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Denny’s: America’s Beloved Diner Faces Nationwide Closures Amid Economic Pressures

Denny’s, the iconic American diner chain that has long been a staple for affordable comfort food, is closing more locations across the country as it grapples with rising costs and declining sales. Once a go-to destination for families and late-night diners alike, Denny’s is now the latest casualty in the ongoing economic battle that has left many restaurant chains struggling to stay afloat.

A National Institution in Decline

Denny’s has shuttered 15 more restaurants this year, adding to the 57 closures in 2023 and 60 in 2022. The closures are a stark reminder of the challenges facing the dining industry, where inflation and shifting consumer behavior have forced many to tighten their belts. The recent closures include the last remaining Denny’s in Langhorne, Bucks County, Pennsylvania, which shut its doors on June 19, leaving local patrons without their beloved neighborhood diner. Another closure in Ashland, Ohio, last month further underscored the widespread impact of these economic pressures.

The Numbers Don’t Lie

The numbers paint a grim picture for Denny’s. The chain’s same-store sales dropped by 0.6 percent compared to the same period last year. While that figure might seem modest, it’s important to remember that Denny’s has already increased its menu prices, meaning that fewer customers are walking through the doors. The drop in customer traffic is a troubling sign for a brand that has long relied on its reputation as a budget-friendly dining option.

Robert Verostek, Denny’s executive vice president and chief financial officer, spoke candidly to investors earlier this year, highlighting the impact of inflation on the chain’s bottom line. He noted that the breakeven point for a Denny’s restaurant has soared from $1 million to $1.2 million, driven by higher costs for food and wages. This significant increase has made it difficult for many locations to remain profitable, leading to the wave of closures.

Fighting Back in the Value Wars

In response to these challenges, Denny’s is not going down without a fight. The chain is joining the “value wars,” a trend among restaurants and fast-food chains to offer more affordable menu options in a bid to attract cost-conscious customers. Denny’s CEO Kelli Valade has announced the return of the chain’s classic meal deals, a move she believes will resonate with loyal customers who fondly remember the value-driven offerings that made Denny’s a household name.

“This was a value platform unique to Denny’s that launched years ago to amazing results, and it’s a unique equity only we have,” Valade told investors. She expressed optimism that the return of these deals would drive customer traffic, based on extensive testing and reengineering of the menu. The chain is banking on nostalgia and affordability to bring customers back through its doors.

The Broader Industry Struggle

Denny’s is not alone in its struggle. The broader restaurant industry has been hit hard by the economic realities of post-pandemic America. Applebee’s, another popular chain, has also been forced to close multiple locations and has responded by introducing its own value deals. The chain recently launched the “Whole Lotta Burger” with fries for $9.99, a direct challenge to the rising prices seen at fast-food giants.

Chili’s has taken a similar approach, unveiling a $10.99 burger meal that is both bigger and cheaper than McDonald’s Big Mac, which now costs nearly $15 in some areas. The value-driven strategies of these chains reflect a broader shift in the industry, where affordability has become a key battleground.

The Road Ahead

As Denny’s navigates these turbulent times, the future of the once-beloved diner chain remains uncertain. While the return of classic meal deals may provide a temporary boost, the chain must continue to adapt to the new economic landscape if it hopes to survive. The closures are a sobering reminder that even America’s most cherished dining institutions are not immune to the forces of inflation and changing consumer habits. The coming months will be crucial as Denny’s and other chains fight to retain their place in the hearts—and wallets—of the American public.

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