable income of our guests.

While the Easter spring break shift benefited the second quarter by approximately 0.4 percentage points, guest counts outpace this benefit and continue to grow even as we rolled over the anniversary of our 2-4-6-8 value menu launched in April of last year. Over the last 12 months, we have grown guest counts 0.6% despite consistently high unemployment and rising energy costs. Our guests appreciate both the value and innovation we continue to provide and have rewarded us accordingly.

Understanding that our guests is our value, our 2-4-6-8 value menu was showcased on the flip side of one of the more successful marketing efforts we have launched, a limited time Baconalia menu. Keying on America's infatuation with bacon, we developed 6 new craveable unique entrees priced between $4.99 and $8.99, with offerings geared to breakfast, lunch and dinner. During the promotion, the 2-4-6-8 menu mix moved down into the high teens off of the low 20% mix seen during the post holiday value season. The performance was in line with our expectations and consistent with our barbell pricing strategy.

In early June, we launched our newest module called Tour of America, featuring 6 new exciting entrees inspired by the unique local cuisine found in various regions of the United States. In addition, we launched our iced coffee offerings nationwide, which along with our real fruit smoothie offerings, provide attractive guest building opportunities for our restaurants as well as meaningful ways to attract new guests. As we stated during our first quarter conference call, the key to our collective success in 2011 will be the balance of everyday affordability and limited time only products. Our limited time only offerings leveraged Denny's core strength as a diner and drive consumer interest while delivering the enhanced dining experience for our guests.

With the continuing challenges of the economic environment and the movement into the more value focused back-to-school season, we will shift a portion of our media weight back to our 2-4-6-8 value menu reminding our guests of the compelling value Denny's provides to fit their budget on a more frequent basis. These items, while lower in price than a typical entree, have been engineered to not have a negative impacted to product cost. As a reminder, in the third quarter of last year we achieved positive 2.3% same-store traffic, which was the highest seen since the first quarter of 2005, offset by a negative 2.9% same-store guest check average. The strong traffic results were driven by the 2-4-6-8 value menu, attractive limited time only products, like skillets that started at $3.99 and build your own omelettes, and the relative improvement in the overall economic conditions.

Turning to growth, we opened 19 few units in the second quarter, after opening 136 new units in 2010, which was the highest number of domestic openings in the Company's history. Denny's has opened 173 new units since the beginning of 2010 and 156 units on a rolling 12-month basis. We continue to execute the Flying J program as we opened 7 additional Flying J conversion sites, bringing the Flying J program total to 119 openings. We remain on track to complete the 25 conversions outlined in our annual guidance. Of the 7 sites converted in the second quarter, 6 were converted by franchisees, and 1 was converted by the Company. The program to date totals show 92 franchise and 27 Company Flying J conversions.

In addition to the Flying J openings, our franchisees and licensees opened 9 traditional units, 2 international units, 1 in Honduras and 1 in Costa Rica, and 1 new Pilot Travel Center location. While there were no university locations during the second quarter, we are maintaining our guidance of 10 university locations during 2011. We have opened a total of 8 university locations since January 2010, 2 of which opened at the first quarter of 2011, demonstrating the attractiveness of the Denny's brand in these new distribution points. We are excited about completing the Flying J conversions and are working closely with our franchisees and licensing partners to continue growing the Denny's brand through traditional and non-traditional venues most domestically and internationally.

Our profitability remains on tract despite the current commodity pressures that are providing headwinds for the restaurant industry. Our growing free cash flow has enabled us to continue strengthening our balance sheet and return cash to shareholders. The results of our second quarter have outperformed our recent history and yet there is still much work ahead. In an economic environment that has been unforgiving to our guests, and in the category focused on differentiation, we will continue to work diligently to improve upon these results in order to deliver shareholder value. It's an exciting time for our Company and I remain committed to helping differentiate Denny's and executing successfully to further strengthen our position as America's favorite diner in 2011 and beyond. With that, I'll turn the call over to Mark Wolfinger, Denny's Chief Financial and Chief Administrative Officer. Mark?

Thank you, John, good afternoon, everyone. Our strong second-quarter performance with positive same-store sales and guest counts and a 55% increase in adjusted income before taxes demonstrate the success of our franchise-focused business model which has enabled us to grow free cash flow, strengthen our balance sheet and return value to shareholders through share repurchases. Denny's had new system growth of positive 12 units in the quarter after opening 19 new units, closing 6 franchise units and 1 Company unit. In addition, we sold 1 Company restaurant to a franchise operator. In the second quarter, system wide same-store sales increased 2%. Same-store sales at Company restaurants increased 2.6% and same-store sales at franchise restaurants increased 1.8%. This is the first time both Company and franchise same-store sales have been positive since the third quarter of 2007.

Looking at the details for Company sales performance, we saw same-store guest count increase of 1.4% in the quarter. This is the first time both same-store sales and guest counts have been positive since the third quarter of 2006. In the second quarter, guest check average increased by 1.2%. This represents a significant improvement relative to the negative same-store guest check declines seen in the prior fourth quarters that were driven by the 2-4-6-8 value menu which was launched nationally in the beginning of the second quarter of 2010. The higher guest check average was primarily driven by product mix with a lower incidence of 2-4-6-8 and a higher mix of higher priced limited time only, or LTO products. In addition, a small portion of the increase in guest check average was driven by the less than 1% price increase implemented with our new core menu rolled out in the middle of June.

The decline in total Company restaurant sales in the second quarter largely reflects the continuing impact of our franchise growth initiative, or FGI, as Company sales decreased $1.3 million, or 1%, primarily due to 11 fewer equivalent Company restaurants compared with the same period last year, which was offset by the 2.6% increase in same-store sales for the quarter. Denny's total operating revenue, including Company restaurant sales and franchise revenue increased by $800,000 compared to the prior year quarter. This marks the first quarter of total operating revenue growth since the fourth quarter of 2006.

I will now turn to the quarterly operating margin table. The Company operating margin decreased by 0.05 percentage points in the second quarter, and was primary impact by the following items I will discuss in more detail. Payroll and benefits costs decreased by 0.4 percentage points to 40.8% of sales, primarily due to improved scheduling of restaurant staff, partially offset by an increase in performance-based compensation and higher state unemployment taxes. Product cost increased by 1.3 percentage points to 24.36% of sales, primarily due to the impact of increased commodity costs. Other operating costs decreased by 0.5 percentage points to 14.7%, primarily driven by the 0.5 percentage point decrease in marketing expenses due to the 2010 media spending related to Super Bowl and the testing of the 2-4-6-8 value menu in the prior year. In summary, the gross profit from our Company operations decreased by $600,000 on a sales decline of $1.3 million.

The second quarter of 2011, Denny's reported franchise and license revenue of $31.8 million compared with $29.8 million in the prior year quarter. The $2 million increase in franchise revenue was primarily driven by a $2.1 million increase in royalties offset by a $100,000 decrease in occupancy revenue. The higher royalty revenue was due to 120 additional franchise equivalent restaurants. Franchisees opened 18 units in the second quarter of this year compared to 8 units in the prior year quarter. The franchise openings this quarter included 9 traditional units, 6 Flying J Travel Center conversions, 2 international locations and 1 new Pilot Travel Center location. In addition to opening 18 franchise units during the second quarter, Denny's franchisees closed 6 restaurants, including 1 relocation.

Franchise operating margin increased by $2 million to $20.7 million in the second quarter. This increase was primarily driven by the $2.1 million increase in royalties, a $100,000 decrease in direct franchise costs offset by the $100,000 decrease in occupancy margin. The decrease in occupancy margin is primarily driven by the impact of lease terminations and closures. Franchise operating margin as a percentage of franchise and licensed revenue was 65.2%, an increase of 2.6 percentage points compared with the prior-year quarter. So franchise margin increase was primarily due to the higher royalties and lower direct franchise cost offset by the lower occupancy and margin. The franchise side of our business contributed 60% of the gross profit, which is $6.8 million more than our Company restaurants. This income shift allows us to reduce the risk and increase the predictability of our earnings.

Total general and administrative expenses for the second quarter increased by $1 million from the prior-year quarter. This increase was primarily due to an increase in share-based compensation expense. Other general and administrative expenses decreased by $300,000 from the prior year quarter, due to $1.5 million in proxy contest costs incurred in the prior year quarter, offset by higher performance-based compensation accruals and an increase in headcount, including Executive positions that were vacant in the prior year quarter. Depreciation and amortization expense declined by $100,000 compared with the prior-year period.

Operating income for the second quarter increased by $800,000 from the prior-year quarter to $13.7 million, primarily due to the $2 million increase in franchise margin partially offset by the $600,000 decrease in the gross profit from our Company operations. Although operating income interest expense for the second quarter decreased by $1.6 million, or 24.8%, to $4.9 million as a result of the lower interest rates under the refinanced and repriced credit facility and a $20.3 million reduction in total gross debt over the last 12 months, we believe the best measure that reflects the impact of ongoing earnings of our business is adjusted income before taxes. In the second quarter, adjusted income before taxes was $9.6 million, a 55% increase year over year.

Moving on to capital expenditures. Our year-to-date cash capital spending was $8.9 million, an increase of $2.6 million compared with the prior year. The increase was driven by a $3.7 million increase in new construction expenditures reflecting the impact of opening 6 Company owned Flying J's this year, 14 new Company owned units in the fourth quarter of 2010 and the timing of payments related to the 4 Flying J units we open in the first quarter of the prior year. The transition to a franchise-focused business model and improved operating performance has allowed us to continue to strengthen our balance sheet as we repaid another $10 million in term loan debt in the second quarter.

We have reduced total debt by $310 million, or 56%, since the end of 2005, lowering interesting expense by $32 million when comparing full year 2005 to the last 12 months. Our totaled debt to adjusted EBITDA ratio was 3.2 times compared to 5.1 times at the end of 2005. The cost of our debt is currently 5.25% compared to 7.7% 12 months ago. We will continue to allocate part of our free cash flow to repay debt as it creates a stronger franchiser and will give us additional flexibility on the use of our free cash flow. We repurchased 1.8 million shares in the second quarter as part of the $6 million stock repurchase program announced at the beginning of the second quarter. We have repurchased a total of 4.8 million shares when you include the $3 million stock repurchase program approved last November and completed in the first quarter.

That wraps up my review of our second quarter results. I will new turn in the call back over to Whit who will speak to our full year 2011 guidance.

Thank you, Mark. Based on year-to-date results and Management's expectations at this time, Denny's is updating the same-store sales portion of its financial guidance for full year 2011 to reflect a positive same-store sales and guest counts in the second quarter. We now expect both Company and franchise same-store sales to range from negative 1% to positive 1% compared to our prior range of negative 2% to positive 1%. We are currently expecting commodities to increase in the mid to high 4% range, which is slightly higher than the outlook given during our first quarter earnings call. Strategically, we remain focused on increasing the relative price value gap between ourselves and our competitors, which is why the new core menu launched in June had less than a 1% price increase.

Our profitability remains on track. We remain optimistic, but cautious, due to the challenging economic environment and inflationary pressures impacting our customers and our business. That wraps up our guidance commentary. I will now turn the call over to the Operator to begin the Q&A portion of our call.

(Operator Instructions)Michael Gallo from CL King.

Hi, good afternoon and congratulations on good results in obviously a difficult environment. My question is for John. John, you've been there for-- been here for 6 months now, I was wondering if you can give us just a little more on your vision for the Denny's brand, where some of the opportunities are, where you ultimately want to take this, and just sorts of 6 months in what's your initial impressions are and where you see some of the greatest areas for opportunity? Thank you.

Sure, Mike, I appreciate that, I feel like I've been here 5 years, 6 months have covered a lot of ground and logged a lot of air miles visiting with franchisees. And mostly our larger operators, Michael, not the smaller ones just yet, although back half of the year, I'll start to focus on some of the more onesie and twosie owners and get their perspectives which I think will-- I expect mostly the same as the larger operators as the-- whether big or small the issues are largely the same. There's concern about commodities right now near term and longer term not quite so much concern. When you think about the brand and the vision and it's positioning in the market place, the competitive environment, that's where the heart of our system, where we spend most of our emotional energy and how we as an officer team try to craft initiatives to carry the brand forward, they're along the lines rally of how the consumer connects to the brand and how they're emotionally connected. So you're likely going to hear us continue to talk about the same kind of things. We'll talk a lot about the diner positioning and really bringing that to life.

We believe that you see in our 3 primary marketing initiatives that we talk about every day value in making sure that, that's not just seen by the consumers in LTO, but longer term that I don't really have to shop prices there all the time. We think there's a benefit to that. Sometimes we'll dial it up. Sometimes we'll dial it back a little, but we want that to be evident to consumers as a competitive advantage. And then you hear us talk about LTO strategies that are not just barbell, but they play along the lines of diner. We think that's a strength to have, a competitive advantage over casual that we can serve breakfast all day. But we also think it's an advantage to have our beyond breakfast initiatives come to life a little more, and those have been a little bit more latent in recent years, we've talked a lot about breakfast. And so this diner positioning can be unique to us in the mid-scale segment and we want to make sure that comes to light. And we do believe we're starting to get traction from socializing that new position that started frankly just a couple of quarters ago. And so I don't think it should surprise anybody that's in ear shot of this call today that, that'll be the focus of the Management team, and it's also the focus of our franchise community.

And can you -- obviously we see it in the second quarter, results to some degree, but I was wondering if you can just help us with a little of the diner positioning of what you're seeing in sort of the lunch and dinner day part, whether you're seeing signs of improvement there? Obviously traditionally Denny's has had a strong breakfast positioning, but hadn't really had a lot of success positioning the brand in some of those other day parts.

Well yes, I'd be happy to talk about that. I think that if you look at just the second quarter, one of the things that benefited us is not just now that we're a year into every day value with our 2-4-6-8 value menu, but also the other end of that barbell working a little harder. So you see the incidents of the value menu dialing down a few percentage points, and the -- not just premium items, but non-breakfast items dialing up in their interest among our core consumers. So I wouldn't go so far as to say that we've -- we have a whole new group of customers, that these are broadening strategies that have really dialed in at this early stage, but what I would say is among our fans there's been a little bit higher trial for menu items that weren't just breakfast, and that these are starting to work from, as evidenced both in check and as in evidenced by product mix. And we've started with a safe one, we did baconalia. It's pretty easy to assume people like bacon on just about anything and we played off of that, and it performed very well for us. So along those same lines, you'd expect to see more LTOs that play off the strength of that every day diner occasion and not just breakfast all day, although we won't abandon that as a strength.

All right. Great, thanks very much.

[Will Clayboth] from Stevens.

Hello, guys, congrats on the quarter. We've seen some of your competitors here recently put up somewhat disappointing traffic numbers. Just wondering if you think there's something that you're doing that they're not, and something that you can maintain? And what gives you confidence there that you can continue to outperform some of these competitors as they try to push more value message as it seems in the current environment?

Well I think the short answer and probably the best answer is we don't have confidence, we're like deer, we're always nervous. And so we're excited about our quarter, and we have noble, highly capable competitors out there, so I think that's probably the best answer I can give you.

Okay. And then wondering if you could update us on your commodity basket, how much is locked in number there, and if you're seeing any opportunities around purchasing, controlling waste to help mitigate that pressure.

Yes well, this is Whit, yes so our-- like we've said for our commodities, we're locked into is it's almost 90% for 2011. So-- and we're-- for the remaining portion of this year, and that's really August through December, we're locked in to around 70% of our items. The items we still have exposure to are pork and fresh produce. And pork, I know we mentioned this in our last call, is that we're locked into 70% of our bacon purchases through the end of the third quarter. So-- and so that's kind of on the commodity side of the equation, and what was your last-- the second part of your question?

Yes, I just wondering if you saw any opportunities out there with-- through purchasing, controlling waste, anything like that to help mitigate that cost pressure?

Yes I mean I think like a lot-- most people the industry, we're certainly looking at all aspects and ways where we can mitigate these inflationary pressures. And yes it's something we've continued to look at going back over the last few years and we're going to continue to work on into the future.

Okay. Great. Thanks, guys.

(Operator Instructions)Tony Brenner from ROTH Capital Partner.

Thank you. Whit, did you say fleetingly that Denny's should raise menu prices by about 1% in June, did I hear that right?

That's correct, Tony. Yes, we-- so with our June, our new core menu that was launched in June, that include a small price increase, it was less than 1%.

Okay. And John indicated that a portion of your promotional efforts would shift back to the 2-4-6-8 menu this quarter, but implied by saying it shouldn't affect product costs, that -- I think that implies that it might not affect margins either, which kind of puzzles me a little bit. Why would that be?

Well it's really -- these products have been engineered to be I would say product-- kind of margin friendly on a percent margin basis. So obviously from a dollar--

Well, if it's-- I mean if you can do that, why hadn't that worked in the previous year, when the 2-4-6-8 menu was being launched?

That's a great question. I think the-- a little bit of the answer is in when you dial up the incidents to a little bit above 20 in a real value season, like just after the holiday period this year, we felt a little more degradation of check. And so I think the cautionary comments that Whit had in his prepared remarks were along those lines. In the third quarter, you have back-to-school, value season, in general we think there'll be some industry dealing, so we're going to dial that up just a little, and the incidents will likely go up. So on a percentage basis, we expect little to no impact, however there could be a few pennies off of check.

So if I could read between the lines, it sounds like whereas earlier 2-4-6-8 basically predominated your marketing efforts, it's going to be interspersed regularly now with limited time offers which have the opposite margin effect, is that fair to say? Or that is exaggerating the purpose?

I think yes, they are certainly going to achieve more of a barbell on the higher check offsetting that impact. And we'll remind you that the strongest incident weights that we saw with the 2-4-6-8 value menu were last year during the second and third quarter.

Right. Fair enough. Thank you very much.

Sam Yake from BGB Securities.

Yes, thanks for taking my question, it was really a great quarter.

Thank you, Sam.

I really applaud your continued share repurchase program and I'm wondering if you could maybe update your thoughts when you look out longer term about your uses of free cash.

Sam, hi, it's Mark. How are you?

Okay. Great, Mark.

I would say it's probably again consistent with some of the comments in my script, Sam, and that is that we obviously continue to focus a piece of our free cash flow on debt reduction. And I think as I mentioned, the last several quarters we've dropped debt down about $10 million a quarter. And then additionally, obviously we continue to buy back the shares, so I think it's that dual approach without giving any more specifics as far as quantifying the ongoing future pieces of that.

Right. It seems to me, Mark, though, with your stock trading where it is and the results improving, the best investment you have is your own common stock. So I really applaud any share repurchases you're doing.

Well, again, we obviously, from our Board, the original authorization was the 3 million share piece, which we completed in the first quarter. And then there's the additional 6 million which as we've mentioned we've made pretty good progress in the current quarter, 1.8 million of those shares purchased during the second quarter.

And then one other quick question, I'm wondering do you have any data you can share about the effectiveness of your advertising? It seems like-- I guess I watch a lot of TV, but I've seen a lot of your ads, they seem to be very good to me. I was watching the NBA playoffs, and you had quite a few on there and I'm just wondering if you have any data on the effectiveness of your recent advertising?

Well, we think again the goal is to emotionally connect with the consumer. And so it is you are one more data point with your positive comments, which we greatly appreciate, of what we're hearing in Blog, in Twitter, in Facebook and in our Denny's-- mydennys.com membership where our fans are growing every month and they're saying very nice things about how we're connecting with them, and so obviously the broadcast messaging is helping.

Okay, very good. Continued good luck.

Thank you.

(Operator Instructions) Mark Smith from Feltl.

Hi, guys. Can you give a quick update on the Refresh Program with franchisees? And then maybe if you can quantify or talk at all about what kind-- any kind of bump that you guys saw in your refreshes and how that program went?

Sure, Mark, it's Mark Wolfinger. On the refresh piece, again, the connotation in the name that we have attached as new day, which obviously as we mentioned before is a refresh to both some of the exterior elements as well as some of the interior elements, so although not from a scope standpoint as broad and deep as a full remodel. So I think we've discussed numbers that are sort of in the $50,000 range on that refresh versus more of a full scale remodel that might be $175,000 to $200,000. We did about 50 of those in the Company stores during the fourth quarter of last year, and we've had franchisees commitments for well over 200 stores probably at this point during -- to be done during this fiscal year, during 2011. Again, we're right now in the summer time frame, which is sort of our high seasonality time frames so we don't anticipate a lot of those will be done during the summer time frame, but will kick back in during the fall as the seasonality curve on sales drops back down.

Great. And then second, can you guys talk about the international opportunity, it's still a smaller kind of piece of the pie, but what opportunities are there long term, and is that something that you could see more excitement on or more movement on over the next 12 months?

Sure, this is John. The -- we're obviously excited about the recent openings that we announced this quarter and those are part of some agreements that have a few additional units embedded in those contracts that will on the strength of these openings, we expect the others will stay right on track. And with this, you always expect, and we remain hopeful that this will continue to track new international development opportunities for our brand. I'd say it's new early for us to predict or modal a significant lift, but obviously we're hopeful what-- how meaningful this can be to us long term. Over the next 12 months, maybe Mark would be better to guide on that, I'm not sure what we've --

Yes, I think the other piece for us, I mean just adding on to John's comments was the fact that we really felt in the previous couple of years, we really had to get the domestic development piece going for us in a very positive manner. And clearly we kicked that into gear back in 2007, 2008 time framing and obviously with Flying J coming along and having that kind of challenge. But I think to John's point, internationally in some of these larger areas as far as population basis, we believe the Denny's brand is a significant opportunity again still obviously in the future tense at this point.

Thank you.

(Operator Instructions)Hugh Denison from Heartland Advisors.

Good afternoon, men. Thanks for hosting this call. Quickly on your franchise conversions, you have a goal of getting to 90%, and I'm -- my first question is I'm just simply curious as to if you expect any near-term activity the remainder of this calendar year in getting towards that goal. And my second question was touched on a little earlier, but when talking about the debt repayment and the share repurchases, I wonder if the Company might have a stated goal or a guideline on where you would like to be in the future, say in your debt to EBITDA ratio?

Hugh, it's Mark, how are you, good evening.

Good afternoon, Mark.

First on the franchise piece, you're right, our target is 90% franchise. I think as of the end of this quarter we moved up 1 percentage point, I think we're at 87% franchise in the quarter, we're 86% in the first quarter. And those last few percentage points are going to close out either through a combination of some selective re-franchising, we still have a few more Company stores that we'll probably re-franchising into the franchise system. And then I think them second piece is once we get out beyond the Flying J conversions, that again most of the new unit development will come out of the franchise system. So I think time frame wise, Hugh, we put something in the next few years that we'll reach that. It could be sooner than later just depending upon how some of those things work for us.

Great.

On the free cash flow piece, I think my response -- I appreciate that input, and we'll think about that as we think about our guidance, as we said guidance for 2012 and be a little bit more specific there. I think to your question, obviously we're executing on both of those elements, but we'll give that further thought with some more specific direction possibly during our guidance discussion.

Great. And before I ring off, perhaps just one comment, you guys must be do some good things over there because the last couple of your competitors who have come through our offices anyway have spoken highly of what's happening at Denny's. So I don't know if they're envious, but they say good things are happening at Denny's, and that's coming from competitors.

Thank you for sharing that.

Thank you, Hugh.

At this time, I would now like to turn the call back over to Management for any closing remarks.

Thank you, Patrick. I'd like to thank everyone for joining us on our second-quarter call today. We look forward to our next earnings conference call to discuss our third-quarter results. Thank you, and have a great evening.

And this concludes today's conference call. You may disconnect at this time.