Denny's Corporation

We're a rowdy bunch. Good morning. This is a great start, some energy in the room. Good morning, everyone. Thank you for being here. I know we've got some people that have come from the West Coast, some people that didn't have to travel far. So for all of you that are spending time with us here today, we appreciate you. We're very grateful. Welcome to the Denny's Investor Day, our first investor conference, and this is for 2024, obviously. The theme, Igniting Growth, the rise of a new day at Denny's, is something that will unfold As we talk throughout the day, something we're really excited about, I think you'll see from the stories you'll hear, the plans you'll see, including outlook for the longer term, that we've got a really great day planned for you. And again, we appreciate you being here. Before I do start, let me quickly make sure to remind you that we will be discussing forward-looking statements and non-GAAP financial measures during this event. Please refer to our SEC filings for a discussion of risk factors and quarterly financial releases for an explanation of our non-GAAP reconciliations to the comparable GAAP measures. So with that, I'm excited to get started and talk to you about what you're going to see from myself and from our team. I'm obviously, I'm Kelly Blatum, the Chief Executive Officer for the Denny's Corporation. But you will see us talking about both of our brands, the Denny's brand, the flagship brand, and then also Kiki's Breakfast Cafe. And we're really excited because until now, and having purchased the Kiki's Breakfast Cafe brand Just a couple of years ago, we've been spending a lot of our time integrating that brand into our shared service model and into the Denny's Corporation. And we'll get to tell you a little bit more. You've been anxious to hear about it and hear what we've been doing with this brand since we purchased it. And you will get to hear that complete story today. So I'm going to review. We released this morning, as most of you know. And so I'll review the highlights from quarter three. This is still an incredibly volatile environment that we are in. I believe we controlled what we can control, and we'll discuss, and I'll give you those highlights in a moment. I am going to talk about the state of the industry and what it looks like in the near term, and what we can see in terms of the outlook for the consumer, and just in general, what we know about the industry. We will talk about the Denny's brand, specifically our playbook. We'll talk about our crave strategies that apply for both brands. You'll hear from Dave Schmidt, our president of Kiki's, and you'll hear from several on the Denny's team as they present those plans. We have a really unique and special opportunity for you. We've got some of our franchisees here from both brands that will be coming up and they'll be doing a fireside chat and some Q&A with Rafael Gross from ICR. We're excited about that. And then finally, you'll hear Robert talk about our long-term outlook, something that has perhaps never, never been done, never been done. For us, this was a chance for you to hear from our, some new members are on executive team. This is a renewed and highly focused executive team and leadership team for both brands. We'll talk about the structure of both of those brands now, having moved from just the Denny's flagship brand for so many years to now having two brands in our portfolio. So we'll talk about that. You'll get a chance, we'll get a chance to showcase that new leadership today and tell those stories, as I've mentioned. We are going to show you and articulate our path to revenue growth and to cash flow growth. We're going to talk about the stabilization of the Denny's brand and the transformation that's underway for the Denny's brand. We're going to talk to you about the path to getting to net growth and improvements for all for all and increases in shareholder value in general. And again, I mentioned we're going to provide long-term outlook. So with that, this is the executive team. So after purchasing the Kiki's brand, we really had to set up an executive team that could focus on, in some cases, there are people maniacally focused only on a single brand, like Chris Bodie, who is here, who is our president and CEO of the Denny's brand, and Dave Schmidt, who is the president and runs the Kiki's brand. So they're split into two separate teams. Everything else is leveraged. Most of the people here you see are are leveraged and support both brands. And you'll hear from some of those folks today. In particular, what I'd say about this leadership team, we have both a blend of folks that have been here, like Robert Barostek, who you know, many of you know, our CFO that's 25 years with the Denny's brand. Steve Dunn, our chief development officer, who you'll hear from today, is 20 years as of last Friday. And then we have new members like Patty Trevino, who has extensive experience in almost every segment in the industry and has now joined us just about three months or so ago. and she's ready to take the stage and talk to you about the marketing transformation that's underway. She's our new chief brand officer. And so with that, let me highlight some of the things you saw this morning in terms of... That is not moving for me. This is being webcast as well, so we're all trying to kind of keep up and make sure, but I do want to make sure that... There we go. Now we're advancing. Awesome. All right. So for the highlights for... The Denny's system in particular, what you saw was sequential improvement from July, August, impact from weather a little bit, and then a stronger September and, again, a strong, so far strong result in early October. So for July in particular, we were flat sales for the Denny's brand. August was negative, impacted by weather, negative 1.7. Sequential improvement when we turned on. our value offer, our unique value equity with 2468. We saw that increase in September to positive 1.1. Started stealing share again from not only casual dining where we've been stealing share a great deal, but we also started stealing share from family dining in the last three quarters. And we definitely saw that same sequential improvement, bigger gains and bigger beats to black box intelligence and other benchmarks that we track. October 0.7% so far. So We are really thrilled as we turn that value offer back on. We're thrilled with the benefits that we are seeing. The other things that impacted our quarter, aside from coming out on August 21st with that everyday value proposition that we know the guests so desperately need, we also were able to launch and had been working on a launch of our third virtual brand with Banda Burrito. That contributed to our sales increase about 70 basis points, and we have almost 1,000 units on the Banda Burrito concept. You will hear later today virtual brands. We hear some talking about it. We hear some that aren't talking about it. And Denny's still seems to be leaning in as a strategy. And you will hear us confirm or reconfirm why for this brand it completely makes sense and it is an incremental guest and why we are continuing to be bullish on our virtual brands and our off-premise strategy as a whole, given our hours at the Denny's brand, given the fact that we can leverage our fixed costs. I would also say for many brands, and you follow them, that have said never to off-premise, never to those third-party aggregators, many now say yes. Even post-pandemic, there are a few that I'll leave, you know, I won't mention them right now. But you will see that, and you do hear that. So, for us, we'll double down and talk to you about why that strategy is important to us. We do have a remodel program that we call Diner 2.0. You're going to hear a lot about that, and not only what that did for us in this quarter, but what we think can be unlocked When we start to get tremendous scale on our remodel program, you'll hear us talk about the incentives we're going to give and how we'll make sure that we can get that flywheel turning and get back into some really strong cadence around remodeling our buildings, our assets, upgrading our assets. So we have great results on those. Those four things were the contributing factors to the results that we saw and improvements that we saw in the quarter. On the Kiki's Brand Cafe, we were negative 1%, but also saw sequential improvements for the Kiki's Brand, heavily impacted right now, as you can imagine, by two storms that came through, both Helene and Milton. So that brand is heavily impacted by that because it is almost all in Florida. That's a Florida-based brand that we are expanding and we have taken outside of Florida already. We actually have locations in Tennessee, two of them. We've been growing that at a fairly decent clip and we'll continue to do that. We'll talk about those growth plans In a minute, we actually opened in Colorado two weeks ago as well. So we've got a strong start. We spent our time doing the right things, I believe, finding the right leadership talent. Dave Schmidt's absolutely the right person coming from a portfolio company with Bloomin' Brands. Actually, he started his career at Denny's way back when and then spent a lot of his time at different brands, both in a CFO role and a president role with different brands at Bonefish. So absolute right person to come in. and leverage what he knows and leverage our portfolio and our shared service assets and then unlock the potential of these great franchisees and the model at Kiki's Breakfast Cafe. So there was improvement there, heavily hit by or heavily impacted, more impacted by the storms because of their location. It did launch, 80% of the system now has alcohol, has sangrias, mimosas, doing really well. We'll let the franchisees tell you about that and Dave speak more to that. But one of the things we found in our research in trying to understand and best protect what was special about the brand, the secret sauce, if you will, when we acquired the brand, we did a ton of research, what we call brand ethos research, to find out what guests expected. One of the things we learned was you expect to be able to have maybe a margarita, maybe a mimosa, maybe sangria, something with brunch. Brunch is fun. And this is a brand leaning very hard into what they can excel at and what they can have different, where they can differentiate. Fresh Starts serve daily. There's new work that's been done just to lean into what makes them unique and different and separate from others in the category. This is becoming a pretty crowded segment, and I'll talk about what the acquisition has meant for us. But they've turned online. They've been able to turn their systems on, do different things with their website, and really start to activate online sales, taking them from where they were to a really great, robust plan for off-premise sales, as well as online, just online and having their website now equipped to speak to that. And then we do have, so we know there's been a lot of interest in how many developments, how many units in the development pipeline or how many signed agreements. So right now over 140 are signed and we're excited about the potential to continue to grow that brand. We've got a remodel that's happened as well. So you've got a whole fleet in Florida that were not ever remodeled, never, ever touched. And I can tell you these franchisees that are with the Kiki's brand are really excited about the potential. And our first one in Dr. Phillips, really did extremely well. So the highlights from the quarter, again, still navigating a tough environment, and again, stealing shares. So share is the name of the game. This is an industry that's been negative in transactions for a very long time. So while we are not, we still want more. We did see that sequential improvement last quarter, the 50 basis point improvement from prior quarter on the Denny's business, and a bigger, even bigger improvement on the Kiki's brand, over 350 basis points, sequential improvement from the prior quarter. Really measured but consistent and wanting to get, obviously, more and more sales and the trajectory is strong, as we mentioned. 111.8 million in total operating revenue. Our adjusted franchise operation margin did not change significantly at 51%, slightly below the last quarter. Our adjusted company restaurant operating margin was 6.2 or 11.8%, as you can see here. Total operating income at 11.7%. Our adjusted EBITDA 20, right on, 20 million, 7.8 for CapEx, and then 14 cents in EPS. So this one I know we'll go through here for a minute, just to make sure that this is all very clear, because you're seeing some new numbers here, and I'll call out just what is different. So we're tightening the range on sales guidance, tightening that range there. As you can see, we did not change the openings. We have changed the closures. And you're going to hear why. And you're going to hear our strategic approach to why we are looking at closures. In fact, for many conversations that we have with you over the years and knowing what our model looks like today post-pandemic, we believe this is absolutely the right thing to do to kind of work towards getting our system healthier. We're not the first brand to do this and have a bigger closure number. That was originally 40 to 60. We're now talking about 75 to 95%. But again, on our terms, working with those franchisees, looking at our quintile analysis, and you'll hear us talk about all the inputs that went into this new number and these new expectations. And then finally, on EBITDA, there's an adjustment there that's been made down to 81 to 84 million. As for the state of the industry, again, I'd like to believe we are controlling everything we can control and have a good playbook with many initiatives in the works, our initiatives When they hit and as they scale, we know that they can contribute to our business and to our model. The industry and the headwinds are real, and I'll step you through just what that looks like and yet why we are still optimistic about the plans going forward. You know this, but the choppy economy and the issues that the American people are, the things that are on everyone's mind right now, that is not expected to change in the near term. There's nothing that we see that suggests that. Slight improvement maybe. post-election, but there's not a lot of reason to think in the near term it won't continue to be choppy. These are some of the reasons why. Personal savings rates, they're below where they were in 2019, or they're below pre-pandemic levels now. That is impacting everyone, but especially the lower income households that I'll speak to in a moment. Food away from home continues to outpace food in grocery stores. And when that happens, there is an absolute real trade down that occurs and people say, I can get that at the grocery store, make it myself versus going out. And it's a delta of almost three points, 4% to just a little over 1% for grocery store inflation. And when that, if you went back 20 years in history, when you see that kind of dynamic happening, you do see people that do the math, but with their feet and stay home a little bit more often. We also saw research, this was Sir Canna, formerly NPD. This research basically said, this is how people are figuring out what to do and how to manage their check. And you've heard it over and over again from many brands in the last few quarters, but they will go out less often. They will eat smaller portions or order less expensive items. There's a comment made in this presentation that basically said, you know, we're seeing a lot more adults order kids meals, right? And as far as we can tell, that's not the Ozempic impact or anything like that. It is really how I manage my check. So maybe less add-ons, maybe less maybe smaller portions, but we do see kids meals being offered more or ordered more with adults. If you are in a household with an income less than $50,000, you're even more impacted. And so many may assume, we'll talk about our household income, which is higher than this, obviously, but we do have a decent amount in our consumer and our target consumer base that do have a household income around 50,000 or less than that. We know that, frankly, this is where we are. And again, we'll talk about what it is for Denny's household income and what the target is or the consumer base is for Kiki's. They are different. But right now, it's just worth knowing, obviously, that the household income, $50,000 or less, are the most impacted by the tough times, personal savings, all the things we just mentioned. And this is just a reality. Family dining. This is the segment we're in. Even Akiki's Breakfast Cafe, which is in that new daytime cafe eatery, whatever you want to call it, is still tucked under family dining. It's not a separate segment, even though it's very different. And there's been explosive growth in that kind of sub-segment. It's still in family dining. And what this would say is, obviously, family dining has had it the worst post-pandemic and has lost the most traffic. But everyone has lost traffic. everyone. So there are things we look to to try and understand not only is the playbook that we have, are we doing the right things, but given this environment, what are the next steps that we take to shore up better strength in our business? And so for us, knowing what's happening in the world, we look to this iconic brand, speaking to Denny's first, this iconic brand is still incredibly relevant in cultural conversations all the time, whether we pay for it or not, whether we you know, encourage the conversation or not, we are out there all the time. And you'll see that from Patty when she covers the transformation happening in marketing and what we've got to work with in terms of this iconic brand. Our new restaurants outperform, significantly outperform the average of the rest of our fleet. And you'll see Steve talk about that. That tells me this is an iconic brand that's resilient because you open a new restaurant, it's brand spanking new. It looks like Denny's, feels like Denny's. You've got that great, amazing food, those great breakfast items. you see that that's a resilient brand that's still relevant today and is still an icon. We outperform Black Box Intelligence. When it's that kind of share game, when you see those kind of declines across every segment of the industry, rather, we're still stealing share, and it is a share game. Six out of the seven last quarters, we beat casual dining, the casual dining index. And that's with some very strong players, and you know who they are in casual dining, but the weakness there and potentially the trade-down that we got from casual dining and because we're running our own race and doing our own things, We consider that to be a win despite, again, our traffic and our sales. Guest sentiment scores continue to improve. And I'll show you that quickly as we delve into the Denny's brand. We've also had consistently solid same restaurant sales. And so lots of smoothed out a bit for COVID here. Kind of a wild looking graph coming off of two very strong years and coming off of lapse basically post COVID. They're still positive. We planned and we showed you the tightening of the range and what we plan to do this year. And this is what we've been able to deliver over many, many years and over a decade. We now have two complimentary breakfast brands that are truly set up to create a long-term, really robust story. And we're excited about that. We are an asset-light company. We're an asset-light model. We generate significant cash flow. We'll talk about that throughout the day. For Denny's, we have kept them separate. For Denny's, we say we love to feed people body, mind, and soul. That came from Harold Butler, who started Denny's as Denny's Donuts in 1953. And there's a unique positioning and there are unique stories for the Kiki's Breakfast Cafe brand that we wanted to keep uniquely separate. And so what you'll see is we take everything we can from a shared service perspective or an enterprise perspective, keeping the crave strategies that are at the top of this graph the same. But then when it gets to the brand, if it touches the guest, if it touches the employee, they are uniquely different. So leverage where we can, but also allow them to do their do their thing, have their own playbook, speak to their own guests. And I'll talk to you about the difference in those guests. The vision for Denny's at this point, we're calling it the road to 400, but it is about getting to AUVs that are $2.2 million over the next several years. And we've got a roadmap that maps exactly to how we will do that, including closures and what that can do to lift the average and to improve the health of the portfolio. So we'll talk about that. You'll see at Kiki's, Dave will talk about 40 million fresh starts annually by 2030. So very clear, distinct goals for the two brands. And again, leveraging shared services in the enterprise. The core focused for the Denny's brand, take back breakfast, reignite value leadership. We're doing that with 2468 and we see tons of room going forward for continued improvements there. And then accelerating off-premise growth, as you've heard us talk about many times. For the Kiki's brand, it's strengthening the core and then it's growth As Robert likes to say, grow the fire out of kikis. So we'll talk about that growth, that explosive growth. For family dining, Denny's is the number two player in the segment. We've contracted the most since COVID. That's a fact. We've contracted the most. But we have one of the highest AUVs. And some of that is due to the closures that have happened, whether trade areas moved or they're just simple, the simple dynamics of the model haven't worked. So for some of those things that we know of, We are controlling and doing what we can to control our environment and control what we are doing. So there's still some really good things there in terms of the Denny's brand. Family Donny makes up 30% of full-service restaurants. So you see all the players that are there and the size. We're ninth in full-service restaurants. And again, you take up a lot of space in that family dining segment, 30%. And then again, I've mentioned this, but three of the last The last three quarters have outpaced family dining, which has brands, again, like First Watch and some of those AM eatery or daytime cafes in it, outpaced as of late, and we've been outpacing casual dining for quite some time. For Kiki's, you can see primarily located in Florida, as we mentioned, this is a franchise model also. It's one of the reasons we purchased this brand, to leverage our world-class franchisor approach, our approach in bringing them in was to leverage that, leverage the different networks that we have with franchisees at Denny's, but then also to take this already franchise model and really grow it exponentially. The daytime eatery category, you see Kiki sitting right there in the middle at 61. We've grown that already since we acquired it. This is limited service hours. This is really one day part. There's huge growth in breakfast that's continuing, whether it's some of these mom and pops And some of these independents that you see in this category, there's a huge opportunity to grow this and to grow it exponentially, while others, those one-offs, those independents are just not going to be able to do that. So the acquisition of Kiki's, in short, has really created a lot of growth opportunities for us. And we continue to be incredibly excited. The unit economics are strong with this brand. The growth potential is there. Again, outside of one or two somewhat large players, larger in the segment, the rest is very, very bifurcated, very fragmented segment with the opportunity for this brand to really leap to the top, to leapfrog to the top. So the growth potential is huge. It's new customer reach. I'll show you that in the next couple of slides, meaning there's not a lot of overlap with the Denny's and Kiki's. We didn't buy something that was exactly the same. We knew exactly what we were purchasing and how we could leverage those locations and have a different real estate strategy a different growth strategy than Denny's, all the while leveraging our enterprise. So this one's important. We get asked a lot, can the Kikis go into the same Denny's site and vice versa? They are different brands. And again, we were crystal clear on that doing this acquisition in terms of what we could do to leverage the portfolio, leverage our franchise network both at Kikis and at Denny's going in and talking to those franchisees about growth. The average unit volumes are similar. The day parts and the amount of hours open are very dissimilar. One that's primarily a 24-7 brand, obviously, and then one that's 7 to 230. So very, very different. The household incomes are different. $63,000 is the average household income for Denny's, and it goes up to $78,000 for Kiki's brand. And the checks are a little bit different. You can see here off-premise, Dave will call this out when he speaks to you later today, but off-premise was basically nonexistent or in the single, mid-single digits, and has now grown to 16% just by turning on the website, getting some online orders through, and then starting to use third-party aggregators to get in that business. And there's other levers that you will see in addition to alcohol and the things here that can be pulled. Their net sediment, you'll see Dave talk about this, so I won't steal this on there, but it's rarefied air. in terms of what that brand has in the way of almost a cult-like following. So it's a complementary player. There's the guest income just shown a different way, household income shown a different way, and the overlap for Denny's. This was done, and this was researched thoroughly to make sure there wasn't too much overlap, and 11% is very low in terms of guests that knew about or have been to a Kiki's. In fact, we have one of our franchisees that is here, Clyde Rucker, has a Denny's in the same strip center that there is a Kiki's. And there's no concern there. They've lived happily there for quite some time. So we know that that's a possibility. Again, different real estate strategy. You're doing inlines and in strip malls and different locations for Kiki's. Denny's is a different animal. So all of what we are doing will continue to be guided by the CRAVE strategies that really work for both brands. So that work will continue. And you'll see us all reference the CRAVE framework. Craveability, winning brands have craveable food, they have great everyday value, and they have a consistently good experience that they deliver to their guests. Both of these brands have the potential to do really incredible things with this framework, with this crave framework as the way forward. The key themes that you'll hear throughout the day is how we are going to grow our AUVs. I've talked a little bit about that. There's a closure that has a potential, closures have a potential impact to that rather. We'll talk about that, but I'll also talk about the ways that will drive traffic and drive that AUV growth. The margin growth and the restaurant growth, you will see us get to net positive growth again for Denny's, which you haven't seen from us in some time, right? You have not seen that in some time. And then cash flow and capital allocation, you'll hear that throughout what we are doing, how we're leveraging our strong balance sheet and strong cash position to continue to allocate it to the things that will create the greatest shareholder return. So for Denny's, I'm going to kick this off and then I'm going to turn it over to the teams pretty quickly. So this is the Denny's leadership team. Chris Bode, he's our new president COO, but he's back from a quick stint with CKE, where he served as president of both the Hardee's and Carl's Jr. brands. He had been with Denny's for 11 years prior to that. And then you've got just a tight, small team. They wake up every day thinking about the Denny's brand. I'll hit on just a couple things that I've mentioned, but the improvements in, so the guests may be thinking about their experiences differently or maybe trading down or maybe thinking about not going out. When they do go out, it better be better. It better be good. And it better be improving. So the guest experience is critical. And we are continuing to just make great strides in the guest experience at Denny's. Way outperforming family dining and even casual dining many times. So the industry as a whole at a 27 and Denny's where they are today, it's a testament to our franchisees and leveraging the tools that we have that can help them to improve. These Google ratings at a Denny's of a 4.3, is also pretty incredible. This is the thing that happens when you say, I'd like to go to a Denny's on this street, and Siri will tell you what the Google rating is, right? So these things matter. These improvements matter, and it makes a big difference to us. So we're going to continue to double down on that guest experience. Our Achilles heel, we're going to focus on, with all of our franchisees, focus on the variability that exists between restaurants. We know that that's the opportunity. When we have 1,600 restaurants, we have over 200 franchisees. Our goal is to continue to focus on that variability and where it is top to bottom. We do have a, I would say, not a silver bullet, but a really strong, we have a way of indicating and showing our franchisees, if you do this, this will happen. And what you see there is primary learning system plan completion, and it's a system called Ignite, it's our learning management system. When that is used, the higher the completion rate of the system that we provide to our franchisees on the Denny side, the higher that is, and those, this is three different case studies on three different franchisees, When they use the tools, when they use the training materials, we see improvements in net sediment, and we also see improvements in sales and traffic. And these are, again, pre and post and over many years that we've been watching this. When we talk to our franchisees, like we just did our big annual convention, we're showing them the power of using the tools that they have and leveraging those tools. We've made improvements. You've heard us talk about this. We didn't want to miss the opportunity to talk about our kitchen optimization or modernization program that happened a couple of years ago when I joined it with just at the tail end of implementation, it has made a difference. We are using this for over 50% of our menu, goes through either our ovens or we are leveraging our re-thermalizer, the equipment that came with this package. We have seen improved scores on bacon, on sausage, things that go through that oven, and even new innovation like the Liege waffles came through that oven. So we think about innovation going forward, the investment that our franchisees made in that equipment is absolutely paying off. We see lower waste. We actually see efficiencies in the back of the house as well. And then you'll hear us not too much today, but you've heard us on earnings call. We'll talk about the investments we're making in technology. This is the only thing you'll see us talk about here today so we can get to the remodel program and some other things that are related to driving and getting the flywheel turning. But we do have the launch of Xenial coming. We are about and ready to go with that. Been in the works for some time, and that has a great return also. We know we can see savings in improved waste. increased table turns. We have KVS screens, kitchen video display screens, that in some cases our franchisees don't have. So this enables a whole new way of implementing or getting food out. It allows us to do a whole lot of different things that will improve. And it enables a, I was like, is that my timer? And it enables a better service model going forward, potentially food runners and beverage runners, things that will simplify operations going forward. We have more investments to go. You'll hear Patty talk about product quality, value leadership with 2468 I've already mentioned, but you're going to see us lean heavily into that because we know the power of that platform for us, and it's a unique equity. We are not chasing someone else's equity on three for whatever. We have our own unique equity there. We'll talk about off-premise and the strategy. We'll also talk about remodels and Dynar 2.0, and then we'll talk about portfolio optimization so you're really clear on that closure number and why we're looking at it the way we are. why that's a strategic approach to the situation we have today and it'll propel long-term growth for us so with that I'm going to turn it over to Patty Trevino I mentioned she's our chief brand officer with amazing background she's hit the ground running I'll let you listen to Patty next thank you good morning everyone I know it's more I think that timer is stressful like looking if you guys see that's my countdown so

So thanks so much for being here this morning. As Kelly said, my name is Patti Trevino. I'm excited to join the Denny's team after, I think, 25 years in the restaurant industry. I've worked at brands like Burger King and Bloomin' Brands, and I've even gotten to work with some of the current leadership team in those brands. But excited to be here with Denny's and just focus a little bit on what we're gonna be talking today. And Kelly shared the CRAVE strategy, and I'm gonna be focused on the E. Does anybody remember what the E stood for? Elevating traffic. So I'll be talking about how we're gonna actually focus on our brand strengths to elevate traffic. And that's through frequency, right? Our current base, like how do we drive frequency of those guests that are coming to our locations today? And then how do we expand that base guest? Of course, that's we're all fighting for that traffic. So leaning into our strategy, our strengths, right, as Denny's is we've got to make sure that we look at how are we going to increase our average visits from 2.2 to 2.5. That will give us that road to 400 goal, right? How do we get that 400,000? Focusing on our strengths, winning key use occasions, and engaging the next generation of devotees. That's basically the formula. So. Kelly talked about this as well. It's like we are a relevant brand. We are part of relevant conversations. And not only do we have these wonderful celebrities, people, but we also are relevant in major headlines. We are earning major headlines, whether it's NVIDIA's founder story to a surprise Blink-182 concert at both, of course, at Denny's. The brand is part of culture today, which, again, is a strength that we have that others do not have. So leveraging our headlines, it really is about us embracing that we are America's diner for today's America. We're the only people that's open for all. I'll talk a little bit about our consumer and who we speak to. Are always there for you. Hospitality, we're open 24-7. So whenever you're craving our delicious pancakes, they're there for you. And generational spanning memory maker. I'll also talk a little bit about different generations that go to Denny's, and we have strength across those types of generations. So I'm going to share a little video on, you know, and talk a little bit about how we are part of culture and a little bit about our guest today. And for those of you on the webcast, I apologize. We weren't able to show that video publicly, but you'll get to see the other videos. So if you saw a blank screen or didn't hear anything, again, this was a video that we only showed here internally. So show the video. We're part of culture. So for us, it really is about making sure that our strategies are built on guest insights, right? Understanding who do we serve, like who our guest is, where do we play, and how we win. So who we serve. And this is what I was talking a little bit about, about our current guests. Our current guests are multi-generational. I've been with brands before, and I'm sure you've heard of other brands where they highly, highly over-indexed in the baby boomer and Generation X. And as you can see, our actual guest profile reaches not only baby boomers, Generation X, but stronghold with millennials and even Generation Z. So this is actually a huge strength for this brand. Ethnicity. Another one, too, that you typically see, you know, you'll see kind of one, but we have a great not only with the Black and African American consumer, but very strong, only over a third of our guests are Hispanic or Latino, which is, again, really great as we know that the generation and the ethnicity is growing in America, in the United States. So again, this is who we serve, where we play. So knowing that we are speaking to a very highly diversified group, we have an opportunity again to be part of culture. So the next one is, where are we going to play? Three things. One, breakfast. We win at breakfast. We have to gain our breakfast food leadership. Second, value. We recently introduced the two, four, six, eight value menu. And then three off-premise. I'm going to go a little bit deeper into kind of these areas and what we've been doing. So I'll start off with breakfast first. When we think about breakfast and we think about the food, there's three things that we're going to focus on and that we've been focused on. The first is core menu optimization. Everybody loves to talk about the right side of the slide or the left side of the slide where it says new innovation and everybody talks about like, oh, we're going to use this and we're introducing this. I'm a big believer that you have to invest in your core menu and making sure that your core menu is working extremely hard for you because that's where your sales and profit run. Right? So core menu optimization is making sure that we are focused on the right things, making sure that the mix is strong, making sure that the margins work extremely well. So that is a whole. So we currently have a study that's being done. We're going to get the report out in the next probably week or two. But that will lead us into making sure that we have a very, very strong core menu. Next one is quality investment. It's not just about saving pennies and removing costs. It's about how do we take some of those pennies that we're saving and reinvesting in the quality of our food. And the third is innovation. Of course, we've got to have some new news. We've got to have some new news to get people excited to come and try. So we are working across these three things. But we can't focus on one without focusing on the two others. It all works together. So some of the things that we've actually done, like I said, the menu optimization study. We're currently under study, and we're going to get the results in the next couple of weeks. Improved bacon. We invested about $8 million in the improvement in quality of our bacon. And that recently went into effect earlier this year. We also introduced, from a new innovation perspective, strawberry stuffed French toast, which has been doing extremely well for us. And then I also wanted to give a little bit of props to our virtual brands like Band of Burrito. We introduced and been doing some ideation for that brand, but we've gotten a lot of excitement about this Grand Slam Burrito that we're going to be testing, and you'll hopefully see it on the menu soon. So again, a balance of menu optimization, improving our products, and some new innovation there. The next that I wanted to speak about is value, right? We talked about, I'm sure everyone has seen a barbell strategy before, and I'm not going to represent this to you because I'm, again, you've probably heard many, many people speak about barbell, but I did want to highlight one thing is in the barbell strategy, the relationship, the pricing relationship between the value side and the upsell side has to be extremely strong because if it breaks, it doesn't work. So we have to make sure that people that come in for a value, that there's an upsell that's not so expensive that they will just stay in the value. So for us working with the finance team and making sure that our barbell strategy has some great products, but at the same time, the pricing relationship, it works as well. So not too much on this. I'll talk a little bit about 246A value. Launched this in late August. And we kicked it off with a really great partner. His name was Beetlejuice. So it was awesome partnership that we had and that we currently have and we'll see through the end of this month. But with that, I'll do a little commercial and then after a couple of commercials that we'll show, I'll talk a little bit about what we've seen from a results perspective and what guests are saying.

So let's go ahead. Wonderful, let's go to the next one.