Chain restaurant operator Denny's Corp. ( DENN) said Monday it will cut trans fats from its menu, changing its frying oil and replacing margarine products used in food preparation.

The company expects to roll out a non-trans fat alternative fry shortening in more than 1,500 restaurants as early as the first half of 2007.

Denny's also said it will work with suppliers to adjust ingredients to remove trans fats as part of a longer-term goal of eliminating trans fats from all products served in Denny's.

New York City became the first city to ban all restaurants from using artificial trans fats last week. Trans fats are believed to lower "good" cholesterol and increase "bad" cholesterol. They have also been linked to heart disease.

Shares of Denny's were trading at $4.64 in the after-hours session, up 2 cents from Monday's closing price of $4.62 on the Nasdaq.