Last Updated on 18 hours by Rojgar samachar
denny’s closing 150 restaurants: Causes, Effects, and Future Strategy
Denny’s, recently announced that it will close 150 of its low-performing restaurants. The move comes as the company’s sales have declined. In this article, we will discuss in detail the reasons behind this decision, its possible effects, and Denny’s future plans.
History and Current Status of Denny’s
Founded in 1953 as “Danny’s Donuts” in Lakewood, California, Denny’s has built its identity as a major diner chain over the decades. Currently, the company has about 1,700 restaurants, most of which are located in the United States. However, in recent years, the company has faced financial challenges and changing consumer trends.
Restaurant Closing Decision
Denny’s has announced that it will close 150 low-performing restaurants by the end of 2025. About half of these restaurants will close by the end of 2024, while the rest will be closed in 2025. The decision is part of the company’s “portfolio optimization” strategy, which aims to improve the profitability of the remaining restaurants by eliminating low-performing locations.
Characteristics of the closing restaurants
According to the company, many of the restaurants to be closed are older where there have been significant changes in consumer behavior. Steve Dunn, executive vice president of Denny’s, explained that some restaurants are no longer in good locations, and some are too old, making them difficult to renovate.
Changing consumer behavior and operating hours
Following the COVID-19 pandemic, consumers’ dining patterns have changed significantly. Many Denny’s restaurants have not reestablished 24/7 operating hours, as customers now dine less frequently at night. As a result of this change, the company is reconsidering its 24/7 operating hours requirement, which will allow franchisees to adjust operating hours to suit their local market demand.
Due to rising food costs and changes in consumer preferences, Denny’s has decided to simplify its menu. The company plans to reduce the number of its menu items from 97 to 46, streamlining operations and providing customers with a more focused and quality-oriented experience.
Financial Challenges and Strategic Responses
Denny’s recently reported a same-store sales decline of 0.1% in its third quarter earnings report. Rising inflation, food costs, particularly the price increase of eggs, and changing economic policies have impacted the company’s profitability. To address these challenges, Denny’s has reintroduced its $2-$4-$6-$8 value menu to attract customers and increase sales.
Future Plans and Expansion
Despite closing restaurants, Denny’s plans to strengthen its brand and expand into new markets. The company acquired Keke’s Breakfast Cafe in 2022 and now plans to open 25 to 40 new restaurants, including new Keke’s locations. The move is part of the company’s diversification strategy to serve different consumer segments.
Denny’s decision to close 150 restaurants is a strategic response to the company’s current challenges and changing market conditions. By closing older and under-performing locations, simplifying menus, and adjusting operating hours, the company is attempting to improve the profitability of its remaining restaurants and better serve customers. Looking ahead, Denny’s is taking proactive steps to strengthen its brand and expand into new markets, allowing it to keep up with changing consumer trends.