Executive Summary: 2Q22 comp increase of +2.5% y/y (+1.8% on a 3-year stacked basis) was driven by +6.5% pricing & +3% mix offset by -7% traffic.
Industry data suggests that consumers have depleted their savings with large retailers talking about increased discounts driven by excess inventory. Further, more value offers are evident in the restaurant industry with more forthcoming.
Denny’s value mix was low-double-digits entering the quarter & increased +3% with its Summer Slamcation promotion (featuring its endless breakfast & its popular Super Slam starting at $6.99). The historical peak of its value mix was in the 20% range when Denny’s launched its $2 $4 $6 $8 platform a decade ago.
During the quarter, commodity inflation increased +18% & labor inflation grew +8% (although both turnover & wage rate growth has begun to moderate recently). Beef, pork & dairy prices are expected to abate during 3Q with eggs, poultry & cooking oils abating during 4Q.