Denny’s, the popular budget-friendly diner chain, announced plans to close 150 underperforming locations as it grapples with slowing business and changing consumer spending habits.
The closures will take place over the next year, with 50 locations shutting down by the end of 2024 and the remaining 100 in 2025.
The decision comes as Denny’s faces financial challenges, including declining traffic and rising costs. Many of the closing locations are considered “too old to be remodeled” or are in areas that have become unprofitable, according to Steve Dunn, Denny’s executive vice president. These underperforming stores have negatively impacted the company’s overall financial performance.
In addition to the closures, Denny’s will reduce its menu, cutting its 97-item offering nearly in half to 46 items. The company cited that more customers are opting for lower-priced meals, with some adults even ordering from the kids’ menu to save money.
The iconic 24/7 operating hours of many Denny’s locations will also be scaled back, as franchisees struggle to cover the costs of staying open around the clock. About a quarter of Denny’s restaurants had already reduced their hours following the pandemic.
The closures and operational adjustments come at a time when Denny’s is experiencing a dip in financial performance. The company reported a 2.1% decline in operating revenue for the third quarter, down to $111.76 million, and a sharp drop in its stock price, which fell 17.6% after the announcement.
Despite the challenges, Denny’s plans to open new restaurants in higher-traffic areas. The company expects to launch 30 to 40 new locations across its Denny’s and Keke’s Breakfast Cafe brands by the end of 2024, aiming for long-term improvement in overall brand performance.
With input from FOX Business and New York Post.
