Denny's shares skyrocketed by more than 25 percent Wednesday after the company announced plans to sell most of its remaining company-owned stores over the next 18 months.
The company intends to sell between 90 and 125 restaurants in order to bring its total franchised locations to between 95 and 97 percent, Mark Wolfinger, chief financial officer for Denny's, told analysts on an earnings call Tuesday. About 89 percent of Denny's restaurants are currently owned by franchisees.
In addition, the company expects to earn about $30 million from selling up to 30 percent of 95 properties it owns. The proceeds will be reallocated toward purchasing higher-quality real estate, Wolfinger said.
"Our refranchising and development strategy will enable us to further evolve as a franchisor of choice that provides more focused support services, all while yielding a higher quality, more asset-light business model," CEO John Miller said in a statement.
By having more franchised locations, Denny's will make more royalty revenue and save on costs associated with running individual restaurants. Franchisees won't be completely on their own, however. Many major brands such as Dunkin and McDonald's often co-invest with franchisees when it comes to major investments like digital upgrades and remodels.
