A pair of activist investors have taken a 9.4% stake in Denny’s with plans to work with management to boost the chain’s share price.
According to an SEC filing Tuesday, serial activists JCP Investment Management and Jumana Capital Partners now own 1.6% and 7.8% of the family-dining chain’s shares, respectively.
The two Houston-based firms previously teamed up to take a large stake in Red Robin last year. JCP has a history of restaurant activism, having taken large positions in Jamba Juice, Applebee’s parent Dine Brands and The Cheesecake Factory over the years. It’s owned by James Pappas, the son of Chris Pappas, the former CEO of Luby’s Cafeteria and current CEO of Pappas Restaurants.
In the filing, JCP and Jumana said they believed Denny’s stock was undervalued and that they plan to work with Denny’s leadership and board to find ways to improve its value. They did not go into detail about what that strategy might entail.
Denny’s stock has fallen more than 20% over the past 12 months, to $5.18 a share. It was down more than 6% on Tuesday afternoon.
In a statement, Denny's said, "The Denny’s Board of Directors and leadership team regularly engage with investors to listen to their perspectives on our business and strategy. Our Board and leadership team are committed to continuing to take actions that are in the best interests of the Company and all shareholders."
JCP’s activism efforts have had mixed results. Last year, it pushed Cheesecake Factory to spin off its smaller concepts, but the chain said it had no plans to do that. At Red Robin, JCP and Jumana were able to get seats on the board after investing $8.3 million in the chain to help pay down debt.
South Carolina-based Denny’s is in the midst of a turnaround effort aimed at improving traffic. But it has struggled this year. Same-store sales declined in the first two quarters, and the company is expecting to finish the year between negative 2% and positive 1% same-store sales growth.
It has found a bright spot, however, in 74-unit Keke’s Breakfast Cafe, the growth concept it acquired in 2022. Same-store sales rose 4% at Keke’s last quarter.
Neither JCP or Jumana responded to a request for comment Tuesday.
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