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Denny's Enters Dominican Republic

Zacks Equity Research

Denny’s Corporation (DENN) recently unveiled its first franchised outlet in the Dominican Republic in association with one of its most recent international partners Grupo Nahas. With this opening at the Food Court of Las Americas International Airport in Santo Domingo, Denny’s made its debut internationally in an airport site.

Denny’s has been eyeing both conventional and non-conventional locations. Apart from airports, university campuses across the country are also the top choices for Denny’s. During 2011, it unveiled five licensed units on university campuses.

Santo Domingo is considered one of the most dynamic economies in the Caribbean catering to both business and leisure travelers. Hence, the opening at Las Americas airport is strategically deemed apt.            

The development partner Grupo Nahas boasts of significant local market knowledge and has a proven track of operating a few leading hotels in that market, including Intercontinental Hotels Group plc (IHG). The franchisee Grupo Nahas also seems excited about working with one of America’s largest full-service family restaurant chains.

Presently operating 1,680 franchised, licensed, and company-owned eateries globally, Denny’s remains in an expansion mode both on domestic and international fronts. Apart from the recent entry into Dominican Republic, Denny’s has its presence in other south and Latin American countries like Costa Rica, Mexico, Honduras, Curaçao and Puerto Rico. According to the company, the brand has so far been well-accepted abroad and intends to capitalize the opportunity fully by expanding in new as well as existing markets.    

During its first quarter of 2012, Denny’s closed 11 system-wide units and opened 6 franchised and licensed units, including two international units in Puerto Rico and Canada. At the end of the quarter, the company had 197 company-owned and 1,483 franchised and licensed restaurants. For full fiscal 2012, Denny's plans to open 40–50 new restaurants, with 1 company-owned unit and the rest franchised.

Denny’s, which competes with the likes of Kona Grill Inc. (KONA) currently, retains a Zacks #2 Rank that translates into a short-term ‘Buy’ rating. We are maintaining our long-term “Neutral” recommendation on the stock.

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