Denny's, the well-known US diner chain famous for its 24/7 breakfast service, has announced that it will close more locations than initially planned. In October, the company disclosed its intention to shut down 150 underperforming stores by the end of 2025, with 50 closures expected in 2024. However, during an investor call on Wednesday, CFO Robert Verostek revealed that 70 to 90 stores will now close in 2025. This, in addition to the 88 closures that took place in 2024, marks an additional 38 store closures compared to the original estimate.
The closures are mainly attributed to expiring leases and the poor condition of aging buildings, which are not financially viable for renovation. Stephen Dunn, Denny's executive vice president, stated that many of the affected locations are too old for remodeling and have not been profitable.
"In any mature brand, when restaurants have been open that long, it is natural that trade areas can shift over time," Denny's Chief Financial Officer Robert Verostek told CNN. "Accelerating the closure of lower-volume restaurants will improve franchisee cash flow and allow them to reinvest into traffic-driving initiatives like our tested and proven remodel program."
Remodeled restaurants did indeed see a 6.5% increase in traffic over the year. However, the company renovated only 23 locations in 2024, which is a small portion of the 1,300 locations it has across the United States.
Denny's has struggled in recent years because of inflation and rising food costs. Sales in January and February nosedived following a strong end to 2024 because of "consumer uncertainty that we are seeing at the moment," Verostek said.
