Proxy Battle Over, Denny's Needs To Move On And Fix The Company -- Fast
The distractions are over for managers at Denny's. Their shareholders sent a group of disgruntled investors who sought three board seats packing at today's annual meeting, and now Denny's needs to get focused on the business at hand -- fixing the chain's long run of plummeting sales.
The past few months have been crazy, with renegade shareholders from Oak Street Capital Management and Dash Acquisitions flinging mud at management's track record, to which Denny's filed an eight-page rebuttal. Then this morning, Denny's management accused the investors of corporate espionage and illegally obtaining confidential franchise-operations documents. Denny's franchisee association, in turn, threatened to sue if operational details were publicly aired.
But it's time for the soap opera to end. It'll take another week to certify election results, but the alternative-proxy filers have already disclosed their bid didn't succeed.
Meanwhile, Denny's core problems haven't gone anywhere. Comparable-store sales are going down, down, down, dragging down company overall revenue. Rival Dine Equity (DIN), owner of IHOP, keeps taking Denny's market share. Denny's is selling off company-owned restaurants on the cheap in a desperate attempt to get franchise owners to improve the units' sales. In general, this tired old brand needs a major refresh.
If Denny's can't show some improvement shortly, the angry-shareholder group may be back with another challenge. Or another investor could well try to wrest control of the company from current management. This company's management still needs to show its investors it knows how to build Denny's value. Investors will ask for CEO Nelson Marchioli's head again in the near future if he can't turn the company around, and soon.
Photo via Flickr user wyinoue