Oct. 22 (UPI) — Denny’s is planning to close 150 “underperforming restaurants,” a tenth of its locations, by next year as part of a growth strategy that will serve up a slimmed-down menu and reduced hours.
The 71-year-old restaurant chain announced the changes Tuesday during an earnings call. While Denny’s did not reveal which restaurants would close, 50 locations will shut down by the end of the year, as the remaining 100 are scheduled to close in 2025.
“We believe this is absolutely the right thing to do to make our system stronger,” Kelli Valade, Denny’s chief executive officer, told investors after revealing a 0.1% drop in same-store sales for the Denny’s brand in the third quarter of 2024. Total operating revenue was $111.8 million compared to $114.2 million for the prior year quarter.
Moving forward, Valade said the company plans to update Denny’s brand with the goal of raising average annual unit volume to $2.2 million.
To reach that goal, Denny’s said it would close restaurants that are “underperforming” and dragging down “the rest of the system” due to their location or age. Many of the older restaurants are too old to be remodeled, the company added.
“Everyone has lost traffic. Everyone,” Valade added, citing research that shows family dining is down about 20% “since Covid.”
The company also said it would reconsider its 24/7 operating hours, which have seen fewer diners during the overnights. Other cost-cutting measures include dropping the number of menu items from 97 to 46.
For those 1,375 Denny’s restaurants that will remain open, franchisees will be offered grants of $100,000 to renovate.
Restaurants that renovate tend to see a $400,000 uptick in sales, according to Steve Dunn, Denny’s executive vice president and chief global development officer.
After Tuesday’s earnings report, Denny’s stock plummeted nearly 18% to close down $1.17 at $5.47 a share. The stock is down 50% for the year.
