Denny's Is Closing a Whopping 150 Restaurants—Here's Why
Denny's faced a wave of closures last year, shuttering 57 restaurants due to soaring costs. Now, the diner chain is planning to close another massive portion of its locations in a bid to strengthen the system as a whole.
During a conference with investors this week, Denny's unveiled plans to shutter around 150 locations, representing about a tenth of its total unit count. Executives said that the closing restaurants have struggled to perform financially and were negatively impacting the health of the overall chain, Restaurant Business Magazine reported. About half of the roughly 150 locations are slated to close by the end of 2024, while the rest will stop serving customers for good in 2025.
Denny's made the closures announcement in tandem with the release of its latest quarterly earnings results on Oct. 22. The diner chain saw a 0.1% decrease in same-store sales, two new restaurant openings, and six restaurant remodels during the third quarter. Denny's reported having 1,586 restaurants in operation as of Sept. 25, down from the 1,603 locations it had as of late June this year. This indicates that a net total of 17 Denny's restaurants closed just last quarter.
CEO Kelli Valade noted during this week's investor conference that customer traffic has dropped across the restaurant industry, particularly among family dining brands. Denny's discovered via a review of its domestic locations that the fifth of its restaurants struggling the most—which are typically older and in areas with changing consumer habits—have been hurting the rest of the system.
Though shuttering restaurants may seem counterintuitive for a chain attempting to make a comeback, Denny's asserts that eliminating poor-performing locations is actually the best move for the company overall.
"We believe this is absolutely the right thing to do to make our system stronger," Valade said, per Restaurant Business Magazine.
In addition to closing underperforming stores, Denny's is making progress on several other strategies to reinvigorate its brand and performance. Chief Development Officer Steve Dunn previewed plans during the conference for a big renovation initiative to freshen up outdated stores and give them a more consistent look. Denny's also plans to continue evolving its menus and focusing on its three virtual restaurant brands (Burger Den, the Meltdown, and Banda Burritos), which the company says have brought in $77 million in sales to date.
Denny's expects to achieve 30 to 40 consolidated restaurant openings during the full 2024 fiscal year, including 12 to 16 new locations for Keke's Breakfast Cafe—another chain in its portfolio. Meanwhile, it anticipates a net decline of 45 to 55 locations across its restaurant brands.
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