Iconic breakfast diner Denny’s is closing 150 ‘underperforming’ locations by the end of next year. The move is seen as heralding more-major changes in the aging brand’s drive to stay alive in the era of Fast Food Value Wars and ‘Resto of the Future’ business models…
A classic Denny’s Breakfast Slam: Nothing short of legendary…
As so many such announcements have, this one came during a quarterly earnings call for shareholders and the financial industry. And it marks the most drastic move yet in a years-long struggle by the chain to meet the challenges of doing business in the 21st Century…
Troubling declines
Denny’s has been showing signs of weakening fan love for at least 10 years. The sales and performance figures quarter after quarter have roller-coastered, with the company alternately reporting dips and recoveries. But the most recent picture is undeniably gloomy.
Denny’s earlier this week revealed its 5th straight quarter of year-over-year declines in same-store sales, at locations open at least one year.
And he head office was not without a quick response to the troubling statistic.
Pruning back the tree
As with an aging fruit tree, when it’s not bearing up to expectations, Denny’s corporate gardeners have elected to prune-back the chain drastically by at least 150 under-performing locations, by the end of next year.
That figure represents about one in 10 of Denny’s existing outlets, which is considered a pretty sig-nificant number.
Stephen Dunn, Denny’s Executive VP and Chief Global Development Officer, said some of those rest-aurants are no longer in good locations. Neighbourhoods and traffic patterns have changed.
Consumer shifts
Another changing dimension of the restaurant business has also impacted Denny’s significantly. Dunn observes that many younger diners have switched from their parents’ favourite eateries, like Denny’s, to newer concepts such as Chipotle’s or Fast Food brands.
Dunn described some locations as ‘quite old’. “You think of a 70-year-old plus brand. We have a lot of restaurants that have been out there for a very long time.” Still others saw traffic shifts during the pandemic that have not reversed, he said.
The implication is that some locations might benefit from decor or overall image upgrades. However, no such plans have been announced – yet.
My take
It’s been clear for some time that Denny’s has needed a facelift – if not some more-drastic business model changes.
It will be interesting to see how the chain addresses the challenge of meeting the expectations of the growing youth demographic while not alienating its traditional, older core market…
~ Maggie J.