An air of uncertainty surrounds the recent announcement by Denny’s in October to close down 150 of its locations within the next year. Having already shut down 88 establishments last year, the possibility of closing up to 90 more restaurants this year implies a staggering increase in closures compared to the initial estimates. Shedding light on this strategic decision, Denny’s CEO, Kelli Valade, addressed the matter during an investor earnings call, attributing the closures to the natural evolution of trade areas in long-standing restaurant brands.
Valade emphasized that the expedited closure of underperforming restaurants aims to enhance franchisee cash flow, enabling them to redirect resources towards initiatives proven to drive foot traffic, such as the company’s successful remodel program. Furthermore, in a bid to balance out the closures, Denny’s divulged plans to launch between 25 to 40 new restaurants in the upcoming year. This expansion strategy will encompass the opening of both Denny’s and Keke’s Breakfast Cafe locations, following Denny’s acquisition of Keke’s in 2022.
Executives pointed out that shifting consumer behaviors, partly influenced by the rising inflation rate hitting 3% in January, have been pivotal in shaping the company’s decision-making process. The unforeseen disruptions caused by extreme weather events like the California wildfires and severe snowstorms across the U.S. have also played a significant role in altering consumer spending patterns. Additionally, concerns regarding bird flu outbreaks and tariffs have exacerbated apprehensions within the consumer base. Notably, Denny’s competitor, Waffle House, recently announced a surcharge on eggs due to the soaring egg prices in the market.
Despite acknowledging the legitimacy of concerns surrounding these external factors, Denny’s spokesperson, Verostek, reassured consumers that the company is actively collaborating with suppliers to mitigate potential disruptions in the supply chain. In response to inquiries about the specific locations affected by the closures, Denny’s clarified that they are unable to disclose this information, citing their policy of not providing advance notice before a closure. With over 1,500 locations nationwide, the iconic diner chain, established in 1953, remains a staple in the American dining landscape.
In a statement to TODAY.com, a spokesperson for Denny’s emphasized the brand’s commitment to supporting franchise owners and staff through the challenging process of closing down a restaurant. The intricate interplay of internal and external factors at play in the restaurant industry underscores the dynamic nature of the business landscape, where adaptability and strategic decision-making are key to navigating through uncertain times.
