Denny's Corporation
(
DENN
) has recently forged a deal with Musiet Group to venture into
Chile. Per the agreement, Musiet will set up 10 Denny's restaurants
in Chile over the next 15 years. The terms of the deal were not
disclosed. The first unit is slated for a 2013 opening in Santiago.
Santiago, the capital of Chile, is considered one of the most
dynamic and modern economies in Latin America with rapid
urbanization. Further, the city is the regional headquarters to
many multinational corporations catering to both business and
leisure travelers. Hence, the opening of the first outlet is deemed
to be apt strategically.
The latest alliance reflects management's intent to make Chile one
of the prime markets for international expansion, considering the
under-penetration of quick-service restaurants as against the North
American countries. To gain traction in the new market, Denny's
will offer breakfast, lunch, and dinner items on a 24-hours
setting.
Operating 1,684 franchised, licensed and company-owned restaurants
globally, Denny's is on an expansion spree on both domestic and
international fronts. At present, Denny's has about 96 units
abroad. The company foresees a large untapped potential for
expansion outside of the U.S.
Apart from its recent entry into the Dominican Republic, Denny's
also has its presence in other Latin American and Caribbean
countries like Costa Rica, Mexico, Honduras, Curaçao and Puerto
Rico. In addition, Denny's also entered into a long-term deal with
the Great China International Group to foray into Asia's largest
country, China.
According to the company, so far the brand has been well accepted
abroad. In fact, Denny's intends to capitalize on this opportunity
by expanding in new as well as existing markets. The latest Chilean
deal is one such effort.
The development partner, Musiet Group, boasts significant local
market knowledge and has a proven track record of operating a few
leading local restaurants in that market. Further, Musiet Group
enjoys the status of being the master franchisee for another U.S.
based casual dining restaurant chain,
Ruby Tuesday Inc.
(
RT
).
During the second quarter of 2012, Denny's did not open any
company-owned unit, but opened nine franchised units including two
international units in the Dominican Republic and Canada.
Denny's, which competes with the likes of
Kona Grill Inc.
(
KONA
) currently, carries a Zacks #3 Rank that translates into a
short-term Hold rating. We are also maintaining our long-term
Neutral recommendation on the stock.
DENNY'S CORP (DENN): Free Stock Analysis Report
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RUBY TUESDAY (RT): Free Stock Analysis Report
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