Major Changes Announced as Denny’s Plans to Close 150 Restaurants Amid Declining Sales

Major Changes Coming To Denny’s Restaurants

Big changes are on the horizon for Spartanburg, South Carolina-based Denny’s, one of America’s long-standing and favored casual dining spots. The company has announced a major adjustment in its operations, that is, they are planning to close 150 of their less profitable eaters. According to Stephen Dunn, Denny’s executive vice president and chief global development officer, these include some that are no longer sitting pretty in terms of location.

Midst of Transformation

These upcoming closures, which will account for about 10% of Denny’s total restaurants, will occur in two phases. Just around half of them will call it quits this year, while the rest plan to do so in 2025. Even though the exact locations of these restaurants have yet to be disclosed, it’s pretty evident that the brand is taking steps to boost its declining sales performance.

Blame it on the Pandemic?

In addition to location issues, Dunn cites changes in foot traffic during the pandemic as another contributing factor to these closures. Many restaurants saw drastic shifts, and customers haven’t returned quite as heavily as before. It seems like COVID-19 has left its bitter taste in the mouths of the restaurant industry, and Denny’s is no exception.

Five Quarters of Declining Sales

Tuesday wasn’t a good day for the Denny’s crew. They had to face the news of their fifth consecutive quarter of year-over-year dips in same-store sales, which consists of sales at locations that have been open for at least a year. However, this decline isn’t the only obstacle Denny’s is currently wrestling with. The notorious restaurant inflation–which is outrunning grocery price inflation–is heaving a substantial crimp in Denny’s plans. After all, who wouldn’t be thinking twice before splashing out on a meal, with prices being so steep?

Family Dining Losing Ground

Denny’s, which falls under the family dining category, confessed to losing the most customer traffic since 2020. Many of the dine-out enthusiasts are now veering towards fast-casual brands or fast-food chains. It’s a tough time for restaurants that built their reputation around family gatherings and leisurely dining. Yet, it’s clear as day that the easy-going dining segment is squaring off against some serious competition.

Signs of Hope?

But, it’s not all gloom and doom for Denny’s. Despite taking a hit in the sales department and facing the bitter truth of closing some of their restaurants, the brand has found some solace in their value menu. This economic option engendered a commendable uplift in their sales data for the latest quarter, showing that all-is-not-lost! What’s more, Denny’s delivery-only brands, such as Banda Burrito, are gathering momentum too. So, while the fast-paced lifestyle might be reshaping dining trends, Denny’s seems to have a plan up its sleeve to stay in the game!

Despite these glimmers of hope, Tuesday’s investor meeting concluded with the company shares dropping almost 18%. It’s a bumpy road ahead for this 70-year-old plus brand, but with strategic moves and some innovative offerings, Denny’s might just be able to cook up a storm once again.