Denny’s, one of America’s most famous and beloved diner chains, is closing more locations nationwide. In a recent investor earnings release, the company confirmed that it will shut down about 30 additional stores in 2025. This comes after a previous announcement stating that 150 locations would close, a process that is already in progress.
Current State of Denny’s Closures
Denny’s had already begun its downsizing efforts before this new announcement. By the end of 2024, at least 88 locations will have been shut down. With the new target set for 2025, the company expects to close another 70 to 90 stores. This means that by the end of 2025, approximately 180 Denny’s locations will have ceased operations. Currently, the company operates around 1,300 restaurants across the United States.
While Denny’s has managed to remodel some underperforming locations to improve business, the results have been mixed. The successful remodels saw a 6.5% increase in customer visits year-over-year. However, remodeling is expensive, and only 24 locations were successfully renovated last year.
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Why Is Denny’s Closing More Stores?
There are multiple reasons for the planned closures. Some of the primary factors include:
- Expiring Leases and Costly Renovations – Many of the locations facing closure have lease agreements that are expiring soon. Renewing these leases or upgrading the buildings to meet new operational standards can be prohibitively expensive.
- Market Changes – The restaurant industry is evolving, and many traditional dine-in chains are struggling to keep up with changing consumer preferences. Many customers now prefer fast-food or takeout options instead of casual sit-down dining.
- Economic Conditions – Rising inflation has affected consumer behavior. With the annual inflation rate reaching 3% in January, customers are becoming more cautious about spending money on dining out.
- Natural Disasters and Weather Conditions – Severe weather events, such as wildfires in California and snowstorms in other parts of the U.S., have negatively impacted customer foot traffic in certain locations.
- Industry-Wide Decline in Family Dining – Reports show that the “family dining” category, which includes restaurants like Denny’s, Applebee’s, Hooters, and TGI Fridays, has seen a significant drop in customer traffic. On the other hand, restaurants like Chili’s and Texas Roadhouse have remained competitive by improving their value offerings and customer service.
Denny’s Future Plans
Even with these closures, Denny’s is not giving up on expansion. The company has announced plans to open 25 to 40 new restaurants in the coming year. About half of these will be Denny’s locations, while the other half will be Keke’s Breakfast Cafe, a brand Denny’s acquired in 2022.
Impact on Employees and Franchise Owners
The closure of so many locations raises concerns for employees and franchise owners. Denny’s has stated that it does not provide advance notice of closures to the public, but it works closely with franchise owners and staff when a location is set to shut down. Franchise owners who operate low-performing locations may see an improvement in profits as the company shifts focus to better-performing restaurants.
Financial Performance and Stock Market Trends
Denny’s remains a publicly traded company, but its stock has seen a significant decline in value over the years. In 2019, shares were valued at around $24, but today, they are trading at less than $5. The recent closures may help improve overall profitability, but the long-term outlook for the company remains uncertain.
Comparison with Other Restaurant Chains
Denny’s is not the only restaurant chain facing difficulties. Other casual dining brands, such as TGI Fridays and Applebee’s, have also closed multiple locations due to declining sales. Domino’s, for example, has struggled in Japan and has announced the closure of over 200 locations there. However, unlike Denny’s, Domino’s is still performing well in the U.S.
Customer Reactions and Brand Loyalty
Many longtime customers are saddened by the closures. Denny’s has been a staple of American culture since it was founded in 1953. For decades, it has been a popular spot for late-night meals, family breakfasts, and casual dining. However, changing consumer habits have led to a decline in demand for the traditional diner experience.
Will Denny’s Survive in the Long Run?
Despite the challenges, Denny’s is making efforts to stay relevant. The company is investing in its remodel program, opening new locations, and adapting to customer preferences. However, the success of these strategies will determine whether Denny’s can maintain its place in the competitive restaurant industry.
Conclusion
Denny’s is undergoing a significant transformation. The closure of 180 locations by the end of 2025 marks a major shift in the company’s strategy. While some restaurants are closing due to economic pressures and changing consumer preferences, Denny’s is still expanding in other areas. The future of the chain remains uncertain, but with the right adjustments, it could continue to be a part of American dining culture for years to come