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By Hugh Cameron
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Diner chain Denny's is accelerating its consolidation process, closing more locations than initially planned as part of its stated effort to streamline operations and better serve customers across the U.S.
How Many Denny's Locations Are Closing Across the US?
In October, the company announced plans to close 150 of its approximately 1,400 U.S. restaurants. Fifty of these locations were set to shut down by the end of 2024, with the rest closing in 2025, Denny's executives confirmed during an earnings call.
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Last week, however, Chief Financial Officer Robert Verostek said that 2025 would see "consolidated restaurant closures between 70 and 90," alongside between 25 and 40 openings.
On the release of the company's full-year results, Verostek also said that 88 Denny's restaurants had closed in 2024. As USA Today noted, this suggests there could be up to 38 more closures than initially anticipated, but when restaurant openings are included, net closures could actually be lower in 2025 than in 2024.
In 2024, net closures were 74, after 14 openings and 88 closures. In 2025, if they closed 90 restaurants and opened 25, they would have a net closure of 65.
Why Are Denny's Closing So Many Locations?
Denny's has cited "shifts in consumer sentiment" as contributing to its 2025 forecast. As well as consumer's growing preferencing for fast-food and eat-at-home options, the company said last week that accelerating store closures will help "to enhance the overall health of our flagship brand."
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In an investor presentation last October, the company highlighted that "family dining" chains like Denny's, Chili's, and Outback Steakhouse were experiencing a steeper decline in foot traffic compared to other dining categories.
While the company has not specified which locations will close or which regions will be most affected, CFO Robert Verostek last week said that "lower-volume" restaurants and those with expiring leases would be due for closure.
What People Are Saying
Kelli Valade, Chief Executive Officer, said on the release of Denny's annual results: "Looking ahead to 2025, there is still work to be done within our brands, particularly as we navigate near-term consumer sentiment that has been affected by macroeconomic factors. With the actions we are taking to maintain our position as a value leader, invest in our brands, reduce costs, and drive traffic, we are well positioned to deliver shareholder value."
CFO Robert Verostek said during Wednesday's earnings call: "In any mature brand, when restaurants have been open that long, it is natural that trade areas can shift over time. 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."
Stephen Dunn, executive vice president and chief global development officer, said in October: "First thing I'll say it's never easy to close restaurants. It's a challenge and you work with external factors, landlords and the like, and of course, you're dealing with people's lives. But we've realized that closing underperforming restaurants is strategically advantageous to a number of our franchisees as it strengthens the bottom line cash flow for the long term."
Denny's told Newsweek: "Coming out of the pandemic, trade areas, traffic trends and where and how our guests want to dine with us have shifted. We have taken a close look at every restaurant in our domestic portfolio, and as a result, at the end of last year we announced the decision to close approximately 150 restaurants by the end of 2025. We began the closing process last year, and we are continuing to work through our plan. More than half of these locations have already closed.
"These changes are strategic business decisions that free up capital to enable our franchisees to open new restaurants in new trade areas to meet our guests where they are today. We currently have more than 1,300 restaurants in the U.S. and almost 1,500 restaurants worldwide, and we will be opening upwards of 20 new locations in 2025. We've also reignited our remodel program, and some current Denny's locations will begin to have a new look and feel soon. We are excited to see how this new design is better meeting our guests' evolved expectations."
What Happens Next
Valade said during the earnings call that she believed the shift in consumer behavior was "temporary" and that the company remained confident in its strategies and "long-term fundamentals of being America's diner."
Despite the closures, Denny's could open as many as 40 new restaurants in 2025, meaning they would have a net loss of up to 50 restaurants this year.
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Update 02/25/25, 3:43 a.m. ET: This article was updated with comment from Denny's.
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