Denny’s to Trim the Fat: 150 Locations Set for Closure
In a bold move signaling a shift in strategy, Denny’s Corporation has announced plans to shutter 150 of its iconic diners by the end of 2025. This decision comes as part of a broader reassessment of its restaurant portfolio, which includes both Denny’s and Keke’s Breakfast Cafe chains.
A Closer Look at the Closures
According to an investor day presentation released on Tuesday, many of these closures will take place within this year. The company is not just cutting back; it aims to revitalize other underperforming locations through various strategies, including potential partnerships with more robust operators. This approach reflects a growing trend in the restaurant industry where adaptability is key.
Denny’s Chief Global Development Officer Steve Dunn highlighted that their analysis revealed significant “traffic shifts” and “convenience shifts” affecting lower-performing restaurants. He noted that some locations are quite dated and may not meet current consumer expectations or preferences.
As it stands, Denny’s operates approximately 1,525 restaurants globally as of late September—a number that will soon see a notable reduction.
The Bigger Picture: Industry Trends
The decision to close underperforming locations aligns with broader trends in the food service sector. For instance, TGI Friday’s recently announced similar measures by closing over a dozen outlets across America within just one month—an indication that even established brands are feeling pressure from changing consumer habits and increased competition from fast-casual dining options.
Denny’s strategy appears focused on enhancing brand health by concentrating resources on higher-volume establishments while phasing out those dragging down overall performance metrics like Average Unit Volumes (AUVs). By doing so, they hope to foster net unit growth moving forward.
Future Plans: New Openings Amidst Closures
Despite these closures, optimism remains for future growth. In its investor day presentation, Denny’s Corporation projected plans to open between 30-40 new restaurants across both brands in 2024—though this would still result in an anticipated net decline of about 45-55 units overall due to closures. Notably, around twelve to sixteen new Keke’s locations are expected among these openings; currently there are only 61 Keke’s restaurants operating nationwide.
This dual approach—closing low-performing sites while launching new ones—is designed not only for immediate financial recovery but also long-term sustainability within an evolving market landscape where customer preferences can shift rapidly.
Financial Snapshot: Q3 Results Reveal Challenges Ahead
On the same day as their investor announcement regarding closures and openings, Denny’s Corporation also shared its third-quarter financial results. The company reported operating revenue totaling $111.76 million—a slight dip of 2.1% compared with last year during the same quarter—and net income narrowed down to $6.52 million.
Looking ahead into fiscal projections for adjusted earnings before interest taxes depreciation and amortization (EBITDA), estimates have been revised downward from previous expectations; now set between $81-84 million for the full year compared with earlier forecasts ranging from $83-87 million.
Conclusion: Navigating Change in Dining Preferences
As we witness major players like Denny’s adapt their business models amid shifting dining landscapes marked by convenience-driven choices and evolving consumer tastes—their proactive measures could serve as valuable lessons for other establishments facing similar challenges today.
With strategic closures paired with targeted expansions planned over coming years—the diner chain aims not just for survival but revitalization amidst fierce competition within America’s ever-changing culinary scene.
