Shares of Denny's Inc. fell on Thursday, after credit-ratings agency Moody's Investors Service affirmed its ratings on the restaurant operator but changed the outlook for the ratings to "Negative" from "Stable."
A negative rating means a downgrade could occur.
Moody's said the outlook change reflects weaker-than-expected operating performance amid a difficult consumer spending environment, high commodity costs, wage increases and tougher competition.
Moody's gave Denny's a speculative-grade liquidity rating of "SGL-3," reflecting adequate liquidity and sufficient cash flow.
Denny's "B1" corporate rating reflects strong brand recognition, meaningful scale and adequate liquidity, as well as lower-than-expected operating performance. The rating is also non-investment grade.
Denny's shares fell 23 cents, or 7.2 percent, to $2.98 during afternoon trading as the broader markets sold off. The stock has traded between $2.50 and $4.99 during the past 52 weeks.
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