Denny's eyes higher food costs, price hikes


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“We’re pleased with what the beyond breakfast initiatives are bringing us … Our dinner and late night are responding in a positive way,” Miller added.

“Even with all the new product news we have, our guests continue to desire value, as evidenced by our $2-$4-$6-$8 Value Menu increasing slightly from the second quarter,” Miller said. “The value menu mix remained in the high teens during the quarter, which was much lower than the 20-percent mix seen during the third quarter of last year.”

He added that Denny’s “everyday affordability strategy continues to work hard for us, driven by our $2-$4-$6-$8 value menu and store-level discounts directed by our local [advertising] co-ops.”

Denny’s expects the prices it pays for goods to rise 3 percent to 5 percent next year, said Mark Wolfinger, chief financial and administrative officer.

“Strategically, we will remain focused on our price value advantage relative to our competitors and potential negative impact of pricing to long-term guest traffic, which is why we are looking at taking a modest amount of pricing next year to offset inflationary pressures,” he said.

Although executives did not provide details on projected price increases, they said price hikes will likely come “earlier” in 2012 than they did this year, when the chain raised prices in June.

New unit growth

Denny’s officials said the company is no longer planning to open in 2011 two units of a fast-casual version of its restaurants called Denny’s Café that it is testing.

“It is [research and development], and we’re excited about our opportunities in nontraditional formats, and we’ll continue to work towards a new introduction,” Miller said. “We’re not ready with details at the moment of the timing of that and the nature of it.