Good day, ladies and gentlemen, and welcome to the Denny's Corporation Second Quarter 2022 Earnings Conference Call. Today's call is being recorded. At this time, I would like to turn the conference over to Curt Nichols, Vice President of Investor Relations and Financial Planning & Analysis. Please go ahead, sir. Thank you, Kyle, and good afternoon, everyone. We appreciate you joining Denny's Second Quarter 2022 Earnings Conference Call. With me today are John Miller, Denny's retiring Chief Executive Officer, Kelli Valade, Denny's Chief Executive Officer and 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 second quarter earnings press release, along with the reconciliation of any non-GAAP financial measures mentioned on the call today. This call is being webcast, and an archive of the webcast will be available on our website later today. John will begin with some opening remarks followed by a business update from Kelli. Robert will then provide a development update and recap our second quarter financial results before commenting on our guidance. After that, we will open it up for 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 knows 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 29, 2021, 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. Thank you, Kurt, and good afternoon, everyone. I wanna thank you for joining our Second Quarter 2022 Earnings Conference Call, which also happens to be my last before I officially retire and fully dedicate my time and energy as a Denny's board member. It has been a pleasure working with each of you, our analysts, and we appreciate your coverage of Denny's. I've been blessed with the good fortune of serving alongside our restaurant teams, franchisees, corporate support functions, leadership team, and board of directors during this assignment, and I have literally cherished every moment. Denny's is a very special place to me. It's led by a talented team with a solid foundation of enduring principles, unwavering determination, and a relentless focus on serving our guests, our franchisees, and our shareholders, and we truly love feeding people. I am confident this brand will continue to prosper for many years to come under the thoughtful leadership of Kelli Valade. With 30 years of restaurant industry experience in multiple executive leadership positions, she is more than well prepared to not only drive this resilient brand forward, but also to accelerate our growth with the support of an amazing team behind her. It's now my pleasure to turn the call over to Kelli Valade, Denny's Chief Executive Officer and President. Kelli? Thank you, John. I know I speak for the entire Denny's family when I wish you the absolute best in your well-deserved retirement. You'll be missed greatly, but we look forward to still benefiting from your wisdom and experience through your continued role on the Denny's board of directors. In my brief time so far at Denny's, I've been incredibly impressed as I've met so many passionate, caring, and talented team members, operators, and franchisees. It's obvious they're the reason this iconic brand has prospered for nearly 70 years. As I settle into my new role, let me express my confidence in the current strategies already in place, as well as the benefits I believe will derive from the newly acquired Keke's Breakfast Cafe. Quite simply, I believe Denny's is poised for a bright and prosperous future, and I'm thrilled to be working here alongside such an amazing team. Turning to the second quarter, Denny's domestic system-wide store sales increased 2.5% compared to 2021 and increased 1.8% compared to 2019. In terms of the monthly cadence, April started off strong as gas prices began to moderate from their initial peak in mid-March. In mid-May, the industry and Denny's experienced softer guest traffic as multiple inflationary pressures converged and weighed on both consumer confidence and consumer sentiment. Once again, the resiliency of the Denny's brand persisted, and our sales relative to 2019 outpaced the Black Box Intelligence Family Dining Index during the quarter by 40 basis points. Even more encouraging, our stores operating 24/7 outperformed the BBI Family Index by over 700 basis points. I want to reiterate, we are a 24-hour brand, and this remains a significant tailwind as demand for the late-night dining occasion is ever present, and 24/7 restaurants are consistently outperforming limited hour restaurants by mid-teens digit sales comps relative to 2019. Notably, during the quarter, we continued making steady progress on this initiative, and we're actively working with our Denny's Franchisee Association on new approaches to accelerate our return to 24-hour operations over the coming quarters. Staffing still remains a primary barrier to accelerating this progress. However, both turnover and wage rate growth have begun moderating recently within the industry and at Denny's. This is definitely encouraging. We also recently launched a unique and differentiated hiring campaign called Bring Your Bestie to Work. This clearly resonated and is working, as evidenced by gained media impressions, increased applications, and most importantly, improved staffing at both company and franchise restaurants. Turning to our menu and advertising, we are committed to a clear barbell strategy of offering high-quality products and a re-energized focus on relative value offerings, which has been and will continue to be a competitive advantage for Denny's. During the second quarter, our media messaging was balanced between the limited-time Hullabaloo Burger and our new endless breakfast promotion. This compelling offer was not only consumer friendly, but also operationally efficient, while appropriately managed commodity inflation with protein upsell opportunities. To remain top of mind for our consumers facing inflationary pressures, we're now featuring Summer Slamcation, including endless breakfast, along with our popular Super Slam starting at $6.99. The good news, this is driving encouraging traffic trends as of late. Turning to off-premise, sales have remained strong at approximately 21% of total sales compared to the pre-pandemic trend of 12%, which far surpasses the Family Dining Index. Related to this, the performance of our virtual brands has also remained very consistent and highly incremental, representing 3% of weekly sales. We're also excited to announce that we are expanding the reach of The Meltdown, formerly a DoorDash exclusive, to multiple delivery partners during the back half of the year. This expansion provides greater upside potential for sales from our already strong virtual business. I'd also like to touch on two of our strategic initiatives, kitchen modernization and cloud-based restaurant technology. The new kitchen equipment has been installed at approximately 50% of our domestic units, and we expect to be substantially complete with this rollout by the end of the year. Our new cloud-based restaurant technology platform is currently in the beta testing phase. We're receiving great feedback from test stores around ease of use and excitement around future enhancements. This implementation is on schedule to be substantially rolled out to all domestic locations by the end of 2023. Both the kitchen and technology platform initiatives are expected to enhance the guest experience and drive operational efficiencies, with the former also providing the ability to further enhance our menu offerings across all day parts. Turning to our recently closed acquisition, we are delighted to welcome Keke's team members, franchisees, and suppliers to the Denny's family. This is an exciting opportunity to participate in the fast-growing AM eatery segment through a complementary brand. We believe our experienced team and track record as a model franchisor can develop Keke's across multiple states with the goal of becoming the A.M. eatery franchisor of choice. In closing, I want to reiterate how excited I am to be a part of this iconic brand. Denny's has a solid foundation, significant competitive advantage, and many opportunities on the horizon. Most notably, we have an exceptionally talented and tenured management team. We have a dedicated and tenacious group of franchisees. We have sales upside as we migrate back to 24/7 operations. We have sound investment strategies providing compelling shareholder returns both today through our share repurchase program and in the future with our strategic investments. Lastly, we now have a momentous opportunity to expand our business into the fast-growing A.M. eatery segment. I truly believe our best days are yet to come, and I'm thrilled to be a part of this great brand. With that, I will turn the call over to Robert Verostek, Denny's Chief Financial Officer. Thank you, Kelli, and good afternoon, everyone. I will begin by providing a development update and a review of our second quarter results before sharing additional details around the Keke's acquisition and guidance comments. Starting with our development highlights, franchisees completed 7 Heritage 2.0 remodels, and we completed 4 company remodels during the second quarter. Additionally, franchisees opened 4 new restaurants during the quarter, including 1 international location in Canada. Moving to our second quarter results, as Kelli mentioned, our same-store sales growth in Q2 was 2.5%. This growth came from a 10% increase in guest check average, which was comprised of approximately 3.5% carryover pricing from the prior year, over 3% pricing taken in the current year, and approximately 3% of product mix benefits. As highlighted in our Q2 earnings investor presentation, domestic average weekly sales for Q2 were approximately $36,000 compared to $34,000 in the pre-pandemic second quarter of 2019. This represents a 5% increase in average weekly sales compared to 2019, whereas the same-store sales only increased 1.8% relative to 2019. The variance between these two metrics demonstrates that while our system portfolio is smaller than it was three years ago, it is also generating higher average weekly sales as lower volume restaurants exit the system. Franchise and license revenue increased $7.3 million or 12.4% to $65.9 million. Royalties and advertising revenue increased by $1.7 million, $1.6 million and $900,000 respectively due to a 2.4% increase in domestic franchise same-store sales for the quarter. The $5.7 million increase in initial and other franchise fees primarily resulted from the recognition of revenue from the sale and installation of kitchen equipment. However, the revenue recorded related to the sale of equipment has an equal and offsetting expense recorded in other direct costs. The $1 million decrease in occupancy revenue primarily resulted from lease terminations. Franchise operating margin was $30.6 million or 46.4% of franchise and license revenue compared to $29.9 million or 51% in the prior year quarter. This margin dollar increase was primarily due to the improvement in sales performance at franchised restaurants. I would like to note that while franchise margin dollars were not impacted by the kitchen equipment rollout, the franchise margin rate was reduced by approximately 450 basis points. This was due to revenue recognition accounting related to the kitchen equipment rollout during the quarter. More information can be found in our 10-Q. However, we expect this margin rate impact to persist throughout the remaining rollout of kitchen equipment, while still having no impact to franchise margin dollars. Company restaurant sales of $49.2 million were up 3.4%, primarily due to the improvement in transactions from limited operating hours in the prior year quarter and an increase in guest check average. Company restaurant operating margin was $4.3 million or 8.8% compared to $9.8 million or 20.5% in the prior year. This was primarily impacted by approximately $2.3 million of unfavorable legal reserve adjustments or over 450 basis points. We consider this a highly infrequent occurrence. Excluding this item, we would have achieved between 13% and 14% company restaurant operating margins. Additionally, we experienced commodity inflation of approximately 18% and labor inflation of approximately 8% during the second quarter. We continue to monitor this inflationary environment in collaboration with our franchisees while remaining thoughtful with regard to pricing strategies and decisions. The roughly 7% of pricing that I mentioned earlier included 1% of pricing the system took in late June. We will have an opportunity to make additional adjustments as needed with our fall core menu. We have taken sufficient pricing to cover the inflationary pressures within our margins on a pennies basis per guest, and we are keenly focused on driving traffic through our well-established and industry-recognized value positioning. Total general and administrative expenses were $16.6 million compared to $17.5 million in the prior year quarter. This was primarily due to a benefit from deferred compensation valuation adjustments and a decrease in corporate incentive compensation, partially offset by an increase in corporate administrative expenses. The change in corporate administrative expenses was primarily due to compensation increases in the current year, coupled with temporary cost reductions related to the COVID-19 pandemic and tax credits related to the CARES Act, both in the prior year. 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 $17.2 million. The provision for income taxes was $7.8 million, reflecting an effective income tax rate of 25.3%. Adjusted Net Income per share was $0.11 compared to $0.18 in the prior year quarter. During the second quarter, we generated Adjusted Free Cash Flow of $6.6 million. Our quarter-end total debt to Adjusted EBITDA leverage ratio was 2.4x, and we had approximately $199 million of debt, total debt outstanding, including $187 million borrowed under our credit facility. During the quarter, we took advantage of a dislocation in our share price and allocated $37.4 million to share repurchases. On a year-to-date basis, we have allocated $49.2 million to repurchase approximately 4.7 million shares. As a result, at the end of the quarter, we had approximately $168 million remaining under our existing repurchase authorization. Now, I'd like to provide some additional comments around Keke's Breakfast Cafe, which we acquired in July for $82.5 million. The transaction was settled in cash and financed through additional borrowings under our revolving credit facility. With the closing, and as previously communicated, we are adjusting our target leverage range to be between 2.5 times and 3.5 times of our Adjusted EBITDA, which results in our current debt leverage ratio being near the midpoint of our range post-transaction. Let me now take a few minutes to expand on the business outlook section of our earnings release. Given the ongoing market and global volatility, we are providing the following estimates for our fiscal third quarter ending September 28, 2022. We anticipate Denny's third quarter domestic system-wide same-store sales to be between 0% and 2% compared to 2021, which represents a similar improvement compared to 2019 and takes into account Denny's seasonal patterns. Our expectations for consolidated total general and administrative expenses are between $17.5 million and $18.5 million, including approximately $2 million related to share-based compensation expense, which does not impact Adjusted EBITDA. We anticipate consolidated Adjusted EBITDA of between $19 million and $21 million. With regards to inflation, we are seeing early signs that commodities may have peaked, and we expect commodities will begin to ease during the third quarter. Additionally, we believe we will continue to see wage rate inflation moderate. To be clear, these estimates include a limited benefit related to Keke's Breakfast Cafe due to a partial quarter of Adjusted EBITDA contribution being offset by upfront transaction costs. In closing, while there is certainly a level of volatility within the macroeconomic environment, we are excited about our bright future with opportunities to unlock additional shareholder value through extending our operating hours with improved staffing, leveraging value messaging to drive transactions, elevating the guest experience through Heritage 2.0 remodels, growing the collective geographic reach of Denny's and Keke's locations, enhancing efficiency with an upgrade of products through updated kitchen equipment, and creating a more seamless digital experience through restaurant technology upgrades. Our model generates a considerable amount of Adjusted Free Cash Flow, which will be enhanced by the acquisition of Keke's, and I want to reiterate our commitment to return capital to shareholders through our successful share purchase program. I also wanna thank our dedicated Denny's family, inclusive of both Denny's and Keke's Breakfast Cafe franchisees and team members, who have continuously remained focused on serving our guests while managing the business needs. Finally, I want to express my sincere appreciation for John's service and how just excited I am to support Kelli in her efforts to drive our business forward. That wraps up our prepared remarks. I will now turn the call over to the operator to begin the Q&A portion of our call. Thank you. Ladies and gentlemen, if you would like to ask a question, please signal by pressing star 1 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, press star 1 to ask a question. We pause just for a moment to assemble the queue. We take our first question from Michael Tamas with Oppenheimer. Your line is open. Please go ahead. Hi. Thanks. First, John, it's been great working with you and hope you enjoy some more free time going forward. Kelli, welcome, and look forward to working with you as well. You know, the first question is really just on the third quarter sales guidance, and I was hoping you could sort of unpack that a little bit. You mentioned that there's more normal seasonal patterns in your guidance this year, and I think the industry's sort of seeing it this year for the first time in the last couple years. Can you maybe talk about what your average weekly sales look like normally in the third quarter relative to, say, the second quarter, so we can sort of understand that? And then secondly, tied to that, can you just talk about the consumer environment, any changes in frequency or spending habits that you're seeing so we can kind of, you know, understand the sales guidance a little bit more? Thanks. Yeah. Let me take the first part of that, Michael. Great hearing from you. Relative to Q2 to Q3, sales do trend down. It's that back- to- school timeframe. They're off probably less than 1%, but it is on a seasonal basis. Adjusted, it is down Q2 to Q3. I think the important part with regard to Q3, and we're starting to see this. We've talked about it in the scripts, but we are moving back towards value. It's deeply embedded in our DNA, something we are really good at. You can see it within some of the Summer Slamcation that we launched early in July. We are seeing the results of that, beneficial results of that. We're not gonna talk about that specifically, but we are seeing the benefits of that, so we look forward to going more deeply into that, in Q3 and think it'll go a long way. We will also leverage, Michael, in Q3. We really believe, and we can talk and unpack this a little bit more about, 24/7. We're going to work with our franchisee association and figure out how to really accelerate getting our franchisees back to 24/7, as quickly as possible. There clearly are benefits in doing so, and both of those, beyond all of the other things we've mentioned in our scripts, should pay dividends in Q3 and beyond. Very significant tailwinds. With regard to the consumer, Kelly? Sure, yeah. Thank you, Michael. I appreciate the question. I think, you know, as it relates to the consumer and the guidance we gave, it's really about, we've seen that, for a while the consumer really was, even in this inflationary environment, been pretty resilient. However, to date, and as of late, you know, we also can see broad industry data that points to consumers kind of depleted their savings and their surplus. That's what's kind of baked into there. We've seen large retailers talk about increased discounts with excess inventories, and in our industry, you just see more value offers and more of those coming. You know, what we are doing really does play to that sweet spot, as we've mentioned a couple times, and Robert just did. We think you'll see more of that. We know it works for us. We know this is a place where we play, and we know our guests count on us for that. We are focused and have our heads down, really on what's most important in front of us. Again, we've mentioned seeing some traction, but there's still so much volatility out there in the consumer mindset. Thanks. That was a great overview. Robert kind of mentioned part of my next question, but you know, you said you were gonna try some new approaches to increase store hours, and I think it was either last year or the prior year, you tried to use some royalty abatements to entice franchisees to be open for longer hours. What other options you think are on the table or what you would explore with your franchisees to try to you know, push them towards doing 24/7? Thanks. That's an excellent question, Michael. It was in Q4 of 2020. It was in hindsight, being 20/20, probably a little soon, given the resurgence of the pandemic at that point in time. It really is gonna be a combination of push and pull, right? We're going to partner with our DFA board, our Denny's Franchisee Association board. We meet with them on a very routine basis. They are really walking lockstep with us. They acknowledge the benefits of 24/7 with us. There is no pushback with regard to that. You may see a combination of various incentives that potentially could come back into the framework to move people along, and also holding people accountable to what their franchise agreements require them to do. With regard to that, the other approach that we will need to focus upon, and Kelli mentioned it within her script, is getting these restaurants staffed. This concept of Bring Your Bestie to Work, that has resonated. It was quite simple in ideation, but quite effective so far in bringing additional employees into our restaurant. Staffing is starting to improve. We have seen that in our staffing levels. That has been the key talking point from our franchisees. Again, it has not been a reticence to move to 24/7. It's just getting staffed for that day part. That is improving. We will continue to work to improve that. And I do believe, I'm confident that we will move that forward. You can see it, Michael, with regard to the performance of our 24/7 units. Kelly called it out. There's just a double-digit difference with regard to the performance of those units. In fact, one other key statistic, the only positive day part versus 2019 is the late night day part isolated to the 24/7 units. There is a lot to really unlock here. Perfect. Thanks so much. Thanks, Michael. Thank you. We take our next question from Nick Setyan with Wedbush Securities. Your line is open. Thank you. Kelli, I look forward to working with you as well. I just wanna kind of unpack the margin trajectory if I may. First it sounds like just, you know, doubling down on the value a little bit and starting in July, you mentioned it's working a little bit. Does that mean mix is going to be negative in Q3 and POS ops and transactions potentially less negative? You know, Nick, that's spot on. Good to hear your voice. That's the way that works, right? You gotta overcome the transactions have to overcome the decline in mix, right? The value of mix is higher. That would suggest the overall GCA it will go a little bit lower. What we have seen so far in July is that we've just with one item, with the Summer Slamcation and being on air with it, we took our value incidence up 3%. We are seeing the traffic benefits from that that would more than offset the cost. As you know, getting those sales higher, Nick, will leverage those fixed costs and drive margins higher. We don't view that a value strategy is a negative to margins. In fact, we believe that it will drive margins higher. Our goal. Maybe a slight repositioning here from what we would've said 3 years ago coming out of our last refranchising, but we do believe that mid- to higher-teens is the place that we can ultimately get these company operating margins back towards. We do believe that it'll be through driving traffic. This is in our sweet spot, Nick. This is what we do, right? We have been known for value. We did this historically with regard to the $2 $4 $6 $8 Value Menu coming out of the Great Recession. A little history, that drove over 6 points of traffic back at that point in time in a profitable way. This is right in, again, in our sweet spot to do this. We believe that this is what the consumer needs right now. We are better tooled and equipped to do this than other brands. Sure. Yeah. I mean, it would be great to see, you know, the traffic trajectory get better. Is it fair to assume that menu pricing stays at around 7% in Q3? You know, I think that's probably fair, Nick. I'd say not necessarily because we're going to take more pricing. It's just already in the system that way. I think that's the right range to think about. Got it. Now, you mentioned, you know, potentially, you know, commodities have peaked, labor, the wage rate may have gotten a little bit better. Can we go into that a little bit more? Where are you seeing, labor inflation in the second half? And then, you know, potentially what inflation or the commodity inflation looks like in Q3 and Q4 or just the second half in general? Very fair questions. What we've seen so far with our wage rate growth, let's take that one first, unpack that. We have seen sequential decline in that. 10% up in Q1, 8% up in Q2. Really not guiding to Q3, but we do believe that the bias in the environment right now from all of the benchmarks that we are hearing would be for that to trend in that similar fashion. The other piece with commodities, we are 15% in Q1. That was 18% in Q2. Like, me, you probably would suggest that's unprecedented. We probably heard that word quite a bit here throughout that earnings season. We suspect that in Q3, we will see that start to abate with regard to beef, pork, and dairy first, and then Q4 with eggs, poultry, and cooking oils kind of following. I think you'll see a sequential improvement from Q2 down to Q3 into Q4. Our suggestion is beef may be temporary given that that's a herd stock reduction, but the avian flu thankfully did not persist for a long period of time. We're rebuilding flocks, which will benefit multiple categories within some of the higher categories within our product mix environment. I think that trending will be down. Again, we haven't guided specifically to those numbers, but the direction clearly will have a downside bias as we move through the balance of the year. All right. Just last question, you know, how to think about Keke's as we start putting that into our models. First, you know, what kind of unit growth or additions do we start to think about in the second half from Keke's on both company-owned and franchise? Second, just remind us what AUVs and unit level margins look like at Keke's in terms of the company-owned stores. Very fair. Let's talk about AUVs first. The AUVs are approximately $1.9 million. That's in that limited AM eatery timeframe, very robust. I believe that going back to what we were saying with the Q1 earnings call, that our margins were 20%-ish or so in that ballpark. These are very robust margins. Upper teens to 20%, I would say there. With regard to the unit openings, we haven't really guided longer term. I do believe we said with the Q1 earnings call that we had 4-5 total openings in the pipeline for the year. A few more. I think we have two open to date. What we are really focused upon now and what will make Keke's a huge success for us is making sure that we are getting ramped up so that the 2023 and 2024 openings trajectory accelerate through that. You can see that the volumes, the margins would point to the fact if we pair that with our ability to train and bring in our new franchisee developers, whether that be us, the additional franchisees outside of the Keke systems or even the Keke's franchisees, it's set up, and this will be, again, a huge win for us. The current franchisees are very excited. Steve Dunn, our Chief Development Officer, has been talking to many of them. They are very excited to develop this brand further and see this as an unlock for us. They don't see this as a big corporate entity kind of trying to gobble them up. They see this as an unlock to future development for them. Ultimately, we said in the Q1 release that it'd be $6.5-$7 million of EBITDA. That was what we based that purchase price upon, and we'll just grow it from there with the incremental units. Yeah. I would add and appreciate the question, Nick. I look forward to working with you as well. I would add, I've spent some time in those restaurants. I've spent some time with those franchisees. We've talked development. They are excited as you just heard from Robert, and hopefully you can hear from us. You know, the plan now, really let Keke's be Keke's. Learn about it. We're learning about this brand. To keep the brand unique. It's got a cult-like following. It's really exciting. The AUVs are exciting, and a strong business model. They've got something really special, and the goal will be to continue to really maintain and enhance what is special about them. There's a lot of excitement, and we've got a great plan in place to go forward. Thank you very much. Thanks, Nick. Thank you. Once again, ladies and gentlemen, please press star 1 to ask a question. Star 1 to ask a question. We take our next question from Jake Bartlett with Truist Securities. Your line is open. Great. Thanks for taking the questions. You know, I wanted just to circle back again on the 24/7 operations. In your last quarter, you disclosed or you mentioned that it was about 50% of the stores. You know, what has that grown to in the second quarter? My math suggests about 53%, but if you could just kinda confirm, you know, where you are in that so we can see the trajectory. You know, you've mentioned kind of one of the obstacles there is staffing. You know, on the last call, you said that limited-hour stores were about 80% staffed versus pre-COVID levels or. If you could just give an update on whether that 80% staff level has improved, that'd be helpful. Hey, Jake. Yeah, the 24/7, we're really excited about that being a tailwind for us. I think at the end of the quarter, we were in the 53-54 range. Looking at Kurt and Kayla to help me with that. With regard to the staffing of the limited hour units, we're looking in our data. We were, I think, at that 80% area. Now, she's up a little. So we're probably in that 80%-85% range is what we're saying. We're seeing the green shoots of things that are working for us, right? That it was a placemat. It was a simple Bring Your Bestie to Work placemat that really started to drive people into the units, and it really is that simple, right? It's not a grand idea, but you gotta execute it, right? You gotta be willing and dedicated to do it. There's a way to get this done, and we are hearing that throughout the leadership in the franchise community now, that they are beginning to see the unlock. We will partner with them and help move them along with regard to that. Great. That's helpful. The next question is on value and nice to see the Super Slam, you know, come back and it seems like it's doing the trick in terms of driving some incremental traffic. You know, my question is about the $2 $4 $6 $8 Value Menu and promoting that nationally. I think over the last couple quarters you've expressed a little hesitancy to get too aggressive until staffing was, you know, in a healthier spot. The question is, you know, what is the appetite or and the ability to kind of get even more aggressive, you know, in promoting that $2 $4 $6 $8 Value Menu, as was successful kind of coming out of the last recession. Yeah. Yeah, Jake. With $2 $4 $6 $8 Value Menu it's somewhat we think probably getting towards the end of its useful life. It doesn't mean that we won't be going much more deeply into value. Again, I mentioned that we think that's where what our consumer needs from us. We are really good at delivering that for them, in a profitable way for us. I think that the idea of value may be changing, right? The what you pay for what you get. A $2 price point may have served a purpose a decade ago. I'm not saying that value is now a $15 plate. This will be price point oriented. I think we may have moved beyond that. Doesn't mean that we don't have a significant pipeline of ways to offer value into our system right now. Yeah, I think the only thing I'd add, Jake, and thank you for the question. In my limited time, I think this is about what is right today and that it's, as Robert said, it may have run its course and it's not that we are doing this in lieu of a more aggressive offer. We think this is a great offer with high quality products and products we know our guests love. We have seen, you have seen value propositions change over the last few years, most definitely. This is the right thing, right time for the Denny's brand and our guests. Great. That feeds into my next question, you know, bit of a history lesson and before tying, you know, focusing on the company. But you know the Great Recession, kind of a big pullback, you know, Denny's same-store sales, you know, were pretty meaningfully negative. So the question is, you know, what has changed now? I guess I would've thought maybe one thing was $2 $4 $6 $8 Value Menu, but in terms of your value proposition and how you might be better positioned now than you were then, why we could feel a little more confident that you'll, you know, withstand, you know, whatever's coming down the pike here better. You know, how would you describe that in terms of, you know, how you're in a better position now than you were back in 2007, 2008? Yeah, that's a history lesson for sure. I think I'll try to draw on my 23 years here. What's different? In 2007, 2008, it was as we were heading into that Great Recession, the $2 $4 $6 $8 Value Menu didn't exist, right? It just didn't. We knew we needed something like that. It was really developed during that timeframe, and it was on the tail end of that. It was April 2010 when that was launched. One thing that has specifically changed is we know how to do value these days. It's a deeply embedded equity, and we're not behind the curve. We're not searching for that platform like we were during the Great Recession. It's already developed. You can see it coming through the Slamcation. You can see it in the other platforms that we have utilized here over the last 4-6 weeks. We're ready and willing to move into it. We were in a very similar place to many brands coming through the pandemic, right? We were dealing with closed dining rooms. We were dealing with inflation. We were dealing with a consumer that really wasn't overly price sensitive for a period of time. That is clearly not where we are moving into Q3 of 2022. Where we are now is a value oriented consumer for us, and we have that institutional knowledge already in place. We do not have to develop that. Some of the other things that are different these days is we have methodologies to deliver to the consumer in ways that we did not have available a decade plus ago. We have the 21% off-prem business that Kelly mentioned, that was 12% prior to the pre-pandemic and even less than that in 2007. We have different vehicles in ways to deliver to our consumers. We are far more tooled to weather whatever downturn may come this way, and we are clearly on the forefront of trying to limit any impact that might bring. Great. That's really helpful. My last question to see if I can get a little more. You know, on Keke's and how we should be modeling that. If you could maybe give us what. You know, I do the math and I have trouble getting to the EBITDA contribution, you know, given the AUV and the restaurant margin that was given. I'm wondering whether the AUVs of the 8 company-owned stores are significantly higher than that $1.9 million average. Anything else that helps in terms of maybe royalty rate. You know, we're gonna have to build this in and, you know, especially with the company side, it really is gonna swing around. Any kind of greater detail there would be really helpful. Let me peel back that onion a little bit further. With that, we do have some higher volume units within that eight-unit company portfolio. And those higher volumes even go with higher margins, right? Volume does help a margin rate. I would suggest that they are a little bit higher in volume, a little bit higher in margin. The other side of that, Jake, with regard to the royalty, and I'm not sure if we shared this, but this would be in the FDD. The royalty rate with regard to the existing units that are in place, the 44 franchise units is a 6% royalty rate. It's a higher royalty rate than what you would get from a 4.5% Denny's. I'm not sure if you knew that or had that already, within your modeling, but that is the math that we're working with. A 6% royalty rate may bridge the gap, may not, you may have already had that. No, that is helpful. I appreciate maybe lastly the third quarter you mentioned a minimal impact from Keke's. I would think the transaction cost would be maybe considered one time. Just you know any other detail there and how we should kind of build in the contribution of Keke's into EBITDA? I think where I would point you back with regard to that, if you go back to our Q1 release when we'd announced this transaction, we talked about $6.5 million-$7 million contribution. That would lead you to a $1.5 million-$1.75 million contribution per quarter from Keke's once you get beyond the transaction cost, which will impact Q3. We will clearly grow it from there. The success of this is really keeping Keke's, not in any way Denny-izing it, keeping it what it is, making sure that we onboard them, learn from them, help build an infrastructure to grow them so that as we move into 2023 and 2024, we accelerate that unit growth. Right now, the transaction was predicated upon $1.5 million-$1.75 million in EBITDA per quarter. Thank you very much. I really appreciate it. Thank you, Jake. Thank you. We take our next question from Todd Brooks with The Benchmark Company. Your line is open. Hey, thank you. John, I wanna wish you the best of luck, and Kelli, I certainly wanna welcome you aboard as well. Big changes. Thank you. for both of you, so congrats. Robert, a few more questions for you here. You ready? Please. Yeah, absolutely. Fire away. On the Keke's side, if you look back historically, what's the most units that they opened in a year? You guys have talked about keeping the operations relatively separate, so I wanna understand what they're geared towards, for kind of a peak openings in the past. Yeah. With that infrastructure, Todd, right? It was, and it's what we really kinda bring to the table, where our expertise lies, that their infrastructure as is probably was in the 4-6 unit range, at max, through that. They. When we talked to them, right, when we talked to their franchisees, when Kelli actually, she was actually down there visiting with the franchisees, it was, "Hey, we're looking forward to this. We want to expand. We know we need training. We need help with site selection," so on and so forth. We're gonna bring that to the table. They have doubled the number of units since 2016. It's gone from 26-52 over that timeframe. It does imply 4-6 a year, but that rate, if we don't accelerate that rate into the future, Todd, this is not going to work for us. We have to get significantly beyond that. We are going to utilize their franchisees who are excited to grow. We are going to use the existing Denny's franchisees. Before we announced this acquisition, under very strict NDAs, we talked to nearly a dozen of them. Every one of the franchisees, our existing Denny's franchisees said, "Yeah, I'm really curious about that." Most said that they would be interested in opening. Not one said, "What are you doing?" Every one said, "We get why you would do that, and we're not afraid of that at all." We have a very talented development team that can go source additional franchisees who are not in either system. Not only will we leverage that group, we'll have a three-pronged approach. We'll put in place the right training resources, we'll put in the right development resources, and we'll move that beyond the 4-6 historical. They were able to do that in a very grassroots way. The owners actually told us that they really didn't solicit any new franchisees or franchise units. It was people just coming to them saying, "Hey, can I open one of these?" It's going to be a different approach to this while really keeping the heart of what makes Keke's great in place. How long does it take to stimulate that, whether it's cross-selling into your franchisees or leveraging your site selection capabilities, your training capabilities? I mean, I know you're not guiding to 23 unit growth yet, but would you expect to see a step up from what they've done historically? Or is there a digestion period that we need to think about when we're modeling Keke's? I think there's a little bit of both, Todd, frankly. I think there is a little bit of digestion. We're still learning them. We don't wanna upset them in any way, shape, or form. They're great as they are. We just wanna take that greatness and share it with more people. We'll need to digest and understand what truly how to grow them in a way, but I'm not telling you it's gonna take two years either. I think you will see a stepped up rate of growth in 2023. I just don't think that will be the peak growth either. I think that will continue to accelerate through 2024 and beyond also. Fair enough. Next question I had, if you look at kind of value incidence as far as menu mix, I know part of it is having more offerings now, that can address a need for value. Maybe entering the quarter versus exiting the quarter, how much incidence increase did you see in value as a percent of mix? Yeah. Let me point you in directions as opposed to giving you specific numbers. It would have been low double digits entering the quarter. And with the one plate alone, the Summer Slamcation, in that plate, we moved it by about 3 percentage points in a very short period of time. We actually don't feel like that's enough. We wanna drive it beyond there, drive transactions in a profitable way. We will look to go beyond that. I would tell you at the peak of our value, it was in the 20% range. That would be. You could go all the way back to when we launched the $2 $4 $6 $8 Value Menu a decade ago, and that would be somewhat of a peak as we utilize that over the course of that decade also. Not guiding that that's where we're going to get, but again, just kinda pointing you to a low double-digit number that we've moved 3% in July, and we will look to leverage further into Q3. That's great. Kelli, a quick one for you, if I can. On the discussion about returning to the operating standard of the 24/7 model, it seems like it may be a little less carrot and a little bit more kind of enforcement and holding franchisees to the responsibility of operating in that model. I just I'm trying to get a sense of the slope for what I mean, if we increased 3% of the base that got back to 24/7, that's, it's kind of a slow pace to get back towards that 80-90% level. How do you see shifting maybe the slope of that curve of returning to 24/7? Yeah. It's a huge priority, as you can probably take away from all the conversation we've had. I will tell you, it's push and pull. It's both, right? It's a balance. It is not just the stick. It's a carrot and there's the incentive part of it. I have been a part of, so limited time here, but actively engaged in this with the head of our DFA board, with other franchisees and having this conversation. I do think the conversations are shifting in terms of I think there's an inflection point here around the staffing, right? We've distilled it down to what else can we do? What other tools, resources, expertise do we have? We've got company restaurants that we can stand up, literally stand up on this and say, "This is the difference in sales. This is the difference in their staffing numbers. And therefore, we gotta get there." They absolutely agree. Again, the plan that we will put in place, there's an urgent plan. We've even got it down to the kinds of numbers we'll want to see per week, per month. This is not over several quarters, but yet, a lot of urgency and a lot of focus between us and those franchisees right now. It's urgent and I think doable. I think they're tired of looking at the same situation, and the inflationary pressures are They all feel that, and they want those solutions, and we've now got ones that are proven to work for us. Okay, great. One final follow-up on that. I know the limited hour stores were kind of in that 80% staffed range. It sounds like maybe some modest improvement in the second quarter, which is below some other full service dining peers that have gotten back to fully staffed. Two parts to the question. One, what level of kind of pre-pandemic staffing do you need to be to open in the 24/7 model confidently? Are you trying to get back to 90% of those levels? Do you need to get all the way back to 100%? I wanna understand how far away some of these limited hour stores are. Secondly, just the pace of hiring improvement relative to some peers. You talked about some slowing in the wage inflation pressures. Does this problem get solved at all by investing some more in wages to grow staff? I'll leave it there. Thanks. Mm-hmm. Hey, Todd, it's Robert again. With regard to what we have seen with our 24/7 units compared to pre-pandemic, it would be about. We're at 100%, right? Versus the pre-pandemic level. To contextualize that a little bit, think of about 50 employees per store is about what it is. When you go across all of our various categories of individuals, whether it be cooks, hostesses, servers, server assistants. The limited hour units are in that 80%-85% range. You're thinking that they are compared to the full 24/7 stores, they're probably down somewhere between 7 and 10 employees. While that 20-point difference sounds really large, we're looking for like 7, 8 employees to get back to that full staff level. The candidate flow coming from that initiative that I talked about would help bridge that gap pretty quickly with regard to that. In regard to your comment or your question about wages, we look at this. We have a very talented compensation group, it's headed up by our VP of comp & ben. We look at literally every market that we're in, this is company, and it's limited markets compared to franchisees. We benchmark every single job code across every DMA, and we believe that we are competitive. I don't think that we are dislocated with regard to what we are paying our employees. We don't have as much visibility to be very transparent to our franchisee system. Frankly, we shy away from that a little bit and look to use third-party consultants just due to joint employer rules. We look to use third-party consultants to help them with that question. From the company perspective, I wouldn't say that this is a pay issue for us. That would vet out, frankly, Todd, with regard to the company portfolio. We have 65 units, and I think it's one, maybe two units that has not bridged the gap to 24/7. That's very helpful. Thank you both. Thanks, Todd. Just a reminder, that is star 1 to ask a question, star 1 to ask a question. We take our next question from Eric Gonzalez with KeyBanc Capital Markets. Your line is open. Hey, thanks. Welcome, Kelli Valade. I'm looking forward to working with you. If you could talk about maybe the comp gap between 24-hour units and the limited-hour units. Then just in the off-premise business, it seems like the delivery channel is really sticky, particularly the third party. That's maybe not something you'd expect just given the high cost. So how do you explain this, and what are you thinking about the future as we potentially head to an economic downturn? What do you know about these customers that are using the brand and that channel that are reasons why that might be stickier than possibly carry out or dine-in channels? Thanks. Yeah. I'll take a stab at that in terms of just what I've seen here and also just kind of looking at the industry and that stickiness question is a great one, right? Because we talk about this being an incremental guest. We absolutely believe that to be the case here. I would just point to this is an area of strength. For a brand in family dining, absolutely an area of strength. There aren't a lot of other players that have not only invested in the infrastructure. The technology infrastructure has helped us. It was in play. A lot of it was in play before the pandemic. That cash-strong position, all that we talk about in terms of this model, helped to move that quickly where others could not and cannot continue to sustain that. I also think too, virtual brands. The virtual brands and their sustained sales, week in, week out, is also a significant strength here. I think, look, the consumer has learned how to use this channel. They've learned how to use the channel. We all believe they're incremental, and I think they will continue to modulate their behavior based on their needs. Now we've got something where we know it's proven, we know it works, and it continues to hold. I think you'll see that modulate if it's a bad flu season. I think people will say, "Okay, well, I can use that channel. I've got another way to find my way to Denny's." I think this will continue to be an area of strength. That stickiness has not held for all brands from research that we see. The way we've done it, the way we've gone about it, the continued way we leverage technology and plans for that in the future, I think will help us here as well. I think it's a trend obviously here to stay. Just the fact that full-service restaurants they've stayed in that low twenties versus what it was before the pandemic is promising. Us being where we are, I also think is just a big strength. Eric, this is Robert. Going back to your question with regard to the comp differential between the 24/7 units and the non-24/7 units. I'm looking back at the last 5 quarters since Q2 of 2021. The differential ranges between 15-20 percentage points, so it's massive. The profitability follows that directly. It's a direct correlate as you might expect. Oddly, when talking to our franchisees, they go, "We get it. We understand how much we're leaving on the table." Now we're gonna work with them even more closely to help bridge that gap, whether it'd be staffing or a little nudge with persuasion against their agreements. It's there for the taking and it's a huge differential. In the 24/7 units, it is positive. It's not just a negative to negative thing. The 24/7 units are significantly positive and significantly outpace the balance of the family dining segment as measured against BBI. On those off-premise transactions, how much of that is coming from that late night day part, whether it be the virtual brands or just your traditional units? I mean, is there a big unlock there as you do staff up? Is that really gonna come from the off-premise business to a certain extent? You know, we're trying to look through our data set here. It didn't stick out to us as we prepped up for the call. I think it probably has a disproportionate weighting towards off-prem, but not so much so that it would make a meaningful difference. All right. That's it for me. Thanks. Thanks, Eric. Thank you. It appears there are no further questions at this time. I'd like to turn the call back to your presenter for any additional closing comments. Thank you, Kyle. I'd like to thank everyone for joining us on today's call. We look forward to our next earnings conference call in early November, during which we will discuss our Third Quarter 2022 Results. Thank you and have a great evening. This concludes today's call. Thank you for your participation. You may now disconnect.