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Dennys lays off 50 workers
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Posted on: 16/06/2008 Denny's Corp. has taken a difficult step in its transition to a franchise-based business model. The restaurant chain has eliminated 50 jobs in a move which the company said would allow it to evolve to support its franchise growth initiative, which was launched in 2007. Nelson Marchioli, president and CEO of Dennys Corp., explained: This is the strongest our balance sheet has been in the past 15 years and this event today makes us even stronger, as we strive to be a more relevant business across the country. As a brand, we want to be the franchisor of choice. When people go out to build or buy restaurants, we want Dennys to be top of mind and to do that you have to provide a different kind of service. Growth is back on the menu for Dennys. These are the difficult things you have to do to remain relevant and to react to the economy with all of the things customers are dealing with. We struggle with these types of days that we have to do this for the betterment of the business, but it's better for our employees that remain. Some job functions and departments have been consolidated, resulting in the redundancy of 25 employees at Denny's corporate headquarters and 25 other field-based employees. Marchioli said that all employees affected will be provided with job outplacement services and given a competitive severance package. As a result of the staff reductions, Denny's is likely to incur related charges of around $5 million during the second quarter. The company also, however, expects to save $6 million to $8 million in core general and administrative expenses during the second half of the year. The announcement was a continuation of the company's restructuring, which began in April and is intended to develop a new direction for the company, with primary emphasis on sales, brand and franchise. The company also is bolstering its marketing focus in sales, consumer insights, innovation and local marketing through a strategic collaboration with its operational leadership. Alex Lewis, Denny's vice president of investor relations, said: 'When you look at our business, we're changing the business that we're in and going to a franchise model that requires different resources, and we're now able to focus on that piece of the organization. It's a different mindset than running company restaurants.' Since launching its franchise initiative, Denny's has sold over 150 of its company restaurants and the company has commitments from franchisees to build 135 new restaurants over the next five years. Mr Marchioli said: 'We've made four strategic business units that include company and franchise operations. That really sends a clear message to our employees and to our shareholders that we're focused on Denny's, the brand, and we're going to build the brand. This is actually an exciting time.' Since 2001, when Marchioli took over as chief executive, around 150 company positions have been eliminated, bringing the number of employees at its corporate headquarters to 300. The company also has reduced its outstanding debt during that period from more than $500 million to about $380 million. Denny's now is one of the largest full-service family restaurant chains in the U.S., consisting of 373 company-owned units and 1,177 franchised and licensed units.
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