Caroline Petrow-Cohen | (TNS) Los Angeles Times
The ubiquitous and popular diner chain Denny’s will close 150 locations by the end of next year amid declining revenue and changing consumer habits, the company announced Tuesday.
Known for 24/7 service and a wide selection of menu items, the company behind the 71-year-old restaurant reported lower-than-expected earnings for the third quarter and has seen shares fall nearly 50% this year.
About 50 locations are marked for closure in 2024, with about 100 more to be shut down in 2025, according to information the company released with its earnings report. The closures represent a 10% reduction in the number of locations the company operates.
Denny’s did not specify which of its roughly 1,500 restaurants would be closed, but Executive Vice President Steve Dunn said the company was targeting underperforming locations that are straining its finances. Many of the locations to be shuttered are too old to be remodeled or are in unprofitable areas, Dunn said.
Total operating revenue for the company was $111 million in the quarter, down from $114 million in the prior year quarter. Operating income dropped from $14 million to $11 million in the same time frame.
“Our third quarter sales results directly reflect ongoing brand investments and dedicated focus on value that resulted in outpacing the category,” said Chief Executive Kelli Valade in a release, despite the company missing analyst expectations.
Denny’s stock tumbled 17% on Tuesday to $5.47 following the announcement of the closures. The company also owns a smaller restaurant chain, Keke’s, which has about 60 locations mostly in Florida.
The chain is among several that have landed in dire financial straits this year after years of high inflation, increased labor costs and declines in customer demand.
The popular seafood chain Red Lobster filed for bankruptcy protection in May, and Rubio’s Coastal Grill did the same in June after closing nearly 50 locations. Fast-casual restaurant chain Mod Pizza barely escaped bankruptcy when it was acquired in July by Los Angeles-based Elite Restaurant Group. Italian American restaurant chain Buca di Beppo wasn’t so fortunate, filing for bankruptcy protection the following month.
Denny’s is also lifting a requirement for its locations to be open 24/7 and reducing the number of menu items from 97 to 46, according to CNN.
©2024 Los Angeles Times. Visit at latimes.com. Distributed by Tribune Content Agency, LLC.
