Denny's Forays into Middle East - Analyst Blog


Operating 1,700 franchised, licensed and company-owned eateries globally, Denny's Corporation ( DENN ) presently remains on an expansion spree both on domestic and international fronts. The company foresees a large untapped potential for expansion outside of the U.S.

The restaurateur has recently signed a deal with a franchisee - Advance Investment LLC - to enter into the market of Middle East. Per the agreement, Advance Investment will set up 30 Denny's outlets across the region over the next 10 years. The financial terms and conditions of the deal have not been disclosed.

The outlets will be located in United Arab Emirates (UAE), Saudi Arabia, Qatar, Bahrain, Kuwait, Egypt, Lebanon, Iraq and Jordan. The first unit is slated for a 2015 opening in UAE.

Middle East is now becoming one of the most dynamic and flourishing economies with rapid urbanization. Hence, the opening of the first outlet is strategically apt.

Advance Investment LLC is an affiliate of the Middle East-based franchise investor, Food Quest Restaurant Management LLC. Food Quest has superior local market knowledge and a proven track record of operating a few leading restaurants like Gourmet Burger Kitchen, Zambar Coastal Kitchen, Punjab Grill & Asia7 in the Middle East market. Encouraged by strong international response to the brand, the franchise partner is keen on working with one of America's largest full-service family restaurant chains.

Denny's made its first appearance outside the U.S. in 1966 by opening an outlet in Mexico. Since then the company has expanded its presence across 11 countries including Canada, Chile, Costa Rica, Curacao, Dominican Republic, El Salvador, Guam, Honduras, Mexico, Puerto Rico and New Zealand. At present, Denny's has about 100 units abroad. Currently, the company is developing 60 units targeting the international market.

Denny's holds a Zacks Rank #4 (Sell). Investors interested in the restaurant industry may consider stocks like Fiesta Restaurant Group, Inc. ( FRGI ), The Cheesecake Factory Inc. ( CAKE ) and Cracker Barrel Old Country Store, Inc. ( CBRL ). While Fiesta Restaurant sports a Zacks Rank #1 (Strong Buy), The Cheesecake Factory and Cracker Barrel have a Zacks Rank #2 (Buy).

CHEESECAKE FACT (CAKE): Free Stock Analysis Report

CRACKER BARREL (CBRL): Free Stock Analysis Report

DENNY'S CORP (DENN): Free Stock Analysis Report

FIESTA RESTRNT (FRGI): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Business , Stocks

Referenced Stocks: CAKE , CBRL , DENN , FRGI

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