America’s beloved diner chain, Denny’s, is facing a harsh reality. Following a period of declining revenue, the company announced plans to close a staggering 150 restaurants by the end of 2025. This drastic move, detailed in a recent investor call, raises serious questions about the future of the brand. Could this be a sign of even steeper decline, with bankruptcy looming on the horizon?
Which Denny’s locations will close?
The first wave of closures will see 50 underperforming restaurants shuttered by the end of 2024. The remaining 100 locations will be closed down in 2025. Denny’s executives revealed these plans during an earnings call on Tuesday.
Many of the restaurants slated for closure are older locations that are no longer viable due to their age or location. Denny’s Executive Vice President and Chief Global Development Officer, Stephen Dunn, explained that some of these restaurants have been in operation for decades and are too old to renovate or are simply located in unprofitable areas.
“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 told investors at the meeting, according USA Today.
Currently, there are 1,358 Denny’s restaurants across the United States, with a significant concentration in California, Texas, Florida, and Arizona. Additionally, over 167 Denny’s locations can be found outside of the U.S., with Canada being the largest market.
While Denny’s has confirmed that 150 restaurants will be closed, the specific locations have not been disclosed.
Denny’s struggles with declining sales
Denny’s, the iconic American diner chain, continues to face challenges as it reported its fifth consecutive quarter of declining same-store sales. This metric measures sales at locations that have been open for at least a year.
The company attributed the sales decline to a combination of factors, including rising restaurant inflation, which is outpacing grocery price inflation. This makes it more difficult for customers to justify dining out, especially at family-dining restaurants like Denny’s. Many customers are opting for faster, more affordable options like fast-casual and fast-food chains.
Despite the overall decline, Denny’s did highlight some positive developments. The company’s value menu helped boost sales in the most recent quarter, and its delivery-only brands, such as Banda Burrito, continue to show growth.
However, the challenges faced by Denny’s were reflected in its stock price. Shares in Denny’s Corp. plummeted nearly 18% on Tuesday after the company’s quarterly earnings fell short of analysts’ expectations. The stock is down a significant 50% for the current financial year.
Is Denny’s filing for bankruptcy soon?
As of October 25th, 2024, there is no official announcement from Denny’s indicating that they are filing for bankruptcy. While the company is facing challenges, bankruptcy is not yet a confirmed move.