Advantica Restaurant Group, Inc. (OTCBB: DINE) today reported that systemwide sales from continuing operations, which include sales from company-owned, franchised and licensed restaurants, increased by approximately 4 percent to $553 million for the first quarter ended March 28, 2001 compared with $533 million in the prior year quarter. This increase is attributable to a modest gain in same-store sales as well as to continued growth in the Denny’s brand which added a net 40 restaurants since the end of the same period last year. During the first quarter, Denny‘s same-store sales for company-owned restaurants increased 2.0 percent while franchised units increased 0.6 percent.

Commenting on the Company’s results for the first quarter, Nelson J. Marchioli, Advantica’s new president and chief executive officer, said, “Since I began my role with Denny’s in February, I have traveled extensively in the field visiting our restaurants. I have spent that time listening to our restaurant managers and observing the challenges they face every day in an increasingly competitive market. While Denny’s maintained its positive sales momentum during the quarter, we continue to operate in a challenging economic environment which includes the impact of rising utility and labor costs. In the long run, we recognize that improved profitability will depend on our ability to increase customer counts. Improving the customer’s overall experience is our top priority, and that must be accomplished one restaurant at a time, one customer at a time, every time.”

Regarding Denny’s strategic direction to move to a more franchise-based operation, Marchioli said, “During the first quarter we sold 28 company restaurants to franchisees in addition to the 148 refranchising transactions completed in 2000. Given the tightened financial markets, however, we do not expect to maintain this pace for the balance of this year. The number of refranchising transactions will also be impacted by our continuing assessment of each restaurant’s potential profitability and performance to ensure maximum shareholder value.

“Following years of limited capital investment, Denny’s initiated a remodeling program in 1999. We continue to fine tune our remodeling efforts to ensure the cost effectiveness of our investment as well as to maximize its impact on the customer’s experience. We expect capital expenditures and repairs and maintenance spending to grow over the balance of 2001 which is essential to strengthening the brand’s position,” Marchioli concluded.

Advantica continues to market for divestiture its COCO‘s and Carrows concepts. On January 8, 2001, Advantica paid $70 million to the lenders under the Coco’s/Carrows credit facility in full and complete satisfaction of Advantica’s guarantee of such facility. As a result of its satisfaction of obligations under its guarantee, Advantica was subrogated to the rights and collateral of the previous lenders. On February 14, 2001, FrD Acquisition Co., the parent of Coco’s and Carrows, filed a voluntary Chapter 11 bankruptcy petition to facilitate the divestiture of Coco’s and Carrows.

At March 28, 2001, Advantica’s $200 million credit facility had outstanding revolver advances of $75 million compared with no outstanding balances at year end 2000. The increase in revolver advances is primarily a result of Advantica’s satisfaction of the Coco’s/Carrows credit facility guarantee. Outstanding letters of credit decreased from $65.3 million at year end to $58.7 million, leaving a net availability of $66.3 million at the end of the first quarter.

First Quarter Consolidated Operations

The Company reported a loss from continuing operations for the quarter of $21.2 million, or $0.53 per common share, compared with last year’s first quarter loss of $37.3 million, or $0.93 per share. This year’s first quarter results included no restructuring or impairment charges, while the loss in the same period last year included a restructuring charge of $7.2 million. This year’s first quarter results include amortization of excess reorganization value of approximately $7.6 million compared with $10.7 million in last year’s quarter. This amortization is a noncash charge related to the implementation of fresh start reporting required upon the Company’s emergence from bankruptcy in January 1998. The amortization will discontinue in January 2003.

Due to the significant noncash depreciation and amortization charges related to fresh start reporting, the Company reports EBITDA as a measure of financial performance.

First Quarter Concept Results

Denny’s revenue decreased to $258 million versus $284 million in the prior year’s first quarter as a result of a 117-unit reduction in company-owned stores due to its refranchising program. Revenue benefited from a 2.0 percent increase in same-store sales. Denny’s EBITDA increased to $29.2 million from $28.9 million in the prior year quarter. The modest increase in EBITDA was attributable to increased income from franchised operations and reduced general and administrative expenses, partially offset by reduced company restaurant margins and a lower company restaurant base. Higher operating costs as a percentage of sales were attributable to increased store labor, repairs and maintenance and utility expenses. Franchise and licensing revenue increased approximately 35 percent to $21.6 million compared with $16.0 million in the prior year quarter, while franchise operating income increased to $11.8 million from $8.8 million in last year’s quarter. The increase in both franchise revenue and operating income is attributable to a 159-unit increase in franchised units compared to the prior year quarter. During the quarter, the Denny’s system opened 11 new restaurants and closed 15, resulting in 1,818 restaurants at the end of the first quarter.

During the first quarter, revenue at FRD declined to $89.4 million from $94.7 million in the prior year quarter, resulting primarily from decreases in same-store sales at Coco’s and Carrows. EBITDA at FRD decreased to $6.1 million versus $8.9 million in the prior year quarter. In addition to the sales decreases, EBITDA at Coco’s and Carrows was negatively impacted by higher utility expenses and increased wage rates. Coco’s first quarter EBITDA declined to $3.6 million from $5.5 million in the prior year quarter. Carrows’ first quarter EBITDA decreased to $2.5 million from $3.4 million in the prior year quarter.

Further Information

Advantica Restaurant Group, Inc. is one of the largest restaurant companies in the United States, operating over 2,400 moderately-priced restaurants in the mid-scale dining segment. Advantica owns and operates the Denny’s, Coco’s and Carrows restaurant brands. For further information on the Company, including news releases, links to SEC filings and other financial information, please visit Advantica’s website at www.advantica-dine.com.

Certain matters discussed in this release constitute forward looking statements and involve risks, uncertainties, and other factors that may cause the actual performance of Advantica Restaurant Group, Inc., its subsidiaries and underlying concepts to be materially different from the performance indicated or implied by such statements. Words such as “expects,” “anticipates,” “believes,” “projects,” “intends,” “plans” and “hopes,” and variations of such words and similar expressions are intended to identify such forward looking statements. Factors that could cause actual performance to differ materially from the performance indicated by such statements include, among others: the competitive pressures from within the restaurant industry; the level of success of the Company’s operating initiatives and advertising and promotional efforts, including the initiatives and efforts specifically mentioned above; adverse publicity; changes in business strategy or development plans; terms and availability of capital; regional weather conditions; overall changes in the general economy, particularly at the retail level; and other factors from time to time set forth in the Company’s SEC reports, including but not limited to the discussion in Management’s Discussion and Analysis in the Company’s Annual Report on Form 10-K for the year ended December 27, 2000 (and in the Company’s subsequent quarterly reports on Form 10-Q).

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                   ADVANTICA RESTAURANT GROUP, INC.
Statements of Consolidated Operations
(Unaudited)

Quarter Quarter
Ended Ended
(In thousands, except per share 3/28/01 3/29/00
amounts)
———- ———-
Revenue:
Company restaurant sales $ 236,787 $ 267,627
Franchise and licensing revenue 21,564 16,033

———- ———-
Total operating revenue 258,351 283,660
———- ———-
Cost of company restaurant sales:
Product costs 59,672 68,633
Payroll and benefits 97,139 109,102
Occupancy 15,069 15,941
Other operating expenses 35,875 39,364
———- ———-
Total costs of company
restaurant sales 207,755 233,040
Franchise restaurant costs 9,723 7,189
General and administrative expenses 16,030 19,171
Amortization of excess
reorganization value 7,574 10,731
Depreciation and other amortization 23,837 27,148
Restructuring charges — 7,248
Gains on refranchising and other,
net (4,400) (4,678)
———- ———–
Total operating costs and
expenses 260,519 299,849
———- ———–
Operating income (loss) (2,168) (16,189)
———– ———–
Other expenses:
Interest expense, net 18,460 21,485
Other nonoperating expenses
(income), net (7) (739)
———– ———–
Total other expenses, net 18,453 20,746
———– ———–
Income (loss) before income taxes (20,621) (36,935)
Provision for income taxes 533 360
———— ———-
Income (loss) from continuing (21,154) (37,295)
operations
Income (loss) from discontinued — (9,180)
operations
———— ———-
Income (loss) before extraordinary (21,154) (46,475)
gain
Extraordinary gain 7,778 —
———— ———-
Net income (loss) applicable to
common shareholders $ (13,376) $ (46,475)
============ ==========

Basic and diluted income (loss) per
share:
Income (loss) from continuing
operations $ (0.53) $ (0.93)
Income (loss) from discontinued
operations — (0.23)
———— ———-

Income (loss) before extraordinary
gain (0.53) (1.16)
Extraordinary gain 0.20 —
———— ———-
Net income (loss) $ (0.33) $ (1.16)
============ ==========

Average outstanding and equivalent
shares 40,117 40,063
============ ==========

ADVANTICA RESTAURANT GROUP, INC.
Consolidated Balance Sheets
(Unaudited)

(In thousands) 3/28/01 12/27/00
———- ———-

ASSETS
Current Assets
Cash and cash equivalents $ 4,090 $ 27,260
Other 33,997 27,269
———- ———–
38,087 54,529

Property and equipment, net 404,261 425,327
Reorganization value in excess
of amounts allocable to
identifiable assets, net 50,603 61,177
Other assets 193,566 202,400
———- ———–
Total Assets $ 686,517 $ 743,433
========== ===========

LIABILITIES AND SHAREHOLDERS’
EQUITY
Current Liabilities
Current maturities of notes
and debentures $ 884 $ 1,086
Current maturities of capital
lease obligations 5,295 10,510
Net liabilities of discontinued
operations 12,580 69,400
Accounts payable and other
accrued liabilities 165,767 213,560
———- ———–
184,526 294,556
———- ———–
Long-Term Liabilities
Notes and debentures, less
current maturities 628,125 553,730
Capital lease obligations,
less current 38,665 39,980
maturities
Other 94,808 101,428
———- ———–
761,598 695,138
———- ———–
Total Liabilities 946,124 989,694
———- ———–
Shareholders’ Equity (259,607) (246,261)
———- ———–
Total Liabilities and
Shareholders’ Equity $ 686,517 $ 743,433
========== ===========

ADVANTICA RESTAURANT GROUP, INC.
Results by Operating Entity
(Unaudited)

Quarter Ended
—————–
(In millions)
3/28/01 3/29/00
——- ——-

Continuing Operations
———————

Denny’s:
Revene $ 258.4 $ 283.7
EBITDA (a) $ 29.2 $ 28.9
Gains on refranchising and
other, net $ 4.4 $ 4.7

Discontinued Operations(b)
————————-

Coco’s:
Revenue $ 51.3 $ 55.6
EBITDA (a) $ 3.6 $ 5.5

Carrows:
Revenue $ 38.1 $ 39.1
EBITDA (a) $ 2.5 $ 3.4

(a) EBITDA is defined by the Company as operating income before
depreciation, amortization and charges for restructuring and
impairment.
(b) Reclassified as discontinued operations in anticipation of the
disposition of Coco’s and Carrows.

ADVANTICA RESTAURANT GROUP, INC.
Statistical Data by Operating Entity
(Unaudited)

Quarter
Same-Store Data (Company-owned) Ended
(increase/(decrease) vs. prior year) 3/28/01
———-

Same-Store
Sales
———-

Denny’s 2.0%
Coco’s (6.6%)
Carrows (0.6%)

Guest Check
Average
———–

Denny’s 4.0%
Coco’s 1.7%
Carrows 4.5%

Quarter Quarter
Average Unit Sales Ended Ended Increase/
(in thousands) 3/28/01 3/29/00 (Decrease)
——— ——— ———-

Denny’s
Company-owned $ 331.8 $ 323.0 2.7%
Franchised $ 285.9 $ 276.5 3.4%

Coco’s
Company-owned $ 350.3 $ 374.1 (6.4%)
Franchised $ 329.2 $ 338.7 (2.8%)

Carrows
Company-owned $ 329.1 $ 327.3 0.5%
Franchised $ 250.4 $ 263.3 (4.9%)

ADVANTICA RESTAURANT GROUP, INC.
Statistical Data by Operating Entity
(Unaudited)

Restaurant Units 3/28/01 3/29/00
——- ——-

Denny’s
Company-owned 705 822
Franchised 1,097 938
Licensed 16 18
——- ——-
1,818 1,778

Discontinued Operations:
Coco’s
Company-owned 143 146
Franchised 36 34
Licensed 303 302
——- ——-
482 482
Carrows
Company-owned 114 117
Franchised 28 28
——- ——-
142 145

——- ——-
2,442 2,405
======= =======