The beloved American restaurant chain Denny’s has announced plans to shutter 150 locations across the country, marking a significant shift in its operations after more than 70 years of service. The closures, representing approximately 10% of the chain’s locations, will be implemented in two phases, with 50 restaurants closing by the end of 2024 and the remaining 100 following in 2025.
This decision comes amid challenging financial results, as revealed in Denny’s third-quarter earnings report for 2024. The company
experienced a 2% decline in revenue compared to the previous year, while same-restaurant sales showed a slight decrease of 0.1%. Franchise establishments saw a 0.1% downturn, and company-owned locations experienced a 0.4% reduction. The company’s earnings per share reached 14 cents, falling short of analysts’ expectations by one cent.
The restaurant industry as a whole has shown signs of recovery, with the National Restaurant Association projecting total industry sales to hit $1 trillion by the end of 2024. However, competition has intensified significantly, with analysts indicating a 45% increase in competitive pressure compared to the previous year. This heightened competition has contributed to ten major restaurant chains filing for bankruptcy in 2024 alone.
Denny’s Chief Global Development Officer Stephen Dunn addressed the closure strategy during the company’s earnings call, explaining that many of the targeted locations are older establishments requiring substantial renovation investments. “Some of these restaurants can be very old. So when you think of a 70-year-old plus brand, you have a lot of restaurants that have been out there for a very long time,” Dunn stated.
Currently, Denny’s Corporation operates 1,586 restaurants globally, including 1,525 Denny’s locations and 61 Keke’s establishments. The company has already closed 42 restaurants year-to-date, comprising 40 franchise locations and two company-owned outlets. Once all planned closures are completed, the total number of Denny’s locations will decrease to approximately 1,375.
Despite these closures, Denny’s maintains an eye toward growth, announcing plans to open between 30 and 40 new restaurants by the end of the year. This strategic realignment appears to have influenced investor sentiment, as evidenced by market reactions. The company’s stock experienced a significant drop of nearly 18% on Tuesday following the closure announcement. However, by Thursday, shares had rebounded, showing an approximate 14% increase.
The restaurant industry’s landscape continues to evolve, with established chains like Denny’s adapting to changing market conditions and consumer preferences. While the closure of numerous locations represents a significant change for the iconic diner chain, it reflects a broader trend of traditional restaurant brands reassessing their physical footprint in response to modern business challenges.
The specific locations slated for closure have not been disclosed, though the company has indicated that age and renovation requirements will be key factors in determining which restaurants will be affected. This strategic reduction in locations represents one of the most substantial changes in recent years for the restaurant chain, which has been a familiar presence in communities across America for generations.