Denny’s Stock Takes a 17% Dive as Chain Announces 150 Restaurant Closures

Written by Elvis Guaman

October 22, 2024

Denny’s Corporation faced a significant setback on Tuesday, with its stock closing down 17% following the announcement that the iconic diner chain will close 150 restaurants over the next two years. The decision, revealed during an earnings call, reflects the company’s ongoing struggle to adapt to changing market conditions and shifting consumer behaviors.

The 71-year-old diner chain plans to shutter 50 locations by the end of 2024, with an additional 100 closing in 2025. This reduction amounts to roughly 10% of Denny’s total footprint, leaving the company with about 1,375 restaurants once the closures are complete. While the company has yet to disclose a specific list of the affected locations, Denny’s executive vice president and chief global development officer, Steve Dunn, emphasized that the closures will target “underperforming restaurants” that are hampering the company’s financial performance.

Dunn explained that some of the locations earmarked for closure are either too old to remodel or situated in areas that have become unprofitable. He acknowledged the challenges posed by Denny’s traditional 24/7 operating hours, stating that the decrease in foot traffic during late-night hours made it “didn’t make sense” for some restaurants to remain open. As a result, Denny’s is considering a major shift in its operating hours, a move that reflects broader trends in the restaurant industry.

In addition to the closures, Denny’s is implementing other changes to streamline operations. The menu is being slimmed down from 97 options to just 46, a response to shifting consumer preferences and economic pressures. The chain has also noticed a trend of cash-strapped adults opting for items from its kid’s menu to save money, indicating a shift in how customers are approaching dining out.

These developments come at a challenging time for Denny’s, which has seen its stock price plummet by 50% over the year. Investors are increasingly concerned about the company’s ability to revitalize its brand and improve its financial performance in a highly competitive and evolving restaurant landscape.

As Denny’s navigates these significant changes, all eyes will be on how the company adapts its business model to remain relevant and appealing to consumers. The upcoming closures and adjustments in operating hours signal a critical moment for the diner chain as it seeks to stabilize its operations and restore investor confidence.

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