Denny's Corporation

08/04/2025 | Press release | Distributed by Public on 08/04/2025 14:59

Quarterly Report for Quarter Ending June 25, 2025 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations
The following Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") should be read in conjunction with our consolidated financial statements and the notes thereto that appear elsewhere in this report and the MD&A contained in our Annual Report on Form 10-K for the fiscal year ended December 25, 2024.
Forward-Looking Statements
This report includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, as codified in Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). The Company urges caution in considering its current trends and any outlook on its operations and financial results disclosed in this report. In addition, certain matters discussed in this report may constitute forward-looking statements. These forward-looking statements, which reflect management's best judgment based on factors currently known, are intended to speak only as of the date such statements are made and involve risks, uncertainties, and other factors that may cause the actual performance of Denny's Corporation, its subsidiaries, and underlying restaurants to be materially different from the performance indicated or implied by such statements. Words such as "expect", "anticipate", "believe", "intend", "plan", "hope", "will" and variations of such words and similar expressions are intended to identify such forward-looking statements. Except as may be required by law, the Company expressly disclaims any obligation to update these forward-looking statements to reflect events or circumstances after the date of this report or to reflect the occurrence of unanticipated events. Factors that could cause actual performance to differ materially from the performance indicated by these forward-looking statements include, among others: economic, public health and political conditions that impact consumer confidence and spending; commodity and labor inflation; the potential impacts of tariffs; the ability to effectively staff restaurants and support personnel; our ability to maintain adequate levels of liquidity for our cash needs, including debt obligations, payment of dividends, planned share repurchases and capital expenditures as well as the ability of our customers, suppliers, franchisees and lenders to access sources of liquidity to provide for their own cash needs; competitive pressures from within the restaurant industry; the level of success of our operating initiatives and advertising and promotional efforts; adverse publicity; health concerns arising from food-related pandemics, outbreaks of flu viruses, or other diseases; changes in business strategy or development plans; terms and availability of capital; regional weather conditions; overall changes in the general economy (including with regard to energy costs), particularly at the retail level; political environment and geopolitical events (including acts of war and terrorism); and other factors from time to time set forth in the Company's SEC reports and other filings, including but not limited to the discussion in Management's Discussion and Analysis and the risks identified in Item 1A. Risk Factors contained in the Company's Annual Report on Form 10-K for the fiscal year ended December 25, 2024 and in the Company's subsequent quarterly reports on Form 10-Q.
Overview
We manage our business by brand and as a result have identified two operating segments, Denny's and Keke's. As of June 25, 2025, the Denny's brand consisted of 1,484 restaurants, 1,422 of which were franchised/licensed restaurants and 62 of which were company operated. At June 25, 2025, the Keke's brand consisted of 74 restaurants, 52 of which were franchised restaurants and 22 of which were company operated.
In addition, we have identified Denny's as a reportable segment. The Denny's reportable segment includes the results of all company and franchised and licensed Denny's restaurants. Total revenues at Keke's for the quarter and year-to-date periods ended June 25, 2025 represented less than 10% of total consolidated revenues. Therefore, the Keke's operating segment is included in Other for segment reporting purposes.
Statements of Income
The following table contains information derived from our Consolidated Statements of Income expressed as a percentage of total operating revenue, except as noted below. Percentages may not add due to rounding.
Quarter Ended Two Quarters Ended
June 25, 2025 June 26, 2024 June 25, 2025 June 26, 2024
(In thousands)
Revenue:
Company restaurant sales $ 58,395 49.6 % $ 54,348 46.9 % $ 112,295 49.0 % $ 106,690 47.2 %
Franchise and license revenue 59,262 50.4 % 61,579 53.1 % 116,999 51.0 % 119,211 52.8 %
Total operating revenue 117,657 100.0 % 115,927 100.0 % 229,294 100.0 % 225,901 100.0 %
Costs of company restaurant sales, excluding depreciation and amortization (a):
Product costs 15,086 25.8 % 13,632 25.1 % 29,297 26.1 % 26,943 25.3 %
Payroll and benefits 21,869 37.5 % 20,493 37.7 % 42,965 38.3 % 40,967 38.4 %
Occupancy 5,181 8.9 % 4,671 8.6 % 10,240 9.1 % 9,244 8.7 %
Other operating expenses 10,209 17.5 % 8,782 16.2 % 19,868 17.7 % 18,542 17.4 %
Total costs of company restaurant sales, excluding depreciation and amortization 52,345 89.6 % 47,578 87.5 % 102,370 91.2 % 95,696 89.7 %
Costs of franchise and license revenue, excluding depreciation and amortization (a) 29,217 49.3 % 33,428 54.3 % 57,571 49.2 % 60,802 51.0 %
General and administrative expenses 21,445 18.2 % 20,486 17.7 % 41,475 18.1 % 41,708 18.5 %
Depreciation and amortization 4,378 3.7 % 3,735 3.2 % 8,485 3.7 % 7,316 3.2 %
Goodwill impairment charges - 0.0 % 20 0.0 % - 0.0 % 20 0.0 %
Operating (gains), losses and other charges, net
1,700 1.4 % 1,565 1.3 % 5,611 2.4 % 1,238 0.5 %
Total operating costs and expenses, net
109,085 92.7 % 106,812 92.1 % 215,512 94.0 % 206,780 91.5 %
Operating income 8,572 7.3 % 9,115 7.9 % 13,782 6.0 % 19,121 8.5 %
Interest expense, net 5,374 4.6 % 4,573 3.9 % 9,802 4.3 % 8,993 4.0 %
Other nonoperating income, net (563) (0.5) % (224) (0.2) % (401) (0.2) % (861) (0.4) %
Income before income taxes 3,761 3.2 % 4,766 4.1 % 4,381 1.9 % 10,989 4.9 %
Provision for income taxes 1,291 1.1 % 1,198 1.0 % 1,585 0.7 % 2,730 1.2 %
Net income $ 2,470 2.1 % $ 3,568 3.1 % $ 2,796 1.2 % $ 8,259 3.7 %
(a)Costs of company restaurant sales percentages are as a percentage of company restaurant sales. Costs of franchise and license revenue percentages are as a percentage of franchise and license revenue. All other percentages are as a percentage of total operating revenue.
Statistical Data Quarter Ended Two Quarters Ended
June 25, 2025 June 26, 2024 June 25, 2025 June 26, 2024
(Dollars in thousands)
Denny's
Company average unit sales $789 $774 $1,547 $1,517
Franchise average unit sales $479 $473 $930 $930
Company equivalent units (a) 61 64 61 64
Franchise equivalent units (a) 1,426 1,485 1,430 1,493
Company same-store sales decrease vs. prior year (b)(c) 0.0% (2.6)% (0.4)% (2.8)%
Domestic franchise same-store sales decrease vs. prior year (b)(c) (1.4)% (0.4)% (2.3)% (0.8)%
Keke's
Company average unit sales $433 $447 $845 $902
Franchise average unit sales $484 $457 $996 $929
Company equivalent units (a) 23 11 21 10
Franchise equivalent units (a) 48 51 47 50
Company same-store sales increase (decrease) vs. prior year (b)(c) 3.4% (4.4)% 2.0% (2.7)%
Franchise same-store sales increase (decrease) vs. prior year (b)(c) 4.2% (4.6)% 4.2% (4.3)%
(a)Equivalent units are calculated as the weighted average number of units in operation during a defined time period.
(b)Same-restaurant sales include sales from company restaurants or non-consolidated franchised and licensed restaurants that were open during the comparable periods noted.
(c)Prior year amounts have not been restated for 2025 comparable units.
Unit Activity Quarter Ended Two Quarters Ended
June 25, 2025 June 26, 2024 June 25, 2025 June 26, 2024
Denny's
Company restaurants, beginning of period 61 64 61 65
Units acquired from franchisees 1 - 1 -
Units closed - - - (1)
End of period 62 64 62 64
Franchised and licensed restaurants, beginning of period 1,430 1,489 1,438 1,508
Units opened 3 3 9 8
Units acquired by Company (1) - (1) -
Units closed (10) (15) (24) (39)
End of period 1,422 1,477 1,422 1,477
Total restaurants, end of period 1,484 1,541 1,484 1,541
Quarter Ended Two Quarters Ended
June 25, 2025 June 26, 2024 June 25, 2025 June 26, 2024
Keke's
Company restaurants, beginning of period 21 11 14 8
Units opened 4 1 6 4
Units acquired from franchisees - - 5 -
Units sold to franchisees (3) (1) (3) (1)
End of period 22 11 22 11
Franchised restaurants, beginning of period 45 50 55 50
Units opened 4 - 5 -
Units purchased from Company 3 1 3 1
Units acquired by Company - - (5) -
Units closed - - (6) -
End of period 52 51 52 51
Total restaurants, end of period 74 62 74 62
Company Restaurant Operations
Company restaurant sales increased $4.0 million, or 7.4%, for the quarter ended June 25, 2025 and $5.6 million, or 5.3%, year-to-date compared to the prior year periods, primarily resulting from a Keke's 12 equivalent unit increase for the current quarter and a Keke's 11 equivalent unit increase year-to-date compared to the prior year periods and an increase in Keke's same-store sales of 3.4% for the current quarter and 2.0% year-to-date compared to the prior year periods. The increases in company restaurant sales were partially offset by a Denny's three equivalent unit decrease for the current quarter and year-to-date periods compared to the prior year periods.
Total costs of company restaurant sales as a percentage of company restaurant sales were 89.6% for the quarter ended June 25, 2025 and 91.2% year-to-date compared to 87.5% and 89.7% for the prior year periods, respectively.
Product costs as a percentage of company restaurant sales were 25.8% for the quarter ended June 25, 2025 and 26.1% year-to-date compared to 25.1% and 25.3% for the prior year periods, respectively. The current quarter and year-to-date period increases as a percentage of company restaurant sales were primarily due to higher commodity costs heavily impacted by higher egg prices, partially offset by increased pricing.
Payroll and benefits as a percentage of company restaurant sales were 37.5% for the quarter ended June 25, 2025 and 38.3% year-to-date compared to 37.7% and 38.4% for the prior year periods, respectively.
Occupancy costs as a percentage of company restaurant sales were 8.9% for the quarter ended June 25, 2025 and 9.1% year-to-date compared to 8.6% and 8.7%, respectively, for the prior year periods. The current quarter increase as a percentage of company restaurant sales was primarily due to a 0.7 percentage point increase in rent and property taxes, offset by a 0.4 percentage point decrease in general liability insurance costs resulting from favorable claims development. The year-to-date increase as a percentage of company restaurant sales was primarily due to a 0.8 percentage point increase in rent and property taxes, offset by a 0.4 percentage point decrease in general liability insurance costs resulting from favorable claims development.
Other operating expenses consist of the following amounts and percentages of company restaurant sales:
Quarter Ended Two Quarters Ended
June 25, 2025 June 26, 2024 June 25, 2025 June 26, 2024
(In thousands)
Utilities $ 1,829 3.1 % $ 1,695 3.1 % $ 3,523 3.1 % $ 3,350 3.1 %
Repairs and maintenance 847 1.5 % 1,008 1.9 % 1,683 1.5 % 2,013 1.9 %
Marketing 2,386 4.1 % 1,876 3.5 % 4,414 3.9 % 3,480 3.3 %
Legal settlements 391 0.7 % 208 0.4 % 796 0.7 % 1,657 1.6 %
Pre-opening costs 645 1.1 % 191 0.4 % 1,354 1.2 % 557 0.5 %
Other direct costs 4,111 7.0 % 3,804 7.0 % 8,098 7.2 % 7,485 7.0 %
Other operating expenses $ 10,209 17.5 % $ 8,782 16.2 % $ 19,868 17.7 % $ 18,542 17.4 %
The current quarter and year-to-date period increases in other operating expenses were primarily due to increased marketing and higher pre-opening costs at Keke's related to new unit openings. The year-to-date period also benefited from favorable legal settlement costs related to unfavorable developments in certain claims during the prior period.
Franchise Operations
Franchise and license revenue and costs of franchise and license revenue consisted of the following amounts and percentages of franchise and license revenue for the periods indicated:
Quarter Ended Two Quarters Ended
June 25, 2025 June 26, 2024 June 25, 2025 June 26, 2024
(In thousands)
Royalties $ 29,091 49.1 % $ 30,014 48.7 % $ 56,928 48.7 % $ 59,320 49.7 %
Advertising revenue 19,490 32.9 % 20,788 33.8 % 38,563 33.0 % 38,926 32.7 %
Initial and other fees 2,804 4.7 % 2,448 4.0 % 5,678 4.9 % 4,264 3.6 %
Occupancy revenue 7,877 13.3 % 8,329 13.5 % 15,830 13.5 % 16,701 14.0 %
Franchise and license revenue
$ 59,262 100.0 % $ 61,579 100.0 % $ 116,999 100.0 % $ 119,211 100.0 %
Advertising costs $ 19,490 32.9 % $ 20,788 33.8 % $ 38,563 33.0 % $ 38,926 32.7 %
Occupancy costs 4,872 8.2 % 5,094 8.3 % 9,805 8.4 % 10,226 8.6 %
Other direct franchise costs 4,855 8.2 % 7,546 12.3 % 9,203 7.9 % 11,650 9.8 %
Costs of franchise and license revenue
$ 29,217 49.3 % $ 33,428 54.3 % $ 57,571 49.2 % $ 60,802 51.0 %
Franchise and license revenue decreased $2.3 million, or 3.8%, for the quarter ended June 25, 2025 and $2.2 million, or 1.9%, year-to-date compared to the prior year periods. Royalties decreased $0.9 million, or 3.1%, and $2.4 million, or 4.0%, for the current quarter and year-to-date periods, respectively, compared to the prior year periods. The decreases in royalties primarily resulted from a decrease of 59 Denny's franchise equivalent units for the current quarter and 63 franchise equivalent units year-to-date compared to the prior year periods, and a decrease in Denny's domestic franchise same-store sales of 1.4% for the current quarter and 2.3% year-to-date as compared to the prior year periods. The decreases also include Keke's franchise equivalent unit decreases of three units for the current quarter and year-to-date periods, respectively. These decreases were partially offset by an increase in Keke's franchise same-store sales of 4.2% for the current quarter and 4.2% year-to-date as compared to the prior year periods.
Advertising revenue decreased $1.3 million, or 6.2%, for the quarter ended June 25, 2025 and $0.4 million, or 0.9%, year-to-date compared to the prior year periods. The decrease in advertising revenue for the current quarter and year-to-date periods primarily resulted from the decrease in Denny's franchise equivalent units and same-store sales noted above. In addition, local advertising co-op contributions decreased by $0.7 million and increased by $1.1 million for the current quarter and year-to-date periods, respectively.
Initial and other fees increased $0.4 million, or 14.6%, for the quarter ended June 25, 2025 and $1.4 million, or 33.2%, year-to-date compared to the prior year periods. These increases in initial and other fees were driven by increased revenue of $0.2
million and $0.5 million from sales of equipment to franchisees for the current quarter and year-to-date periods, respectively. The year-to-date period ended June 25, 2025 also included the collection of a $0.6 million early franchise termination fee.
Occupancy revenue decreased $0.5 million, or 5.4%, for the current quarter and $0.9 million, or 5.2%, year-to-date compared to the prior year periods, primarily due to lease terminations and modifications.
Costs of franchise and license revenue decreased $4.2 million, or 12.6%, for the quarter ended June 25, 2025 and $3.2 million, or 5.3%, year-to-date compared to the prior year periods. Advertising costs decreased $1.3 million, or 6.2%, for the current quarter and decreased $0.4 million, or 0.9%, year-to-date, which corresponds to the related advertising revenue decreases for the current quarter and year-to-date periods noted above. Occupancy costs decreased $0.2 million, or 4.3%, for the current quarter and $0.4 million, or 4.1%, year-to-date compared to the prior year periods, primarily due to lease terminations. Other direct franchise costs decreased $2.7 million, or 35.7%, for the current quarter and $2.4 million, or 21.0%, year-to-date compared to the prior year periods. The decrease in other direct franchise costs for the current quarter and the year-to-date period was primarily due to a $2.6 million distribution to franchisees related to a review of advertising costs in the prior year periods. As a result of the changes in franchise and license revenue discussed above, costs of franchise and license revenue decreased to 49.3% and 49.2% of franchise and license revenue for the quarter and year-to-date periods ended June 25, 2025, respectively, from 54.3% and 51.0% for the prior year periods, respectively.
Other Operating Costs and Expenses
Other operating costs and expenses such as general and administrative expenses and depreciation and amortization expense relate to both company and franchise operations.
General and administrative expensesconsisted of the following:
Quarter Ended Two Quarters Ended
June 25, 2025 June 26, 2024 June 25, 2025 June 26, 2024
(In thousands)
Corporate administrative expenses
$ 15,226 $ 15,776 $ 30,470 $ 30,968
Share-based compensation 2,982 2,624 5,767 5,400
Incentive compensation
2,759 1,898 5,016 4,421
Deferred compensation valuation adjustments
478 188 222 919
Total general and administrative expenses
$ 21,445 $ 20,486 $ 41,475 $ 41,708
Total general and administrative expenses increased $1.0 million, or 4.7%, for the quarter ended June 25, 2025 and decreased $0.2 million, or 0.6%, year-to-date compared to the prior year periods.
Corporate administrative expenses decreased $0.6 million for the quarter and $0.5 million for the year-to-date period, primarily due to the elimination of positions during each period. Share-based compensation increased by $0.4 million for the quarter and the year-to-date period. The increases for both periods were primarily due to plan performance adjustments in the prior year. Incentive compensation increased by $0.9 million for the quarter and $0.6 million for the year-to-date period. The changes in incentive compensation for both periods primarily resulted from our performance against plan metrics. Changes in deferred compensation valuation adjustments have offsetting gains or losses on the underlying nonqualified deferred plan investments included as a component of other nonoperating income, net, for the corresponding periods.
Depreciation and amortizationconsisted of the following:
Quarter Ended Two Quarters Ended
June 25, 2025 June 26, 2024 June 25, 2025 June 26, 2024
(In thousands)
Depreciation of property and equipment
$ 3,545 $ 2,823 $ 6,815 $ 5,478
Amortization of finance lease ROU assets 299 348 607 700
Amortization of intangible and other assets
534 564 1,063 1,138
Total depreciation and amortization expense
$ 4,378 $ 3,735 $ 8,485 $ 7,316
The increases in total depreciation and amortization expense for the quarter and year-to-date periods ended June 25, 2025 were primarily due to new Keke's units.
Operating (gains), losses and other charges, netconsisted of the following:
Quarter Ended Two Quarters Ended
June 25, 2025 June 26, 2024 June 25, 2025 June 26, 2024
(In thousands)
(Gains) losses on sales of assets and other, net $ 425 $ 526 $ (1,317) $ (94)
Impairment charges 49 619 3,265 714
Restructuring charges and exit costs
1,226 420 3,663 618
Operating (gains), losses and other charges, net
$ 1,700 $ 1,565 $ 5,611 $ 1,238
(Gains) losses on sales of assets and other, net for the quarter and year-to-date periods ended June 25, 2025 and June 26, 2024 were primarily related to the sales of real estate and restaurants.
We recorded impairment charges of less than $0.1 million and $3.3 million for the quarter and year-to-date periods ended June 25, 2025, primarily related to closed franchise restaurants and the relocation of certain support functions.
Restructuring charges and exit costs consisted of the following:
Quarter Ended Two Quarters Ended
June 25, 2025 June 26, 2024 June 25, 2025 June 26, 2024
(In thousands)
Exit costs $ 9 $ 49 $ 49 $ 91
Severance and other restructuring charges
1,217 371 3,614 527
Total restructuring and exit costs
$ 1,226 $ 420 $ 3,663 $ 618
Severance and other restructuring charges for the quarter and year-to-date periods ended June 25, 2025 primarily consisted of severance costs resulting from the elimination of 26 positions during the quarter and 66 positions year-to-date, as part of a cost savings initiative.
Operating income was $8.6 million for the quarter ended June 25, 2025 and $13.8 million year-to-date compared to $9.1 million and $19.1 million, respectively, for the prior year periods.
Interest expense, netconsisted of the following:
Quarter Ended Two Quarters Ended
June 25, 2025 June 26, 2024 June 25, 2025 June 26, 2024
(In thousands)
Interest on credit facility $ 4,666 $ 5,167 $ 9,213 $ 10,224
Interest income on interest rate swaps (840) (1,536) (1,915) (3,044)
Interest on finance lease liabilities 463 497 933 1,006
Letters of credit and other fees
102 179 214 311
Interest income
(56) (61) (100) (132)
Total cash interest, net 4,335 4,246 8,345 8,365
Amortization of deferred financing costs
159 159 318 318
Amortization of interest rate swap losses 879 167 1,138 309
Interest accretion on other liabilities
1 1 1 1
Total interest expense, net
$ 5,374 $ 4,573 $ 9,802 $ 8,993
Interest expense, net increased $0.8 million for both the quarter and year-to-date periods ended June 25, 2025, respectively, primarily due to increases in amortization of interest rate swap losses. We expect to amortize $4.2 million from accumulated other comprehensive loss, net to interest expense, net related to dedesignated interest rate swaps during the next 12 months.
Other nonoperating income, net increased $0.3 million and decreased $0.5 million for the quarter and year-to-date periods ended June 25, 2025, respectively, compared to the prior year periods. These changes were primarily due to market value changes of deferred compensation plan investments.
Provision for income taxeswas $1.3 million for the quarter ended June 25, 2025 and $1.6 million year-to-date compared to $1.2 million and $2.7 million, respectively, for the prior year periods. The effective tax rate was 34.3% for the current quarter and 36.2% year-to-date, compared to 25.1% and 24.8% for the prior year periods, respectively. The effective income tax rate for the quarter and year-to-date periods ended June 25, 2025 included discrete items relating to share-based compensation of 9.0% and 11.5%, respectively. We did not have similar discrete items for the quarter and year-to-date periods ended June 26, 2024. We expect the 2025 fiscal year effective tax rate to be between 23% and 27%. The annual effective tax rate cannot be determined until the end of the fiscal year; therefore, the actual rate could differ from our current estimates.
On July 4, 2025, H.R. 1, the budget bill known as the One Big Beautiful Bill Act ("OBBBA") was enacted. The OBBBA includes significant provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, modifications to the international tax framework, and the restoration of favorable tax treatment for certain business provisions. The legislation has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. We are currently assessing its impact on our consolidated financial statements.
Net income was $2.5 million for the quarter ended June 25, 2025 and $2.8 million year-to-date compared to $3.6 million and $8.3 million for the prior year periods, respectively.
Liquidity and Capital Resources
Our primary sources of liquidity and capital resources are cash generated from operations and borrowings under our credit facility (as described below). Principal uses of cash are operating expenses, capital expenditures, and the repurchase of shares of our common stock.
The following table presents a summary of our sources and uses of cash and cash equivalents for the periods indicated:
Two Quarters Ended
June 25, 2025 June 26, 2024
(In thousands)
Net cash provided by operating activities $ 14,368 $ 14,396
Net cash used in investing activities (17,536) (10,349)
Net cash provided by (used in) financing activities 2,636 (7,774)
Decrease in cash and cash equivalents $ (532) $ (3,727)
Net cash flows provided by operating activities were $14.4 million for the year-to-date period ended June 25, 2025 and the year-to-date period ended June 26, 2024, respectively. We believe that our estimated cash flows from operations, combined with our capacity for additional borrowings under our credit facility and cash on hand, will enable us to meet our anticipated cash requirements and fund capital expenditures over the next 12 months.
Net cash flows used in investing activities were $17.5 million for the year-to-date period ended June 25, 2025. These cash flows included capital expenditures of $16.4 million and acquisitions of restaurants of $4.1 million, partially offset by net proceeds from asset sales of $1.9 million and investment sales of $1.1 million. Net cash flows used in investing activities were $10.3 million for the year-to-date period ended June 26, 2024. These cash flows included capital expenditures of $9.9 million and investment purchases of $1.5 million, partially offset by net proceeds from asset sales of $1.0 million.
Our principal capital requirements have been largely associated with the following:
Two Quarters Ended
June 25, 2025 June 26, 2024
(In thousands)
Facilities $ 3,365 $ 2,182
New construction 9,044 5,427
Remodeling 3,128 510
Information technology 297 861
Other 550 968
Capital expenditures $ 16,384 $ 9,948
Net cash flows provided by financing activities were $2.6 million for the year-to-date period ended June 25, 2025, including net long-term debt borrowings of $6.7 million, partially offset by cash payments of tax withholding on share-based compensation of $1.0 million, payments for stock repurchases of $1.7 million and net bank overdraft payments of $1.4 million. Net cash flows used in financing activities were $7.8 million for the year-to-date period ended June 26, 2024, which included net long-term debt borrowings of $1.3 million and net bank overdraft borrowings of $2.2 million, partially offset by cash payments for stock repurchases of $9.4 million and payments of tax withholding on share-based compensation of $1.9 million.
Our working capital deficit was $55.7 million at June 25, 2025 compared to $55.6 million at December 25, 2024. We are able to operate with a substantial working capital deficit because (1) restaurant operations and most food service operations are conducted primarily on a cash (and cash equivalent) basis with a low level of accounts receivable, (2) rapid turnover allows for a limited investment in inventories, and (3) accounts payable for food, beverages and supplies usually becomes due after the receipt of cash from the related sales.
Credit Facility
The Company and certain of its subsidiaries have a credit facility consisting of a five-year $400 million senior secured revolver (with a $25 million letter of credit sublimit). The credit facility includes an accordion feature that would allow us to increase the size of the facility to $450 million. Borrowings bear a tiered interest rate, which is based on the Company's consolidated leverage ratio. The maturity date for the credit facility is August 26, 2026.
The credit facility is available for working capital, capital expenditures and other general corporate purposes. The credit facility is guaranteed by the Company and its material subsidiaries and is secured by assets of the Company and its subsidiaries, including the stock of its subsidiaries (other than its insurance captive subsidiary). It includes negative covenants that are usual for facilities and transactions of this type. The credit facility also includes certain financial covenants, including a maximum consolidated leverage ratio of 4.0 times and a minimum consolidated fixed charge coverage ratio of 1.5 times. As of June 25, 2025, our consolidated leverage ratio was 3.98 times and our consolidated fixed charge coverage ratio was 2.05 times. We were in compliance with all financial covenants as of June 25, 2025, and we expect to remain in compliance throughout the remainder of 2025.
As of June 25, 2025, we had outstanding revolver loans of $268.6 million and outstanding letters of credit under the credit facility of $15.9 million. These balances resulted in unused commitments of $115.5 million as of June 25, 2025 under the credit facility.
As of June 25, 2025, borrowings under the credit facility bore interest at a rate of Adjusted Daily Simple SOFR plus 2.25%. Letters of credit under the credit facility bore interest at a rate of 2.38%. The commitment fee, paid on the unused portion of the credit facility, was set to 0.35%.
Prior to considering the impact of our interest rate swaps, described below, the weighted-average interest rate on outstanding revolver loans was 6.67% and 6.98% as of June 25, 2025 and December 25, 2024, respectively. Taking into consideration our interest rate swaps that are designated as cash flow hedges, the weighted-average interest rate of outstanding revolver loans was 5.36% and 5.01% as of June 25, 2025 and December 25, 2024, respectively.
Technology Transformation Initiatives
The Company has committed to investing approximately $4 million toward a new cloud-based restaurant technology platform in domestic franchise restaurants, which will lay the foundation for future technology initiatives to further enhance the guest experience. The rollout is in progress and is expected to continue through 2026.
Critical Accounting Policies and Estimates
For information regarding our Critical Accounting Policies and Estimates, see the "Critical Accounting Policies and Estimates" section in Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the fiscal year ended December 25, 2024.
Implementation of New Accounting Standards
Information regarding the implementation of new accounting standards is incorporated by reference from Note 2 to our unaudited consolidated financial statements set forth in Part I, Item 1 of this report.
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