Denny’s, the iconic American diner chain renowned for its 24/7 service and hearty breakfast offerings, has announced plans to close an additional 70 to 90 locations by the end of 2025. This decision follows the company’s previous announcement to shutter 150 restaurants. Keep reading to find out what’s behind this latest round of closures.
Denny’s announces more store closures amid efforts to revitalize sales
Denny’s is pressing forward with its store closure strategy as part of an effort to revive sluggish sales. Last October, the company announced plans to shutter 150 locations, with about half closing in 2024. At the time, Stephen Dunn, Denny’s executive vice president and chief global development officer, highlighted that some restaurants were in outdated locations.
“Some of these restaurants can be very old,” Dunn noted during an October investor meeting. “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.”
On Wednesday, February 12th, during an update to investors, Denny’s reported that 88 restaurants closed throughout 2024, including 30 in the fourth quarter. Looking ahead to 2025, the company revealed its plan to shutter an additional 70 to 90 locations, though specific sites have not been disclosed.
Robert Verostek, Denny’s chief financial officer, emphasized that shifting market dynamics play a role in these closures. “In any mature brand, when restaurants have been open that long, it is natural that trade areas can shift over time,” he said during an investor call. He also noted that some of the affected locations have expiring leases.
Are the store closures a smart move?
Denny’s CEO Kelli Valade remains confident in the company’s strategy, emphasizing the progress made in strengthening its flagship brand. “We have made significant progress in our strategy to enhance the overall health of our flagship brand by accelerating the closure of lower-volume restaurants,” Valade stated. In addition to shutting down underperforming locations, the company— which also owns Keke’s restaurants—has completed nearly two dozen remodels. Despite the closures, Denny’s plans to expand, with 25 to 40 new locations set to open this year.
Denny’s remains optimistic despite falling short of recent expectations
Denny’s initially believed that consumer behavior was returning to normal after the disruptions caused by the COVID-19 pandemic and high inflation. People were starting to dine out more, and Denny’s, with its value-focused menu, seemed well-positioned to benefit. However, the restaurant chain recently observed a decline in consumer spending. This slowdown started in January and has worsened in recent weeks.
Denny’s attributes this shift to a combination of factors, including changing consumer sentiment (People are becoming more cautious about their spending due to economic uncertainties), and the current macroeconomic environment, which is highlighted by ongoing inflation, potential recession fears, and other broader economic challenges.
Despite the current slowdown, Denny’s believes this is a temporary blip and that consumer spending will eventually rebound.
Meanwhile, in response to escalating egg costs, which have necessitated a surcharge at Waffle House, Denny’s is implementing measures to mitigate the impact. CFO Robert Verostek stated that the company is collaborating with suppliers to “ensure minimal disruptions.”