Denny's (DENN) Stock Forecast & Price Target

Denny's Corp has shown improvement in recent sales trends, with management noting that same-store sales have been better recently. The company's dual revenue streams from food and beverage sales, along with franchise-related income, contribute to a stable financial model, which is particularly favorable given the highly franchised nature of its operations. Additionally, the emerging opportunities from the Keke's Breakfast Cafe brand present a promising growth potential, suggesting a positive outlook for future performance despite recent challenges in the micro-cap restaurant sector.

Denny's Corp has faced significant challenges as evidenced by its reaffirmed guidance for fiscal year 2025, indicating same-store sales (SSS) may decline by up to 2.0%, with expectations leaning toward the lower end of this range. In the second quarter of 2025, the company reported a 1.3% decline in domestic systemwide SSS for its core Denny's brand, reflecting ongoing difficulties within the Family Dining segment amid a challenging operating environment. Additionally, the performance of the Keke's Breakfast Cafe brand remains unproven outside of Florida, and a deceleration in sales trends by approximately 300 basis points further highlights the strains on revenue generation, culminating in an EBITDA miss attributed to these SSS shortfalls and increasing general and administrative expenses.