Denny’s, known as “America’s Diner,” has announced plans to close 150 of its underperforming restaurants by the end of 2025. This move comes as part of a strategy to strengthen its cash flow and boost financial performance in a tough economic climate. According to company executives, 50 of the locations will shut down by the end of 2024, with another 100 set to close in 2025. The company is aiming to streamline operations and focus on stronger-performing restaurants.
If Denny’s is closing restaurants
Denny’s has taken this extreme measure in response to poor performance at certain sites. Some of the restaurants set for closure have existed for a long time and are either too expensive to refurbish or in locations that do not encourage profit. Denny’s Executive Vice President Stephen Dunn explained that these establishments have been in operation for many years making it difficult to update them.
The strategy is announced at a period when the costs of running a restaurant are escalating due to inflation making it hard for chains such as Denny’s to stay profitable. Consequently, the chain is looking to offload its less profitable outlets in a bid to concentrate on more profitable ones.
The current state of Denny’s
As of now, Denny’s operates 1,358 restaurants across the United States, with significant presences in states like California, Texas, and Florida. In addition to its U.S. locations, there are more than 167 Denny’s restaurants internationally, with a large number located in Canada.
While Denny’s has not yet released a detailed list of which specific restaurants will close, it is clear that the company is focusing on improving its overall restaurant portfolio.
Stock impact and financial struggles
After the announcement of the closings, Denny’s shares tumbled post nearly 18% after the quarterly simply posted below expectations. For the year, the stock was downward around 50%. The Executives admitted that doing away with these outlets is not an easy decision, considering the fact that it affects employees, franchise owners and even the surrounding necessitate. Nevertheless, they emphasized that this is an appropriate step to protect the financial health of the organization in future.
While calling off the operations of the restaurants, it is Stephen Dunn’s opinion that probably the most difficult aspect is regarding putting to waste jobs and housing. However, the step is essential in improving future expansion of the company.
A look at the bigger picture
The Denny’s closures fit the larger narrative playing out in the restaurant sector. Majority of the dining chains are struggling following the increased costs, inflation, and the shift of consumer behavior towards dining out, now that the pandemic is in the past. Indeed, by the time the year was 2024, Denny’s had already shut down 57 units because of under performance. Also, the brand’s shake up through the introduction of bargain meals which included the reintroduction of the $2-$4-$6-$.
