UPDATE
About two months ago, I blogged on how Denny’s had become a target of certain activist investors looking to right a fledging American franchise. A proxy fight was mounted by The “Committee to Enhance Denny’s”, a group of investors who collectively account for about 6.5% of Denny’s common stock. Fed up with Denny’s losing 20 percent of its market share to I-HOP and other breakfast chains over the last five years, dejected over more than $300 million spent in remodeling capital expenditures which have yet to yield quantifiable dividends to shareholders, and annoyed with inadequate marketing messages, the group had sought to replace three current Denny’s directors with candidates of their own. One of these investors, Jonathan Dash was a guest on CNBC’s “Squawk On The Street” Tuesday. He discussed the need to hold management’s feet to the fire regarding poor financial results over the last seven to eight years as well as issues such as overpricing an inferior food product and promoting to a clientele unlikely to repeatedly patronize the establishment.
The committee was seeking not to just replace any three directors, but the CEO, chairwoman, and former chairman of the board. Following Denny’s annual meeting on Wednesday, the “Committee to Enhance Denny’s” does not believe any of their three nominees were successfully elected to the board based on the information they received, though details may not be made official for another week or so. What’s more, the group appears to be facing litigation from Denny’s for distributing confidential Denny’s Franchisee Association (“DFA”) documents in its effort to persuade shareholders to shake-up the board. The chairman of the DFA questioned the group’s ethics and judgment and accused the committee of obtaining, distributing and misrepresenting materials to further its personal agenda. None of this news has been good for Denny’s shareholders either it seems with shares down more than eleven percent since last Friday.
Greg Ruel - Advisory Services Manager
