Denny’s to Close Nearly 150 Underperforming Stores
In a strategic move to enhance brand consistency and drive growth, Denny’s has announced the closure of approximately 150 underperforming stores nationwide. This decision aims to strengthen the overall retail system by eliminating locations that have been identified as detracting from the financial performance of other branches. CEO Kelli Valade expressed confidence that this step is crucial to bolstering the brand’s stability.
Financial Performance and Closure Plan
The closures are part of Denny’s efforts to achieve its target of raising the annual average store volume to $2.2 million. Nearly half of the underperforming locations will cease operations by year-end, with the remainder scheduled to close in 2025. This move aligns with the company’s assessment that these stores’ outdated facilities and changing market dynamics have hindered their success.
System-Wide Evaluation and Renovations
Denny’s has conducted a thorough evaluation of its system, noting inconsistencies in the appearance and practices of its storefronts. The “Diner 2.0” renovation program aims to address these disparities by offering financial incentives to franchisees for upgrades. Operators who participate in the program will receive a $100,000 grant from a $25 million loan pool established by Denny’s.
Uplift Sales and Traffic
Historical data suggests that renovated restaurants can experience a significant increase in sales and customer traffic. Dunn, Denny’s chief development officer, estimates a potential uplift of $400,000, with past renovations generating a 6.4% sales boost and a 6.5% increase in traffic.
Changes in Operating Hours
In addition to store closures and renovations, Denny’s is also adjusting its operating hours. Approximately 25% of stores have opted to discontinue overnight operations, departing from the pre-pandemic goal of 24/7 availability. This decision is driven by the company’s financial priorities but is likely to alter the dining habits of customers who frequently visit Denny’s after midnight.
Next Steps
Denny’s will continue to monitor the impact of these changes and adjust its strategy accordingly. The company remains committed to enhancing the customer experience and maintaining its brand’s relevance in the evolving restaurant landscape. Future company initiatives will be closely observed to gauge their effectiveness in achieving Denny’s growth objectives.
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