Denny's, a well-known breakfast chain, is accelerating its restaurant closure plans in the face of rising inflation and changing consumer preferences. The company will close more locations than initially anticipated, exceeding its previous target of 150 closures by 2025.
Denny's is poised to close more restaurants in the U.S. this year than initially projected, joining a growing number of companies implementing closures in response to escalating inflation and evolving consumer habits. The breakfast chain disclosed the additional planned closures during an earnings call this week.
Here's what you need to know: Denny's had previously announced in October 2022 that it anticipated closing 150 of its lowest-performing locations throughout the latter half of 2022 and into 2025. The company executed 88 closures last year, according to its records. During an earnings call on February 12, 2023, Denny's Chief Financial Officer Robert Verostek stated that the company anticipates closing 'between 70 and 90 restaurants in 2025, which includes some closures related to lease expirations.' A specific list of the anticipated Denny's restaurant closures was not made public, and the company did not immediately respond to a request for such information. If the chain proceeds with the upper estimate of 90 closures this year, in addition to its already 88 restaurant closures, this would represent almost 30 more locations than initially anticipated. Denny's operates more than 1,500 restaurants across the United States, as indicated on its website. 'These closures had an average unit volume of slightly under $1.1 million and were open on average for nearly 30 years,' Verostek informed investors. 'In any mature brand, when restaurants have been open that long, it is natural that trade areas can shift over time.' Verostek further added: 'As trends stabilize and our second half sales initiatives are implemented, including remodels and a new loyalty program, we anticipate comps will rise throughout the year and place us more firmly within the range.'Indeed, the company also anticipates opening between 25 and 40 new restaurants – half of which are projected to be Denny's and the other half Keke's Breakfast Café – a breakfast restaurant chain that Denny's acquired in 2022.
Denny's Restaurant Closures Inflation Consumer Behavior Earnings Call
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