Sunday, April 18, 2010

Dennys Meeting in May

The restaurant chain Dennys will hold its annual shareholders meeting in May.

Incumbent directors are involved in a proxy campaign against the nominees of a dissident group led by Oak Street Capital Management and Dash Acquisitons, who together account for about 6.3% of Dennys' common shares.

One of the claims of these shareholders is that Dennys has not been responsive to the needs of its franchisees, as exhibited for example in a letter sent to the Dennys board last year by the franchisees' organization, the DFA, a group that represents 85% of the company's franchised restaurants.

That letter, dated November 9, referred to the "emotional toll from the anxiety, frustration and despair of the franchisees," and included a graph indicating "that not only have system-wide same store sales been negative for the last eight quarters but the gap between our Brand and its primary competitor (IHOP) is widening ... the sales trends are indicative of the fundamental process failures...."

The company has now produced on its own behalf a newer letter from the DFA, asserting regret that there "may be some confusion about communications from the DFA Board during 2009 expressing certain concerns to the Denny’s Board on behalf of its members."

Actually, according to the latest letter, everything is lovey-dovey now: "As a result of those communications, a healthy and constructive process began which included a meeting between you and me. The focus of this process and our meeting involved a comprehensive discussion of the state of the Denny’s Brand, strategic initiatives and franchisee perspectives."

Don't you love a good group hug?

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