Denny’s says it’s closing 150 of its locations around the country in order to turn around their brands flagging sales. According to USA Today, 50 of these closures will occur this year, with the other half taking place in 2025. This will decrease the total Denny’s locations by about 10%. The specific locations that are shutting down have not yet been announced by the company.
Stephen Dunn, Denny’s executive vice president and chief global development officer, gave a few reasons as to why these locations weren’t performing well, saying, “Some of these restaurants can be very old. You think of a 70-year-old plus brand. We have a lot of restaurants that have been out there for a very long time.” He also explained that other locations saw traffic shifts as a result of the COVID pandemic which have yet to revert to their previous patterns. Denny’s is very well known for their 24/7 open doors, but due to a loss in cash flow, they’ve been unable to return to these hours since the pandemic. Ideally, the company would be able to return to the around-the-clock time schedule that made them so successful.
Restaurant inflation is moving at a much quicker rate than that of grocery inflation, which makes individuals more likely to save money with pre-purchased meals. Along with this, folks who do decide to eat out often lean towards more casual restaurants as opposed to family dining options like Denny’s. These two changes are some of the biggest reasons for the overall decline in financial stability for this company as of this decade.
Other changes at Denny’s include a severely trimmed menu, with the number of food options being decreased from 97 to 46. The chain also noticed that adults were ordering off its kid’s menu at a much higher rate in order to save money.
Shares in Denny’s corp have tumbled nearly 18% since these closures were announced. It’s annual stock is down 50% for the financial year.
Ultimately, Denny’s is hoping to use this decision as a means to turn their company around. “It’s never easy to close restaurants. It’s a challenge, you work with external factors, landlords,” Dunn said, “and of course, you’re dealing with people’s lives, but we’ve realized that closing underperforming restaurants is strategically advantageous to a number of our franchisees as it strengthens the bottom line cash flow for the long term.” Ideally, Denny’s will be able to revert their financial gains back to pre-pandemic levels.
