Denny's Plans To Close 150 Restaurants Nationwide – Here's What To Know

Denny's Corporation, the parent company of the beloved diner chain Denny's, announced on Tuesday, October 22, 2024 that the company is initiating plans to close 150 of its over 1,500 restaurants across the country by the end of next year. In addition, the company may reduce operating hours from its iconic 24/7 model at select locations in struggling markets. The announcement was made during the third quarter earnings call for investors.

Restaurant Business reports that Denny's CEO Kelli Valade told investors that the closures and other measures are "absolutely the right thing to do to make our system stronger." According to the company's third quarter earnings news release, the company reported a 0.1% decrease in same-store sales year-over-year for franchised restaurants and a 0.4% decrease for company-owned restaurants. Operating revenue for the quarter, compared with the equivalent period in 2023, was down $2.4 million, per the release.

While a list of locations has yet to be released, Denny's Chief Development Officer Steve Dunn noted that the closing restaurants are underperforming stores that can't be renovated and updated, according to Fast Company. He noted that the weakest-performing fifth of the system was impacting the entire chain, per Restaurant Business; Valade also emphasized that traffic at most restaurants was down from the previous year. "Everyone has lost traffic," she said, presenting research to investors that family dining in particular has decreased significantly.

The company plans to close up to half of the targeted restaurants by the end of this year, while the rest are scheduled to shut down by the end of 2025. This is on top of the 18 franchised stores that closed during the third quarter and the total of 58 (franchised and company-owned) locations that closed over the past year, according to the third quarter earnings report. Currently, there are 1,525 Denny's locations.

In addition to underperforming sales, CEO Kelli Valade noted that an inventory of all restaurants uncovered an "Achilles heel" in the form of aging and inconsistent store designs from market to market, per Restaurant Business. The company has launched the Diner 2.0 renovation program, which is aimed at remodeling and updating all stores. Denny's Corporation announced it will provide incentives for franchisees to renovate, including $100,000 grants for operators who remodel according to company guidelines. Six remodels were completed during the third quarter.

Additionally, underperforming stores may reduce hours, rather than operating around the clock. Valade says about a quarter of all stores will not be returning to 24/7 operation, and the company will not enforce its pre-pandemic goal of having every location open all day and night, per Restaurant Business. This decision departs from one of the diner chain's oldest policies. According to the company's website, it was founded in Lakewood, California, as an ice cream shop in 1953. Three years later, partner Harold Butler converted the eight-store chain to Danny's Coffee Shops and instituted the now-iconic 24-hour service. The iconic Denny's name was finally coined in 1959.