Whit Kincaid - Senior Director of Investor Relations John Miller - President, Chief Executive Officer Mark Wolfinger - Chief Financial Officer, Executive Vice President, Chief Administrative Officer.

Michael Gallo - CL King Will Slabaugh - Stephens Inc. Colin Radke - Wedbush Securities Mark Smith - Feltl and Company Tony Brenner - ROTH Capital Partners.

Good day, everyone and welcome to the Denny's Corporation third quarter 2015 earnings conference call. Today's conference is being recorded. At this time, I would like to turn the conference over to Mr. Whit Kincaid, Senior Director of Investor Relations. Please go ahead, sir..

Thank you. Good afternoon. Thank you for joining us for Denny's third quarter 2015 earnings conference call. With me today from management are John Miller, Denny's President and Chief Executive Officer and Mark Wolfinger, Denny's Executive Vice President, Chief Administrative Officer and Chief Financial Officer.

Please refer to our website at investor.dennys.com to find our third quarter earnings press release along with any reconciliation of non-GAAP financial measures mentioned on the call with their corresponding GAAP measures. This call is being webcast and an archive of the webcast will be available on our website later today.

John will begin today's all with his introductory comments. Mark will then provide a recap of our third quarter results along with brief commentary on our annual guidance for this year. After that, we will open it up for questions.

Before we begin, let me remind you that in accordance with the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995, the company knows that certain matters to be discussed by members of management during this call may constitute forward-looking statements.

Management urges caution in considering its current trends and any outlook on earnings provided on this call. Such statements are subject to risks, uncertainties and other factors that may cause the actual performance of Denny's to be materially different from the performance indicated or implied by such statements.

Such risks and factors are set forth in the company's most recent annual report on Form 10-K for the year ended December 31, 2014 and in any subsequent quarterly reports on Form 10-Q. With that, I will now turn the call over to John Miller, Denny's President and Chief Executive Officer..

Thank you, Whit and good afternoon, everybody. Throughout the third quarter, brand momentum continued as we generated strong same-store sales growth at both company and franchise restaurants. In addition, we grew both adjusted EBITDA and adjusted net income per share, while generating strong free cash flow.

We believe that we are still in the early innings of our brand revitalization. Our objective, which is to consistently grow sales and earnings per share are dependent on the execution of key initiatives in four key strategic areas.

The first is to deliver a differentiated and relevant brand in order to achieve consistent positive same-store sales increases. Our effective execution to enhance our food, service and atmosphere is evidenced by system same-store sales growth in 17 of the last 18 quarters.

Given the strength of our results through the first three quarters, we are on track to achieve the highest annual same-store sales growth for the brand in over a decade with the highest annual same-store sales growth in company restaurants in over two decades.

It would be more exciting is that our system guest traffic has grown over the last four quarters while guest traffic at our company restaurants has grown in seven consecutive quarters. We continue to evolve our menus to match our guest needs by responding to their desire for better quality and more cravable product.

This past quarter, we made further enhancements to our core menu while executing two limited time only menus. The first was an exclusive partnership with the Fantastic Four movie. The second was our Big Burger Bash menu, which showcased premium burgers along with a few of our new sandwiches found in the core menu.

With each and every quarter, we are getting better at delivering high-quality products with more consistent service standards supported by our field training and coaching initiatives. Our heritage remodel program has proven critical to our revitalization strategy as it further reinforces the improvements made to-date in our food and service.

With only 30% of the system expected to reflect the successful heritage image by the end of this year, we are thrilled to have the opportunity to build on our progress. We expect over 200 system remodels to be completed this year, including approximately 50 company restaurants.

Next year, we anticipate completing over 200 system remodels, while finishing remodeling our company restaurants. Our second key strategic area is to consistently operate great restaurants with the primary goal of consistently improving guest satisfaction and their intent to return.

We are encouraged by the results we are realizing from the ongoing investments made in our brand and our team members and in our company restaurants. They also recognize the need to continue to invest in our strategies to further elevate the Denny's experience and to build on our momentum in the coming years.

Our Pride review program has been well received by our franchisees and we have added additional training and operations expertise to our brand. Last week, Denny's franchisee association held its annual convention. We are thrilled to be working with such talented and passionate group of franchisees, vendors and employees.

This event is a culmination of many interactions throughout the year and is critical to forging the relationships necessary to strengthen and expand the brand. Our third key strategic area is to grow the global franchise in order to expand Denny's geographic reach of domestic and international locations throughout the world.

With five international openings through the first three quarters and 109 international restaurants opened at the end of the quarter, we are growing our international business. We are thrilled to open our first location in Dubai during the quarter.

This is the first location in a development agreement to open 30 restaurants in the Middle East over the next 10 years. Our franchisee is moving fast and expects to open their second restaurant in Dubai before the end of the year.

We are making progress expanding the Denny's brand internationally with the right franchise partners and recently signed a development agreement to open 15 restaurants in Indonesia. We are working to sign additional development agreements for new regions over the coming quarters.

Our fourth key strategic area is to drive profitable growth for all stakeholders. We are focused on growing margins and profits yet maintaining a disciplined focus on operating costs for G&A and capital allocation.

We remain committed to growing earnings per share primarily through our highly franchised business which provides a lower risk profile with upside from operating a meaningful base of high volume company restaurants.

Our continued growth and profitability will be driven by a combination of investments in our brand and our company restaurants along with shareholder friendly allocation of free cash flow.

We believe the acquisition of franchise restaurants is one way to enhance our company restaurant portfolio and we will continue to review opportunities as they come available. We are on track to acquire our third restaurant this year, which is located in Miami, where we currently have 11 company restaurants.

Our new Kwik Trip partnership speaks to the strength of the brand and the success we have had at travel center locations across the country. For those who aren't familiar with the brand, Kwik Trip is a family-owned company based in Wisconsin with over 450 convenience stores throughout Wisconsin, Minnesota and Iowa.

They currently have four travel center stores with existing restaurants. They are excited to open new Denny's at these stores and hope to have the opportunity to add new restaurants as they look to expand their footprint with new travel center locations.

We believe the Upper Midwest is an underpenetrated reason for Denny's as we currently have 36 franchise restaurants in those three states. We believe that this partnership will help us accelerate restaurant development in that region.

In summary, we believe the foundation is in place to build on our restaurants, our results and sustain momentum as we move ahead. The improvements we have achieved today, give us the confidence we can continue to grow the Denny's brand benefiting franchisees, employees and shareholders.

We will continue to prioritize allocation of our free cash flow toward reinvestment in the brand and toward shareholders. We have allocated approximately $160 million toward our ongoing share repurchase program since late 2010. In addition, we continue to add to the strength and flexibility of our balance sheet.

Our commitment to our stakeholders continues as we execute our brand revitalization strategies enabling us to unlock the full potential of the Denny's brand. With that, I will turn the call over to Mark Wolfinger, Denny's Chief Financial Officer and Chief Administrative Officer.

Mark?.

Thank you, John and good afternoon, everyone. Our third quarter results were highlighted by growing domestic systemwide same-store sales by 6.1%, growing adjusted EBITDA by 14.4% and generating $12.4 million of free cash flow. During the quarter, franchisees opened nine restaurants including one international and two nontraditional locations.

Our system restaurant count increased by four as five franchise restaurants were closed during the quarter. In addition, we acquired one franchise restaurant location in Northern California. As a result, we ended the quarter with 1,700 total restaurants, including 161 company restaurants.

Denny's total operating revenue including company restaurant sales and franchise and license revenue increased 5.8% to $123.8 million, primarily due to the increase in same-store sales. Domestic systemwide same-store sales increased 6.1%, primarily due to an increase in same-store guest check along with an increase in same-store guest traffic.

The increase in guest check average was driven by both favorable product mix and higher menu pricing. Franchise and licensing revenue increased $300,000 primarily due to a 6% increase in royalty and fee revenue resulting from the 5.9% growth in domestic franchise same-store sales.

This increase was partially offset by a $1.1 million decrease in occupancy revenue, which was driven by lease terminations over the last 12 months. Franchise operating margin grew by $1 million to $23.9 million or 69.1% of franchise and license revenue, primarily due to the increase in royalty revenue. Moving now to our company restaurant.

Sales at company restaurants grew 7.8% to $89.3 million, primarily due to a 7% increase in same-store sales. Company restaurant operating margin of 15.9% of company restaurant sales increased 2.6 percentage points with a $3.2 million increase.

The increase in company margin was primarily due to the leveraging effect from higher same-store sales, a favorable workers compensation adjustment and the reopening of the Las Vegas Casino Royale restaurant, which were partially offset by higher product costs and higher incentive compensation.

Total general and administrative expenses were $16 million compared to $13.4 million in the prior-year quarter, primarily due to increases in share-based compensation and payroll and benefits. Adjusted EBITDA increased $3 million to $23.6 million, growing 14.4% compared to the prior-year.

Free cash flow after capital investments, cash taxes and cash interest was $12.4 million compared to $12.8 million in the prior-year quarter, due to higher capital expenditures. We invested $8.4 million in capital expenditures during the quarter, which included remodeling 13 company restaurants.

In addition, we acquired a franchise restaurant for $1.3 million. During the quarter, we allocated $17.7 million to repurchase 1.5 million shares of common stock and through the first three quarters of this year, we have allocated $38.9 million to repurchase 3.5 million shares outpacing our spending for all of 2014.

Subsequent of the quarter end, we completed the 10 million share repurchase program announced in April 2013. And throughout October 30, we had allocated approximately $52 million to repurchase $4.6 million shares. As a result, we approximately $92 million remaining under the $100 million authorized share repurchase program.

On October 30 we amended our credit facility to increase the borrowing capacity and flexibility. The revolving credit facility was increased by $75 million to $325 million with no change to the majority date.

There was no change to the interest rate, which varies based on the total debt ratio ranging from LIBOR plus 125 basis points to LIBOR plus 225 basis points. The maximum leverage ratio was raised from three times to 3.5 times.

And as long as our total debt ratio is below three times, we have an unlimited basket for returning cash to shareholders subject to minimum availability requirements. This is an increase from 2.5 times.

The additional capacity allows us to maintain flexibility while we accelerate our share repurchases, as we intend to enter in a $50 million accelerated share repurchase program in the near-term.

Funding for the accelerated share repurchases will come from our revolving facility taking our total debt to approximately $220 million and our leverage ratio to approximate 2.4 times from around 1.9 times at the end of the third quarter.

As a result, our interest cost would increase by 25 basis points taking our weighted average interest rate to approximately 2.5% based on current interest rates and taking into account the LIBOR interest rate swap we have on a $120 million of our debt.

Including the $50 million from the potential accelerated share repurchase program, our cumulative share repurchases would exceed $200 million since beginning the program in November 2010 with over $100 million repurchased in 2015 alone.

And going forward, we will seek to maintain a leverage ratio in the two to three times range, which would allow us to maintain flexibility as we grow our adjusted EBITDA. Now let me take a few minutes to expand on the business outlook section of our earnings press release.

Based on third quarter results and management's current expectations, we have updated our annual guidance expectations for 2015. We now anticipate company same-store sales to grow between 6% and 6.5% compared to our previous range of 5.5% to 6.5%.

Domestic franchise same-store sales growth is expected to be approximately 80 basis points below company same-store sales, which equates to a range of 5.2% to 5.7%. We are on track to open 44 to 46 new restaurants including four company operated locations opened in partnership with Kwik Trip convenient stores.

Cash capital spending is now expected to be between $31 million and $33 million due to the company restaurant openings, the acquisition of another franchise restaurant and the purchase of a real estate interest at one of our Las Vegas restaurants.

The scrape and rebuild of one of our company restaurants will now occur in the first quarter of next year instead of the end of this year. We expect our total general and administrative expenses to be at the high end of our guidance range between $66 million and $67 million.

This does include approximately $7 million of share-based compensation expense which represents a $1.2 million increase compared to the prior-year. Our expectation for adjusted EBITDA remains between $86 million and $88 million, which represents 4% to 6% annual growth and is higher than our original expectations.

Our updated guidance for free cash flow is $40 million to $42 million due to the increase in capital expenditures.

And going forward, we will continue to balance the allocation of our cash towards supporting investments in the brand and our company restaurants as well as returning value to our shareholders through our ongoing share repurchase program. That wraps up our guidance commentary.

I will now turn the call to the operator to begin the Q&A portion of our call..

[Operator Instructions]. We will take our first question from Michael Gallo with CL King..

Hi. Good afternoon. Congratulations on the good results. I just wanted to delve on a couple of numbers. First the cost of goods certainly was up substantially, I think both on a sequential and year-over-year basis.

Was that just egg prices? And then how should we think about that going forward?.

Yes. Mike, it's John. The back half of the year, of course, were affected by eggs. So about 5%..

Was there anything else in there? Or was that from promotion?.

No. It is primarily eggs. So that's about the increase year-over-year..

Okay.

And just going forward in Q4, I know prices have abated somewhat from the spike in the summer, would you expect that would now [indiscernible] in Q4?.

They do seem to cure faster than the prediction from the last time there was an avian flu challenge in the United States. But that requires all the way through the first half of next year, which obviously gets us into some 2016 conversation..

Okay. John, the core SG&A, I know that SG&A was up and obviously you had the incentive-based comp accruals, but I guess when I look at the core SG&A was up double digits as well.

What drove that? Are there certain investments you are making? Help me frame why core G&A is growing at a rate faster than sales growth?.

Mike, what we done, we have made some investments in some areas to improve the way the business runs. The stickiness of our training department has been less than optimal. So we have added operations coaches that we talked about of the last two or three calls. We now have 10 operations coaches to support our Pride growth program.

And then we made investments in additional officers to run training and operations services for the ongoing long-term benefit of simplifying menus, line execution, overall ticket times and guest affinity. The kinds of things that has helped build on the momentum of the brand. So yes, there are share-based comp issues and then investments in the brand.

And Mark can take you through a few more of the details..

Yes. So Mike, it's Mark. Just a couple of quick comments further to John's comments. Again our Q2 guidance, this is annual for G&A was $64 million to $67 million. And what we did obviously with our most recent comments here today, we are just tightening that guidance to that $66 million to $67 million for the full year.

Then I mentioned as far as core G&A and this really goes to your question, I mentioned both payroll and benefits but obviously to John's comments about bringing in senior players in the key areas here, the kind of investment we are making in people, that would also obviously include recruiting and relocation expenses as well.

But across the quarter and really across the year, it's really a combination of half of that investment type of focus and the other half tends to be incentive or share-based incentive, both the annual incentive and share-based incentive driven as well..

You feel you have the personnel that you need at this point now? Or should we expect more incremental investment in the cores in years ahead?.

Yes. Again that gets into the 2016 inferences being made. I think we are comfortable at this point, saying it's going to in that same mid-60s range..

All right. Depending on, obviously share-based comp, but I get that..

That would be the variable..

Yes..

And next we will move to Will Slabaugh with Stephens Inc..

Yes. Thanks, guys. Congrats on the quarter. I want to ask you about the guidance. There has been a lot of commentary around choppiness in September and October. So I just wanted to follow-up on your implied 4Q same-store sales guidance, which while still strong would be a little bit of a deceleration from what you have been saying.

So I am just curious if you have seen anything recently that worries you? Or is there anything different that you had noticed with a consumer over the past month or two?.

That's a great question, Will. It's John, again. I think looking at fourth quarter, again just the cautionary remarks. We don't give your monthly guidance and guide too far ahead.

I think, though, if you look at the annual guidance, which implied here in the 6% to 6.5% number, 80 basis points lower for franchise, so we are going to be in that 1.5% to 3.5% company range and again, franchisees falling about 80 basis points behind that for the quarter.

We have been talking about this for a number of quarters in a row that it would feel like a deceleration but the year-over-year is only slightly decelerating because we had a very strong fourth quarter wrap up the last year. Remember, this is 17 of 18 consecutive quarters guiding for another to be on top of that.

So we think that generally while there is a little choppiness out there, with weather in Texas or some of the Texas news, but overall there remains brand momentum, but there is a slowdown obviously in the fourth quarter with all that we are going over from last year..

Got it. That's helpful. And on the value front, can you talk about that the $2 $4 $6 $8 mix in the quarter? And if there has been much change from last quarter, where I think you mentioned there is an increasing percentage of customers trading away from that and more toward your premium LTOs or other items, just more or less away from value..

That's true and that's a good catch. The Burger Bash successful for us, $2 $4 $6 $8 mix has fallen, it's down to about 14% company, 16% franchise, about 600 basis points difference from last year quarter-over-quarter. And a good portion of that is, if you get in the details you will remember that it's the $2 and $4 items that are trading a lot less.

The $6 and $8 dollars items are a little bit more consistent. And we took the free beverage away for all that of $8 items. And it just moved people towards the core menu. So it was a very good strategy that we pulled off with improving value scores overall and remaining positive transactions. So I would say a win for brand and for shareholders alike..

Got it. Thanks, John..

And next we will move to Nick Setyan with Wedbush Securities..

Hi. Thanks. This is actually Colin Radke, on for Nick. Thanks for taking my question. I was just wondering if you could provide a maybe little bit more color in terms of what you are seeing in the sales trends by geography? You kind of alluded to some Texas weakness earlier.

I was just wondering if you could maybe provide a little more detail around that?.

Sure. I think we are fairly consistent with what you see in other nationally reported reports, whether it be Navtrak [ph] or other sources. The West has been the strongest. True also for Denny's. We are gaining California, Washington, Arizona, Nevada and then Florida, obviously, strong as well as the Southeast.

It has been a touch more choppy in different places around the country where it has been a consistent pattern through the first half of the year. Texas softened up a little bit. We continue to have positive traffic there. But we are running behind -- positive traffic through the first half of year and then it did go negative in the third quarter.

It's running about 250basis points behind. So if you look at a three year period, it's been one of the stronger performers and of late it's been more modest. And you see that fall off in the smaller areas, Midland-Odessa and the smaller towns. And I think that answers the geographical question you had..

Yes. Thank you. Also just kind of housekeeping.

What was the guest check average or the pricing in the quarter?.

Pricing is two to company, two-ish franchise and guest check average 5.6 in the quarter..

Okay.

And then how should we think about menu pricing going forward, as we look out to Q4 and into 2016? I guess how much more room do you think you guys have? And is that 2% type of range reasonable to think about given some of the headwinds from a cost and also that minimum wage inflation?.

Sure. Great question. I think when you talk about wages, there is more labor inflation coming. When you add, 20 states in 2015 had wage increases. You build on some but had increases in 2014. So it is a headwind for the industry and for Denny's. We did take some pricing in California, California wage increases. They went from $8 to $9 in 2014.

That will go $9 to $10 in 2016. So we expect that we will continue to take price, I think, in the January menu somewhere a little less than 1% and maybe around the 2% range for the full year.

We think there is that kind of pricing room given the wage increases expected in select markets and it does create a bit of a headwind, while the 2% to 3% wage increase for our California operations, 50 to 70 basis point headwind. If you tried to get it all at once, it tends to have more negative results longer-term.

But it does affect not the whole country. And then of course that speaks to the commodity inflation that we expect as well. So we believe we will stay in that 2% price increase range and in that two percentage to 2.5% commodity increase as a very early outlook for 2016..

Got it.

And just to kind of clarify that 2% range, that's on a company wide basis? That's not specific only to the California restaurants? Is that correct?.

Yes. The overall brand two-is company, two, two-ish franchise, 2.2..

Got it. Perfect. Thank you very much..

Next we have Mark Smith with Feltl and Company..

Hi guys. Can you just walk us through your accelerated share repurchase plan? I assume that that's kicking off real soon..

Yes. Hi, Mark. It's Mark Wolfinger.

How are you?.

Doing well.

How are you?.

I think probably first a little bit of the numbers here. In. And I outline these in my description and obviously my script, but just real quick. You know, we obviously have picked up our share repurchase program as we have gone through the year.

And as I mentioned, not only did we buy $17 million shares, about 1.5 million shares during the third quarter, but through 10/30. So we basically gave you a number through the end of October. We are at $52 million of share repurchases, about 4.6 million shares.

So this accelerated repurchase program, which again we are intending to enter into, so obviously it's not finalized as of yet, would obviously bring into play another $50 million of share repurchases on top of the $52 million we have already done through the end of October.

And I don't want to get into a lot of the technical specifics, but obviously, wrapping around this is obviously the increase in our leverage and the increase in our revolver that I described, which I am sure, Mark, as you know the history of Denny's and all of the deleveraging efforts we have made over the years, obviously this was a strong consideration for us to go in and expand the size of the revolver and increase our debt.

And also I think it has allowed us to speak to a leverage range of sort of staying in that 2 to 3 times levered range. So the accelerated share repurchase plan, we are certainly excited about it. It really brings in more shares than, I would say a day-by-day repurchase program and obviously, is funded through the increase in the revolver.

So that would bring us, if you put the numbers together, it would bring us to over $100 million of share repurchases this year, which obviously, I think quick math would exceed 10% of our market cap..

Definitely. Excellent.

And then on Kwik Trip, are these all conversions?.

Yes, they are. All four of them, three are in Wisconsin and one is in Iowa. The three in Wisconsin were actually operated directly by Kwik Trip and this is Kwik Trip with a K, K W I. Okay, well, probably up North, you are familiar with the brand, obviously. And then one was an Iowa which was run by an independent operator.

But all four of those, we plan to convert this calendar year, actually this fiscal year, which as I mentioned is, they are going to be company operated units. We feel that we are underpenetrated in that part of the Midwest, obviously the upper Midwest.

And it's interesting, they have these four locations, they have 450 locations in total through their C-Store business, but they actually have these four restaurant locations. And when we looked at this, they are very similar to a travel center type of venue and from an investment standpoint, we are probably looking at the same investment range.

That investment range is probably $600,000 to $700,000 per conversion. So obviously these are pre-existing restaurant sales will be converted to Denny's. So it will basically be a brand-new Denny's store with a pre-existing sale history with an investment number that is obviously well below $1 million per store..

So it sounds like we can expect pretty similar to the old Flying J conversions?.

I would say it's a similar parallel. And again we are excited about this partnership with Kwik Trip and I think in John's comments, we talked about the potential there but again, these are the first four and we will see how we go from there..

And then I just want to confirm, you have got another acquisition that you are working on right now of one store that you would expect that in Q4?.

Yes, that's correct. And these fit into and I think that's the interesting balance with the kind of free cash flow metrics that Denny's has and even with the increase in our leverage, our leverage ratio is still going to be below 2.5 times. We have the capability to do a number of things from an investment standpoint.

So accelerating company remodels is an example of what we have been doing and obviously that's been feeding back very positively to the brand and certainly through the comp sales numbers you have seen for company stores. And then that we picked time to time pieces of real estate. I mentioned the piece of real estate we purchased out in Vegas.

And that sort of comes down to cap rate and long-term property control. But to your specific question, we have been buying franchise stores on a selective basis where the multiples makes sense and the geography makes sense.

So certainly, if we have a company base field management and stores in certain locations, we will go out and purchase franchise stores at the right kind of multiples. And I think this one coming up is in South Florida, if I recall where we do have a presence down there from a company operations standpoint..

Excellent. Thank you..

Next we will take Tony Brenner with ROTH Capital Partners..

Thank you. Two questions really. First, I know that you have got a fair sales slip from the store remodels.

I wonder if you could breakout what comps have been in the past quarter in the stores that have been remodeled, whether it has significant differences there?.

Yes. Tony, this is Mark. I will probably ask John to jump in here. I don't think we have a specific number for the previous quarter, but I think as we have said, these remodels have been contributing probably mid single-digit type of comp and that number ranges depending upon the age and profile of the store.

So those stores from a condition standpoint, that are truly due for remodel tend to have a little bit of a higher comp than the ones which are, form an over image standpoint. What we have seen some, if we just go back in time, it is probably on average about 100 basis points difference in comp, if you average it across the board.

But again, that's based on geography. It's based on number of different things..

Yes. Just if I could add to that point. I think to clarify Mark's last point, when you think about, call it 30% of the system done by the end of the year, to just round that out on the whole year, call it quarter of the system. So a quarter of the system up in mid single digits, call it one point difference impact to the whole brand.

Sales impact not comp difference. Comps is obviously stronger in all stores..

Right. And secondly, can I get back to that general and administrative expenses. Over the past seven or eight years, the company store profile has gone from 35% to 9.5% of the system. The system is no bigger than it was sent, roughly the same number of stores.

Even allowing for additional training and service personnel and share compensation, why shouldn't that number be lower than it was seven or eight years ago? It's exactly the same. There has been no decline..

I will have to do a little homework to answer that more specifically. I think that the total dollars, counting franchise support costs, is in the franchise margin rather than corporate G&A is materially lower, very materially different.

And then of course, seven or eight years ago from a prerecession or recessionary period to today and top talent cost money to manage a growing brand. So I think the better thing for us to do is maybe take this one-on-one and get some specific support for your question..

Thank you..

And we will move and take a follow-up from Michael Gallo with CL King..

I just have a follow-up question on Kwik Trip.

Is this just a one-off where you are going to do the four stores? Or did I hear you right that depending on how these stores go that you think there could be some additional opportunities? And if those opportunities come up would it be similar to pilot where you might open it up to the franchisees as well? Thanks..

Mike, it's a great question. I think right now we are investing in the relationship and the potential of what it could be, knowing that we are really tickled to have four new stores opening on the company side inside this fiscal year. It does a number of things.

It helps take a market where we are underpenetrated, gives some exposure with some brand new restaurants. That's exciting to us. And the potential is just too early to really know. Obviously we are optimistic, but it's just too early to know..

Okay. Well, it sounds like obviously depending on how those four stores go, that will certainly be a conversation, which is exciting. Thank you..

That does conclude our question-and-answer session. At this time, I will turn the call back to John Miller for closing remarks..

We,, thank you operator. I would like to thank everybody for joining us on the call today. In summary, we have brand momentum that continues to benefit us from the execution of our revitalization efforts. We are pleased by the results we are realizing from these ongoing investments with around 28% currently reflecting the heritage image.

We are still in the early innings of our brand revitalization with the foundation in place to build on our results and sustain momentum. We will continue to prioritize allocation of our free cash flow toward reinvestment in the brand and returning cash to shareholders through our ongoing share repurchase program.

Our plan to accelerate our share repurchase program reflects the confidence we have and our strategies to execute and grow the Denny's brand. We look forward to our next earnings conference call in February to discuss our fourth quarter 2015 results. Thank you again. Have a great evening, everybody..

And once again everyone, that concludes our conference call. Thank you all for your participation..