10q10k10q10k.net

What changed in DENNY'S Corp's 10-K — 2022 vs 2023

vs

Paragraph-level year-over-year comparison of DENNY'S Corp's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+212 added−218 removedSource: 10-K (2024-02-26) vs 10-K (2023-02-27)

Top changes in DENNY'S Corp's 2023 10-K

212 paragraphs added · 218 removed · 166 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

46 edited+9 added−13 removed52 unchanged
Biggest changeFinancial information about our operations, including our revenues and net income (loss) for the fiscal years ended December 28, 2022, December 29, 2021, and December 30, 2020, and our total assets as of December 28, 2022 and December 29, 2021, is included in our Consolidated Financial Statements. 1 Macroeconomic Conditions Starting in 2020 and continuing through 2022, the global economic crisis resulting from the spread of the coronavirus (“COVID-19”), along with government and consumer responses, has had a substantial impact on our restaurant operations, including impacts on labor and commodity costs and the ability of many Denny’s franchise restaurants to return to 24/7 operations.
Biggest changeFinancial information about our operations, including our revenues and net income for the fiscal years ended December 27, 2023, December 28, 2022, and December 29, 2021, and our total assets as of December 27, 2023 and December 28, 2022, is included in our Consolidated Financial Statements. 1 Franchising and Development Franchising Our criteria to become a Denny’s franchisee include minimum liquidity and net worth requirements and appropriate operational experience.
Mr. Dunn has been Executive Vice President and Chief Global Development Officer since April 2021. He previously served as Senior Vice President and Chief Global Development Officer from July 2015 to April 2021, as Senior Vice President, Global 8 Development from April 2011 to July 2015 and as Vice President, Company and Franchise Development from September 2005 to April 2011.
Dunn has been Executive Vice President and Chief Global Development Officer since April 2021. He previously served as Senior Vice President and Chief Global Development Officer from July 2015 to April 2021, as Senior Vice President, Global Development from April 2011 to July 2015 and as Vice President, Company and Franchise Development from September 2005 to April 2011. 8 Mr.
We believe we are in material compliance with applicable laws and regulations, but we cannot predict the effect on operations of the enactment of additional regulations in the future. We have implemented various aspects of The Patient Protection and Affordable Care Act and the Health Care and Education Affordability Reconciliation Act. However, the law or other related requirements may change.
We believe we are in material compliance with applicable laws and regulations, but we cannot predict the effect on operations of the enactment of additional regulations in the future. We have implemented applicable aspects of The Patient Protection and Affordable Care Act and the Health Care and Education Affordability Reconciliation Act. However, the law or other related requirements may change.
Product Development and Marketing The Denny’s name has been associated with high-quality, reasonably priced entrees, appetizers and beverages which have appealed to guests across all generations for nearly 70 years.
Product Development and Marketing The Denny’s name has been associated with high-quality, reasonably priced entrees, appetizers, desserts, and beverages which have appealed to guests across all generations for nearly 70 years.
Open daily from 7:00 a.m. to 2:30 p.m, Keke’s produces meals that are handmade using the best ingredients available, including fresh fruits and vegetables, and the highest quality bread and dairy products. In addition to breakfast items, Keke’s also serves burgers, paninis, salads, and sandwiches.
Open daily from 7:00 a.m. to 2:30 p.m, Keke’s produces meals that are handmade using the best ingredients available, including fresh fruits and vegetables, and the highest quality bread and dairy products. In addition to Mornings from Scratch breakfast items, Keke’s also serves burgers, paninis, salads, and sandwiches.
Following the World Health Organization’s declaration of the COVID-19 pandemic on March 11, 2020, federal, state and local governments responded by implementing restrictions on travel, “stay at home” directives, “social distancing” guidance, limitations of dine-in food service, and mandated dining room closures which collectively had a significant adverse impact on the Company’s business performance, results of operations and cash flows for the years ended December 29, 2021 and December 30, 2020.
Following the World Health Organization’s declaration of the COVID-19 pandemic on March 11, 2020, federal, state and local governments responded by implementing restrictions on travel, “stay at home” directives, “social distancing” guidance, limitations of dine-in food service, and mandated dining room closures which collectively had a significant adverse impact on the Company’s business performance, results of operations and cash flows for the year ended December 29, 2021.
Restaurant Operations Management & Operations We believe that the consistent and reliable execution of basic restaurant operations in each of our restaurants, whether it is company or franchised, is critical to our success. We expect both our company and franchised restaurants to maintain the same high brand standards. Our standards are, and have been, critical to the brand’s success.
Restaurant Operations Management & Operations We believe that the consistent and reliable execution of basic restaurant operations in each of our restaurants, whether it is company or franchised, is critical to our success. We expect both our company and franchised restaurants to maintain the same high brand standards. Our standards are, and have been, critical to Denny’s success.
Economic, Market and Other Conditions The restaurant industry is affected by many factors, including changes in national, regional and local economic conditions affecting consumer spending; the political environment (including acts of war and terrorism); changes in customer travel patterns including changes in the price of gasoline; changes in socio-demographic characteristics of areas where restaurants are located; changes in consumer tastes and preferences; food safety and health concerns; outbreaks of flu or other viruses (such as the coronavirus) or other diseases; increases in the number of restaurants; and unfavorable trends affecting restaurant operations, such as rising wage rates, health care costs, utility expenses and unfavorable weather.
Economic, Market and Other Conditions The restaurant industry is affected by many factors, including changes in national, regional and local economic conditions affecting consumer spending; the political environment (including acts of war and terrorism); changes in customer travel patterns including changes in the price of gasoline; changes in socio-demographic characteristics of areas where restaurants are located; changes in consumer tastes and preferences; food safety and health concerns; outbreaks of flu or other viruses (such as COVID-19) or other diseases; increases in the number of restaurants; and unfavorable trends affecting restaurant operations, 7 such as rising wage rates, health care costs, utility expenses and unfavorable weather.
Marketing and Advertising We deploy national, local and co-operative marketing strategies to promote and amplify Denny’s brand strengths as “America’s Diner.” Through integrated marketing strategies, we promote our various breakfast, lunch, dinner, and late-night menu offerings and premium limited-time-only offerings as well as the convenience of online ordering and payment for pick up or delivery.
Marketing and Advertising We deploy national, local and co-operative marketing strategies to promote and amplify Denny’s brand strengths as “America’s Diner.” Through integrated marketing strategies, we promote our various breakfast, lunch, dinner, and late-night menu offerings and premium limited-time-only offerings as well as the convenience of online ordering and payment for takeout or delivery.
The council consists of 19 cross-functional members representing various positions throughout our organization, who serve as ambassadors, bridge builders, data collectors, educators, accountability partners and champions of DEI within our brands.
The council consists of 23 cross-functional members representing various positions throughout our organization, who serve as ambassadors, bridge builders, data collectors, educators, accountability partners and champions of DEI within our brands.
We pride ourself in serving our guests food that is safe, wholesome and meets our quality standards. Our systems are based on Hazard Analysis and Critical Control Points (“HACCP”) principles.
We pride ourselves in serving our guests food that is safe, wholesome and meets our quality standards. Our systems are based on Hazard Analysis and Critical Control Points (“HACCP”) principles.
This testing process ensures that new menu items are not only appealing, competitive, profitable and marketable, but can be prepared and delivered with excellence in our restaurants. We continually evolve our menu through new innovations and improvements to meet the needs of ever-changing consumer and marketplace.
This testing process ensures that new menu items are not only appealing, competitive, profitable and marketable, but can be prepared and delivered with excellence in our restaurants. We continually evolve our menu with new innovations and improvements to meet the ever-changing consumer needs.
In addition, we provide our employees with access to a 401(k) savings plan, tuition reimbursement, life insurance options, and a competitive vacation policy.
In addition, we provide our employees with access to a safe harbored 401(k) savings plan, tuition reimbursement, life insurance options, and a competitive vacation policy.
As a leading full-service family dining brand, we’ve developed a craveable, indulgent menu that forges brand loyalty, attracts new guests to Denny’s and establishes the framework for our primary marketing strategies. Menu Offerings As “America’s Diner,” Denny’s has created a menu that offers a large selection of craveable, indulgent products served in a friendly and welcoming atmosphere for all guests.
As a leading full-service family dining brand, we’ve developed a craveable, indulgent menu that forges brand loyalty, attracts new guests to Denny’s and establishes the framework for our primary marketing strategies. Menu Offerings As “America’s Diner,” Denny’s has created a menu featuring a large selection of craveable items served in a friendly and welcoming atmosphere for all guests.
License agreements for nontraditional locations, such as university campuses, may contain higher royalty and lower advertising contribution rates than the traditional franchise agreements. Our domestic contractual royalty rate averaged approximately 4.39% during 2022. We work closely with our franchisees to plan and execute many aspects of the business.
License agreements for nontraditional locations, such as university campuses, may contain higher royalty and lower advertising contribution rates than the traditional franchise agreements. Our domestic contractual royalty rate averaged approximately 4.36% during 2023. We work closely with our franchisees to plan and execute many aspects of the business.
The size of our brands provide significant purchasing power, which often enables us to obtain products at favorable prices from nationally recognized suppliers. In the U.S., the majority of Denny’s products are purchased and distributed through McLane Company, Inc. under a long-term distribution contract.
The size of our brands provide significant purchasing power, which often enables us to obtain products at favorable prices from nationally recognized suppliers. In the United States, the majority of Denny’s products are purchased and distributed through McLane Company, Inc. under a long-term distribution contract.
Outside the U.S., we and our International Denny’s franchisees primarily use decentralized sourcing and distribution systems involving many different global, regional and local suppliers and distributors. Our international franchisees generally select and manage their own third-party suppliers and distributors, subject to our internal standards.
Outside the United States, we and our International Denny’s franchisees primarily use decentralized sourcing and distribution systems involving many different global, regional and local suppliers and distributors. Our international franchisees generally select and manage their own third-party suppliers and distributors, subject to our internal standards.
Human Capital Human capital management considerations are at the core of Our Guiding Principles, the drivers of which include leveraging our culture of belonging and the capability of our people to fuel brand performance and franchise success, as well as recruiting and equipping the best restaurant operators in the world to deliver great customer experiences.
Human Capital Human capital management considerations are at the core of Our Guiding Principles, the drivers of which include leveraging our culture of belonging and the capability of our people to fuel brand performance and franchise success, as well as recruiting and equipping high quality restaurant operators to deliver great customer experiences.
See “Risk Factors” for additional information. 7 Government Regulations We and our franchisees are subject to federal, state, local and international laws and regulations governing various aspects of the restaurant business, such as compliance with various minimum wage, overtime, health care, sanitation, food safety, citizenship, and fair labor standards, as well as laws and regulations relating to safety, fire, zoning, building, consumer protection and taxation.
Government Regulations We and our franchisees are subject to federal, state, local and international laws and regulations governing various aspects of the restaurant business, such as compliance with various minimum wage, overtime, health care, sanitation, food safety, citizenship, and fair labor standards, as well as laws and regulations relating to safety, fire, zoning, building, consumer protection and taxation.
International Development In addition to the development agreements signed for domestic restaurants, as of December 28, 2022, we had potential to develop approximately 118 international franchised Denny’s restaurants with our current development partners in various locations including Canada, Central America, Curacao, Indonesia, Mexico, the Middle East, the Philippines and the United Kingdom.
International Development In addition to the development agreements signed for domestic restaurants, as of December 27, 2023, we had potential to develop approximately 128 international franchised Denny’s restaurants with our current development partners in various locations including Canada, Central America, Indonesia, Mexico, the Middle East, the Philippines and the United Kingdom.
Diversity by the Numbers Diverse team members make up approximately: • 75% of our total workforce and 72% of restaurant management • 63% of our restaurants are owned by diverse franchisees ◦ Of the 63%, 21% are owned by women who are actively engaged in the business • Our Board of Directors consists of nine directors – 56% are from a diverse background and 44% are women • 6% of our total restaurants are owned by members of the LGBTQ+ community We believe in accountability that starts with our leadership and extends to all of our team members.
Diversity by the Numbers Diverse team members make up approximately: • 75% of our total workforce and 80% of restaurant management • 63% of our domestic restaurants are owned by diverse franchisees • 21% of our domestic restaurants are owned by women who are actively engaged in the business • Our Board of Directors consists of eight directors – 63% are from a diverse background and 63% are women • 6% of our domestic restaurants are owned by individuals who identify as members of the LGBTQ+ community We believe in accountability that starts with our leadership and extends to all of our team members.
As of December 28, 2022, we had approximately 3,700 employees of whom approximately 3,300 were employees of our company-owned restaurants and approximately 400 were corporate employees at our restaurant support centers or in the field. Our commitments and progress towards executing this strategy in support of employee experience and performance are reflected below.
As of December 27, 2023, we had approximately 3,500 employees of whom approximately 3,100 were employees of our company-owned restaurants and approximately 400 were corporate employees at our restaurant support centers or in the field. Our commitments and progress towards executing this strategy in support of employee experience and performance are reflected below.
These commitments were attached to the sale of 113 company restaurants during 2018 and 2019. At December 28, 2022, we had approximately 93 domestic development commitments.
These commitments were attached to the sale of 113 company restaurants during 2018 and 2019. At December 27, 2023, we had approximately 78 domestic development commitments.
Additionally, our franchisees are required to contribute up to 3.25% of gross sales for marketing and may make additional advertising contributions as part of a local marketing co-operative. Approximately 82% of our Denny’s franchised restaurants were operating under this traditional agreement as of December 28, 2022.
Additionally, our franchisees are currently contributing up to 3.25% of gross sales for marketing and may make additional advertising contributions as part of a local marketing co-operative. Approximately 81% of our Denny’s franchised restaurants were operating under this traditional agreement as of December 27, 2023.
The Keke’s Brand We acquired Keke's on July 20, 2022. Keke’s is a daytime eatery dedicated to providing a consistently outstanding breakfast experience through fresh food that is made to order, excellent service from a welcoming staff, and a clean and comfortable environment.
Keke’s is a daytime eatery dedicated to providing a consistently outstanding breakfast experience through fresh food that is made to order, excellent service from a welcoming staff, and a clean and comfortable environment.
Numerous policy changes have been made or been influenced by the feedback we receive from our employees. We are proud to offer an Employee Assistance Program to all employees and family members. This confidential program is available 24/7 for personal or professional consultations.
Numerous policy changes have been made or been influenced by the feedback we receive from our employees. We are proud to offer Modern Health Mental Wellness benefits to all full-time employees and family members and a full featured Employee Assistance Program to all other employees. This confidential program is available 24/7 for personal or professional consultations.
While we anticipate the majority of the Denny’s restaurants related to various domestic and international development agreements will be opened generally as scheduled, from time to time some of our franchisees’ ability to grow and meet their development commitments may be hampered by the economy, the lending environment or other circumstances.
While we anticipate the majority of the Denny’s restaurants related to various domestic and international development agreements will be opened generally as scheduled, from time to time some of our franchisees’ ability to grow and meet their development commitments may be hampered by the economy, the lending environment or other circumstances. 2 Franchise Focused Business Model We expect the majority of our future restaurant openings and growth of the Denny’s brand to come primarily from the development of franchised restaurants.
See “Risk Factors” for a discussion of risks related to governmental regulation of our business. Information about our Executive Officers The following table sets forth information with respect to each executive officer as of the filing date of this report: Name Age Positions John W. Dillon 51 President, Denny’s Inc. Stephen C.
See “Risk Factors” for a discussion of risks related to governmental regulation of our business. Information about our Executive Officers The following table sets forth information with respect to each executive officer as of the filing date of this report: Name Age Positions Stephen C. Dunn 59 Executive Vice President and Chief Global Development Officer Jay C.
Sharps Myers has been Executive Vice President, Chief Legal Officer, Chief People Officer and Secretary since February 2021. She previously served as Senior Vice President, General Counsel and Secretary from June 2020 to February 2021.
She previously served as Executive Vice President, Chief Legal Officer and Corporate Secretary from August 2023 to February 2024, as Executive Vice President, Chief Legal Officer, Chief People Officer and Corporate Secretary from February 2021 to August 2023 and as Senior Vice President, General Counsel and Corporate Secretary from June 2020 to February 2021.
(capping off a 10-year career there). Ms. Valade has been Chief Executive Officer since September 2022. She joined the Company first serving as Chief Executive Officer and President from June 2022 to September 2022 and became a member of our Board of Directors in July 2022.
She joined the Company first serving as Chief Executive Officer and President from June 2022 to September 2022 and became a member of our Board of Directors in July 2022.
Approximately 45% of Keke’s total weekly sales occur on the weekends, and off-premise sales, including sales for delivery, represented approximately 14% of total sales in 2022. As of December 28, 2022, the Keke’s brand consisted of 54 franchised and company restaurants in Florida, of which 46, representing 85% of total Keke’s restaurants, were franchised and eight were company restaurants.
Approximately 48% of Keke’s total weekly sales occur on the weekends, and off-premises sales, including sales for delivery, represented approximately 14% of total sales in 2023. As of December 27, 2023, the Keke’s brand consisted of 58 franchised and company restaurants in Florida, of which 50, representing 86% of total Keke’s restaurants, were franchised and eight were company restaurants.
See “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for a more detailed discussion. The operation of our franchise system is also subject to regulations enacted by a number of states and rules promulgated by the Federal Trade Commission.
The operation of our franchise system is also subject to regulations enacted by a number of states and rules promulgated by the Federal Trade Commission.
Our menu items are conveniently enjoyed by guests either in our restaurants, via pick-up, curb-side delivery or delivery through our Denny’s on Demand platform and third-party delivery providers. Denny’s on Demand is our internal digital ordering platform that provides guests with a personalized experience by enabling them to order whatever they want, whenever they want.
Our Denny’s menu can be conveniently enjoyed by guests either in our restaurants, via takeout, curb-side or delivery through our Denny’s on Demand platform and third-party delivery providers. Denny’s on Demand is our online ordering platform enabling our guests to order whatever they want, whenever they want.
Sites are evaluated based on a variety of factors, including but not limited to: • demographics; • traffic patterns; • visibility; • building constraints; • competition; • environmental restrictions; and • proximity to high-traffic consumer activities.
Our development teams work closely with franchisees and real estate brokers to identify sites that meet specific standards. Sites are evaluated based on a variety of factors, including but not limited to: • demographics; • traffic patterns; • visibility; • building constraints; • competition; • environmental restrictions; and • proximity to high-traffic consumer activities.
The majority of these restaurants are expected to open over the next ten years. During 2022, we opened eight international franchised locations, including three in Canada, two in Mexico and one each in Curacao, Guatemala and the Philippines.
The majority of these restaurants are expected to open over the next ten years. During 2023, we opened 11 international franchised locations, including five in the Philippines, four in Canada, one each in El Salvador and Puerto Rico.
Cheese’s and Peter Piper Pizza) from May 2011 to February 2015. Mr. Gilmore has been Senior Vice President, Chief Accounting Officer and Corporate Controller since February 2021. He previously served as Vice President, Chief Accounting Officer and Corporate Controller from May 2007 to February 2021. Ms.
Gilmore has been Senior Vice President, Chief Accounting Officer and Corporate Controller since February 2021. He previously served as Vice President, Chief Accounting Officer and Corporate Controller from May 2007 to February 2021. Ms. Sharps Myers has been Executive Vice President, Chief Legal & Administrative Officer and Corporate Secretary since February 2024.
See “Risk Factors” for further information regarding Information Technology. Seasonality Restaurant sales are generally higher in the second and third calendar quarters (April through September) than in the fourth and first calendar quarters (October through March). Additionally, severe weather, storms and similar conditions may impact sales volumes seasonally in some operating regions.
See “Risk Factors” for further information regarding Information Technology and “Cybersecurity” for further information regarding our approach to cybersecurity. Seasonality Restaurant sales are generally higher in the second and third calendar quarters (April through September) than in the fourth and first calendar quarters (October through March).
As of December 28, 2022, the Company consisted of 1,656 restaurants, 1,582 of which were franchised/licensed restaurants and 74 of which were company operated.
As of December 27, 2023, the Company consisted of 1,631 restaurants, 1,558 of which were franchised/licensed restaurants and 73 of which were company operated.
Denny’s offers a wide selection of lunch and dinner items including entrees, burgers, sandwiches and salads, along with an assortment of appetizers and desserts. We have four dayparts, breakfast, lunch, dinner and late night, accounting for 27%, 36%, 21% and 16%, respectively, of average daily sales. Weekends have traditionally been the most popular time for guests to visit our restaurants.
We have four dayparts, breakfast, lunch, dinner and late night, accounting for 27%, 36%, 21% and 16%, respectively, of average daily sales. Weekends have traditionally been the most popular time for guests to visit our restaurants. In 2023, 38% of an average week of sales occurred from Friday late night through Sunday lunch.
Additionally, they help foster a more inclusive work environment, improve communication and trust among employees and enhance understanding of all employees about the value of diversity. The seven 5 business resource groups include the African American Leadership Group, Asian Pacific Islander Leadership Group, Emerging Leaders Group, Hispanic Leadership Group, LGBTQ+ Leadership Group, Veterans Leadership Group, and Women’s Leadership Group.
Additionally, they help foster a more inclusive work environment, improve 5 communication and trust among employees and enhance understanding of all employees about the value of diversity.
Denny’s has been serving guests for nearly 70 years and is best known for its all day breakfast fare. The Build Your Own Grand Slam, one of our most popular menu items, traces its origin back to the Original Grand Slam which was first introduced in 1977.
Denny’s has been serving guests for nearly 70 years and is best known for its all day breakfast fare. The Grand Slam, one of our most popular menu items, was first introduced in 1977. Denny’s offers a wide selection of lunch and dinner items including entrees, burgers, sandwiches and salads, along with an assortment of appetizers and desserts.
These insights come together to form the strategic foundation for menu architecture, pricing, promotion and advertising. Our guests are the center of all menu innovations at Denny’s. Before introducing a new menu item to market, we rigorously test it against consumer expectations, standards of culinary discipline, food science and technology, nutritional analysis, financial benefit and operational execution.
Before introducing a new menu item to market, we rigorously test it against consumer expectations. We ensure that our culinary standards, food science and technology efficiencies, nutritional analysis, financials and operational execution all meet the business requirements.
Dunn 58 Executive Vice President and Chief Global Development Officer Michael L. Furlow 65 Executive Vice President and Chief Information Officer Jay C. Gilmore 53 Senior Vice President, Chief Accounting Officer and Corporate Controller Gail Sharps Myers 53 Executive Vice President, Chief Legal Officer, Chief People Officer and Secretary Kelli F. Valade 53 Chief Executive Officer Robert P.
Gilmore 54 Senior Vice President, Chief Accounting Officer and Corporate Controller Gail Sharps Myers 54 Executive Vice President, Chief Legal & Administrative Officer and Corporate Secretary Pankaj K. Patra 47 Executive Vice President, Chief Digital and Technology Officer Kelli F. Valade 54 Chief Executive Officer Robert P. Verostek 52 Executive Vice President and Chief Financial Officer Mr.
We offer a wide variety of entrées for breakfast, lunch, dinner and late-night dining as well as appetizers, desserts and beverages. Most Denny’s restaurants also offer special menu items for children and seniors at reduced prices.
We offer a variety of options for breakfast, lunch, dinner and late-night including classic entrees, salads, appetizers, desserts and beverages. Most Denny’s restaurants also offer kid’s menus and senior specials.
As of December 28, 2022, the Denny’s brand consisted of 1,602 franchised, licensed and company restaurants around the world, including 1,445 restaurants in the United States and 157 international restaurant locations. As of December 28, 2022, 1,536 of Denny’s restaurants were franchised or licensed, representing 96% of the total Denny’s restaurants, and 66 were company restaurants.
Additionally, off-premises sales, including sales for delivery and through our two virtual brands, represented approximately 20% of total sales in 2023. As of December 27, 2023, the Denny’s brand consisted of 1,573 franchised, licensed and company restaurants around the world, including 1,407 restaurants in the United States and 166 international restaurant locations.
The table below sets forth information regarding the distribution of single-store and multi-store franchisees as of December 28, 2022: Number of Denny’s Restaurants Owned Franchisees Percentage of Franchisees Restaurants Percentage of Restaurants One 84 38.4 % 84 5.5 % Two to five 73 33.3 % 225 14.6 % Six to ten 27 12.3 % 219 14.3 % Eleven to fifteen 14 6.4 % 172 11.2 % Sixteen to thirty 10 4.6 % 234 15.2 % Thirty-one and over 11 5.0 % 602 39.2 % Total 219 100.0 % 1,536 100.0 % Keke’s Development Similar to Denny’s, we expect the majority of our future Keke’s restaurant openings and growth of the brand to come primarily from the development of franchised restaurants.
The table below sets forth information regarding the distribution of single-store and multi-store franchisees as of December 27, 2023: Number of Denny’s Restaurants Owned Franchisees Percentage of Franchisees Restaurants Percentage of Restaurants One 79 38.0 % 79 5.2 % Two to five 68 32.7 % 215 14.3 % Six to ten 29 14.0 % 227 15.0 % Eleven to twenty 16 7.7 % 224 14.9 % Twenty-one to thirty-five 8 3.8 % 230 15.3 % Thirty-six and over 8 3.8 % 533 35.3 % Total 208 100.0 % 1,508 100.0 % Keke’s Development We anticipate the first few Keke’s restaurant openings outside of Florida will likely be company operated restaurants to prove the appeal of the brand in new markets.
Removed
In 2022, 38% of an average week of sales occurred from Friday late night through Sunday lunch. Additionally, off-premise sales, including sales for delivery and through our two virtual brands, represented approximately 21% of total sales in 2022.
Added
As of December 27, 2023, 1,508 of Denny’s restaurants were franchised or licensed, representing 96% of the total Denny’s restaurants, and 65 were company restaurants. The Keke’s Brand We acquired Keke's on July 20, 2022.
Removed
During 2020, many of our company and franchised and licensed restaurants were temporarily closed and most of the restaurants that remained open had limited operations. As of the end of 2022, many Denny’s restaurants have not returned to full operating hours, particularly at the late night daypart.
Added
Similar to Denny’s, we expect the majority of our future Keke’s restaurant openings and growth of the brand to come primarily from the development of franchised restaurants. As of December 27, 2023, we had 14 development agreements for 94 Keke’s franchised restaurants. Site Selection The success of any restaurant is significantly influenced by its location.
Removed
Our operating results substantially depend upon the sales volumes, restaurant profitability, and financial stability of our company and franchised and licensed restaurants. We cannot currently estimate the duration or future negative financial impact of these macroeconomic conditions on our business.
Added
Continuous product innovation is essential to meeting the needs of our consumers, including new offerings within our core breakfast platform, adding value across signature bundles, such as Super Slam, and delivering crave-worthy core menu and limited-time-only recipes.
Removed
See “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for additional information relating to the impact of these macroeconomic on our business and financial results. Franchising and Development Franchising Our criteria to become a Denny’s franchisee include minimum liquidity and net worth requirements and appropriate operational experience.
Added
The new Denny’s mobile app, available for IOS and Android, provides a personalized online ordering experience. Guests can also order from Dennys.com. Both the mobile app and website make it easy for guests to order their favorite Denny’s items for 3 takeout or delivery.
Removed
As a result of the COVID-19 pandemic, we have deferred many of our domestic and international development commitments for one year or more from their original due date. 2 Franchise Focused Business Model We expect the majority of our future restaurant openings and growth of the Denny’s brand to come primarily from the development of franchised restaurants.
Added
Denny’s Rewards members can access their digital wallets to receive rewards and promotions, both in-restaurant, online and via the Denny’s mobile app. Product Development Denny’s, a consumer-driven brand focused on craveable food and hospitality, provides a variety of menu choices for any time of day in a warm and comfortable atmosphere.
Removed
However, we anticipate the first few Keke’s restaurant openings outside of Florida will likely be company operated restaurants to prove the appeal of the brand in new markets. Site Selection The success of any restaurant is significantly influenced by its location. Our development teams work closely with franchisees and real estate brokers to identify sites that meet specific standards.
Added
Our Product Development team innovates menu items that delight our guests. This team leverages insight from the most up-to-date trend data, primary and secondary qualitative and quantitative research, franchise expertise, vendor innovation and operator experiences. These insights come together to form the strategic foundation for menu architecture, pricing, promotion and advertising.
Removed
We consistently optimize our product offering to further align with consumer needs, which includes enhancing our core “breakfast all day” platform while providing everyday affordability, abundant value menu items, such as Super Slam, and delivering compelling core menu and limited-time-only products.
Added
The eight business resource groups include the African American Leadership Group, Asian American, Native Hawaiian, Pacific Islander Leadership Group, Emerging Leaders Group, Hispanic Leadership Group, LGBTQ+ Leadership Group, Veterans Leadership Group, Wellbeing Group, and Women’s Leadership Group.
Removed
Guests simply have to log onto the new Denny’s mobile app or online 3 for takeout or delivery to wherever they want to enjoy their favorite Denny’s items. Our new mobile app also grants Denny’s Rewards members access to their digital wallets to receive rewards and promotions, both in-restaurant and online.
Added
Additionally, severe weather, storms and similar conditions may impact sales volumes seasonally in some operating regions.
Removed
Product Development Denny’s is a consumer-driven brand focusing on hospitality, menu choices and the overall guest experience. Our Product Development team innovates menu items that delight our guests during each visit. This team works to understand the most up-to-date trends through consumer insights from primary and secondary qualitative and quantitative studies and ideas from our franchisees, vendors and operators.
Added
(capping off a 10-year career there). Mr. Patra has been Executive Vice President, Chief Digital and Technology Officer since October 2023. Prior to joining the Company, he served as Senior Vice President and Chief Information Officer at Brinker International, Inc. (where he worked for about 15 years). Ms. Valade has been Chief Executive Officer since September 2022.
Removed
Verostek 51 Executive Vice President and Chief Financial Officer Mr. Dillon has been President of Denny’s Inc. since September 2022.
Removed
He previously served as Executive Vice President and Chief Brand Officer from February 2020 to September 2022, as Senior Vice President and Chief Brand Officer from December 2018 to February 2020, as Senior Vice President and Chief Marketing Officer from October 2014 to December 2018, as Vice President, Brand and Field Marketing from June 2013 to October 2014 and as Vice President, Marketing from July 2008 to June 2013.
Removed
Mr. Furlow has been Executive Vice President and Chief Information Officer since April 2021. He previously served as Senior Vice President and Chief Information Officer from April 2017 to April 2021.
Removed
Prior to joining the Company, he served as Chief Information Officer and Senior Vice President of IT at Red Robin Gourmet Burgers, Inc. from October 2015 to April 2017 and as Chief Information Officer and Senior Vice President of IT of CEC Entertainment, Inc. (an operator and franchisor of Chuck E.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

28 edited+7 added−15 removed61 unchanged
Biggest changeOur brand’s expansion into international markets may present increased risks due to lower customer awareness of our brand, our unfamiliarity with those markets and other factors. The international markets in which our franchisees currently operate, and any additional markets our franchisees may enter outside of the United States, have many differences compared to our domestic markets.
Biggest changeThe international markets in which our franchisees currently operate, and any additional markets our franchisees may enter outside of the United States, have many differences compared to our domestic markets. There may be lower consumer familiarity with the Denny’s brand in these markets, as well as different competitive conditions, consumer tastes and economic, political and health conditions.
Our amended and restated by-laws provide that consistent with the applicable provisions of the Delaware General Corporation Law (the “DGCL”), unless our Board of Directors, acting on behalf of the Company, consents in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware shall be the sole and exclusive forum for any and all internal corporate claims, including but not limited to: • any derivative action or proceeding brought on our behalf; • any action asserting a claim of breach of fiduciary duty owed by any stockholder, director, officer, other employee or stockholder of the Company to us or our stockholders; 13 • any action arising pursuant to any provision of the DGCL or as to which the DGCL confers jurisdiction on the Court of Chancery of the State of Delaware; and • any action asserting a claim against us that is governed by the internal affairs doctrine.
Our amended and restated by-laws provide that consistent with the applicable provisions of the Delaware General Corporation Law (the “DGCL”), unless our Board of Directors, acting on behalf of the Company, consents in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware shall be the sole and exclusive forum for any and all internal corporate claims, including but not limited to: 13 • any derivative action or proceeding brought on our behalf; • any action asserting a claim of breach of fiduciary duty owed by any stockholder, director, officer, other employee or stockholder of the Company to us or our stockholders; • any action arising pursuant to any provision of the DGCL or as to which the DGCL confers jurisdiction on the Court of Chancery of the State of Delaware; and • any action asserting a claim against us that is governed by the internal affairs doctrine.
For additional information concerning our indebtedness see “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources.” Risks Related to our Common Stock Many factors, including those over which we have no control, affect the trading price of our common stock.
For additional information concerning our indebtedness see “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources.” 16 Risks Related to our Common Stock Many factors, including those over which we have no control, affect the trading price of our common stock.
Such incidents or reports could negatively affect our brands and reputation, and a decrease in customer traffic resulting from these reports could negatively impact our revenues and profits. Similar incidents or reports occurring at other restaurant brands unrelated to us could likewise create negative publicity, which could negatively impact consumer behavior towards us.
Such incidents or reports could negatively affect our brands and reputation, and a decrease in customer traffic resulting from these reports could negatively impact our revenues and profits. Similar incidents or reports occurring at other restaurant brands unrelated to us could likewise create negative publicity, which 11 could negatively impact consumer behavior towards us.
It is possible that economic or other conditions where restaurants are located could decline in the future, potentially resulting in reduced sales at those locations. 11 Food safety and quality concerns may negatively impact our business and profitability.
It is possible that economic or other conditions where restaurants are located could decline in the future, potentially resulting in reduced sales at those locations. Food safety and quality concerns may negatively impact our business and profitability.
In addition, the food service industry in general, and our results of operations and financial condition in particular, may be adversely affected by unfavorable trends or developments, especially in the periods following the COVID-19 pandemic, such as: • volatility in certain commodity markets; • increased food costs; • health concerns arising from food safety issues and other food-related pandemics, outbreaks of flu or viruses, such as coronavirus, or other diseases; • increased energy costs; • labor and employee benefits costs (including increases in minimum hourly wage, employment tax rates, health care costs and workers’ compensation costs); • regional weather conditions; • the availability of experienced management and hourly employees; and • other general inflation impacts.
In addition, the food service industry in general, and our results of operations and financial condition in particular, may be adversely affected by unfavorable trends or developments, such as: • volatility in certain commodity markets; • increased food costs; • health concerns arising from food safety issues and other food-related pandemics, outbreaks of flu or viruses, such as COVID-19, or other diseases; • increased energy costs; • labor and employee benefits costs (including increases in minimum hourly wage, employment tax rates, health care costs and workers’ compensation costs); • regional weather conditions; • the availability of experienced management and hourly employees; and • other general inflation impacts.
Multi-unit food service businesses such as ours can be materially and adversely affected by widespread negative publicity of any type, including food safety, outbreak of flu or viruses (such as coronavirus) or other health concerns, criminal activity, guest discrimination, harassment, employee relations or other operating issues.
Multi-unit food service businesses such as ours can be materially and adversely affected by widespread negative publicity of any type, including food safety, outbreak of flu or viruses (such as COVID-19) or other health concerns, criminal activity, guest discrimination, harassment, employee relations or other operating issues.
We are subject to federal, state, local and international laws and regulations governing, among other things: • preparation, labeling, advertising and sale of food; • sanitation; • health and fire safety; • land use, sign restrictions and environmental matters, including those associated with efforts to address climate change; • employee health care requirements, including the implementation and uncertain legal, regulatory and cost implications of the health care reform law; • management and protection of the personnel data of our guests, employees and franchisees; • payment card regulation and related industry rules; • the sale of alcoholic beverages; • hiring and employment practices, including minimum wage and tip credit laws and fair labor standards; and • Americans with Disabilities Act.
We are subject to federal, state, local and international laws and regulations governing, among other things: • preparation, labeling, advertising and sale of food; • sanitation; • health and fire safety; • land use, sign restrictions and environmental matters, including those associated with efforts to address climate change; • employee health care requirements; • management and protection of the personnel data of our guests, employees and franchisees; • payment card regulation and related industry rules; • the sale of alcoholic beverages; • hiring and employment practices, including minimum wage and tip credit laws and fair labor standards; and • Americans with Disabilities Act.
In September 2022, the National Labor Relations Board proposed a new rule that would allow a party asserting a joint-employment relationship to establish joint-employer status by using evidence of indirect and reserved forms of control bearing on an employee’s essential terms and conditions of employment.
In October 2023, the National Labor Relations Board issued a new rule that would allow a party asserting a joint-employment relationship to establish joint-employer status by using evidence of indirect and reserved forms of control bearing on an employee’s essential terms and conditions of employment.
If a significant number of franchisees become financially distressed, it could harm our operating results. For 2022, our ten largest franchisees accounted for approximately 37% of our total franchise and license revenue. The balance of our franchise revenue was derived from the remaining 233 Denny’s and Keke’s franchisees.
If a significant number of franchisees become financially distressed, it could harm our operating results. For 2023, our ten largest franchisees accounted for approximately 38% of our total franchise and license revenue. The balance of our franchise revenue was derived from the remaining 224 Denny’s and Keke’s franchisees.
The development of new restaurants may be adversely affected by risks such as: 12 • inability to identify suitable franchisees; • costs and availability of capital for the Company and/or franchisees; • competition for restaurant sites; • negotiation of favorable purchase or lease terms for restaurant sites; • inability to obtain all required governmental approvals and permits; • delays in completion of construction; • cost of materials; • challenge of identifying, recruiting and training qualified restaurant managers; • developed restaurants not achieving the expected revenue or cash flow once opened; • challenges specific to the growth of international operations that are different from domestic development; and • general economic conditions.
The development of new restaurants may be adversely affected by risks such as: 12 • inability to identify suitable franchisees; • costs and availability of capital for the Company and/or franchisees; • competition for restaurant sites; • negotiation of favorable purchase or lease terms for restaurant sites; • inability to obtain all required governmental approvals and permits; • delays in completion of construction; • cost of materials; • challenge of identifying, recruiting and training qualified restaurant managers; • restaurants not achieving the expected revenue or cash flow once opened; • expansion of the Keke’s brand outside of the state of Florida due to lower customer awareness in a highly competitive category; • challenges specific to the growth of international operations that are different from domestic development; and • general economic conditions.
Such laws impose registration and disclosure requirements on franchisors in the offer and sale of franchises, and may contain provisions that supersede the terms of franchise agreements, including limitations on the ability of franchisors to terminate franchises and alter franchise arrangements.
We are also subject to federal, state, local and international laws regulating the offer and sale of franchises. Such laws impose registration and disclosure requirements on franchisors in the offer and sale of franchises, and may contain provisions that supersede the terms of franchise agreements, including limitations on the ability of franchisors to terminate franchises and alter franchise arrangements.
If we or our franchisees fail to comply with these laws and regulations, we or our franchisees could be subjected to restaurant closure, fines, penalties and litigation, which may be costly and could adversely affect our results of operations and financial condition. In addition, the future enactment of additional legislation regulating the franchise relationship could adversely affect our operations.
If we or our franchisees fail to comply with these laws and regulations, we or our franchisees could be subjected to restaurant closure, fines, penalties and litigation, which may be costly and could adversely affect our results of operations and financial condition.
We receive and maintain certain personal information about our guests, employees and franchisees. Our use of this information is subject to international, federal and state regulations, as well as conditions included in certain third-party contracts.
Our use of this information is subject to international, federal and state regulations, as well as conditions included in certain third-party contracts.
However, the amount of ultimate loss may differ from these estimates. A judgment that is not covered by insurance or that is significantly in excess of our insurance coverage for any claims could materially adversely affect our financial condition or results of operations.
A judgment that is not covered by insurance or that is significantly in excess of our insurance coverage for any claims could materially adversely affect our financial condition or results of operations.
If this broader standard were to be adopted, we could potentially be liable for unfair labor practices and other violations by franchisees or we could be required to conduct collective bargaining negotiations regarding employees of franchisees, who are independent employers.
Under this broader standard, which goes into effect on February 26, 2024, we could potentially be liable for unfair labor practices and other violations by franchisees or we could be required to conduct collective bargaining negotiations regarding employees of franchisees, who are independent employers.
Food service businesses and the performance of company and franchised restaurants may be materially and adversely affected by factors such as: • consumer preferences, including nutritional and dietary concerns; 10 • consumer spending habits; • global, national, regional and local economic conditions; • demographic trends; • traffic patterns; • the type, number and location of competing restaurants; and • the ability to renew leased properties on commercially acceptable terms, if at all.
Food service businesses and the performance of company and franchised restaurants may be materially and adversely affected by factors such as: • consumer preferences, including nutritional and dietary concerns; • consumer spending habits; • global, national, regional and local economic conditions; • demographic trends; • traffic patterns; • the type, number and location of competing restaurants; and • the ability to renew leased properties on commercially acceptable terms, if at all. 10 Dependence on frequent deliveries of fresh produce and other food products subjects food service businesses to the risk that shortages or interruptions in supply caused by adverse weather, food safety warnings, animal disease outbreak or other conditions beyond our control could adversely affect the availability, quality and cost of ingredients.
Risks Related to Development Strategies Our growth strategy depends on our ability and that of our franchisees to open new restaurants. Delays or failures in opening new restaurants could adversely affect our planned growth and operating results.
Risks Related to Development Strategies Our growth strategy depends on our ability and that of our franchisees to open new restaurants.
We are subject to the risk of, or are involved in from time to time, complaints or litigation brought by former, current or prospective employees, customers, franchisees, vendors, landlords, regulatory agencies, shareholders or others. We assess contingencies to determine the degree of probability and range of possible loss for potential accrual in our financial statements.
Legal and Regulatory Risks Litigation may adversely affect our business, financial condition and results of operations. We are subject to the risk of, or are involved in from time to time, complaints or litigation brought by former, current or prospective employees, customers, franchisees, vendors, landlords, regulatory agencies, shareholders or others.
An estimated loss contingency is accrued if it is probable that a liability has been incurred and the amount of loss can be reasonably estimated. Because lawsuits are inherently unpredictable and unfavorable resolutions could occur, assessing contingencies is highly subjective and requires judgments about future events. We regularly review contingencies to determine the adequacy of the accruals and related disclosures.
Because lawsuits are inherently unpredictable and unfavorable resolutions could occur, assessing contingencies is highly subjective and requires judgments about future events. We regularly review contingencies to determine the adequacy of the accruals and related disclosures. However, the amount of ultimate loss may differ from these estimates.
As a result, franchised international restaurants may take longer to reach expected sales and profit levels, or may never do so, thereby affecting the brand’s overall growth and profitability. Building brand awareness may take longer than expected, which could negatively impact our profitability in those markets.
Additionally, there are risks associated with sourcing quality ingredients and other commodities in a cost-effective and timely manner. As a result, franchised international restaurants may take longer to reach expected sales and profit levels, or may never do so, thereby affecting the brand’s overall growth and profitability.
Changes in these principles or their interpretations or changes in underlying assumptions, estimates and judgments by us could significantly change our reported or expected financial performance. 15 Information Technology Risks Failure of computer systems, information technology, or the ability to provide a continuously secure network, or cyber attacks against our computer systems, could result in material harm to our reputation and business.
Information Technology Risks Failure of computer systems, information technology, or the ability to provide a continuously secure network, or cyber attacks against our computer systems, could result in material harm to our reputation and business. We and our franchisees rely heavily on computer systems and information technology to conduct business and operate efficiently.
Those controls include an annual proactive risk assessment, advanced comprehensive analysis of data threats, identification of business email compromise and proper security awareness education. The Audit & Finance Committee of our Board of Directors has oversight responsibility related to our cybersecurity risk management programs and periodically reviews reports on cybersecurity metrics, data privacy and other information technology risks.
The Audit & Finance Committee of our Board of Directors has oversight responsibility related to our cybersecurity risk management programs and periodically reviews reports on cybersecurity metrics, data privacy and other information technology risks. We receive and maintain certain personal information about our guests, employees and franchisees.
Failure to comply with any such legal requirements could subject us to monetary liabilities and other sanctions, which could adversely impact our results of operations and financial condition. Legal and Regulatory Risks Litigation may adversely affect our business, financial condition and results of operations.
These include antitrust and tax requirements, anti-boycott regulations, import/export/customs and other international trade regulations, the USA Patriot Act and the Foreign Corrupt Practices Act. Failure to comply with any such legal requirements could subject us to monetary liabilities and other sanctions, which could adversely impact our results of operations and financial condition.
We have implemented various aspects of The Patient Protection and Affordable Care Act and the Health Care and Education Affordability Reconciliation Act. However, the law or other related requirements may change. 14 We are also subject to federal, state, local and international laws regulating the offer and sale of franchises.
In addition, the future enactment of additional legislation regulating the franchise relationship could adversely affect our operations. 14 We have implemented applicable aspects of The Patient Protection and Affordable Care Act and the Health Care and Education Affordability Reconciliation Act. However, the law or other related requirements may change.
We and our franchisees rely heavily on computer systems and information technology to conduct business and operate efficiently. We have instituted monitoring controls intended to protect our computer systems, our point-of-sale systems and our information technology platforms and networks against external threats.
We have instituted monitoring controls intended to protect our computer systems, our point-of-sale systems and our information technology platforms and networks against external threats. Those controls include an annual proactive risk assessment, advanced comprehensive analysis of data threats, identification of business email compromise and proper security awareness education.
Additional risks and uncertainties not presently known to us or that we currently believe to be immaterial may also impair our business operations. 9 Risks Related to Macroeconomic Conditions Resulting from the COVID-19 Pandemic The COVID-19 pandemic has disrupted and could continue to disrupt our business, which could continue to have a material adverse impact on our business, results of operations, liquidity and financial condition for an extended period of time.
It is not possible to predict or identify all risk factors. Additional risks and uncertainties not presently known to us or that we currently believe to be immaterial may also impair our business operations. 9 Risks Related to Macroeconomic Conditions A decline in general economic conditions could adversely affect our financial results.
Our returns and profitability may be negatively impacted by a number of factors, including those described below.
If we are unable to compete effectively, we could experience lower demand for our products, downward pressure on prices, reduced margins, a loss of market share, reduced franchisee profitability and an inability to attract qualified franchisees in the future. Our returns and profitability may be negatively impacted by a number of factors, including those described below.
Removed
It is not possible to predict or identify all risk factors.
Added
Consumer spending habits, including discretionary spending on dining at restaurants such as ours, are affected by many factors including: • prevailing economic conditions, including interest rates; • energy costs, especially gasoline prices; • levels of employment; • salaries and wage rates, including tax rates; and • consumer confidence.
Removed
The outbreak of COVID-19 has had a material adverse effect on our business, results of operations, liquidity and financial condition. In 2020 and continuing through 2022, the continuing effects of the COVID-19 pandemic significantly impacted the economy in general, and our business specifically, and it could continue to negatively affect our business in a number of ways.
Added
Weakness or uncertainty regarding the economy, both domestic and international, as a result of reactions to consumer credit availability, increasing energy prices, inflation, increasing interest rates, unemployment, pandemics such as the COVID-19 pandemic, war, terrorist activity or other unforeseen events could adversely affect consumer spending habits, which may result in lower operating revenue.
Removed
These effects could include, but are not limited to: • inability of individual restaurants to return to full operating hours due to availability of employees or the inability to attract, retain and incentivize our employees; • failure of third parties on which we rely, including our franchisees and suppliers, to meet their respective obligations to the Company, or significant disruptions in their ability to do so, which may be caused by their own financial or operational difficulties or issues with the regional or national supply chain; • volatility of commodity costs; and • disruptions or uncertainties for a sustained period of time which could hinder our ability to achieve our strategic goals and our ability to meet financial obligations as they come due.
Added
Delays or failures in opening new restaurants could adversely affect our planned growth and operating results. The expansion of the Denny’s brand into international markets may present increased risks due to lower customer awareness of our brand, our unfamiliarity with those markets and other factors.
Removed
The extent to which the effects of the COVID-19 pandemic, or other outbreaks of disease or similar public health threats, materially and adversely impacts our business, results of operations, liquidity and financial condition is highly uncertain and will depend on future developments.
Added
Building brand awareness may take longer than expected, which could negatively impact our profitability in those markets. We are subject to governmental regulations in our international markets impacting the way we do business with our international franchisees.
Removed
Such developments may include the geographic spread and duration of this or other health threats, the development of new variants of this or other viruses and their related severity, and the actions that may be taken by various governmental authorities and other third parties in response to future outbreaks.
Added
We assess contingencies to determine the degree of probability and range of possible loss for potential accrual in our financial statements. An estimated loss contingency is accrued if it is probable that a liability has been incurred and the amount of loss can be reasonably estimated.
Removed
The effects of the COVID-19 pandemic on our business could be long-lasting and could continue to have adverse effects on our business, results of operations, liquidity, cash flows and financial condition, some of which may be significant, and may adversely impact our ability to operate our business on the same terms as we conducted business prior to the pandemic even after our restaurants fully reopen.
Added
Changes in these principles or their 15 interpretations or changes in underlying assumptions, estimates and judgments by us could significantly change our reported or expected financial performance.
Removed
Dependence on frequent deliveries of fresh produce and other food products subjects food service businesses to the risk that shortages or interruptions in supply caused by adverse weather, food safety warnings, animal disease outbreak or other conditions beyond our control could adversely affect the availability, quality and cost of ingredients.
Added
Risks Related to Indebtedness Our indebtedness could have an adverse effect on our financial condition and operations. As of December 27, 2023, we had total indebtedness of $266.0 million, including finance leases.
Removed
There may be lower consumer familiarity with the Denny’s brand in these markets, as well as different competitive conditions, consumer tastes and economic, political and health conditions. Additionally, there are risks associated with sourcing quality ingredients and other commodities in a cost-effective and timely manner.
Removed
We are subject to governmental regulations in our international markets impacting the way we do business with our international franchisees. These include antitrust and tax requirements, anti-boycott regulations, import/export/customs and other international trade regulations, the USA Patriot Act and the Foreign Corrupt Practices Act.
Removed
Risks Related to Indebtedness Changes in the method used to determine LIBOR rates and the phasing out of LIBOR may affect our financial results. Borrowings under our credit facility bear interest at variable rates based on LIBOR.
Removed
In addition, we have interest rate swaps designated as cash flow hedges of our exposure to variability in future cash flows attributable to payments of LIBOR due on forecasted notional debt obligations.
Removed
LIBOR and certain other interest “benchmarks” may be subject to regulatory guidance and/or reform that could cause interest rates under our current or future debt agreements and interest rate swaps to perform differently than in the past or cause other unanticipated consequences.
Removed
The Financial Conduct Authority (“FCA”), the authority that regulates LIBOR, announced it intends to cease all such rates by mid-2023. The Alternative Reference Rates Committee ("ARRC") has proposed that the Secured Overnight Financing Rate ("SOFR") is the rate that represents best practice as the alternative to USD-LIBOR for use in debt and derivative financial instruments.
Removed
Although an alternative to LIBOR has been contemplated in The New Credit Facility, it is unclear as to the new method of calculating LIBOR that may evolve, and this new method could adversely affect the Company’s interest rates on current or future debt obligations and interest rate swaps. 16 Our indebtedness could have an adverse effect on our financial condition and operations.
Removed
As of December 28, 2022, we had total indebtedness of $272.7 million, including finance leases.

Item 2. Properties

Properties — owned and leased real estate

2 edited+0 added−0 removed2 unchanged
Biggest changeThe restaurant buildings average between 4,000 - 5,000 square feet, allowing them to accommodate an average of 135 - 170 guests. 17 The number and location of our restaurants as of December 28, 2022 are presented below: United States - Denny’s Company Franchised / Licensed Total Alabama — 7 7 Alaska — 1 1 Arizona 1 84 85 Arkansas — 10 10 California 22 343 365 Colorado — 19 19 Connecticut — 5 5 Delaware — 1 1 District of Columbia — 2 2 Florida 9 115 124 Georgia — 12 12 Hawaii 2 4 6 Idaho — 10 10 Illinois — 47 47 Indiana — 34 34 Iowa — 3 3 Kansas — 5 5 Kentucky — 11 11 Louisiana — 6 6 Maine — 3 3 Maryland — 24 24 Massachusetts 2 4 6 Michigan — 14 14 Minnesota — 17 17 Mississippi — 4 4 Missouri — 30 30 Montana — 3 3 Nebraska — 3 3 Nevada 7 32 39 New Hampshire 2 — 2 New Jersey — 7 7 New Mexico — 29 29 New York — 41 41 North Carolina — 21 21 North Dakota — 3 3 Ohio — 35 35 Oklahoma — 10 10 Oregon — 22 22 Pennsylvania — 35 35 Rhode Island — 3 3 South Carolina 3 8 11 South Dakota — 1 1 Tennessee — 5 5 Texas 14 191 205 Utah — 25 25 Vermont 2 — 2 Virginia 2 19 21 Washington — 41 41 West Virginia — 4 4 Wisconsin — 22 22 Wyoming — 4 4 Total Domestic - Denny’s 66 1,379 1,445 18 International - Denny’s Company Franchised / Licensed Total Canada — 84 84 Costa Rica — 3 3 Curacao N.V. — 1 1 El Salvador — 2 2 Guam — 2 2 Guatemala — 4 4 Honduras — 6 6 Indonesia — 2 2 Mexico — 15 15 New Zealand — 7 7 Philippines — 10 10 Puerto Rico — 15 15 United Arab Emirates — 5 5 United Kingdom — 1 1 Total International - Denny’s — 157 157 Total Domestic - Denny’s 66 1,379 1,445 Total - Denny’s 66 1,536 1,602 United States - Keke’s Company Franchised / Licensed Total Florida 8 46 54 Total Domestic - Keke’s 8 46 54 Total 74 1,582 1,656 Of our total 1,656 restaurants, our interest in restaurant properties consists of the following: Company Restaurants Franchised Restaurants Total Owned properties 16 61 77 Leased properties 58 153 211 74 214 288 We have generally been able to renew our restaurant leases as they expire at then-current market rates.
Biggest changeThe restaurant buildings average between 4,000 - 5,000 square feet, allowing them to accommodate an average of 135 - 170 guests. 17 The number and location of our restaurants as of December 27, 2023 are presented below: United States - Denny’s Company Franchised / Licensed Total Alabama — 6 6 Alaska — 1 1 Arizona 1 83 84 Arkansas — 10 10 California 22 341 363 Colorado — 20 20 Connecticut — 5 5 Delaware — 1 1 District of Columbia — 2 2 Florida 9 115 124 Georgia — 11 11 Hawaii 2 4 6 Idaho — 11 11 Illinois — 44 44 Indiana — 30 30 Iowa — 3 3 Kansas — 4 4 Kentucky — 11 11 Louisiana — 6 6 Maine — 3 3 Maryland — 23 23 Massachusetts 2 3 5 Michigan — 13 13 Minnesota — 13 13 Mississippi — 4 4 Missouri — 28 28 Montana — 2 2 Nebraska — 3 3 Nevada 7 33 40 New Hampshire 2 — 2 New Jersey — 6 6 New Mexico — 29 29 New York — 37 37 North Carolina — 18 18 North Dakota — 3 3 Ohio — 31 31 Oklahoma — 10 10 Oregon — 21 21 Pennsylvania — 35 35 Rhode Island — 2 2 South Carolina 3 8 11 South Dakota — 1 1 Tennessee — 4 4 Texas 14 190 204 Utah — 24 24 Vermont 1 — 1 Virginia 2 18 20 Washington — 41 41 West Virginia — 4 4 Wisconsin — 23 23 Wyoming — 4 4 Total Domestic - Denny’s 65 1,342 1,407 18 International - Denny’s Company Franchised / Licensed Total Canada — 86 86 Costa Rica — 3 3 Curacao N.V. — 1 1 El Salvador — 3 3 Guam — 2 2 Guatemala — 4 4 Honduras — 6 6 Indonesia — 2 2 Mexico — 15 15 New Zealand — 7 7 Philippines — 15 15 Puerto Rico — 16 16 United Arab Emirates — 5 5 United Kingdom — 1 1 Total International - Denny’s — 166 166 Total Domestic - Denny’s 65 1,342 1,407 Total - Denny’s 65 1,508 1,573 United States - Keke’s Company Franchised / Licensed Total Florida 8 50 58 Total Domestic - Keke’s 8 50 58 Total 73 1,558 1,631 Of our total 1,631 restaurants, our interest in restaurant properties consists of the following: Company Restaurants Franchised Restaurants Total Owned properties 16 61 77 Leased properties 57 134 191 73 195 268 We have generally been able to renew our restaurant leases as they expire at then-current market rates.
The remaining terms of leases range from less than one to approximately 40 years, including optional renewal periods. Our corporate offices include an owned building in Spartanburg, South Carolina and leased buildings in Irving, Texas and in Orlando, Florida.
The remaining terms of leases range from less than one to approximately 39 years, including optional renewal periods. Our corporate offices include an owned building in Spartanburg, South Carolina and leased buildings in Irving, Texas and in Orlando, Florida.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

9 edited+1 added−3 removed3 unchanged
Biggest changeCOMPARISON OF FIVE-YEAR CUMULATIVE TOTAL SHAREHOLDER RETURN ASSUMES $100 INVESTED ON DECEMBER 27, 2017 ASSUMES DIVIDENDS REINVESTED FISCAL YEAR ENDED DECEMBER 28, 2022 Russell 2000® Index (1) Current Peer Group (2) Former Peer Group (3) Denny’s Corporation December 27, 2017 $ 100.00 $ 100.00 $ 100.00 $ 100.00 December 26, 2018 $ 87.26 $ 105.53 $ 105.41 $ 121.34 December 25, 2019 $ 111.72 $ 111.48 $ 111.65 $ 151.12 December 30, 2020 $ 133.69 $ 130.52 $ 130.40 $ 105.30 December 29, 2021 $ 153.33 $ 136.60 $ 136.25 $ 117.16 December 28, 2022 $ 119.04 $ 116.55 $ 116.81 $ 67.16 (1) The Russell 2000 Index is a broad equity market index of 2,000 companies that measures the performance of the small-cap segment of the U.S. equity universe.
Biggest changeCOMPARISON OF FIVE-YEAR CUMULATIVE TOTAL SHAREHOLDER RETURN ASSUMES $100 INVESTED ON DECEMBER 26, 2018 ASSUMES DIVIDENDS REINVESTED FISCAL YEAR ENDED DECEMBER 27, 2023 Russell 2000® Index (1) Peer Group (2) Denny’s Corporation December 26, 2018 $ 100.00 $ 100.00 $ 100.00 December 25, 2019 $ 128.02 $ 106.15 $ 124.54 December 30, 2020 $ 153.21 $ 124.28 $ 86.78 December 29, 2021 $ 175.71 $ 129.52 $ 96.56 December 28, 2022 $ 136.41 $ 110.20 $ 55.34 December 27, 2023 $ 166.29 $ 153.83 $ 67.08 (1) The Russell 2000 Index is a broad equity market index of 2,000 companies that measures the performance of the small-cap segment of the U.S. equity universe.
An aggregate amount is available for such dividends or share repurchases as follows: • an amount not to exceed $50.0 million if the Consolidated Leverage Ratio (as defined in the credit agreement, as amended) is 3.5x or greater and an unlimited amount if the Consolidated Leverage Ratio is below 3.5x, provided that, in each case, at least $20.0 million of availability is maintained under the revolving credit facility after such payment; and • an additional annual aggregate amount equal to $0.05 times the number of outstanding shares of our common stock, as of August 16, 2021, plus each additional share of our common stock that is issued after such date.
An annual aggregate amount is available for such dividends or share repurchases as follows: • an amount not to exceed $50.0 million if the Consolidated Leverage Ratio (as defined in the credit agreement, as amended) is 3.5x or greater and an unlimited amount if the Consolidated Leverage Ratio is below 3.5x, provided that, in each case, at least $20.0 million of availability is maintained under the revolving credit facility after such payment; and • an additional aggregate amount equal to $0.05 times the number of outstanding shares of our common stock, as of August 16, 2021, plus each additional share of our common stock that is issued after such date.
The graph and table assume that $100 was invested on December 27, 2017 (the last day of fiscal year 2017) in each of the Company’s common stock, the Russell 2000® Index and the current and former peer groups and that all dividends were reinvested.
The graph and table assume that $100 was invested on December 26, 2018 (the last day of fiscal year 2018) in each of the Company’s common stock, the Russell 2000® Index and the current and former peer groups and that all dividends were reinvested.
During the quarter ended December 28, 2022, we purchased 773,152 shares of our common stock for an aggregate consideration of approximately $7.8 million pursuant to this share repurchase program. 20 Performance Graph The following graph compares the cumulative total shareholder return on our common stock for the five fiscal years ended December 28, 2022 (December 27, 2017 to December 28, 2022) against the cumulative total return of the Russell 2000® Index and a peer group, selected by us, of companies that we believe compose a representative sampling of public companies in our industry comparable to us in size and composition.
During the quarter ended December 27, 2023, we purchased 1.8 million shares of our common stock for an aggregate consideration of $16.2 million pursuant to this share repurchase program. 20 Performance Graph The following graph compares the cumulative total shareholder return on our common stock for the five fiscal years ended December 27, 2023 (December 26, 2018 to December 27, 2023) against the cumulative total return of the Russell 2000® Index and a peer group, selected by us, of companies that we believe compose a representative sampling of public companies in our industry comparable to us in size and composition.
As of December 28, 2022, the weighted average market capitalization of companies within the index was approximately $2.8 billion with the median market capitalization being approximately $1.0 billion. (2) The current peer group consists of 15 public companies that operate in the restaurant industry. The peer group includes the following companies: BJ’s Restaurants, Inc. (BJRI), Bloomin’ Brands, Inc.
As of December 27, 2023, the weighted average market capitalization of companies within the index was approximately $2.7 billion with the median market capitalization being approximately $0.8 billion. (2) The peer group consists of 14 public companies that operate in the restaurant industry. The peer group includes the following companies: BJ’s Restaurants, Inc. (BJRI), Bloomin’ Brands, Inc.
(BLMN), Brinker International, Inc. (EAT), Cracker Barrel Old Country Store, Inc. (CBRL), Del Taco Restaurants, Inc. (TACO), Dine Brands Global, Inc. (DIN), El Pollo Loco Holdings, Inc. (LOCO), Fiesta Restaurant Group, Inc. (FRGI), Jack in the Box Inc. (JACK), Noodles & Company (NDLS), Ruth’s Hospitality Group, Inc. (RUTH), Shake Shack, Inc. (SHAK), Texas Roadhouse, Inc.
(BLMN), Brinker International, Inc. (EAT), Cracker Barrel Old Country Store, Inc. (CBRL), Dine Brands Global, Inc. (DIN), El Pollo Loco Holdings, Inc. (LOCO), Fiesta Restaurant Group, Inc. (FRGI), Jack in the Box Inc. (JACK), Noodles & Company (NDLS), Ruth’s Hospitality Group, Inc. (RUTH), Shake Shack, Inc. (SHAK), Texas Roadhouse, Inc. (TXRH), The Cheesecake Factory Incorporated (CAKE), and Wingstop Inc. (WING).
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Our common stock is listed under the symbol “DENN” and trades on the Nasdaq Capital Market (“Nasdaq”). As of February 23, 2023, there were 56,424,922 shares of our common stock outstanding and approximately 41,000 record and beneficial holders of our common stock.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Our common stock is listed under the symbol “DENN” and trades on the Nasdaq Capital Market (“Nasdaq”). As of February 22, 2024, there were 52,253,719 shares of our common stock outstanding and approximately 36,000 record and beneficial holders of our common stock.
Though we have not historically paid cash dividends, we have in recent years undertaken share repurchases. The table below provides information concerning repurchases of shares of our common stock during the quarter ended December 28, 2022.
Though we have not historically paid cash dividends and currently do not expect to do so in the foreseeable future, we have in recent years undertaken share repurchases. The table below provides information concerning repurchases of shares of our common stock during the quarter ended December 27, 2023.
Period Total Number of Shares Purchased Average Price Paid Per Share (1) Total Number of Shares Purchased as Part of Publicly Announced Programs (2) Approximate Dollar Value of Shares that May Yet be Purchased Under the Programs (2) (In thousands, except per share amounts) September 29, 2022 – October 26, 2022 262 $ 9.85 262 $ 157,702 October 27, 2022 – November 23, 2022 51 11.53 51 $ 157,115 November 24, 2022 – December 28, 2022 460 9.96 460 $ 152,527 Total 773 $ 10.45 773 (1) Average price paid per share excludes commissions.
Period Total Number of Shares Purchased Average Price Paid Per Share (1) Total Number of Shares Purchased as Part of Publicly Announced Programs (2) Approximate Dollar Value of Shares that May Yet be Purchased Under the Programs (2) (In thousands, except per share amounts) September 28, 2023 – October 25, 2023 900 $ 8.52 900 $ 108,917 October 26, 2023 – November 22, 2023 600 8.94 600 $ 103,542 November 23, 2023 – December 27, 2023 292 10.09 292 $ 100,428 Total 1,792 $ 8.91 1,792 (1) Average price paid per share excludes commissions.
Removed
We revised this peer group in 2022 to more closely reflect a representative sampling of comparable companies in our industry. As required by SEC regulations, the following graph also shows the cumulative return of the former peer group.
Added
Del Taco Restaurants, Inc. (TACO), which had previously appeared in our peer group, was acquired and is no longer an independent public company. 21 Item 6. Reserved
Removed
(TXRH), The Cheesecake Factory Incorporated (CAKE), and Wingstop Inc. (WING). 21 (3) The former peer group consists of 14 public companies that operate in the restaurant industry. The peer group includes the following companies: BJ’s Restaurants, Inc. (BJRI), Bloomin’ Brands, Inc. (BLMN), Brinker International, Inc. (EAT), Cracker Barrel Old Country Store, Inc. (CBRL), Del Taco Restaurants, Inc.
Removed
(TACO), Dine Brands Global, Inc. (DIN), El Pollo Loco Holdings, Inc. (LOCO), Fiesta Restaurant Group, Inc. (FRGI), Jack in the Box Inc. (JACK), Ruth’s Hospitality Group, Inc. (RUTH), Shake Shack, Inc. (SHAK), Texas Roadhouse, Inc. (TXRH), The Cheesecake Factory Incorporated (CAKE), and Wingstop Inc. (WING). Item 6. Reserved

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

77 edited+24 added−19 removed26 unchanged
Biggest changeManagement’s Discussion and Analysis of Financial Condition and Results of Operations relates to the Denny’s brand unless otherwise noted. 23 Statements of Operations Fiscal Year Ended December 28, 2022 December 29, 2021 December 30, 2020 (Dollars in thousands) Revenue: Company restaurant sales $ 199,753 43.8 % $ 175,017 44.0 % $ 118,160 40.9 % Franchise and license revenue 256,676 56.2 % 223,157 56.0 % 170,445 59.1 % Total operating revenue 456,429 100.0 % 398,174 100.0 % 288,605 100.0 % Costs of company restaurant sales, excluding depreciation and amortization (a): Product costs 53,617 26.8 % 42,982 24.6 % 29,816 25.2 % Payroll and benefits 76,412 38.3 % 65,337 37.3 % 51,684 43.7 % Occupancy 15,154 7.6 % 11,662 6.7 % 11,241 9.5 % Other operating expenses 34,275 17.2 % 26,951 15.4 % 21,828 18.5 % Total costs of company restaurant sales, excluding depreciation and amortization 179,458 89.8 % 146,932 84.0 % 114,569 97.0 % Costs of franchise and license revenue (a) 135,327 52.7 % 109,140 48.9 % 94,348 55.4 % General and administrative expenses 67,173 14.7 % 68,686 17.3 % 55,040 19.1 % Depreciation and amortization 14,862 3.3 % 15,446 3.9 % 16,161 5.6 % Operating (gains), losses and other charges, net (1,005) (0.2) % (46,105) (11.6) % 1,808 0.6 % Total operating costs and expenses, net 395,815 86.7 % 294,099 73.9 % 281,926 97.7 % Operating income 60,614 13.3 % 104,075 26.1 % 6,679 2.3 % Interest expense, net 13,769 3.0 % 15,148 3.8 % 17,965 6.2 % Other nonoperating income, net (52,585) (11.5) % (15,176) (3.8) % (4,171) (1.4) % Net income (loss) before income taxes 99,430 21.8 % 104,103 26.1 % (7,115) (2.5) % Provision for (benefit from) income taxes 24,718 5.4 % 26,030 6.5 % (1,999) (0.7) % Net income (loss) $ 74,712 16.4 % $ 78,073 19.6 % $ (5,116) (1.8) % (a) Costs of company restaurant sales percentages are as a percentage of company restaurant sales.
Biggest changeManagement’s Discussion and Analysis of Financial Condition and Results of Operations relates to the Denny’s brand unless otherwise noted. 23 Statements of Income Fiscal Year Ended December 27, 2023 December 28, 2022 December 29, 2021 (Dollars in thousands) Revenue: Company restaurant sales $ 215,532 46.5 % $ 199,753 43.8 % $ 175,017 44.0 % Franchise and license revenue 248,390 53.5 % 256,676 56.2 % 223,157 56.0 % Total operating revenue 463,922 100.0 % 456,429 100.0 % 398,174 100.0 % Costs of company restaurant sales, excluding depreciation and amortization (a): Product costs 55,789 25.9 % 53,617 26.8 % 42,982 24.6 % Payroll and benefits 80,666 37.4 % 76,412 38.3 % 65,337 37.3 % Occupancy 17,080 7.9 % 15,154 7.6 % 11,662 6.7 % Other operating expenses 34,064 15.8 % 34,275 17.2 % 26,951 15.4 % Total costs of company restaurant sales, excluding depreciation and amortization 187,599 87.0 % 179,458 89.8 % 146,932 84.0 % Costs of franchise and license revenue (a) 122,452 49.3 % 135,327 52.7 % 109,140 48.9 % General and administrative expenses 77,770 16.8 % 67,173 14.7 % 68,686 17.3 % Depreciation and amortization 14,385 3.1 % 14,862 3.3 % 15,446 3.9 % Goodwill impairment charges 6,363 1.4 % — — % — — % Operating (gains), losses and other charges, net 2,530 0.5 % (1,005) (0.2) % (46,105) (11.6) % Total operating costs and expenses, net 411,099 88.6 % 395,815 86.7 % 294,099 73.9 % Operating income 52,823 11.4 % 60,614 13.3 % 104,075 26.1 % Interest expense, net 17,597 3.8 % 13,769 3.0 % 15,148 3.8 % Other nonoperating income, net 8,288 1.8 % (52,585) (11.5) % (15,176) (3.8) % Net income before income taxes 26,938 5.8 % 99,430 21.8 % 104,103 26.1 % Provision for income taxes 6,993 1.5 % 24,718 5.4 % 26,030 6.5 % Net income $ 19,945 4.3 % $ 74,712 16.4 % $ 78,073 19.6 % (a) Costs of company restaurant sales percentages are as a percentage of company restaurant sales.
As we are not able to reasonably estimate the timing or amount of these payments, the related balances have not been reflected in this table. Critical Accounting Policies and Estimates Our reported results are impacted by the application of certain accounting policies that require us to make subjective or complex judgments.
As we are not able to reasonably estimate the timing or amount of these payments, the related balances have not been reflected in this table. 32 Critical Accounting Policies and Estimates Our reported results are impacted by the application of certain accounting policies that require us to make subjective or complex judgments.
(d) Refer to Note 12 to our Consolidated Financial Statements for a further discussion of our defined benefit plan obligations and timing of expected payments. 32 (e) Refer to Note 19 to our Consolidated Financial Statements for a further discussion of our purchase obligations and timing of expected payments. (f) Unrecognized tax benefits are related to uncertain tax positions.
(d) Refer to Note 12 to our Consolidated Financial Statements for a further discussion of our defined benefit plan obligations and timing of expected payments. (e) Refer to Note 19 to our Consolidated Financial Statements for a further discussion of our purchase obligations and timing of expected payments. (f) Unrecognized tax benefits are related to uncertain tax positions.
Sales and customer traffic at both company and franchised restaurants are affected by the success of our marketing campaigns, new product introductions, product quality enhancements, customer service, availability of off-premise dining options, and menu pricing, as well as external factors including competition, economic conditions affecting consumer spending and changes in guests’ tastes and preferences.
Sales and customer traffic at both company and franchised restaurants are affected by the success of our marketing campaigns, new product introductions, product quality enhancements, customer service, availability of off-premises dining options, and menu pricing, as well as external factors including competition, economic conditions affecting consumer spending and changes in guests’ tastes and preferences.
For 2021, the difference in the overall effective rate from the U.S. statutory rate was primarily due to state and foreign taxes, partially offset by the generation of employment credits. The 2021 rate was also impacted by an expense of $1.3 million from disallowed compensation deductions.
For 2021, the difference in the overall effective rate from the U.S. statutory rate was primarily due to state and foreign taxes, partially offset by the generation of employment credits. The 2021 rate was also impacted by $1.3 million of disallowed compensation deductions.
For long-term debt with variable rates, we have used the rate applicable at December 28, 2022 to project interest over the periods presented in the table above, taking into consideration the impact of the interest rate swaps that are designated as cash flow hedges for the applicable periods. The finance lease obligation amounts above are inclusive of interest.
For long-term debt with variable rates, we have used the rate applicable at December 27, 2023 to project interest over the periods presented in the table above, taking into consideration the impact of the interest rate swaps that are designated as cash flow hedges for the applicable periods. The finance lease obligation amounts above are inclusive of interest.
For 2020, the difference in the overall effective rate from the U.S. statutory rate was primarily due to state and foreign taxes, partially offset by the generation of employment credits.
For 2022, the difference in the overall effective rate from the U.S. statutory rate was primarily due to state and foreign taxes, partially offset by the generation of employment and foreign tax credits.
We believe that our estimated cash flows from operations for 2023, combined with our capacity for additional borrowings under our credit facility, will enable us to meet our anticipated cash requirements and fund capital expenditures over the next twelve months. 30 Net cash flows used in investing activities were $86.6 million for the year ended December 28, 2022.
We believe that our estimated cash flows from operations for 2024, combined with our capacity for additional borrowings under our credit facility, will enable us to meet our anticipated cash requirements and fund capital expenditures over the next twelve months. 30 Net cash flows used in investing activities were $7.6 million for the year ended December 27, 2023.
(b) Refer to Note 9 to our Consolidated Financial Statements for a further discussion of our lease obligations and timing of expected payments. (c) Interest obligations represent payments related to our long-term debt outstanding at December 28, 2022.
(b) Refer to Note 9 to our Consolidated Financial Statements for a further discussion of our lease obligations and timing of expected payments. (c) Interest obligations represent payments related to our long-term debt outstanding at December 27, 2023.
During the past five fiscal years, we have not made any material changes to the accounting methodologies used to assess the areas discussed below, unless noted otherwise. Descriptions of what we consider to be our most significant critical accounting policies are as follows: Self-insurance liabilities.
We have not made any material changes to the accounting methodologies used to assess the areas discussed below, unless noted otherwise. Descriptions of what we consider to be our most significant critical accounting policies are as follows: Self-insurance liabilities.
The decrease in cash flows provided by (used in) operating activities was primarily due to increased operating costs at company restaurants and the timing of prior year accrual payments and receivable collections.
The decrease in cash flows provided by operating activities in 2022 compared to 2021 was primarily due to increased operating costs at company restaurants and the timing of prior year accrual payments and receivable collections.
Taking into consideration our interest rate swaps that are designated as cash flow hedges, the weighted-average interest rate of outstanding revolver loans was 5.31% and 4.44% as of December 28, 2022 and December 29, 2021, respectively. Interest Rate Hedges We have interest rate swaps to hedge a portion of the forecasted cash flows of our floating rate debt.
Taking into consideration our interest rate swaps that are designated as cash flow hedges, the weighted-average interest rate of outstanding revolver loans was 5.04% and 5.31% as of December 27, 2023 and December 28, 2022, respectively. Interest Rate Hedges We have interest rate swaps to hedge a portion of the forecasted cash flows of our floating rate debt.
Company restaurant sales for 2022 increased $24.7 million, or 14.1%, primarily driven by a 10.4% increase in company same-store sales resulting from price increases to partially offset inflationary costs. The increase in sales includes $6.2 million from Keke’s.
The increase in Denny’s company same-store sales primarily resulted from price increases to partially offset inflationary pressures. Company restaurant sales from Keke’s increased $8.2 million in 2023. Company restaurant sales for 2022 increased $24.7 million, or 14.1%, primarily driven by a 10.4% increase in Denny’s company same-store sales resulting from price increases to partially offset inflationary costs.
Packaging costs and delivery fees (included as a component of other operating expenses) also fluctuate with changes in delivery and off-premise sales. Our fiscal year ends on the last Wednesday in December. As a result, a fifty-third week is added to a fiscal year every five or six years.
Packaging costs and delivery fees (included as a component of other operating expenses) also fluctuate with changes in delivery and off-premises sales. Our fiscal year ends on the last Wednesday in December. As a result, a fifty-third week is added to a fiscal year every five or six years. Fiscal 2023, 2022 and 2021 each included 52 weeks of operations.
The 2021 increase was primarily due to prior year temporary cost reductions related to the COVID-19 pandemic, including net reductions in tax credits related to the CARES Act of approximately $1.2 million. Share-based compensation decreased by $2.2 million in 2022 and increased by $5.7 million in 2021.
The 2022 increase was primarily due to compensation increases in the current year and prior year temporary cost reductions related to the COVID-19 pandemic, including net reductions in tax credits related to the CARES Act of approximately $0.5 million. Share-based compensation decreased by $2.5 million in 2023 and by $2.2 million in 2022.
All other percentages are as a percentage of total operating revenue. 24 Statistical Data Fiscal Year Ended December 28, 2022 December 29, 2021 December 30, 2020 (Dollars in thousands) Denny’s Company average unit sales $2,985 $2,709 $1,812 Franchise average unit sales $1,729 $1,597 $1,181 Company equivalent units (a) 65 65 65 Franchise equivalent units (a) 1,561 1,581 1,614 Company same-store sales increase (decrease) vs. prior year (b)(c) 10.4% 55.3% (36.7)% Domestic franchised same-store sales increase (decrease) vs. prior year (b)(c) 6.0% 40.1% (30.9)% Keke’s (d)(e) Company average unit sales $772 $— $— Franchise average unit sales $802 $— $— Company equivalent units (a) 4 — — Franchise equivalent units (a) 20 — — (a) Equivalent units are calculated as the weighted average number of units outstanding during a defined time period.
All other percentages are as a percentage of total operating revenue. 24 Statistical Data Fiscal Year Ended December 27, 2023 December 28, 2022 December 29, 2021 (Dollars in thousands) Denny’s Company average unit sales $3,073 $2,985 $2,709 Franchise average unit sales $1,843 $1,729 $1,597 Company equivalent units (a) 65 65 65 Franchise equivalent units (a) 1,522 1,561 1,581 Company same-store sales increase vs. prior year (b)(c) 2.7% 10.4% 55.3% Domestic franchised same-store sales increase vs. prior year (b)(c) 3.6% 6.0% 40.1% Keke’s (d) Company average unit sales $1,796 $772 N/A Franchise average unit sales $1,828 $802 N/A Company equivalent units (a) 8 4 N/A Franchise equivalent units (a) 48 20 N/A Company same-store sales decrease (b) (1.1)% N/A N/A Franchise same-store sales decrease (b) (4.4)% N/A N/A (a) Equivalent units are calculated as the weighted average number of units outstanding during a defined time period.
These cash flows included $82.5 million for the acquisition of Keke’s and capital expenditures of $11.8 million, partially offset by proceeds from the sale of real estate and other assets of $4.1 million and collections on real estate acquisitions of $3.6 million. Net cash flows provided by investing activities were $29.0 million for the year ended December 29, 2021.
Net cash flow used in investing activities were $86.6 million for the year ended December 28, 2022. These cash flows included $82.5 million for the acquisition of Keke’s and capital expenditures of $11.8 million, partially offset by proceeds from the sale of real estate and other assets of $4.1 million and collections on real estate acquisitions of $3.6 million.
As a 27 result, costs of franchise and license revenue as a percentage of franchise and license revenue decreased to 48.9% for 2021 from 55.4% in 2020. Other Operating Costs and Expenses Other operating costs and expenses such as general and administrative expenses and depreciation and amortization expense relate to both company and franchise operations.
As a result, costs of franchise and license revenue as a percentage of franchise and license revenue increased to 52.7% for 2022 from 48.9% in 2021. 27 Other Operating Costs and Expenses Other operating costs and expenses such as general and administrative expenses and depreciation and amortization expense relate to both company and franchise operations.
Occupancy costs decreased $2.1 million, or 8.2%, in 2022, primarily related to lease terminations. Other direct costs increased $22.4 million, or 172.8%, primarily due to $19.1 million of expense as part of the installation of kitchen equipment at franchise restaurants as mentioned above.
Other direct costs increased $22.4 million, or 172.8%, primarily due to $19.1 million of expense as part of the installation of kitchen equipment at franchise restaurants as mentioned above.
For additional details related to the provision for (benefit from) income taxes as well as changes in the effective tax rate, see Note 15 to our Consolidated Financial Statements. Net income (loss) was income of $74.7 million for 2022, income of $78.1 million for 2021 and a loss of $5.1 million for 2020.
For additional details related to the provision for income taxes as well as changes in the effective tax rate, see Note 15 to our Consolidated Financial Statements. Net income was $19.9 million for 2023, $74.7 million for 2022 and $78.1 million for 2021.
Restructuring charges and exit costs consisted of the following: Fiscal Year Ended December 28, 2022 December 29, 2021 December 30, 2020 (In thousands) Exit costs $ 86 $ 323 $ 204 Severance and other restructuring charges 1,324 952 2,199 Total restructuring and exit costs $ 1,410 $ 1,275 $ 2,403 Total restructuring and exit costs for 2022 primarily consisted of severance costs.
Restructuring charges and exit costs consisted of the following: Fiscal Year Ended December 27, 2023 December 28, 2022 December 29, 2021 (In thousands) Exit costs $ 190 $ 86 $ 323 Severance and other restructuring charges 2,346 1,324 952 Total restructuring and exit costs $ 2,536 $ 1,410 $ 1,275 Total restructuring and exit costs for 2023 and 2022 primarily consisted of severance costs.
The following table presents a summary of our sources and uses of cash and cash equivalents for the periods indicated: Fiscal Year Ended December 28, 2022 December 29, 2021 December 30, 2020 (In thousands) Net cash provided by (used in) operating activities $ 39,452 $ 76,173 $ (3,137) Net cash provided by (used in) investing activities (86,596) 29,014 4,651 Net cash provided by (used in) financing activities 20,043 (78,455) (994) Increase (decrease) in cash and cash equivalents $ (27,101) $ 26,732 $ 520 Net cash flows provided by operating activities were $39.5 million for the year ended December 28, 2022 compared to net cash flows provided by operating activities of $76.2 million for the year ended December 29, 2021.
The following table presents a summary of our sources and uses of cash and cash equivalents for the periods indicated: Fiscal Year Ended December 27, 2023 December 28, 2022 December 29, 2021 (In thousands) Net cash provided by operating activities $ 72,125 $ 39,452 $ 76,173 Net cash (used in) provided by investing activities (7,564) (86,596) 29,014 Net cash (used in) provided by financing activities (63,191) 20,043 (78,455) Increase (decrease) in cash and cash equivalents $ 1,370 $ (27,101) $ 26,732 Net cash flows provided by operating activities were $72.1 million for the year ended December 27, 2023 compared to net cash flows provided by operating activities of $39.5 million for the year ended December 28, 2022.
We estimate that the additional operating week added approximately $6.3 million of operating revenue in 2020. 22 Factors Impacting Comparability For 2022, 2021 and 2020, the following items impacted the comparability of our results: • Company restaurant sales increased from $118.2 million in 2020 to $175.0 million in 2021 and $199.8 million in 2022, primarily from our progressive recovery from the COVID-19 pandemic that began in 2020. • Royalty income, which is included as a component of franchise and license revenue, increased from $67.5 million in 2020 to $103.4 million in 2021 and $113.9 million in 2022, also related to our recovery from the COVID-19 pandemic. • Initial and other fees increased from $7.3 million in 2020 and $8.0 million in 2021 to $28.3 million in 2022.
Factors Impacting Comparability For 2023, 2022 and 2021, the following items impacted the comparability of our results: • Company restaurant sales increased from $175.0 million in 2021 to $199.8 million in 2022 and $215.5 million in 2023, primarily from our progressive recovery from the COVID-19 pandemic that began in 2020 and the acquisition of Keke’s in 2022. 22 • Royalty income, which is included as a component of franchise and license revenue, increased from $103.4 million in 2021 to $113.9 million in 2022 and $120.1 million in 2023, also related to our recovery from the COVID-19 pandemic and the acquisition of Keke’s in 2022. • Initial and other fees increased from $8.0 million in 2021 to $28.3 million in 2022 and decreased to $13.9 million in 2023.
Occupancy revenue decreased $0.1 million, or 0.2%, in 2021 primarily due to lease terminations, partially offset by higher percentage rents as a result of sales increases. Costs of franchise and license revenue increased $26.2 million, or 24.0%, in 2022. Advertising costs increased $6.0 million, or 8.5%, which corresponds to the related advertising revenue increases noted above.
Costs of franchise and license revenue increased $26.2 million, or 24.0%, in 2022. Advertising costs increased $6.0 million, or 8.5%, which corresponds to the related advertising revenue increases noted above. Occupancy costs decreased $2.1 million, or 8.2%, in 2022, primarily related to lease terminations.
Other operating expenses consisted of the following amounts and percentages of company restaurant sales: Fiscal Year Ended December 28, 2022 December 29, 2021 December 30, 2020 (Dollars in thousands) Utilities $ 7,273 3.6 % $ 5,814 3.3 % $ 5,148 4.4 % Repairs and maintenance 3,874 1.9 % 2,743 1.6 % 2,608 2.2 % Marketing 5,294 2.7 % 4,594 2.6 % 3,904 3.3 % Legal settlements 4,224 2.1 % 2,134 1.2 % 506 0.4 % Other direct costs 13,610 6.8 % 11,666 6.7 % 9,662 8.2 % Other operating expenses $ 34,275 17.2 % $ 26,951 15.4 % $ 21,828 18.5 % 26 For 2022, legal settlement costs were higher as a percentage of sales primarily due to unfavorable development in certain claims.
Other operating expenses consisted of the following amounts and percentages of company restaurant sales: Fiscal Year Ended December 27, 2023 December 28, 2022 December 29, 2021 (Dollars in thousands) Utilities $ 7,848 3.6 % $ 7,273 3.6 % $ 5,814 3.3 % Repairs and maintenance 3,661 1.7 % 3,874 1.9 % 2,743 1.6 % Marketing 5,603 2.6 % 5,294 2.7 % 4,594 2.6 % Legal settlements 2,302 1.1 % 4,224 2.1 % 2,134 1.2 % Other direct costs 14,650 6.8 % 13,610 6.8 % 11,666 6.7 % Other operating expenses $ 34,064 15.8 % $ 34,275 17.2 % $ 26,951 15.4 % 26 For 2023, legal settlement costs were lower as a percentage of sales primarily due to unfavorable developments in certain claims during the prior year.
Total costs of company restaurant sales as a percentage of company restaurant sales were 89.8% in 2022, 84.0% in 2021 and 97.0% in 2020 consisting of the following: Product costs as a percentage of company restaurant sales were 26.8% in 2022, 24.6% in 2021 and 25.2% in 2020.
The increase in sales in 2022 includes $6.2 million from Keke’s. Total costs of company restaurant sales as a percentage of company restaurant sales were 87.0% in 2023, 89.8% in 2022 and 84.0% in 2021 consisting of the following: Product costs as a percentage of company restaurant sales were 25.9% in 2023, 26.8% in 2022 and 24.6% in 2021.
Nonoperating income for 2022 includes $55.0 million of gains related to dedesignated interest rate swap valuation adjustments, partially offset by losses of $2.2 million on deferred compensation plan investments. Nonoperating income for 2021 includes $12.8 million of gains related to dedesignated interest rate swap valuation adjustments and $2.2 million in gains on deferred compensation investments.
Nonoperating expense for 2023 includes $10.6 million of losses related to valuation adjustments for dedesignated interest rate hedges, partially offset by gains of $2.1 million on deferred compensation plan investments. Nonoperating income for 2022 includes $55.0 million of gains related to dedesignated interest rate swap valuation adjustments, partially offset by losses of $2.2 million on deferred compensation plan investments.
Franchise Operations Franchise and license revenue and costs of franchise and license revenue consisted of the following amounts and percentages of franchise and license revenue for the periods indicated: Fiscal Year Ended December 28, 2022 December 29, 2021 December 30, 2020 (Dollars in thousands) Royalties $ 113,891 44.4 % $ 103,425 46.4 % $ 67,501 39.6 % Advertising revenue 75,926 29.6 % 69,957 31.3 % 53,745 31.5 % Initial and other fees 28,262 11.0 % 8,009 3.6 % 7,332 4.3 % Occupancy revenue 38,597 15.0 % 41,766 18.7 % 41,867 24.6 % Franchise and license revenue $ 256,676 100.0 % $ 223,157 100.0 % $ 170,445 100.0 % Advertising costs $ 75,926 29.6 % $ 69,957 31.3 % $ 53,745 31.5 % Occupancy costs 24,090 9.4 % 26,237 11.8 % 26,732 15.7 % Other direct costs 35,311 13.8 % 12,946 5.8 % 13,871 8.1 % Costs of franchise and license revenue $ 135,327 52.7 % $ 109,140 48.9 % $ 94,348 55.4 % Royalties increased by $10.5 million, or 10.1%, in 2022 primarily resulting from a 6.0% increase in domestic franchised same-store sales as compared to the prior year.
Franchise Operations Franchise and license revenue and costs of franchise and license revenue consisted of the following amounts and percentages of franchise and license revenue for the periods indicated: Fiscal Year Ended December 27, 2023 December 28, 2022 December 29, 2021 (Dollars in thousands) Royalties $ 120,131 48.4 % $ 113,891 44.4 % $ 103,425 46.3 % Advertising revenue 78,494 31.6 % 75,926 29.6 % 69,957 31.3 % Initial and other fees 13,882 5.6 % 28,262 11.0 % 8,009 3.6 % Occupancy revenue 35,883 14.4 % 38,597 15.0 % 41,766 18.7 % Franchise and license revenue $ 248,390 100.0 % $ 256,676 100.0 % $ 223,157 100.0 % Advertising costs $ 78,494 31.6 % $ 75,926 29.6 % $ 69,957 31.3 % Occupancy costs 22,160 8.9 % 24,090 9.4 % 26,237 11.8 % Other direct costs 21,798 8.8 % 35,311 13.8 % 12,946 5.8 % Costs of franchise and license revenue $ 122,452 49.3 % $ 135,327 52.7 % $ 109,140 48.9 % Royalties increased by $6.2 million, or 5.5%, in 2023 primarily resulting from a 3.6% increase in Denny’s domestic franchise same-store sales as compared to the prior year.
General and administrative expenses consisted of the following: Fiscal Year Ended December 28, 2022 December 29, 2021 December 30, 2020 (In thousands) Corporate administrative expenses $ 52,115 $ 44,367 $ 41,135 Share-based compensation 11,400 13,602 7,948 Incentive compensation 5,811 8,628 4,351 Deferred compensation valuation adjustments (2,153) 2,089 1,606 Total general and administrative expenses $ 67,173 $ 68,686 $ 55,040 Total general and administrative expenses decreased by $1.5 million, or 2.2%, in 2022 and increased by $13.6 million, or 24.8%, in 2021.
General and administrative expenses consisted of the following: Fiscal Year Ended December 27, 2023 December 28, 2022 December 29, 2021 (In thousands) Corporate administrative expenses $ 60,339 $ 52,115 $ 44,367 Share-based compensation 8,880 11,400 13,602 Incentive compensation 6,640 5,811 8,628 Deferred compensation valuation adjustments 1,911 (2,153) 2,089 Total general and administrative expenses $ 77,770 $ 67,173 $ 68,686 Total general and administrative expenses increased by $10.6 million, or 15.8%, in 2023 and decreased by $1.5 million, or 2.2%, in 2022.
Our principal capital requirements have been largely associated with the following: Fiscal Year Ended December 28, 2022 December 29, 2021 December 30, 2020 (In thousands) Facilities $ 4,596 $ 3,206 $ 4,107 New construction 91 — 23 Remodeling 3,846 1,477 992 Information technology 2,638 1,410 1,386 Other 673 1,262 454 Capital expenditures (excluding acquisitions) $ 11,844 $ 7,355 $ 6,962 Cash flows provided by financing activities were $20.0 million for the year ended December 28, 2022, which included net debt borrowings of $89.5 million and net bank overdrafts of $0.3 million, partially offset by cash payments for stock repurchases of $65.0 million and payments of tax withholding on share-based compensation of $4.8 million.
Our principal capital requirements have been largely associated with the following: Fiscal Year Ended December 27, 2023 December 28, 2022 December 29, 2021 (In thousands) Facilities $ 4,378 $ 4,596 $ 3,206 New construction 3,782 91 — Remodeling 394 3,846 1,477 Information technology 827 2,638 1,410 Other 597 673 1,262 Capital expenditures (excluding acquisitions) $ 9,978 $ 11,844 $ 7,355 Cash flows used in financing activities were $63.2 million for the year ended December 27, 2023, which included cash payments for stock repurchases of $52.1 million, net debt payments of $7.8 million and payments of tax withholding on share-based compensation of $3.0 million.
Net cash flows provided by operating activities were $76.2 million for the year ended December 29, 2021 compared to net cash flows used in operating activities of $3.1 million for the year ended December 30, 2020.
Net cash flows provided by operating activities were $39.5 million for the year ended December 28, 2022 compared to net cash flows provided by operating activities of $76.2 million for the year ended December 29, 2021.
The effective tax rate was 24.9% for 2022, 25.0% for 2021 and 28.1% for 2020. For 2022, the difference in the overall effective rate from the U.S. statutory rate was primarily due to state and foreign taxes, partially offset by the generation of employment and foreign tax credits.
For 2023, the difference in the overall effective rate from the U.S. statutory rate was primarily due to state and foreign taxes, partially offset by the generation of employment and foreign tax credits. The 2023 rate was also impacted by $1.9 million of disallowed compensation deductions.
It includes negative covenants that are usual for facilities and transactions of this type. The credit facility also includes certain financial covenants with respect to a maximum consolidated leverage ratio and a minimum consolidated fixed charge coverage ratio. We were in compliance with all financial covenants as of December 28, 2022.
The credit facility also includes certain financial covenants with respect to a maximum consolidated leverage ratio and a minimum consolidated fixed charge coverage ratio. We were in compliance with all financial covenants as of December 27, 2023.
Depreciation and amortization consisted of the following: Fiscal Year Ended December 28, 2022 December 29, 2021 December 30, 2020 (In thousands) Depreciation of property and equipment $ 11,118 $ 11,441 $ 11,284 Amortization of finance right-of-use assets 1,704 1,895 1,870 Amortization of intangible and other assets 2,040 2,110 3,007 Total depreciation and amortization expense $ 14,862 $ 15,446 $ 16,161 The 2022 decrease in total depreciation and amortization expense was primarily due to certain assets becoming fully depreciated and fewer asset retirements.
Depreciation and amortization consisted of the following: Fiscal Year Ended December 27, 2023 December 28, 2022 December 29, 2021 (In thousands) Depreciation of property and equipment $ 10,720 $ 11,118 $ 11,441 Amortization of finance right-of-use assets 1,451 1,704 1,895 Amortization of intangible and other assets 2,214 2,040 2,110 Total depreciation and amortization expense $ 14,385 $ 14,862 $ 15,446 The decreases in total depreciation and amortization expense during 2023 and 2022 were primarily due to certain assets becoming fully depreciated.
The 2022 increase as a percentage of sales was primarily due to general liability insurance cost increases in the current year in addition to a prior year decrease, as well as higher rents. The 2021 decrease as a percentage of sales was due to the leveraging effect of higher sales.
The 2023 increase as a percentage of sales was primarily due to new Keke’s leases for restaurants that have yet to open. The 2022 increase as a percentage of sales was primarily due to general liability insurance cost increases in the current year in addition to a prior year decrease, as well as higher rents.
Accordingly, domestic franchised same-store sales should be considered as a supplement to, not a substitute for, our results as reported under GAAP. (c) Prior year amounts have not been restated for 2022 comparable restaurants. (d) Statistical data reported for Keke’s has been calculated from the acquisition date forward and has not been annualized.
Accordingly, domestic franchised same-store sales should be considered as a supplement to, not a substitute for, our results as reported under GAAP. (c) Prior year amounts have not been restated for 2023 comparable restaurants. (d) Effective July 20, 2022, the Company acquired Keke’s, and as such, data for the year ended December 28, 2022 only represent post-acquisition results.
Interest expense, net consisted of the following: Fiscal Year Ended December 28, 2022 December 29, 2021 December 30, 2020 (In thousands) Interest on credit facilities $ 8,478 $ 5,478 $ 8,658 Interest on interest rate swaps 1,310 4,023 3,160 Interest on finance lease liabilities 2,350 2,960 3,129 Letters of credit and other fees 1,053 1,438 1,259 Interest income (87) (25) (96) Total cash interest 13,104 13,874 16,110 Amortization of deferred financing costs 634 1,105 875 Amortization of interest rate swap losses 29 167 783 Interest accretion on other liabilities 2 2 197 Total interest expense, net $ 13,769 $ 15,148 $ 17,965 Interest expense, net decreased during 2022 primarily due to decreased deferred financing cost amortization and decreased financing lease interest.
Interest expense, net consisted of the following: Fiscal Year Ended December 27, 2023 December 28, 2022 December 29, 2021 (In thousands) Interest on credit facilities $ 18,929 $ 8,478 $ 5,478 Interest on interest rate swaps (5,028) 1,310 4,023 Interest on finance lease liabilities 2,139 2,350 2,960 Letters of credit and other fees 738 1,053 1,438 Interest income (171) (87) (25) Total cash interest 16,607 13,104 13,874 Amortization of deferred financing costs 635 634 1,105 Amortization of interest rate swap losses 353 29 167 Interest accretion on other liabilities 2 2 2 Total interest expense, net $ 17,597 $ 13,769 $ 15,148 Interest expense, net increased during 2023 primarily due to increased average borrowings and higher average interest rates, partially offset by receipts from our interest rate swaps.
As of December 28, 2022, we had outstanding revolver loans of $261.5 million and outstanding letters of credit under the credit facility of $12.3 million.
As of December 27, 2023, we had outstanding revolver loans of $255.5 million and outstanding letters of credit under the credit facility of $11.5 million.
Unit Activity Fiscal Year Ended December 28, 2022 December 29, 2021 December 30, 2020 Denny’s Company restaurants, beginning of period 65 65 68 Units acquired from franchisees 1 — — Units closed — — (3) End of period 66 65 65 Franchised and licensed restaurants, beginning of period 1,575 1,585 1,635 Units opened 28 20 20 Units acquired by Company (1) — — Units closed (66) (30) (70) End of period 1,536 1,575 1,585 Total restaurants, end of period 1,602 1,640 1,650 25 Fiscal Year Ended December 28, 2022 December 29, 2021 December 30, 2020 Keke’s Company restaurants, beginning of period — — — Units acquired 8 — — End of period 8 — — Franchised and licensed restaurants, beginning of period — — — Units opened 2 — — Units acquired 44 — — End of period 46 — — Total restaurants, end of period 54 — — Company Restaurant Operations Company same-store sales increased 10.4% in 2022 and 55.3% in 2021 compared with the respective prior year.
Unit Activity Fiscal Year Ended December 27, 2023 December 28, 2022 December 29, 2021 Denny’s Company restaurants, beginning of period 66 65 65 Units acquired from franchisees — 1 — Units closed (1) — — End of period 65 66 65 Franchised and licensed restaurants, beginning of period 1,536 1,575 1,585 Units opened 28 28 20 Units acquired by Company — (1) — Units closed (56) (66) (30) End of period 1,508 1,536 1,575 Total restaurants, end of period 1,573 1,602 1,640 25 Fiscal Year Ended December 27, 2023 December 28, 2022 December 29, 2021 Keke’s Company restaurants, beginning of period 8 — — Units acquired — 8 — End of period 8 8 — Franchised and licensed restaurants, beginning of period 46 — — Units opened 4 2 — Units acquired — 44 — End of period 50 46 — Total restaurants, end of period 58 54 — Company Restaurant Operations Company restaurant sales for 2023 increased $15.8 million, or 7.9%, primarily driven by a 2.7% increase in Denny’s company same-store sales and the operation of Keke’s for a full year in 2023.
At December 28, 2022, the Denny’s brand consisted of 1,602 franchised, licensed and company restaurants. Of this amount, 1,536 of Denny’s restaurants were franchised or licensed, representing 96% of the total restaurants, and 66 were company restaurants. We acquired Keke's on July 20, 2022 for a purchase price of $82.5 million.
At December 27, 2023, the Denny’s brand consisted of 1,573 franchised, licensed and company restaurants. Of this amount, 1,508 of Denny’s restaurants were franchised or licensed, representing 96% of the total restaurants, and 65 were company restaurants. We acquired Keke's on July 20, 2022.
Interest expense, net decreased during 2021 primarily due to decreased average borrowings and lower average interest rates. 29 Other nonoperating income, net was $52.6 million, $15.2 million, and $4.2 million for 2022, 2021 and 2020, respectively.
Interest expense, net decreased during 2022 primarily due to decreased deferred financing cost amortization and decreased financing lease interest. 29 Other nonoperating expense (income), net was expense of $8.3 million, income of $52.6 million and income of $15.2 million for 2023, 2022 and 2021, respectively.
Prior to considering the impact of our interest rate swaps, described below, the weighted-average interest rate on outstanding revolver loans was 6.37% and 2.09% as of December 28, 2022 and December 29, 2021, respectively.
The commitment fee, paid on the unused portion of the credit facility, was set to 0.30%. Prior to considering the impact of our interest rate swaps, described below, the weighted-average interest rate on outstanding revolver loans was 7.41% and 6.37% as of December 27, 2023 and December 28, 2022, respectively.
For underperforming assets, we use the income approach to determine both the recoverability and estimated fair value of the assets. To estimate future cash flows, we make certain assumptions about expected future operating performance, such as revenue growth, operating margins, risk-adjusted discount rates, and future economic and market conditions.
To estimate future cash flows, we make certain assumptions about expected future operating performance, such as revenue growth, operating margins, risk-adjusted discount rates, and future economic and market conditions. If the long-lived assets of a restaurant are not recoverable based upon estimated future, undiscounted cash flows, we write the assets down to their fair value.
For assets identified as held for sale, we use the market approach and consider proceeds from similar asset sales. We assess impairment of restaurant-level assets based on the operating cash flows of the restaurant, expected proceeds from the sale of assets and our plans for restaurant closings.
We assess impairment of restaurant-level assets based on the operating cash flows of the restaurant, expected proceeds from the sale of assets and our plans for restaurant closings. For underperforming assets, we use the income approach to determine both the recoverability and estimated fair value of the assets.
In addition, a 0.4 percentage point increase in workers’ compensation costs was partially offset by a 0.4 percentage point decrease in group insurance costs. The 2021 decrease as a percentage of sales was due to the leveraging effect of higher sales.
In addition, a 0.4 percentage point increase in workers’ compensation costs was partially offset by a 0.4 percentage point decrease in group insurance costs. Occupancy costs as a percentage of company restaurant sales were 7.9% in 2023, 7.6% in 2022 and 6.7% in 2021.
See Note 2 to our Consolidated Financial Statements for a further discussion of our policies regarding self-insurance liabilities. Impairment of long-lived assets . We evaluate our long-lived assets for impairment at the restaurant level on a quarterly basis, when assets are identified as held for sale or whenever changes or events indicate that the carrying value may not be recoverable.
We evaluate our long-lived assets for impairment at the restaurant level on a quarterly basis, when assets are identified as held for sale or whenever changes or events indicate that the carrying value may not be recoverable. For assets identified as held for sale, we use the market approach and consider proceeds from similar asset sales.
Gains on sales of assets and other, net of $47.8 million for 2021 primarily related to the sale of three parcels of real estate. Gains on sales of assets and other, net of $4.7 million for 2020 primarily related to the sales of real estate.
Gains on sales of assets and other, net for 2023, 2022, and 2021 were primarily related to the sales of real estate.
Incentive compensation decreased by $2.8 million in 2022 and increased by $4.3 million in 2021. The changes in incentive compensation for both periods primarily resulted from our performance against plan metrics. Changes in deferred compensation valuation adjustments have offsetting gains or losses on the underlying nonqualified deferred plan investments included as a component of other nonoperating income, net.
Changes in deferred compensation valuation adjustments have offsetting gains or losses on the underlying nonqualified deferred plan investments included as a component of other nonoperating expense (income), net, for the corresponding periods.
Net cash flows provided by investing activities were $4.7 million for the year ended December 30, 2020. These cash flows were primarily proceeds from the sale of real estate of $9.4 million and proceeds from the sale of investments of $2.9 million, partially offset by capital expenditures of $7.0 million and investment purchases of $1.4 million.
These cash flows included capital expenditures of $10.0 million, investment purchases of $1.3 million, and a real estate acquisition of $1.2 million, partially offset by net proceeds from the sale of three parcels of real estate for $3.2 million and net investment proceeds of $1.9 million.
Impairment charges of $1.0 million, $0.4 million and $4.1 million for the years ended December 28, 2022, December 29, 2021 and December 30, 2020, respectively, primarily resulted from our assessment of underperforming restaurants.
Impairment charges of $2.2 million, $1.0 million and $0.4 million for the years ended December 27, 2023, December 28, 2022 and December 29, 2021, respectively, primarily resulted from our assessment of underperforming restaurants. See Note 2 and Note 14 to our Consolidated Financial Statements for further discussion of our policies regarding impairment of long-lived assets. Impairment of Goodwill.
The credit facility is available for working capital, capital expenditures and other general corporate purposes. The credit facility is guaranteed by the Company and its material subsidiaries and is secured by assets of the Company and its subsidiaries, including the stock of its subsidiaries (other than its insurance captive subsidiary).
The credit facility is guaranteed by the Company and its material subsidiaries and is secured by assets of the Company and its subsidiaries, including the stock of its subsidiaries (other than its insurance captive subsidiary). It includes negative covenants that are usual for facilities and transactions of this type.
Payroll and benefits as a percentage of company restaurant sales were 38.3% in 2022, 37.3% in 2021 and 43.7% in 2020. The 2022 increase as a percentage of sales was primarily due to a 0.9 percentage point increase in team labor due to higher wage rates.
For 2023, the decrease as a percentage of sales was primarily due to increased pricing to offset a portion of higher commodity costs. For 2022, the increase as a percentage of sales was primarily due to increased commodity costs. Payroll and benefits as a percentage of company restaurant sales were 37.4% in 2023, 38.3% in 2022 and 37.3% in 2021.
Advertising revenue increased $16.2 million, or 30.2%, in 2021 resulting from the increase in domestic franchised same-store sales. Additionally, 2020 included advertising fee abatements of $1.3 million. Initial and other fees increased $20.3 million, or 252.9%, in 2022 primarily resulting from the recognition of $19.1 million of revenue from the sale and installation of kitchen equipment at franchise restaurants.
Initial and other fees increased $20.3 million, or 252.9%, in 2022 primarily resulting from the recognition of $19.1 million of revenue from the sale and installation of kitchen equipment at franchise restaurants. Occupancy revenue decreased $2.7 million, or 7.0%, in 2023 primarily due to lease terminations. Occupancy revenue decreased $3.2 million, or 7.6%, in 2022 primarily due to lease terminations.
The average domestic contractual royalty rate, including the impact of abatements in prior years, was 4.39%, 4.35% and 3.86% for 2022, 2021 and 2020, respectively. Advertising revenue increased $6.0 million, or 8.5%, in 2022 primarily resulting from the increase in domestic franchise same-store sales.
In 2022, royalties increased by $10.5 million, or 10.1% primarily resulting from a 6.0% increase in Denny’s domestic franchise same-store sales as compared to the prior year. The increase in royalties included $2.2 million from Keke’s. The average domestic contractual royalty rate was 4.42%, 4.39% and 4.35% for 2023, 2022 and 2021, respectively.
Our Keke’s operating segment includes the results of all company and franchised Keke’s restaurants. As of December 28, 2022, the Keke’s brand consisted of 54 franchised and company restaurants in Florida. Of this amount, 46 Keke’s restaurants were franchised, representing 85% of total Keke’s restaurants, and eight were company restaurants.
As of December 27, 2023, the Keke’s brand consisted of 58 franchised and company restaurants in Florida. Of this amount, 50 Keke’s restaurants were franchised, representing 86% of total Keke’s restaurants, and eight were company restaurants.
This investment is expected to yield long-term benefits through menu enhancements across all dayparts, but especially the dinner daypart, with new and improved food offerings. The new equipment is also expected to provide immediate benefits through increased kitchen efficiency and productivity while also reducing food waste.
The new equipment is also expected to provide immediate benefits through increased kitchen efficiency and productivity while also reducing food waste.
This allocation process involves the use of estimates and assumptions made in connection with estimating the fair value of assets acquired and liabilities assumed including assumptions for which there was limited observable market information: forecasted future revenues and operating margins, including projected growth in restaurant unit counts and average unit volumes, royalty rate, and discount rates.
The income approach involves the use of estimates and assumptions including forecasted future revenues and operating margins, including projected growth in restaurant unit counts and average unit volumes, royalty rate, and discount rates.
These changes were primarily the result of plan modifications made in 2020 and related valuations. In addition, the 2020 long-term incentive plan had a two-year vesting period compared to a typical three-year vesting term like our other long-term incentive plans. The 2020 long-term incentive plan became fully vested in May 2022.
The 2023 decrease was primarily due to forfeitures and our performance against plan metrics. The 2022 decrease was primarily due to the 2020 long-term incentive plan having a two-year vesting period compared to a typical three-year vesting period. The 2020 long-term incentive plan became fully vested in May 2022.
Total restructuring and exit costs for 2021 were primarily made up of relocation costs associated with moving certain employees to our support center in Irving, Texas. Total restructuring and exit costs for 2020 primarily relate to the Company permanently separating with approximately 50 support center staff.
Total restructuring and exit costs for 2021 were primarily made up of relocation costs associated with moving certain employees to our support center in Irving, Texas. Impairment charges of $2.2 million, $1.0 million and $0.4 million for 2023, 2022 and 2021, respectively, primarily resulted from our assessment of underperforming restaurants.
These balances resulted in unused commitments of $126.2 million as of December 28, 2022 under the credit facility. 31 As of December 28, 2022, borrowings under the credit facility bore interest at a rate of LIBOR plus 2.25% and the commitment fee, paid on the unused portion of the credit facility, was set to 0.35%.
These balances resulted in unused commitments of $133.0 million as of December 27, 2023 under the credit facility. 31 As of December 27, 2023, borrowings under the credit facility bore interest at a rate of Adjusted Daily Simple SOFR plus 2.00%. Letters of credit under the credit facility bore interest at a rate of 2.13%.
At the end of 2022, we had 214 franchised restaurants that were leased or subleased from Denny’s, compared to 265 at the end of 2020. • Total revenues at Keke’s for the year ended December 28, 2022 represented less than 2% of total consolidated revenues, therefore, the Keke’s operating segment is included in Other for segment reporting purposes.
Total revenues at Keke’s for the year ended December 27, 2023 represented less than 5% of total consolidated revenues, therefore, the Keke’s operating segment is included in Other for segment reporting purposes. Our Keke’s operating segment includes the results of all company and franchised Keke’s restaurants.
Borrowings bear a tiered interest rate, which is based on the Company's consolidated leverage ratio. The credit facility contains provisions specifying alternative interest rate calculations to be used at such time LIBOR ceases to be available as a benchmark due to reference rate reform. The maturity date for the credit facility is August 26, 2026.
Borrowings bear a tiered interest rate, which is based on the Company's consolidated leverage ratio. The maturity date for the credit facility is August 26, 2026. The credit facility is available for working capital, capital expenditures and other general corporate purposes.
The income for 2020 includes losses on interest rate swaps of $7.4 million resulting from the discontinuance of hedge accounting treatment on a portion of our interest rate swaps and income of $10.3 million related to interest rate swap valuation adjustments on dedesignated interest rate swaps subsequent to the discontinuation of hedge accounting and $1.8 million in gains on deferred compensation plan investments.
Nonoperating income for 2021 includes $12.8 million of gains related to dedesignated interest rate swap valuation adjustments and $2.2 million in gains on deferred compensation investments. For additional details related to the interest rate swaps, see Note 10 to our Consolidated Financial Statements.
Contractual Obligations Our future contractual obligations and commitments at December 28, 2022 consisted of the following: Payments Due by Period Total Less than 1 Year 1-2 Years 3-4 Years 5 Years and Thereafter (In thousands) Long-term debt (a) $ 261,500 $ — $ — $ 261,500 $ — Finance lease obligations (b)(c) 26,013 3,768 5,958 4,773 11,514 Operating lease obligations (b) 182,569 23,031 41,805 36,952 80,781 Interest obligations (c) 50,888 13,879 27,757 9,252 — Defined benefit plan obligations (d) 1,761 972 265 210 314 Purchase obligations (e) 216,740 216,740 — — — Unrecognized tax benefits (f) 869 — — — — Total $ 740,340 $ 258,390 $ 75,785 $ 312,687 $ 92,609 (a) Refer to Note 10 to our Consolidated Financial Statements for a further discussion of our long-term debt and timing of expected payments.
Contractual Obligations Our future contractual obligations and commitments at December 27, 2023 consisted of the following: Payments Due by Period Total Less than 1 Year 1-2 Years 3-4 Years 5 Years and Thereafter (In thousands) Long-term debt (a) $ 255,500 $ — $ 255,500 $ — $ — Finance lease obligations (b)(c) 23,368 3,312 5,991 4,136 9,929 Operating lease obligations (b) 167,787 21,977 41,424 35,097 69,289 Interest obligations (c) 33,910 12,538 21,372 — — Defined benefit plan obligations (d) 1,205 582 230 159 234 Purchase obligations (e) 202,018 202,018 — — — Unrecognized tax benefits (f) 445 — — — — Total $ 684,233 $ 240,427 $ 324,517 $ 39,392 $ 79,452 (a) Refer to Note 10 to our Consolidated Financial Statements for a further discussion of our long-term debt and timing of expected payments.
The increase in cash flows provided by (used in) operating activities in 2021 compared to 2020 was primarily due to the improvement of operating results in 2021 and the timing of prior year accrual payments.
The increase in cash flows provided by operating activities was primarily due to the timing of inventory purchases, receivables collections, and accrual payments related to our franchise kitchen equipment project over the past two years.
Corporate administrative expenses increased by $7.7 million in 2022 and increased by $3.2 million in 2021. The 2022 increase was primarily due to compensation increases in the current year and prior year temporary cost reductions related to the COVID-19 pandemic, including net reductions in tax credits related to the CARES Act of approximately $0.5 million.
Corporate administrative expenses increased by $8.2 million in 2023 and increased by $7.7 million in 2022. The 2023 increase was primarily due to compensation increases and administrative costs related to Keke’s.
As a result, costs of franchise and license revenue as a percentage of franchise and license revenue increased to 52.7% for 2022 from 48.9% in 2021. Costs of franchise and license revenue increased $14.8 million, or 15.7%, in 2021. The increase was primarily related to increased advertising costs, which corresponds to the related advertising revenue increases noted above.
Costs of franchise and license revenue decreased $12.9 million, or 9.5%, in 2023. Advertising costs increased $2.6 million, or 3.4%, which corresponds to the related advertising revenue increases noted above. Occupancy costs decreased $1.9 million, or 8.0%, in 2023, primarily related to lease terminations.
This increase was the result of a kitchen modernization program that began in early 2022. We bill our franchisees and recognize revenue when the related equipment is installed with a like amount recorded as a component of other direct costs. The majority of the installations were completed in 2022.
We billed our franchisees and recognized revenue when the related equipment was installed with a like amount recorded as a component of other direct costs. • Occupancy revenues, included as a component of franchise and license revenue, result from leasing or subleasing restaurants to franchisees.
See Part II Item 7A. Quantitative and Qualitative Disclosures About Market Risk for details on our interest rate swaps. Kitchen Modernization and Technology Transformation Initiatives During 2022, the Company substantially completed the process of upgrading and improving kitchen equipment throughout the domestic system.
See Part II Item 7A. Quantitative and Qualitative Disclosures About Market Risk for details on our interest rate swaps. Technology Transformation and Kitchen Modernization Initiatives The Company has committed to investing approximately $4 million toward a new cloud-based restaurant technology platform in domestic franchise restaurants, which will lay the foundation for future technology initiatives to further enhance the guest experience.
The 2021 decrease included a 3.9 percentage point decrease in management labor, 1.7 percentage point decrease in team labor, and 0.5 percentage point decrease in workers’ compensation costs. Occupancy costs as a percentage of company restaurant sales were 7.6% in 2022, 6.7% in 2021 and 9.5% in 2020.
The 2023 decrease was partially offset by a 0.5 percentage point increase in workers’ compensation costs. The 2022 increase as a percentage of sales was primarily due to a 0.9 percentage point increase in team labor due to higher wage rates.
The 2021 decrease in total depreciation and amortization expense was the result of certain intangible assets becoming fully amortized in 2020. 28 Operating (gains), losses and other charges, net consisted of the following: Fiscal Year Ended December 28, 2022 December 29, 2021 December 30, 2020 (In thousands) Gains on sales of assets and other, net $ (3,378) $ (47,822) $ (4,678) Restructuring charges and exit costs 1,410 1,275 2,403 Impairment charges 963 442 4,083 Operating (gains), losses and other charges, net $ (1,005) $ (46,105) $ 1,808 Gains on sales of assets and other, net of $3.4 million for 2022 primarily related to the sale of two parcels of real estate.
In addition, investments in general and administrative expenses to support the growth of the brand and an extended development cycle have also impacted near-term cash flow projections. 28 Operating (gains), losses and other charges, net consisted of the following: Fiscal Year Ended December 27, 2023 December 28, 2022 December 29, 2021 (In thousands) Gains on sales of assets and other, net $ (2,220) $ (3,378) $ (47,822) Restructuring charges and exit costs 2,536 1,410 1,275 Impairment charges (1) 2,214 963 442 Operating (gains), losses and other charges, net $ 2,530 $ (1,005) $ (46,105) (1) Impairment charges include impairments related to property, operating right-of-use assets, finance right-of-use assets, and reacquired franchise rights.
Cash flows used in financing activities were $1.0 million for the year ended December 30, 2020, which included net debt repayments of $31.6 million, cash payments for stock repurchases of $36.0 million offset by proceeds of $69.6 million from the issuance of common stock.
Cash flows provided by financing activities were $20.0 million for the year ended December 28, 2022, which included net debt borrowings of $89.5 million, partially offset by cash payments for stock repurchases of $65.0 million and payments of tax withholding on share-based compensation of $4.8 million.
For 2021, other direct costs were lower as a percentage of sales due to the leveraging effect of higher sales, partially offset by higher delivery fees and legal settlement costs.
For 2022, legal settlement costs were higher as a percentage of sales primarily due to unfavorable developments in certain claims.
Impairment charges of $1.0 million, $0.4 million and $4.1 million for 2022, 2021 and 2020, respectively, primarily resulted from our assessment of underperforming restaurants. Operating income was $60.6 million in 2022, $104.1 million in 2021 and $6.7 million in 2020.
Operating income was $52.8 million in 2023, $60.6 million in 2022 and $104.1 million in 2021.
Inputs used are generally obtained from historical data supplemented by current and anticipated market conditions and growth rates.
Inputs used are generally obtained from historical data supplemented by current and anticipated market conditions and growth rates. 33 The market approach involves the selection and application of cash flows multiples of a group of similar companies to the projected cash flows of the reporting unit. Considerable management judgment is necessary in determining the inputs to these approaches.
Occupancy revenue has decreased from $41.9 million in 2020 to $38.6 million in 2022 primarily as a result of lease expirations.
Occupancy revenue has decreased from $41.8 million in 2021 to $35.9 million in 2023 primarily as a result of lease expirations. At the end of 2023, we had 195 franchised restaurants that were leased or subleased from Denny’s, compared to 246 at the end of 2021. • Information discussed in Item 7.
For additional details related to the interest rate swaps, see Note 10 to our Consolidated Financial Statements. The provision for (benefit from) income taxes was an expense of $24.7 million for 2022, expense of $26.0 million for 2021 and a benefit of $2.0 million for 2020.
The provision for income taxes was $7.0 million for 2023, $24.7 million for 2022 and $26.0 million for 2021. The effective tax rate was 26.0% for 2023, 24.9% for 2022 and 25.0% for 2021.
Removed
Fiscal 2022 and 2021 each included 52 weeks of operations, whereas 2020 included 53 weeks of operations.
Added
Our next 53-week year will be fiscal 2025.
Removed
Therefore, initial and other fees are expected to be significantly lower in 2023 as a result of the reduced impact of this program. • Occupancy revenues, included as a component of franchise and license revenue, result from leasing or subleasing restaurants to franchisees.

… 40 more changes not shown on this page.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

4 edited+5 added−2 removed6 unchanged
Biggest changeA summary of our interest rate swaps as of December 28, 2022 is as follows: Trade Date Effective Date Maturity Date Notional Amount Fair Value Fixed Rate (In thousands) Swaps designated as cash flow hedges March 20, 2015 March 29, 2018 March 31, 2025 $ 120,000 $ 4,904 2.44 % October 1, 2015 March 29, 2018 March 31, 2026 $ 50,000 $ 2,392 2.46 % Dedesignated swaps February 15, 2018 March 31, 2020 December 31, 2033 $ 130,000 (1) $ 12,751 3.19 % Total $ 300,000 $ 20,047 (1) The notional amounts of the swaps entered into on February 15, 2018 increase periodically until they reach the maximum notional amount of $425.0 million on September 28, 2029.
Biggest changeA summary of our interest rate swaps as of December 27, 2023 is as follows: Trade Date Effective Date Maturity Date Notional Amount Fair Value Fixed Rate (In thousands) Swaps designated as cash flow hedges March 20, 2015 March 29, 2018 March 31, 2025 $ 120,000 $ 3,162 2.34 % October 1, 2015 March 29, 2018 March 31, 2026 $ 50,000 $ 1,680 2.37 % February 15, 2018 March 31, 2020 December 31, 2033 $ 37,000 (1) $ 4,046 3.09 % Total $ 207,000 $ 8,888 (1) The notional amounts of the swaps entered into on February 15, 2018 increase periodically until they reach the maximum notional amount of $335 million on August 31, 2033. 34 On March 31, 2023, the Company entered into an amendment of its interest rate swaps.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk Interest Rate Risk We have exposure to interest rate risk related to certain instruments entered into for other than trading purposes. Specifically, as of December 28, 2022, borrowings under our credit facility bore interest at variable rates based on LIBOR plus 2.25% per annum.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk Interest Rate Risk We have exposure to interest rate risk related to certain instruments entered into for other than trading purposes. Specifically, as of December 27, 2023, borrowings under our credit facility bore interest at variable rates based on Adjusted Daily Simple SOFR plus 2.00% per annum.
With the exception of these changes in the fair value of our interest rate swaps and in the levels of borrowings under our credit facility, there have been no material changes in our quantitative and qualitative market risks since the prior reporting period.
Depending on market considerations, fluctuations in the fair values of our interest rate swaps could be significant. With the exception of these changes in the fair value of our interest rate swaps and in the levels of borrowings under our credit facility, there have been no material changes in our quantitative and qualitative market risks since the prior reporting period.
For additional information related to our interest rate swaps, including changes in the fair value, refer to Notes 8, 10 and 18 to our Consolidated Financial Statements. 34 Commodity Price Risk We purchase certain food products, such as beef, poultry, pork, eggs and coffee, and utilities such as gas and electricity, that are affected by commodity pricing and are, therefore, subject to price volatility caused by weather, production problems, delivery difficulties and other factors that are outside our control and which are generally unpredictable.
Commodity Price Risk We purchase certain food products, such as beef, poultry, pork, eggs and coffee, and utilities such as gas and electricity, that are affected by commodity pricing and are, therefore, subject to price volatility caused by weather, production problems, delivery difficulties and other factors that are outside our control and which are generally unpredictable.
Removed
As of December 28, 2022, the total notional amount of our interest rate swaps was in excess of 100% of our floating rate debt.
Added
The amendment transitions our interest rate swap benchmark interest rates from LIBOR to Daily Simple SOFR, and as such the fixed rates in the table above have been adjusted to the appropriate fixed rates. The conversion to Daily Simple SOFR did not have a material impact on the Company’s consolidated financial position or results of operation.
Removed
Based on the portion of the swaps in excess of our floating rate debt as of December 28, 2022, a hypothetical change of 100 basis points in LIBOR would change our annual cash flow by approximately $0.4 million. Depending on market considerations, fluctuations in the fair values of our interest rate swaps could be significant.
Added
As of December 27, 2023, our swaps effectively increase our ratio of fixed rate debt from 4% of total debt to 82% of total debt.
Added
Based on the levels of borrowings under the credit facility as of December 27, 2023, if interest rates changed by 100 basis points, our annual cash flow and income before taxes would change by $0.3 million.
Added
This computation is determined by considering the impact of hypothetical interest rates on the credit facility at December 27, 2023, taking into consideration the interest rate swaps that will be in effect during the next 12 months. However, the nature and amount of our borrowings may vary as a result of future business requirements, market conditions and other factors.
Added
For additional information related to our interest rate swaps, including changes in the fair value, refer to Notes 8, 10 and 18 to our Consolidated Financial Statements.

Other DENN 10-K year-over-year comparisons