Company Name: Denny's Corp.
Public Availability Date: March 22, 2007

Document Sections:

INQUIRY LETTER
APPENDIX 1
APPENDIX 2
INQUIRY LETTER
STAFF REPLY LETTER

[INQUIRY LETTER]

January 26, 2007

VIA E-MAIL AND OVERNIGHT DELIVERY

U.S. Securities and Exchange Commission
Division of Corporation Finance
Office of the Chief Counsel
100 F Street, N.E.
Washington, D.C. 20549

Re: Shareholder Proposal by People for the Ethical Treatment of Animals

Ladies and Gentlemen:

Denny's Corporation, a Delaware corporation (the "Company"), has received a shareholder proposal dated December 13, 2006 (the "Proposal", attached as Appendix A), from People for the Ethical Treatment of Animals (the "Proponent" or "PETA") for inclusion in the Company's proxy statement for its 2007 annual meeting of shareholders (the "2007 Annual Meeting"). The Company believes it properly may omit the Proposal from its proxy materials for the 2007 Annual Meeting for the reasons discussed below. The Company respectfully requests confirmation that the staff (the "Staff") of the Securities and Exchange Commission (the "Commission") will not recommend enforcement action if the Company excludes the Proposal from its proxy materials in reliance upon Rule 14a-8(i)(10) promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange Act").

The Company intends to mail to shareholders, on or about April 20, 2007, its definitive proxy statement and form of proxy in conjunction with its 2007 Annual Meeting. That meeting currently is scheduled to be held on May 23, 2007. The Company intends to file definitive copies of its proxy materials with the Commission at the same time the proxy materials are first mailed to shareholders.

Pursuant to Rule 14a-8(j) promulgated under the Exchange Act, enclosed on the Company's behalf are six copies of each of (i) the Proposal and (ii) this letter, which sets forth the grounds on which the Company proposes to omit the Proposal from its proxy materials. Also enclosed are an additional copy of this letter, which we request to have file-stamped and returned in the enclosed postage-prepaid envelope, and copies of correspondence related to the Proposal. As required by Rule 14a-8(j), a copy of this letter also is being sent to the Proponent as notice of the Company's intention to omit the Proposal from the Company's definitive proxy materials.

I. The Proposal and Background

On December 6, 2004, the Company received a proposal from PETA which requested that the Company's board of directors "issue a report to shareholders by October 2005, prepared at reasonable cost and omitting proprietary information, on the feasibility of Denny's requiring its chicken suppliers to phase in controlled-atmosphere killing..." This particular stockholder proposal was sent to several companies in the restaurant industry, including McDonald's Corporation. McDonald's agreed to prepare the report on controlled-atmosphere killing ("CAK") requested by PETA (the "McDonald's Report", attached as Appendix B) in exchange for PETA's withdrawal of its proposal. By letter dated January 21, 2005 (attached as Appendix C), the Company agreed to send copies of the McDonald's Report to its chicken suppliers for use in improving the treatment of chickens, in return for PETA's withdrawal of its stockholder proposal. PETA subsequently withdrew its proposal to the Company. The McDonald's Report was released in June of 2005, and as agreed, the Company forwarded the report to all of its chicken suppliers. In the McDonald's Report, the Company indicated that it would conduct a follow-up assessment of CAK by the end of 2006 or sooner. To our knowledge, this follow-up assessment has not been released, but when it is released, the Company will review McDonald's follow up assessment and will forward the assessment to its chicken suppliers to assist them in their ongoing consideration of this emerging technology.

On December 21, 2005, the Company received a proposal from PETA which requested that the Company's board of directors issue interim reports to shareholders following the second, third and fourth quarters of 2006, detailing the progress made toward accelerating the implementation of CAK. By letter dated January 27, 2006 (attached as Appendix D), in return for PETA's withdrawal of its stockholder proposal, the Company agreed to review and share the findings of the update to the McDonald's Report with the chief executive officers of all of the Company's chicken suppliers.

The Proposal at issue requests that the Company's board of directors issue a report to shareholders on the feasibility of requiring its suppliers to phase in CAK, "the least cruel form of poultry slaughter available." The Proposal further requests that the report should be prepared by the end of November 2007 at a reasonable cost and should omit proprietary information.

The Company owns and operates the Denny's restaurant brand. As of December 27, 2006, the Denny's brand consisted of 1,545 restaurants, 521 of which are company-owned and operated and 1,024 of which are franchised/licensed restaurants. The Company's sales are broadly distributed across each of its dayparts (i.e., breakfast, lunch, dinner and late night); however, breakfast items account for the majority of the Company's sales. The Company's restaurants offer a variety of meat products, including beef, chicken and pork. The Company does not own or slaughter any animals that go into the restaurants' product offerings, but instead purchases meat products through independent suppliers.

II. Grounds for Exclusion

The Proposal may be excluded from the Company's proxy materials for the 2007 Annual Meeting under Rule 14a-8(i)(10) under the Exchange Act, because the essential objective of the Proposal has been substantially implemented.

The Staff has taken the position that shareholder proposals have been substantially implemented within the meaning of rule 14a-8(i)(10) when the company has implemented the essential objective of the proposal. See, e.g. PPG Industries, Inc. (January 19, 2004) (where the company had publicly issued an animal welfare policy committing the company to use alternatives to animal testing, proposal requesting that the board issue statement regarding similar issues was held excludable on basis of having been substantially implemented); Xcel Energy, Inc. (February 17, 2004) (where proposal requesting an assessment and report regarding reduction of emissions, which had already been initiated by the company, was held excludable on the basis of having been substantially implemented); and The Gap, Inc. (March 16, 2001) (proposal that requested a report on child labor practices of the company's vendors was held excludable because the company had already established a code of vendor conduct, monitored vendor compliance and published the related information and stated its willingness to discuss the issues raised by the proposal with interested shareholders). Further, the exclusion under Rule 14a-8(i)(10) is "designed to avoid the possibility of shareholders having to consider matters which have already been favorably acted upon by the management..." Exchange Act Release No. 34-12598 (July 7, 1976). We believe that the Company has satisfied the substantial implementation test of Rule 14a-8(i)(10) for the reasons discussed below.

It is evident from the supporting statement contained in the Proposal that the essential objective of the Proposal is for the Company to urge its suppliers to implement CAK or, at the least, to urge its suppliers to evaluate the feasibility of CAK. The proposals that the Company received from PETA in 2004 and 2005 also had the same objective. That the Company is being asked to issue a feasibility report is superfluous to the underlying objective of the Company influencing its suppliers and eventually requiring them to implement CAK. As stated in its letter to PETA dated January 27, 2006, the Company will (and does) assist its suppliers in their ongoing consideration of CAK. The Company's management is committed to monitoring CAK technology developments and to reviewing research reports published by reputable scientific organizations and industry leaders in this regard. To this end, the Company has discussed and continues to discuss CAK and the humane treatment of chickens with its suppliers. Subsequent to sharing the McDonald's Report with its suppliers, the Company has provided them various trade reports on CAK supplier programs.

The Proposal requests the Company to issue a report on the feasibility requiring its chicken suppliers to phase in controlled-atmosphere killing and the Company does evaluate the feasibility of requiring its chicken suppliers to implement CAK. The Company has had a long-standing policy with respect to the humane treatment of animals and of working with its suppliers to ensure humane animal handling and care. In 2004, the Company formed an animal welfare task force. The Company also supports the animal welfare standards as developed by the Food Marketing Institute and the National Council of Chain Restaurants. The Company is continually working with its suppliers to ensure that the newest slaughter procedures are thoroughly tested and scientifically evaluated and, if satisfactory to the Company and its suppliers, implemented by the suppliers. Certain of the Company's suppliers have been and continue to evaluate CAK as a slaughter technique and the Company is committed to continuing to stay abreast of CAK technology. These evaluations consider a number of factors, including: animal welfare; scientific research and studies; production methods used commercially both in the U.S. and internationally; food safety and product quality; the safety of humans involved in the slaughter process; technical difficulties in operating equipment and procedures; environmental factors and expected costs. However, we are not in a position to recommend implementation of a new slaughter technique until both the Company and its suppliers are satisfied that such technique offers recognizable benefitseconomically and with regard to the humane treatment of animals. It should be noted that the McDonald's Report itself draws no conclusion regarding the relative humaneness of CAK, but instead concludes that it would be "premature to require adoption of what is still an emerging technology." In addition, there is currently no chicken supplier that utilizes CAK that can provide portion-controlled, sliced chicken product to meet the Company's specifications. Nevertheless, as more studies are conducted and new procedures become available, the Company, together with its suppliers, will continue to consider and discuss the feasibility of different slaughter techniquesincluding controlled atmosphere killing.

Further to the point that the Proposal has been substantially implemented is the fact that PETA withdrew its 2004 shareholder proposal in response to the Company's agreement to review and send copies of the McDonald's Report (upon its completion) to its chicken suppliers. Then in 2006, PETA withdrew its 2005 shareholder proposal in response to the Company's agreement to review the update to the McDonald's Report and share the findings (and the findings of the original McDonald's Report) with the CEOs of all of the Company's poultry suppliers in order to "advance the ongoing dialogue at the senior level regarding the prospect of ultimately moving toward the adoption and implementation of the promising technology." As the essential objective of the Proposal is to have the Company urge its suppliers to implement CAK, Denny's has already implemented that objective by engaging in dialogue for the past two years with its suppliers regarding the implementation of CAK. That the Company's efforts show substantial implementation is evidenced by PETA's withdrawal of its proposal two years in a row.

In addition, the McDonald's Report is publicly available at www.mcdonalds.com/corp/invest/gov/mcd_cr062905.html and was itself issued in response to a shareholder proposal from PETA in 2004 that is very similar to this Proposal and to the proposal received by Denny's in 2004. The McDonald's Report has become the restaurant industry's preeminent report on CAK and is often referred to by chicken suppliers and consumers and by PETA itself. McDonald's is one of the largest buyers of chicken meat in the United States, while the Company purchases a very small percentage of chicken in the U.S. market (0.007% or 480,000 lbs purchased by the Company per week out of 660,000,000 lbs of chicken produced per week). Thus, since we have accomplished the "essential objective" of the Proposal and are thoughtfully and continuously considering these issues, to prepare a new report outlining the costs and benefits of CAK would be duplicative of McDonald's industry leading efforts and would be a waste of Company resources and of little value to the Company and its stockholders. Furthermore, the Company is always willing to discuss its approach to the issues raised by the Proposal with all interested shareholders.

It should be noted that in order to make the determination that a procedure or policy has been substantially implemented, the Commission does not require that a company implement every aspect of the proposal in question. See Exchange Act Release No. 34-20091 (August 16, 1983). See also, AMR Corporation (April 17, 2000), Masco Corp. (March 29, 1999; request for reconsideration denied on April 19, 1999), Erie Indemnity Company (March 15, 1999), AutoNation, Inc. (March 5, 2003; request for reconsideration denied on March 20, 2003) and AutoNation, Inc. (February 10, 2004; request for reconsideration denied on April 1, 2004), where in each instance the Staff concurred that an issuer may omit a shareholder proposal from its proxy materials under Rule 14a-8(i)(10) where the proposal was not implemented exactly as proposed. Rather, a company need only have appropriately addressed the concerns underlying such a proposal. See, e.g. Texaco, Inc. (reconsideration request from company approved on March 28, 1991) (company's environmental policies and practices rendered the proposal moot despite some differences between the company's policies and practices and the specific request of the proposal).

We note that in Wendy's International, Inc. (February 8, 2005) and Hormel Foods Corporation (November 10, 2005) the Staff refused to allow similar CAK proposals to be excluded under Rule 14a-8(i)(10). However, in Wendy's International, the company's argument rested solely on its adoption of an animal welfare statement, and in Hormel, the company argued that it had already implemented CAK at its own turkey supply facilities but did not address its other poultry suppliers. The facts in the case at hand are distinguishable from the Wendy's and Hormel decisions because the Company has taken discrete, tangible action in evaluating, and urging all of its suppliers to evaluate, the feasibility of CAK as a new slaughter method. The Company monitors CAK developments and reviews research reports published by reputable scientific organizations and industry leaders such as McDonald's. In addition, we have directed our staff to monitor and review the follow-up assessment of CAK which McDonald's indicated that it would produce no later than the end of 2006.

We believe the Proposal has been substantially implemented by virtue of the Company's continuing active consideration of the feasibility of requiring chicken suppliers to implement CAK and related issues through our animal welfare task force, by providing the McDonald's Report to our chicken suppliers and the past and continuous dialogue with our suppliers regarding the McDonald's Report and humane treatment of chickens in general, by our continued commitment to further the dialogue regarding the adoption and implementation of CAK and by our willingness to discuss such issues with interested stockholders.

Based on the foregoing, the Company believes that it may omit the Proposal from its definitive proxy materials for its 2007 Annual Meeting, and the Company respectfully requests that the Staff not recommend any enforcement action if the Proposal is omitted from such proxy materials.

In order to facilitate transmission of the Staff's response to our request, our facsimile number is (864) 597-8950 and the Proponent's facsimile number is (757) 622-0457. Please call the undersigned at (864) 597-8672 if you have any questions or need additional information.

Thank you for your consideration.

Sincerely,

/s/

J. Scott Melton
Assistant General Counsel

[APPENDIX 1]

Appendix A

December 13, 2006

Rhonda J. Parrish, Secretary and General Counsel
Denny's Corporation
203 E. Main St.
Spartanburg, SC 29319-9966

Dear Ms. Parrish:

Attached to this letter is a shareholder proposal submitted for inclusion in the proxy statement for the 2007 annual meeting. Also enclosed is a letter from People for the Ethical Treatment of Animals' (PETA) brokerage firm, Morgan Stanley, confirming ownership of 2,200 shares of Denny's Corporation common stock acquired more than three years ago. PETA has held these shares continuously for more than three years and intends to hold them through and including the date of the 2007 annual shareholders meeting.

Please contact the undersigned if you need any further information. If Denny's Corporation will attempt to exclude any portion of this proposal under Rule 14a-8, please advise me within 14 days of your receipt of this proposal. I can be reached at 757-962-8264, or via e-mail at MattPrescott@peta.org.

Sincerely,

/s/

Matt Prescott, Manager
Factory Farming Campaigns
Enclosures: Morgan Stanley letter
2007 Shareholder Resolution

[APPENDIX 2]

Report on Controlled-Atmosphere Killing

RESOLVED, in order to advance the interests of our company and the welfare of animals killed for its restaurants, shareholders request that the board of directors issue a report to shareholders on the feasibility of requiring its suppliers to phase in "controlled-atmosphere killing" (CAK), the least cruel form of poultry slaughter available. This report should be prepared by the end of November 2007 at a reasonable cost and should omit proprietary information.

Supporting Statement

Every chicken sold by Denny's is killed using the electric immobilization process, which involves dumping and shackling live birds, shocking them in an electrified water bath, slitting their throats, and defeathering them in tanks of scalding-hot water. Electric immobilization lowers product quality and is cruel:

Birds suffer broken bones, bruising, and hemorrhaging when they are dumped and shackled, which lowers meat quality.

Birds flap about, and many miss the stun baths entirely; those who are shocked are merely immobilized and still feel pain afterward. Many birds also miss the killing blades. This means that live birds enter the scalding tanks, which decreases yield because these birds are condemned. It also increases contamination (live birds defecate in tanks). According to the U.S. Department of Agriculture (USDA) Food Safety and Inspection Service, "[P]oultry products are more likely to be adulterated if they are produced from birds [who] have not been treated humanely" (70 Fed. Reg. 56624).

Workers handle live birds at every stage. Consequently, abuse has been documented at the plants of America's top poultry suppliersincluding one where workers were found stomping on live birds, spitting tobacco in their eyes, and spray-painting their faces.

CAK is USDA-approved and improves product quality, yield, and animal welfare:

With CAK, birds are placed in chambers while they are still in their transport crates, where their oxygen is replaced with inert gasses (i.e., argon and nitrogen), efficiently and gently putting them "to sleep."

CAK improves product quality by lowering rates of broken bones, bruising, and contamination; increases shelf life by slowing down the decaying process; eliminates the possibility that conscious birds will be scalded to death (which would decrease contamination and increase yield); and eliminates the possibility of workers' abusing the animals, since birds are dead before being handled.

Every published review of CAKincluding one conducted by McDonald'sconcludes that it is superior to electric immobilization with regard to animal welfare, as do top animal welfare scientists and meat-industry advisors like Dr. Temple Grandin and Dr. Ian Duncan.

Denny's has stated that it believes that "CAK has the potential to become a viable method of poultry slaughter ... for all Denny's suppliers." Despite thisand even though CAK improves product quality and the treatment of animals and is a matter of significant social and public policyDenny's has yet to produce a report on the feasibility of requiring its suppliers to adopt the technology. Clearly, it is in the company's best interests that shareholders vote for this resolution.

[INQUIRY LETTER]

February 8, 2007

Office of the Chief Counsel
Division of Corporation Finance
U.S. Securities and Exchange Commission
100 F. St. N.W.
Washington, DC 20549

Via regular and electronic mail: cfletters@sec.gov

Re: Shareholder proposal of People for the Ethical Treatment of Animals ("PETA") for inclusion in the 2007 Proxy Statement of Denny's Corporation

Ladies and Gentlemen:

This letter is filed in response to a letter dated January 26, 2007, submitted to the SEC by Denny's Corporation ("Denny's" or "the company"). The company seeks to exclude a shareholder proposal submitted by PETA based on Rule 14a-8(i)(10) asserting that it has been substantially implemented. For the reasons that follow, PETA requests that the SEC recommend enforcement action if the proposal is omitted from the proxy materials.

I. The Proposal Has Not Been Substantially Implemented

The Resolution is very straightforward:

RESOLVED, in order to advance the interests of our company and the welfare of animals killed for its restaurants, shareholders request that the board of directors issue a report to shareholders on the feasibility of requiring its suppliers to phase in "controlled-atmosphere killing" (CAK), the least cruel form of poultry slaughter available. This report should be prepared by the end of November 2007 at a reasonable cost and should omit proprietary information.

As detailed in the company's no action letter, PETA filed a similar resolution at McDonald's for inclusion in its 2005 proxy materials. McDonald's agreed to prepare a report on CAK and the McDonald's Report was issued in mid-2005. PETA had filed substantially the same CAK resolution at Denny's in 2005 and 2006, both of which were withdrawn based on the company's agreeing to supply its poultry suppliers with copies of the McDonald's Report and an update to it, which has yet to be released.

Thus, Denny's argument is not based on the company's implementing the resolution, but rather hinges on its circulating the McDonald's Report to its poultry suppliers, and an agreement to circulate an update to that report as well. Neither circulating the McDonald's Report, nor agreeing to circulate an as-yet-unreleased-update to that Report, constitutes implementation of the proposal under review. Similarly, there is no basis for concluding that the "essential objective of the Proposal" has been implemented. (No Action Letter, p. 2.) The content of Denny's letter proves both points.

A. The Resolution Asks Denny's to Report on Information It Purports To Have Already Compiled

Denny's describes in its No Action Letter its long-standing commitment to the humane treatment of animals. Denny's makes the following claims:

The company evaluates the "feasibility of requiring its chicken suppliers to phase in controlled-atmosphere killing." (p. 3.)

The company has "a long-standing policy" aimed at "working with its suppliers to ensure humane animal handling and care." (p. 3.).

Denny's continually works with its suppliers to ensure that the "newest slaughter procedures are thoroughly tested and scientifically evaluated and, if satisfactory to the Company and its suppliers, implemented by its suppliers." (p. 3.)

"Certain of the Company's suppliers have been and continue to evaluate CAK as a slaughter technique and the Company is committed to continuing to stay abreast of CAK technology." (p. 3.)

Based on these representations, it is evident that Denny's has collected a great deal of information and data on the CAK method, information and data which is more current than the 2005 McDonald's Report. In fact Denny's admits that the McDonald's Report was inclusive "with regard to the humane treatment of animals" and that it concludes that it would be "'premature to require adoption of what is still an emerging technology.'" (p. 3.) Those statements alone beg for additional information and reporting.

Moreover, from the suppliers' point of view, getting a copy of the McDonald's Report from Denny's, is distinctly different from receiving Denny's first hand view on the feasibility of requiring its suppliers to implement CAK. The latter conveys a heightened level of concern and involvement, and telegraphs the same message to the suppliers.

Accordingly, issuing a report to shareholders on the feasibility of phasing in the CAK technology is an obvious way to impart the company's more current findings to shareholders, and is the logical endpoint to Denny's on-going commitment to the issue.

B. There Have Been Substantial Changes in the CAK Field Since Release of the McDonald's Report

Since the McDonald's Report was issued in 2005, CAK has progressed and advanced. Many slaughterhouses in the U.S. have switched to CAK. Agricultural scientists at the University of Arkansas are performing independent studies of the CAK method.1 Two companies - Dakota Provisions and Michigan Turkey Growershave developed their own patented systems for CAK. A CAK system manufactured by Praxair is being hailed by producers and industry experts like Dr. Temple Grandin as the most significant development in CAK technology in recent years.

Denny's intimation that sending its suppliers the McDonald's Report plus any update that might eventually be released, is tantamount to substantially implementing the proposal, is like saying two week old bread is substantially the same as a fresh-baked loaf. It is just not the same. By the time Denny's issues its report to shareholders as requested in the resolution, the information in the McDonald's Report will be more than two and one-half years old.

Inasmuch as Denny's claims to be of the cutting edge of this important technology, it is time for the company to serve up a fresh loaf, so to speak. Shareholders are entitled to no less.

C. The Staffs Non-Concurrence in Wendy's International and Horrael Foods Corporation Governs the Outcome of Denny's No Action Application

As Denny's correctly points out, the Staff refused to allow similar CAK proposals to be omitted in Wendy's International, Inc. (Feb. 8, 2005) and Hormel Foods Corporation (Nov. 10, 2005). Wendy's sought to omit the CAK resolution by arguing that it had adopted an animal welfare policy, while Hormel asserted that it had implemented CAK at its own facilities but did not address implementation by its outside suppliers.

While Wendy's and Hormel at least did something, Denny's has done nothing in terms of issuing a report to shareholders on the feasibility of requiring its suppliers to phase in the CAK method. The company purports to be deeply involved in the CAK issue, constantly monitoring and studying the method, and engaging its suppliers in a dialogue, but it has never reported to shareholders as to what it has found. Denny's should be held to the same standard applied in Wendy's International, Inc. (Feb. 8, 2005) and Hormel Foods Corporation (Nov. 10, 2005).

II. The Proposal Raises Significant Social and Economic Policy Concerns

PETA's proposal provides as much detail as the 500-word limit permits, in terms of describing how the abuse and mistreatment of birds is rampant throughout the food industry, and how it can be remedied. The fact is that such abuse and mistreatment can be virtually eliminated by the implementation of a humane and technologically superior slaughter method. The CAK method enhances the treatment of the animals, improves the workplace environment for the slaughterhouse workforce, and results in a higher quality product. These are serious social and economic policy concerns which lie at the heart of PETA's shareholder resolution.

For the foregoing reasons, we respectfully request that the SEC advise Denny's that it will take enforcement action if the company fails to include PETA's proposal in its 2007 Proxy Statement. Please feel free to contact me should you have any questions or require further information. I may be reached directly at SusanH@peta.org or 703-478-5995.

-----FOOTNOTES-----

¹ As reported by Tyson Foods, Inc. in its opposition statement to PETA's CAK shareholder resolution filed in 2006.

[STAFF REPLY LETTER]

March 22, 2007

Response of the Office of Chief Counsel Division of Corporation Finance

Re: Denny's Corporation Incoming letter dated January 12, 2007

The proposal requests that the board issue a report to shareholders on the feasibility of Denny's requiring its suppliers to phase in controlled-atmosphere killing.

We are unable to concur in your view that Denny's may exclude the proposal under rule 14a-8(i)(10). Accordingly, we do not believe that Denny's may omit the proposal from its proxy materials in reliance on rule 14a-8(i)(10).

Sincerely,

/s/

Amanda McManus
Attorney-Adviser