The Comeback Kid

NEW YORK ( TheStreet) -- Casual dining chain Denny's ( DENN) has come a long way in the past few years.

Tuesday's second-quarter earnings release provided more evidence the company's turnaround is progressing. Casual dining is an extremely competitive business with a crowded landscape, It is also littered with chains that could not survive. Denny's nearly joined them, more than once.

Back in 1997, Denny's parent company Flagstar filed for bankruptcy. When Denny's emerged from bankruptcy, its struggles continued, crushed by the weight of a heavy debt load. It was also hampered by the threat of obsolescence. Denny's was a well-known brand during my teenage years, with lots of advertising, but seemingly faded into oblivion over the subsequent decade.

That's one of the other difficulties for restaurant chains -- consumer tastes are always changing, and it's difficult to stay relevant.

Case in point: I'd all but forgotten that Denny's was still a publicly traded company until the infamous 2009 Super Bowl breakfast giveaway ad campaign. While not nearly as powerful as the Domino's Pizza ( DPZ) ad campaign that was unveiled in 2009, it did put Denny's back on my radar.

In these ads, Denny's announced that it would give away two million free breakfasts on the Tuesday following the Super Bowl. The company did the same thing the following year. While these rather expensive ads were ultimately used as ammunition against the company as a poor use of the advertising budget in a subsequent proxy fight by activists, it was a brilliant way to say "we're still here."

Since then, Denny's has made significant progress in a rather difficult environment. The company stayed profitable through the last recession, and has actively been paying down debt. Total debt stood at $554 million at the end of 2005; as of the end of the latest quarter, it was down to $204 million. Last year at this time, total debt was $218 million, so the company continues to whittle it down.

Denny's has also been buying back stock, to the tune of 1.4 million shares last quarter and 8.1 million shares since late 2010.

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