USA – Table service dinner-style restaurant chain Denny’s has revealed plans to shut down 150 restaurants by the end of next year amid a decline in revenues and shifts in consumer habits.
Denny’s is set to close 50 restaurants in 2024, followed by an additional 100 in the subsequent year. Executive Vice President Steve Dunn noted that the company is focusing on underperforming locations.
The Los Angeles Times reports that the planned closures will result in a 10% reduction in Denny’s locations.
The company’s third-quarter earnings report for 2024 indicated results that fell short of expectations, with shares declining nearly 50% over the year.
Total operating revenue decreased from US$114 million in the third quarter of the previous year to US$111 million in the same quarter of 2024. Operating income also dropped, falling to US$11 million from US$14 million during the same period.
As of the end of the third quarter, Denny’s reported total debt of US$272 million, which includes US$261 million in borrowings under its credit facility. The company’s portfolio features both the Denny’s and Keke’s brands.
These financial strains are compounded by broader industry issues such as rising labor and food costs, making it difficult for family dining establishments like Denny’s to compete with less expensive fast-casual and fast-food options.
CEO Kelli Valade commented that the third-quarter sales results reflect ongoing brand investments and a focus on value, which have led to performance exceeding category averages.
She highlighted that Denny’s domestic same-restaurant sales outperformed the BBI Family Dining index for the third consecutive quarter, aided by the relaunch of the popular US$2-US$4-US$6-US$8 value menu and the expansion of off-premises offerings through the new virtual brand, Banda Burrito.
Keke’s also saw a significant sequential improvement in same-restaurant sales as efforts to implement foundational marketing strategies and expand its alcohol program progressed, helping to close the gap with competitors.
As of September 25, 2024, there were 1,525 Denny’s restaurants globally, with 1,464 franchised or licensed and 61 operated by the company.
The Keke’s brand, primarily based in Florida, consists of 61 locations, with 50 franchised and 11 company-operated.
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