Hey, welcome to the Denny's Corporation fourth quarter and fiscal year 2021 earnings call. Today's conference is being recorded. At this time, I would like to turn the conference over to Curt Nichols, Vice President, Investor Relations and Financial Planning and Analysis. Please go ahead, sir. Thank you, Jess, and good afternoon, everyone. Thank you for joining us for Denny's fourth quarter 2021 earnings conference call. With me today from management are John Miller, Denny's Chief Executive Officer, Mark Wolfinger, Denny's President, and Robert Verostek, Denny's Executive Vice President and Chief Financial Officer. Please refer to our website at investor.dennys.com to find our fourth quarter earnings press release, along with the reconciliation of any non-GAAP financial measures mentioned on this call today. This call is being webcast, and an archive of the webcast will be available on our website later today. John will begin today's call with a business update. Mark will then provide some comments around operating hours, staffing levels, and development. Then Robert will provide a recap of our fourth quarter financial results before commenting on our guidance. After that, we will open it up to questions. 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 notes that certain matters to be discussed by members of management during this call may constitute forward-looking statements. Management urges caution in considering its current trends and any outlook on earnings provided during 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 risks and factors are set forth in the company's most recent annual report on Form 10-K for the year ended December 30th, 2020, and in any subsequent Forms 8-K and quarterly reports on Form 10-Q. With that, I will now turn the call over to John Miller, Denny's Chief Executive Officer. John? Thank you, Curt, and good afternoon, everyone. I am incredibly pleased with the sales progression we've experienced early in the fourth quarter with domestic system-wide same-store sales increasing from 1% above 2019 sales levels in October to 4% above 2019 sales levels in November. We also experienced growth in all sales channels with on-premise sequentially growing nearly 3% and off-premise promotions contributing to over 5% of sequential growth. This reaffirms that consumer demand remains high through both thriving dine-in transactions when COVID case counts are normalized and the ongoing stickiness of our off-premise channels. The full-service restaurant industry experienced same-store sales deceleration during the last two weeks of December due to the rise in Omicron cases, and Denny's was no exception. Additionally, we were impacted by the holiday mismatches during December, with Christmas and New Year's falling on a weekend where we are typically at capacity, comparing to a weekday in 2019 where we experienced greater upside potential. The Omicron variant impact continued into January as well. However, as cases have now begun to decline, our sales are gaining momentum once again. We also have a few tailwinds that gave us confidence in our longer-term outlook. With our latest investment in brand-wide recruiting, we have made it much easier for job seekers to apply for positions at Denny's restaurants, company, and franchise through our new career website, and we are experiencing increased candidate flow as a result. We are excited to offer opportunities for career growth and a love for serving people. This is exemplified by our recent recognition as one of only two restaurant brands in the top 100 most loved workplaces for 2021 by Newsweek and Best Practice Institute. Additionally, the consumer remains in a generally healthy position right now despite inflationary pressures. While we continue to offer value items, guests are increasingly willing to pay for the full-service dining experience they have missed over the last two years. Turning to our recently announced strategic initiatives, we are progressing on the rollout of our new kitchen modernization initiative as well as our new cloud-based restaurant technology platform across the domestic system. Both of these are expected to enhance the guest experience and drive operational efficiencies while the kitchen equipment also provides the ability to enhance our menu offerings across all day parts. We have implemented our Heritage 2.0 remodel restart program, which generated mid-single-digit sales lifts during the testing prior to the pandemic. We also have two new domestic development commitment drivers, our partnership with REEF for ghost kitchens and our upfront cash incentive for domestic development. These strategic initiatives, along with the management team dedicated to supporting our franchisees, led to another prestigious award from Entrepreneur as the top franchise in our category. I would also like to mention how proud I am of our brand and the amazing progress we have made with regards to diversity, equity, and inclusion. We continue to give back to the communities we serve through our Hungry for Education scholarship program, our partnerships with No Kid Hungry and St. Jude Children's Research Hospital, and our Mobile Relief Diner. In closing, the last two years have been unlike anything we have ever experienced, but I'm so proud of our teams and our franchisees for their commitment and dedication to this brand. The future ahead at Denny's is bright, and I'm so thankful to be a part of such a dynamic, innovative, and agile brand. With that, I'll turn the call over to Mark Wolfinger, our Denny's President. Thank you, John. I also want to reiterate how extremely proud I am of this brand for the recent awards and accolades. Being recognized as one of only two restaurant companies on Newsweek's Best Places to Work list, as well as the Entrepreneur magazine's number one franchise in our category is truly remarkable. Turning to our fourth quarter results, we continue to see improvement in our effective operating hours with approximately 72% of our domestic system operating on average at least 18 hours per day as of the end of December. This is a 10% point increase from the end of the third quarter, resulting in 20 effective operating hours across the system. As John mentioned, persistent industry-wide staffing challenges continue to impact our effective operating hours. However, our human resources team has been very proactive in our hiring efforts and has made tremendous progress. Hourly turnover at our company restaurants is consistently below industry benchmarks, and we believe this is largely due to our comprehensive training programs and competitive wages. In fact, on average, when you include tips, our servers at company restaurants make 165% of the full state minimum wage, not just the tip credit minimum wage. Also, we now have 100% staffing in our general manager positions across all company restaurants for the first time since the pandemic began. We believe that once we have the right leadership in the general manager position, other levels of staffing and key metrics improve in due course. This allows us to shift our focus to reminding both new and tenured employees why we were voted one of the best places to work and focusing on our retention efforts. Additionally, we have developed a comprehensive document that shares our best practices for recruiting, hiring, and retention, which we have shared with our franchisees to help them succeed as well. We estimate that domestic franchise restaurants operating 24/7 have achieved staffing levels similar to pre-pandemic staffing, and limited hour franchise restaurants are operating at approximately 80% of the staffing levels they had pre-pandemic. However, we are encouraged to see applicant flow across the domestic system continue to run higher than our historical average and believe staffing levels will improve in due course. Turning to development, franchisees opened seven restaurants during the fourth quarter, including one international location in Mexico. These openings were offset by 14 franchise closures, bringing our year-end unit count to 1,640. While John mentioned that we announced three new programs back in early January, I want to provide some additional color. The first is our Heritage 2.0 remodel restart program. During the early months of the pandemic, we deferred all remodel requirements in an effort to alleviate capital constraints. With approximately two years of delayed remodels, we've extended the remodel cycle from seven years to eight years, and we've also worked with franchisees who have multiple remodels due, to map out a more normalized capital spending expectation. Despite the deferral, the compelling Heritage 2.0 returns drove franchisees to complete remodels during the fourth quarter, and we also completed three company remodels. Our second announcement was a new development agreement with REEF, providing us the ability to launch ghost kitchens in underrepresented metropolitan markets and use them as a testing ground for new consumer reach. We anticipate opening the first of several new REEF locations during the first half of 2022. Our last announcement was a new development incentive program available to our domestic franchisees. This program not only provides more lucrative incentives of up to $400,000 in underpenetrated domestic markets, but it also provides upfront cash as opposed to our historical practice of reduced fees over time. Franchisees have shown great enthusiasm for this new program, and we expect formal sign-ups to begin in the near term, leading to new unit development picking up in 2023. This is all incremental to our existing domestic development pipeline, which includes 73 remaining commitments from our recently completed refranchising strategy. The last two years have certainly been a challenge on the development front as our franchisees have navigated the pandemic. With sales recovering and these new programs in place, I'm very optimistic about our long-term restaurant development outlook. I'll now turn the call over to Robert Verostek, Denny's Chief Financial Officer, to discuss our quarterly performance. Robert? Thank you, Mark, and good afternoon, everyone. I would now like to share a brief review of our fourth quarter results as well as our expectations for the first quarter 2022. Domestic system-wide same-store sales during the fourth quarter increased 0.7% compared to 2019. After highlighting positive preliminary same-store sales for October during our third quarter earnings call, the positive sales trend continued through November. However, sales softened in December due to both holiday shifts and the increase in Omicron variant cases. This softness continued into January with elevated COVID cases. However, as with previous variants, same-store sales have begun to improve as cases begin to subside. We continue to see progression in the number of units operating 24/7, up from 48% of the domestic system at the end of December to approximately 50% of the domestic system at the end of January. We are encouraged to see these restaurants consistently outperform those with limited hours by a spread of nearly 20% points. Therefore, we still believe this performance differential presents an ongoing opportunity as our system looks to extend operating hours, particularly as staffing levels improve. Now turning to our fourth quarter results. Franchise and license revenue increased 27.6% to $60.2 million, primarily due to improving sales from dine-in restrictions in the prior year quarter. Franchise operating margin was $31.1 million or 51.6% of franchise and license revenue compared to $21.4 million or 45.2% in the prior year quarter. The margin increase was primarily due to the improvement in sales performance at franchised restaurants. Company restaurant sales of $47.4 million were up 23.2%, primarily due to the improvement in sales from reduced dine-in restrictions compared to the prior year quarter. Company restaurant operating margin was $7.0 million or 14.8% compared to $1.4 million or 4.3% in the prior year quarter. This margin increase was primarily due to the improvement in sales performance at company restaurants. However, we recorded approximately $1.4 million in unfavorable legal and medical reserve adjustments during the fourth quarter, reducing company restaurant operating margin by approximately 2.9% points. We experienced commodity inflation of approximately 11%, which was offset by sales leverage from improving transaction counts, lower value incidents, and pricing. These items collectively resulted in a 20 basis point improvement in our product cost line. With commodity inflation pressures likely to remain, at least in the near term, we have continuously worked with our franchisees to ensure appropriate pricing strategies while factoring in favorable mix shifts that we are experiencing. We will continue to monitor this inflationary environment and have additional opportunities to adjust accordingly throughout 2022 to balance the effects. Total general and administrative expenses were $17.7 million compared to $20.5 million in the prior year quarter. This change was primarily due to decreases in performance-based incentive compensation, share-based compensation expense, and market valuation changes in the company's deferred compensation plan liabilities compared to the prior year quarter. These decreases were partially offset by prior year quarter benefits of approximately $1 million in tax credits related to the CARES Act, in addition to temporary cost reductions. As a reminder, share-based compensation expense and market valuation changes are non-cash items and do not impact adjusted EBITDA. These results collectively contributed to adjusted EBITDA of $24.1 million. The provision for income taxes was $15.0 million, reflecting an effective income tax rate of 25.7%. Adjusted net income per share was $0.16 compared to adjusted net loss per share of $0.05 in the prior year quarter. During the fourth quarter, we generated adjusted free cash flow of $3.4 million after cash capital expenditures of $12.4 million. Cash capital expenditures included approximately $10.4 million related to real estate acquisitions in addition to maintenance and remodel capital. As a reminder, the previously announced sale of two parcels of real estate in December 2021 that generated approximately $49 million in proceeds is excluded from our adjusted free cash flow, while the purchase of real estate is included. Excluding the real estate acquisitions, adjusted free cash flow would have been approximately $13.8 million for the fourth quarter. We anticipate allocating an additional $3 million from the proceeds obtained in December 2021 towards an additional like-kind exchange transaction during the fiscal first quarter of 2022. Our quarter-end total debt to adjusted EBITDA level was 2.1x, and we had approximately $183 million of total debt outstanding, including $170 million borrowed under our credit facility. As we have stated in the last few earnings calls, we are currently more comfortable with a leverage range of between 2x and 3x adjusted EBITDA in the near term, whereas prior to the pandemic, we would have targeted longer-term leverage somewhere between 3x and 4x. During the quarter, we allocated $24 million to share repurchases, resulting in $30.6 million allocated to share repurchases for the full year. Between the end of the fourth quarter and February 11th, 2022, we allocated an additional $10.7 million to share repurchases, resulting in approximately $207 million remaining under our existing repurchase authorization. Since beginning our share repurchase program in late 2010, we have allocated over $595 million to repurchase approximately 57 million shares at an average price of $10.50 per share. Excluding a follow-on offering during the pandemic, we have reduced our total net share count by 46%. In addition to share repurchases, our financial flexibility has provided other opportunities to continue our long-standing practice of returning capital to shareholders while also investing in the business. Recent brand investments such as optimizing our real estate portfolio, the technology transformation and kitchen modernization initiatives, and the new cash development incentive program that Mark mentioned earlier, give us great confidence in the future of this iconic brand. Let me now take a few minutes to expand on the business outlook section of our earnings release. Given the dynamic impact of COVID-19 cases on the company's operations and volatility around commodity inflation and labor availability, we cannot reasonably provide a business outlook for full fiscal year 2022 at this time. However, the following estimates for our fiscal first quarter of 2022 ending March 30th, 2022 reflect management's expectations that the current economic environment will not change materially. Starting with our first quarter 2022 earnings call, we will return to our standard practice of comparing 2022 same-store sales to the prior year as opposed to 2019. Additionally, we intend to return to our normal practice of reporting quarterly data instead of monthly data. However, we will still provide as much clarity as possible as we navigate through the ongoing recovery. With that said, we anticipate first quarter domestic system-wide same-store sales to be between 26%-28% compared to 2021. Our expectations for total general and administrative expenses are between $17 million and $18 million, including approximately $4 million related to share-based compensation expense, which does not impact adjusted EBITDA. Based on the guidance I just described, we anticipate adjusted EBITDA of between $17 million and $19 million, including approximately $2.5 million related to cash payments for share-based compensation. This deceleration from fourth quarter 2021 adjusted EBITDA is primarily due to seasonality in sales and the weight of Omicron on January and early February results. However, as we mentioned earlier, we are starting to see the Omicron impact dissipate. In closing, while we experienced another temporary impact from a COVID variant, we are still well on our way through the recovery curve from this pandemic. We produced $24 million in adjusted EBITDA during the fourth quarter, with approximately half of our domestic restaurants operating 24/7, providing a tailwind as staffing and operating hours improve. Our asset-light business model converts approximately 50% of adjusted EBITDA to adjusted free cash flow, and we have a history of consistently returning capital to shareholders. I want to thank our dedicated franchisees and Denny's team members who have maintained focus on serving our guests and gearing up for our exciting revitalization initiatives on the horizon. That wraps up our prepared remarks. I will now turn the call over to the operator to begin the question and answer portion of our call. Thank you. Ladies and gentlemen, if you would like to ask a question, it is star one on your telephone keypad. If you're using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Again, it is star one to ask a question. We'll pause for just a moment to allow everyone an opportunity to signal. Our first question comes from Michael Tamas with Oppenheimer. Your line is open. Please go ahead. Hi. Thanks, everyone. Good afternoon. Hey, Michael. You know, you guys mentioned in the long-term vision in the press release and talked about it a bit in your prepared remarks, and I wanted to dive into that a little bit more and what that might mean or what it could look like for investors. You know, your long-term same-store sales have averaged, you know, low single digits or so, but the unit growth has really been the elusive piece. Now that you've got some of these building blocks in place with the refranchising development agreements, the REEF partnership, and the new franchisee incentive program, do you think there's a situation where we could be looking at your unit growth as you talked about in 2023 and beyond, also being low single digits combined with that low single digit sort of same-store sales to have a nice little algorithm there? Sure. A great question. I think, you know, obviously, we've been careful not to guide with a ton of precision around that, but the goal, of course, is to get back to a longer term double-digit growth in net unit growth. We still believe that there's a little purging off the bottom, but that, as evidenced by where we finished last year, is slowing while all of these other initiatives are designed to accelerate growth on the other end. We do have the agreements that we have in Canada and the Philippines that has stimulated growth at a faster than the pace that we anticipated in the early going. We like those. Agent agreements. At the same time, we think this stimulus for new development should spur additional growth that we can guide on a little bit, with a little bit more precision in the coming quarters. It does take a little time to build that pipeline, but once it builds, it does like a flywheel continue to gain momentum as we evidenced from our Flying J initiative that built some new interest for Denny's and spurred some growth. Our FDP programs have also accelerated some of our development agreement efforts. What will come at the head of this though will be our remodel program that's getting the restart inside this year. The first portion of the year will go a little slower as it builds momentum toward the end, but we do expect a fairly substantial year in remodels this year, which is another catalyst for building sales and building momentum and visibility in our brand. Gotcha, makes sense. You know, you also talked about the new technology and kitchen modernization strategies. Can you talk about maybe what are the biggest advantages that those are going to unlock for you that's gonna allow you to do something different than what you're doing now? You mentioned operational efficiencies, but is there also a sales benefit that's gonna allow you to roll out some sales drivers that maybe you couldn't implement today? Ultimately, all of these channels are sort of coming at the pace guests will adopt them. Right now we have cashiers at Denny's. We don't do tableside banking with our servers. But with new technology, we'll be able to sort of mimic what is tableside with a high degree of control and efficiency. We'll be able to take orders tableside. We'll be able to do that curbside. We'll be able to take advantage of, you know, any number of technologies that reside better in the cloud for updating, you know, all the mundane, tedious things like menu management and updating prices and, you know, mixed shift changes when you have, you know, challenges with the shift or product inventory. We're able to sort of add or delete items on the fly for like, you know, a busy Friday night shift and what maybe shows up on to-go item menu, QR code, self-checkout. There's a long list of things that come with these technologies. Now, many of these exist right now in the marketplace in one form or another. The advantage of this platform that we're unfolding is it all resides in one integrated system across the entire franchising company base, so we can all move together rather than disjointed initiatives. If we wanna do a product promotion or something, you know, across the system on a single platform, a lot of those things become easier. It's easier to merchandise certain products on different shifts to our customers. They'll be able to do more things through ultimately, you know, kiosk or curbside ordering of their own. The interface on these apps, and the upgrades are, you know, much more intuitive, and I'd say best in class compared to where we've been historically, where we might be middle of the pack or lower with a few too many keystroke entries for our guests, maybe didn't always remember addresses or credit card data as efficiently as it does now. This new platform is best in class, and when it's easier to use, we tend to see a lot higher adoption rate by our guests. When they're hard to use, you just sort of return to some other model, or you don't download the app at all. We see this as being pioneering. The other benefit is that sort of the bigger picture is that as these become ubiquitous in the market, there is an expectation they go with fast casual and with retail ordering. In full-service dining, there is not the same expectation that you have this level of technological capabilities, whether it's inside dining or to go. I think as these unfold, more and more people will be able to just default to those that have a technology relationship with the brand first rather than a human interface. They will be able to eliminate some pain points that are associated with full-service dining, how you enter, how you wait, how you order, how you settle, how you leave, how you look up calorie information, promotional information. There will be those that would rather navigate a digital menu than pick up an actual menu they touch and flip through the pages for safety, sanitation reasons and just to use search engine capabilities. All these things just enhance the way in which consumers interact with brands, and we're proud to say that we will soon be at the forefront rather than in the middle. Awesome. Thanks so much. Once again, it was star one if you had a question. We will go next to Jake Bartlett with Truist Securities. Your line is open. Please go ahead. Great. Thanks for taking the question. You know, my first is about the quarter to date, you know, the impact of Omicron. I'm hoping you can help us understand, you know, how much Omicron has hurt, you know, sales so far. We saw the deceleration in December. If you can give us an idea of maybe just as to kind of the hole you're digging out of or, you know, in relationship to the guidance for the first quarter. You know, where do you, what do you have to make up to get there? [crosstalk] Sure. Well, let's just- Go, John. Go ahead, Robert. Hey, Jake, it's Robert. Sorry about that. Yeah, so when you look at Omicron, we distinctly saw that impact. It came in late into December. You saw the trends that we were on. We did talk a little bit about the mismatch of the holidays. Clearly by the time you hit the end of December, that impact came in pretty substantially. I think it's reflected as you would expect in our guidance ranges, but you can see it both in the 26%-28%. It's not as easily seen, but you can see it in the $17 million-$19 million adjusted EBITDA range. That would be typically several, a couple of million dollars lower than what seasonality would otherwise suggest would be in that quarter. It carried the biggest impact of that through the heart of January. We tried to be very clear in our prepared remarks as we have moved into February and particularly further into February, we have seen that drop off dramatically. What you have seen, if you look at it, pretty consistently because we haven't guided, I can't really get into the exact numbers. If you look at the way Delta impacted us back in the August and September timeframe, if you look at the magnitude of Delta and the change in trend there, and then look forward to literally the Omicron and the steep curve there, you may get a sense of how that portrayed. Now, Delta was a small, less highly topped out impact, but over a longer period of time. Omicron was much more intensive, but for a shorter period of time. Suffice to say, it's hard to give you the exact number, but we do see that waning currently. Great. That's helpful. Then, you know, my next question is on the restaurant level margins. If I understood correctly, kind of adding back the 2.9%, kind of one time charge in there, I think you get to your 17.7% restaurant level margins, which is even with the fourth quarter of 2019. That's despite, you know, pretty significant, I think labor inflation, but also the commodity inflation that you mentioned. You know, I'm wondering how you're able to sustain those margins, kind of have flat margins. You know, we assume that there's delivery costs and other costs in there. What's offsetting? What's driving some of the efficiencies? Is it maybe running pretty lean still on the labor side? Just what are the moving pieces to being able to hold those restaurant-level margins on a two-year basis? Yeah, that's an excellent question, Jake. Thank you for asking that. Just to set the context correctly, that's really kind of the way that we are looking at it also, the%14.8 plus the%2.9. We do internally believe that those were more one-time costs. That's why we framed it the way we did. I think it's a combination of various levers that we are pulling as we move through this very volatile time frame. Partially, a menu mix management issue within there. We really have looked at some of the best performing items with some of the best food costs and candidly, some of the ones that are easier from an operational aspect. We've managed that menu inclusive of keeping some of the value plays within there. It's not all just taking the higher priced items. We have maintained our value positioning. We have our value stance. If you think about our $2 $4 $6 $8 value plates and our Super Slam plates, those have mixed consistently between 10%-15% over the course of 2021. It's not just a function of taking all of the higher priced plates within there. Obviously, there is pricing within that dynamic also. In fact, we did take additional pricing of 2% on the company side as we entered Q4. We do have a couple of more opportunities to take pricing throughout 2022 if and when that is needed. Again, we haven't pulled the trigger on that yet, but we do have those opportunities. Then our ops teams have really focused on some savings initiatives as we've gone through this pandemic. Really, again, one of those other levers. Really tightened down on our waste management. Again, you can see that coming through, not only coming through the product cost line as we leverage 20 basis points despite the commodity inflation that you mentioned there, that 11% that we referenced, along with targeting some other savings opportunities and packaging costs and the such. There's not any one thing. In fact, I'll give you another tidbit with regard to that margin, another piece that's in there that's not readily apparent in there, and this is really good information. We have additional, believe it or not, I'm gonna couch this as good information, additional overtime dollars and additional training dollars sitting in Q4 between a half point and a full point. Why that is good is it gets back to our staffing levels within the restaurants. Our units that are 24/7, which are literally like 61 of the 65 units on the company portfolio, really are at pre-pandemic levels of staffing. Including all of our restaurants now post-pandemic are fully staffed with a general manager. We've really moved in and out of that over the course of the last two years with the volatility in staffing. Excuse me, these new positions are not as efficient as the pre-pandemic level, so you're experiencing additional training dollars to get them up to speed, additional overtime dollars to cover more shifts than a fully seasoned staff may be able to. Even within that 14.8%, there's a half point to a point that ultimately goes away as we get further into a seasoned staff. But for the moment, it's really good from the standpoint that we are getting back to that level of staffing. Great. That's all helpful. Thank you so much. Thank you, Jake. Our next question comes from James Rutherford with Stephens. Your line is open. Please go ahead. Hello. Good afternoon. I wanted to ask about the pace of getting more restaurants open for the full 24/7 operating hours. I guess the way I wanna ask this is how much of the delay is true staffing challenges, and how much do you think is it that there's some franchisees that simply are very content to run limited hours for the simplicity of it, or is that a component at all? Also just what's the overall risk that as this goes on longer, that consumer habits kinda change, and they sort of forget that that's a place they can go in the middle of the night. Just kinda couple questions around that 24/7. Sure. Those are all great questions and obviously we'd like to see this accelerate. It is starting to pick up. We think we'll continue to build momentum. As Robert alluded to, as staffing improves, the investment in day shifts to build nighttime shifts, and the confidence in those continues to improve. If you look at our best performing over the last quarter and the quarter before, it really is you know the weekend dinner and followed by breakfast, then late night, and then lunch. But in the 24/7 stores, the best performing day part is our late night. As our franchisees see the strong performance and outperformance of the brand during that day part, they recognize a number of benefits from that. One, it's a younger audience, slightly more affluent than the average of who's historically filled up our dining rooms. This is a tremendous opportunity to get exposure to our, newly introduced product lines, especially with this kitchen renovation and the new items we'll be adding soon associated with that. There's just no better way than when there's not a lot of other competitors open during that hour. They're seeing the benefits and the momentum build faster in the 24/7 stores. From our franchisee association board all the way through our franchise conversations, the commitment is there. We've not had anybody dig their heels in and say, "This is not for me. I'm not doing it." We just don't see evidence that that's the long-term effect. Now, consumer habits and behavior. Of the full-service options available, there's not a lot. There are a number of quick-serve options available, you know, say from 10:00 A.M. to 5:00 A.M. or 6:00 A.M. in the morning. But in terms of full-service dining, curbside delivery of full-service type menu items, you know, we enjoy a rare position there of being one of the few that has the footprint that we have across the country with 24/7 availability. We do have confidence that we will earn those transactions back as those stores open and confident that we'll continue to build momentum along those lines. We'll go next to Nick Setyan with Wedbush Securities. Your line is open. Please go ahead. Thank you. First, I just wanna confirm that the $1.4 million legal impact in Q4 wasn't adjusted, and so adjusted EBITDA would have been something like $24.5 million as opposed to the $24 million. Is that correct? Hey, Nick. This is Robert. You're correct. The 24.1% is inclusive of that legal impact, and the 14.8% margins are inclusive of that legal impact. If you were to right size for those, it would get you closer to 18% restaurant level margins and closer to $25.5 million in adjusted EBITDA reconciled for that one item. Okay. I mean, just given the huge beat that would imply on unit level margin, you guys were well above on the franchise margin. The comp guidance for Q1 is actually slightly better than what we're all expecting. The 26%-28% is actually above the 25% or so I think we're all modeling for the system comp. The EBITDA guidance is obviously well below in terms of what we were expecting, and like you said, it's over $2 million, you know, lower than what we would have expected given the Omicron impact. The Omicron impact, we're not seeing it in necessarily the comp, but we are seeing it in the margins. I think there's a little bit of confusion as to, you know, why that margin is so much lower. Maybe we could peel back the onion in terms of, you know, what the company-owned comp is, what you expect, that's embedded in that 26%-28%, you know, comp guidance for the system for Q1. And then maybe just kind of help us understand what that company-owned margin would imply. And then I guess where else are we, you know, seeing that delta? Is it on the franchise margins? Like, where else are we seeing that to kind of explain, you know, why we're so much lower on adjusted EBITDA in terms of the Q1 guide? Hey, Nick, this is Robert. I get the question. There's a lot to unpack there. A couple of things. There's not necessarily as we move now into 2022, the comp differential that we were experiencing between company and franchise becomes a little more muted as you begin to roll over that year-over-year. We've had the 90%+ of the units on the company portfolio now fully 24/7 for the majority of that time. When you roll over that, the comp is not necessarily as pronounced there. I do think with regard to some of the modeling that we have seen is that there is a differential, a higher weight is being allocated to a company's comp there. The other piece that I think if we look at models to models, with regard to what we're seeing in ours versus what we may be seeing from you guys, is the cash component of the stock-based compensation. We included $2.5 million. We called that out, specifically in my remarks. What that ends up being is the expense itself, and this becomes a little nuanced, but the expense itself does not come into the adjusted EBITDA. It's scoped out. The shares that are functionally withheld to cover the taxes that are ultimately provided to the participants in those programs come through as an adjusted EBITDA hit. We have $2.5 million of that in the current estimate in that $17 million-$19 million range that is clearly outpacing what we were experiencing in 2021 with those payments. In general, some of the other G&A. If we're looking model to model, we do believe that the G&A that we've included within our $17 million-$18 million in the core aspects outside of the stock-based compensation, the deferred adjustments. If you just look at what we call the kind of core G&A and the incentive compensation may be outpacing what's included in those models. I think that's probably the best I'm gonna be able to do for you. There is clearly an Omicron impact. That impact is clearly contained within the 26%-28% same-store sales range. That's probably about the best I'm gonna be able to do for you at this point. Got it. Is there any way we can maybe contextualize, you know, where sales are trending now versus, say, October and November? Are we within the range of October- November, or are we below that still? Yeah, it's a good question. I'm looking at Curt right now to see what we can say. Again, we're trying to avoid getting into these intra-quarter guides. I think the reality is that Omicron curve comes down and you're looking at the same data that we're looking at, and it's come down dramatically over the last two to three weeks. We are experiencing the sales recovery as about as quickly. It's very highly correlated with regard to the spikes and the recoveries in that, so. Okay. Thank you very much. Thanks, Nick. Ladies and gentlemen, once again, it is star one if you had a question or comment. We will move next to Todd Brooks with The Benchmark Company. Your line is open. Please go ahead. Hey, thanks. Good evening, everyone. Hey, Todd. Hey, Todd. Hey. If we can dig in on the staffing side a little bit, you talked about some of the company's specific efforts around the platform. You talked qualitatively to an improvement in hiring that you're seeing. I know one of your peers talked about kind of that September-October timeframe, kind of one to two applicants for every open position, and now seeing 10-12 applicants for every open position. How does that match up magnitude-wise with the improvement in kind of incoming staffing flows that you're seeing currently? We are seeing, you know, again, continued improvement in applicant flow, and this started, you know, some time back. Unfortunately, you know, the first wave of that a couple quarters back, you know, resulted in higher applicant flow but not necessarily higher position fills. Then later, a lot more momentum was built in sort of filling positions, but then the retention wasn't near what it was historically for our brand and for our franchisees' experience, suggesting that, you know, folks, you know, took a position and then maybe weren't quite ready to come back to work or it's pretty burdensome to come back to work in a staff that's, you know, not fully trained and running as smoothly as, you know, historical. There's sort of been a bumpy start to restaffing. We're hearing this across, you know, healthcare, retail, you know, lots of different industries, construction industries where we hear these similar stories where it's building momentum in applicant flow way ahead of, you know, actual, you know, sort of committed, service hours and sort of career building efforts. We are starting to see that improve dramatically. The company stores are, you know, you know, approaching that, I guess, you know, you know, 90% near 100% staffed level. We are 100% staffed at the general manager position. We think our franchisees are still in that 80% range, and so we've got, you know, about half the system at the end of the fourth quarter, not guiding into this quarter or beyond yet, but certainly we ended the year around 48% 24/7. Again, that continues to build momentum. I don't know how to qualify it much further. Applicant flow is no longer really the challenge. We are doing a lot of work with exit interviews to hear, you know, what it is people are looking for. Any insight we can get, we're trying to solve, you know, in real time and on the spot. Again, our retention levels are much lower than, you know, the full service averages generally at Denny's corporate, which is why we've won some awards and recognition for best places to work. I think that those best practices and the sort of gate to those has been of a lot more interest across our entire franchise system. We have a lot of people paying attention to onboarding, training, respectful work environments, and just making sure we get that right. You know, we're not the only brand focused on it, that's for sure. You know, all I can say is that, you know, it does continue to improve bit by bit. Okay, that's helpful. Then, Robert, if I take what John just commented on how the recovery has kind of rolled out with applicants turning into better retention and then, just better staffing levels that's starting to play out here recently. What's the rate? I mean, we seem to be tracking on kind of a 2% a month increase in the stores operating in the 24/7 model. With recent staffing improvements, what kind of slope should we put on that improvement curve as we go across 2022? I just wanna make sure that we're all kind of level set against if we're entering at 48% back in the 24/7 model, what's the right way to think about maybe exit rate in 2022 or what the slope of that recovery curve should look like? Yeah, that's the $64 million question, Todd, right? Because you're spot on. When you look at that, the rate at which we're adding. Transparently, it's the franchisees that are adding because we're primarily there on the company side. You're spot on with your 2% trend, right? If you look back in the earnings release from Q3, it's kind of even in Q4 here, it'll pin it at 2%. Even December- January, it was 2% going from 48%- 50%. I think I called that out in my script. I think, frankly, we would expect that in the near term, you'd probably see something similar and we would look to accelerate that, right? Our initial thoughts when we were talking about this probably six to nine months ago is that slope would get you to something closer to a full level by the end of 2022. I'm not certain that we're there. You can draw that line somewhere between 2% and 4%. Again, I don't think we're on a 4% curve at this moment. It will take that acceleration in staffing. Because John, when he spoke, he was spot on with regard to our best current thinking of what we know from franchisee staffing levels. The units that are not 24/7 are staffed at about 80%. The franchisee units that are open 24/7 are very similar to company units. They're approaching pre-pandemic, if not over pre-pandemic levels of staffing. Going back to James' question about the staffing levels of these units, yes, the 24/7 is predominantly a staffing issue at this point in time and ramping that up. I would like to say, and again, this is not a guide, I would like to say that we could move beyond this 2% trend that we've experienced for the last six to eight months, but it's just probably too early to quote that. Just to map it with operational reality, and John talked about this, that these people you're bringing in now, you don't throw them into an overnight shift. They've got to train, they've got to work day for a while before those bodies are ready. I guess operationally, a hire made now, when are they ready for an overnight shift? What's that lag between hiring and readiness? Right. A lot of this has to do with experience. Servers and cooks can get there at different levels depending on their experience level coming in. We are starting to also get a little relief in that the experience level is starting to return. Over the last couple of quarters, you know, entry level employees were, you know, much less experienced, and so we're starting to see a reversal of that as well. You could take, you know, a couple of weeks to get a cook ready to go, or it could be three days, right? It just depends on the position they hold, the experience of the manager that's on that same shift. There's a number of dynamics that affect it. That too is shortening, which helps the momentum. To just reiterate what Robert said, because of Omicron starting to wane, you know, we see similar habits of, you know, improvement, and then we saw the Delta wave and the Omicron wave create deceleration. We're careful not to guide the year just yet, but we'll have a lot more confidence coming out of this year in another month or two. Okay, great. Thanks for the, feedback. Thanks, Todd. Our next question comes from Eric Gonzalez at KeyBanc Capital Markets. Your line is open. Please go ahead. Hey. Thanks. Just maybe following up on that discussion around the 2% month-over-month increase in the 24/7 units. Maybe if you could discuss what drove that improvement. I guess I was a little surprised to hear that improved in January, you know, given what you're facing, the headwinds from staffing exclusions and maybe people calling out sick. Really what drove that 2% improvement in January, and do you see a correlation as you know, the week-over-week trends get better from an overall sales perspective? Do you see a correlation to, you know, the franchisee willingness to maybe go to 24 hours and increase that mix? Yes, I do. I think there are not really structural holdouts per se, but rather some were just so much further behind other franchisees where they nearly fully shut down or cranked it down to almost nothing. While they are rebuilding their staff, they're still struggling to get, you know, all the way to right in their current daytime shifts. They want to get a little bit more stability underneath themselves before they build on top of that. We too want to push and drag and pull, but at the same time, we don't wanna do anything out of sync with the reality of customer satisfaction scores. We do have to march and step with the capabilities of each location and management team. When you have stores with very green management, their capacity to move at the same pace of experience management is considerably different. You think in the company fleet or higher average volume units backed by some you know a stronger balance sheet in the way we managed through it was a little bit more supportive of staff retention and that's you know paid dividends for the company fleet. Longer term franchisees who did the same were more fully staffed and enjoyed some tremendous upside from 24/7 sales, but not every franchisee was in that same position. Got it. If I could just maybe ask about pricing. You said you just took a price increase in the company on stores, I think you said 2%. Can you maybe talk about how much effective pricing is in the franchise system, or at least maybe what you're advising your franchisees to do on price and perhaps comment on your inflation outlook? I think you said 11% for the fourth quarter. What are you seeing in the commodity markets for 2022? Sure. Franchisees, again, because the company fleet's smaller and scattered about, given that we have a big footprint in California on the average, franchisees are a little ahead of the company on pricing, but not materially. We're kind of in the same range, and we're experiencing the check change is coming in about half from pricing, half from mix changes, where, as Rob was alluding to earlier, we're seeing these higher lunch and dinner entrees and higher beverage incidents being enjoyed right now, in spite of the stickiness of our to-go transactions. That's really good news for us, where people are moving away from just the value-priced breakfast items on the menu. Now that said, we still believe value has a pretty strong place in family dining. You know, even inside this quarter, we were promoting some of our melts. The Nashville Hot Chicken items are a very hot idea right now across America, across many brands. That's a really high consumer scoring product we wanna make sure was out there in the mix. Then we also promoted our Super Slam during the quarter. We do have a presence in the value positioning. It's not as loud as historically because you know, this is a check environment until we get more fully staffed. It does show that, you know, we are prepared to lean on traffic drivers at the right time in a better staffed environment, but also right now to enjoy a higher check and high trial of some items that historically don't get the same level of attention on our menu. When it comes to commodities, I think just frankly, it's. I'd love to assist a little more. It's a bit too early. We're not guiding and frankly, I think, you know, it's too early for us to know with much clarity at the moment. Fair enough. I'll pass it on. Thanks, Eric. We'll go next to Brett Levy at MKM Partners. Your line is open. Please go ahead. Great. Thanks for taking the question. I guess just continuing on that point a little bit, how are you thinking about, what you want to pursue in terms of marketing, not just the messaging, but also the pace of spend? What would it take for you to have, one or more tranches of incremental pricing? I'm sorry, could you repeat one or more tranches of incremental? Of incremental menu pricing. Got it. Yeah. You know, pricing you know is you know it's really interesting what's happened over the last couple of quarters with higher wage inflation and then you know the short supply, some of which people are saying it is you know sort of adjusts over time. You know, while things were in short supply, you know, we're really proud that at Denny's we did not you know see a lot of product outages. We were able to you know maintain the menu we had in mind to offer with very little interruption. What that allowed us to do is focus a little bit more on pushing higher trial around these lunch and dinner items that we were talking about. Because of that mix shift change towards some of those items, while they had some price, they were really more just mix toward, you know, double cheeseburgers and dinner entrees and chicken fried steaks and the kinds of things that we're pleased to see people try rather than. There's a little bit lower average check across the breakfast menu overall, and a little bit more of a value or frequency among breakfast users, heavy breakfast users of our brand. This long revitalization to our heritage as America's diners and as not just a breakfast all day place, but a place that's got breakfast, lunch, dinner, and late night with, you know, great, you know, diner options that the pandemic, I wouldn't say it did a favor to anybody. The one, you know, silver lining is that we're getting high trial and adoption for both third-party delivery channels and dine-in channels for items that we wanted to start to get more credibility around. That takes pressure. While there will be pricing, and I would say that, because of wage inflation, pricing will maintain the sort of above historical norms for the eat out industry. This invention of product lines that historically have not existed on Denny's menu through the kitchen initiatives creates a little bit of a blur to that scenario, where we'll be adding some new items at a price that's appropriate for the market, and it's not necessarily a price increase. There'll be more interesting commentary about that over the next several quarters as the menu evolves and some of these initiatives unfold. I know you're not going to give too much granular detail in terms of quarter-to-date trends, but is there anything you can share in terms of where you saw the greatest strength or weakness, either day part or geography. Sure. Thanks. Sure, absolutely. You know, same with Delta. You know, our best performing, you know, was Florida, Texas, California. This, you know, last quarter was really no exception. California, Texas, Florida, Arizona were our strongest performing markets, but we also were positive and, you know, 40%+ some odd of the system. You've got a lot of areas that were strong, in spite of Omicron. Illinois, Missouri, Nevada, Colorado, Oregon, there are a lot of places that just continue to have positive momentum. I'd say the Northeast, Midwest continues to struggle the most, when there's the Delta and Omicron, they were hit harder, and that was true again this time around. Great. Thank you. We'll return to James Rutherford with Stephens. Your line is open. Please go ahead. Hey, thanks for getting me back in. I was on mute when I queued in for my second one earlier. I wanted to ask about value. I think you all have been de-emphasizing $2 $4 $6 $8 on your menu. Correct me if I'm wrong about that, but just, you know, and that's given the overall strong consumer spending environment that the industry has enjoyed for a while now, which you mentioned a minute ago, John. I'm curious, if you look at even the most recent data, is there any early signs in your mix or traffic, you know, Omicron aside, that indicate the consumer environment is starting to shift or change at all, in a way that you may need to pivot somewhat more back to a value messaging in the near future? Just what are your thoughts around that? Sure. I think you sort of keep your playbook. You have all the plays ready based on the circumstance and situation. When you're a little bit less staffed, and with this much wage in place, and you try to avoid, you know, a deep addiction to just driving value for transaction's sake, if it's not gonna give you the lift. If you're not gonna get the uptake, particularly in the Northeast or the Midwest, there's no particular good reason to discount somebody who may have come anyway or for me to go anyway. At the same time, as people get out and about, and we start to rebuild these transactions in a post-Omicron environment, we're not gonna wanna yield customers that are looking for a deal. When your competitor is offering one, we don't wanna lose share. We all pay close attention to what's going on. The body language of the quick serve and fast casual environment has been the same. There's been much less emphasis on discounting. What you're seeing now, post-holiday, post-Omicron, a little bit of a reversal in that. You're starting to see some of the quick serve players start to return to some dealing, not as deep, maybe as in recent past, but as staffing starts to stabilize in some of the quick serve brands, you're starting to see a little bit of return to that. True to form, you'll see that return to some degree in the casual and mid-scale players as well. Again, it's too early for us to guide precisely what that is other than I will tell you, as I mentioned a moment ago, we were not ashamed to have, you know, not an overweight or not a heavyweight media buy, but to have some value exposure in the first quarter with our Super Slam. Thanks for the thoughts. With no other questions holding, I'll turn the conference back to Mr. Miller for any additional or closing comments. Okay. Thank you. I would like to say thanks for joining us on the call today. We are very pleased with the progress we've made through the pandemic and as we continue navigating the recovery despite temporary interruptions. We are making steady progress addressing staffing challenges and extensive hiring and training efforts, and we believe this situation will correct itself in due course. As it does and operating hours are extended, we see additional potential for our brand based on the performance of those restaurants already open 24/7. We are pleased with the consistency of our elevated off-premise sales volumes, which have been supported by the successful launch of our two virtual brands. We were also encouraged by the level of adjusted EBITDA and adjusted free cash flow generated by our highly franchised business model during the fourth quarter, which enabled us to return $24 million to shareholders through our share repurchase program. We believe the meaningful investments we are making in kitchen equipment and restaurant technology platforms will propel the brand forward with exciting high quality product opportunities and an enhanced guest experience. Finally, we are excited to relaunch our successful Heritage Remodel program, along with the opportunity to enhance our existing development pipeline through our partnership with REEF and our new franchisee incentive program. We do look forward to our next earnings conference call in early May, and we will discuss our first quarter 2022 results at that time. Thank you again, everybody, for joining, and have a nice evening. Ladies and gentlemen, that will conclude today's call. We thank you for your participation. You may disconnect at this time, and have a great day.