Denny’s is gearing up to close 150 restaurants to revive profitability and strengthen “the bottom line cash flow.” The 71-year-old diner chain announced its plans to shutter some “underperforming” locations weighing down the company’s finances.
Denny’s executives broke the news during an earnings call on Tuesday, causing its shares to drop by 17%. The restaurant chain has not revealed the 150 restaurants in particular. However, it confirmed that some of its older and “underperforming” locations will be closed.
Denny’s will close 50 restaurants by the end of 2024
According to USA Today, Denny’s currently operates 1,525 restaurants globally and plans to close 150 by the next year. However, the company plans to shutter fifty of these locations by the end of 2024 and the remaining hundred over the next year. Executive Vice President and Chief Global Development Officer Stephen Dunn announced that they will target “old” restaurants that are beyond remodeling and unprofitable.
During the investors’ meeting, Stephen Dunn emphasized, “Some of these restaurants can be very old. So when you think of a 70-year-old plus brand, you have a lot of restaurants that have been out there for a very long time.” Furthermore, Dunn called closing Denny’s restaurants a “strategically advantageous” move. He believes it can benefit “a number of our franchisees” by strengthening “the bottom line cash flow for the long term,” per TODAY.
Nonetheless, the decision will result in the closing of a tenth of Denny’s restaurants globally, leaving behind 1,375 locations. The company is also looking to reduce its 97-item menu to 46 options. Dunn noted, “It’s never easy to close restaurants. It’s a challenge, you work with external factors, landlords, and of course, you’re dealing with people’s lives.” The U.S. has 1,358 Denny’s restaurants, primarily in California, Texas, Florida, and Arizona.
Moreover, on Tuesday, Denny’s shares dropped by 17% after the earnings failed to meet the experts’ expectations. The company also reported a fall in its overall running sales in the third quarter compared to last year.
