American diner company Denny’s has planned to shut down 150 outlets in the upcoming months. As per reports, the announcement was made during an earnings call with the investors on October 22, 2024, while they reviewed the third quarter results. In 2023, 57 of its restaurants had to be shut down due to the rising costs.
Reportedly, the company plans to close at least 50 of its lowest-performing restaurants by this year while the remaining 100 will be shut down next year. The reason behind the closures is to increase the overall cash flow but it must be noted that only the restaurants that have become too old to remodel and are based on unprofitable locations would be shut down.
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As of September 2024, there are 1586 Denny’s restaurants globally. The majority of the restaurants are in the US, i.e. 1358 with the maximum outlets in Arizona, Texas, Florida, and California. Nonetheless, it is still not confirmed which specific restaurants would be affected.
Indiana is home to 29 Denny's locations, with the largest number in the Indianapolis area. These locations include Bedford, Dale, Evansville, Greenwood, Haubstadt, Hebron, Indianapolis, Jasper, Lafayette, Lake Station, Michigan City, Oakland City, Portage, Scottsburg, Shelbyville, Spiceland, Terre Haute, Vincennes, Westfield, and Whiteland.
Denny's reported a $2.4 million decrease in total operating revenue compared to the same quarter last year. As a result, the company's shares fell by about 18% on October 22, 2024, with its stock down 50% for the financial year. Chief Development Officer Steve Dunn mentioned that closing underperforming locations would help improve Denny's long-term stability.
Denny’s CEO Kalli Valade mentioned that customer traffic has dropped across the restaurant industry
During this week's investor conference, CEO Kelli Valade highlighted a decline in customer traffic across the restaurant industry, especially among family dining brands. Denny's internal review revealed that the bottom 20% of its domestic locations, often older and situated in areas with shifting consumer habits, have negatively impacted the rest of the business.
Along with closing underperforming locations, the diner company is implementing various strategies to revitalize its brand and improve performance. During the conference, Steve Dunn outlined plans for a major renovation initiative aimed at modernizing outdated stores and creating a more cohesive appearance.
The company is also focused on updating its menus and continuing to grow its three virtual restaurant brands Burger Den, the Meltdown, and Banda Burritos, which have generated $77 million in sales so far.
Denny's projects 30 to 40 consolidated restaurant openings during the 2024 fiscal year, including 12 to 16 new locations for Keke's Breakfast Cafe, another brand under its umbrella. However, the company expects a net reduction of 45 to 55 locations across its portfolio.
One notable Denny's tradition that may be discontinued at certain locations is the requirement to stay open 24/7. Valade shared that around 25% of the restaurants have chosen not to operate overnight, and indicated the chain will no longer pursue its pre-pandemic objective of having all units open around the clock.
Company executives also revisited their plan to revitalize Denny’s operations and enhance the brand's appeal to both new and returning customers, with a key focus on offering value.
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