Denny’s Corporation, a renowned name in the foodservice industry, plans to shut down 150 Denny’s outlets, by the close of 2025. The corporation oversees not only the extensive Denny’s chain but also reins in the Keke’s Breakfast Cafe branches. The aforementioned Denny’s locations slated for closure will be strategically phased out during this tenure, a portion of which will cease operations within the current year itself, according to latest details released on a recent investor day presentation.
While some Denny’s outlets will see their operations cease, others will witness a revitalizing transformation led by potential acquisitions by more robust operators. This strategy was unveiled as part of the same company’s investor day presentation. The compelling decision to implement these reforms was the result of thorough audits carried out at various domestic locations in the recent past.
A unique and challenging aspect the organization faced was the age of some of these locations. It was observed that several of the restaurants within the corporation’s operational purview might date back quite a few years.
As of the end of September, Denny’s Corporation was at the helm of 1,525 restaurants spread across various global locations. The company voiced its intent of enhancing the overall brand positioning by filtering out weaker, lower-performing facilities while investing in potential, higher-performing outlets as part of its future plan. Such a tactical approach, it hopes, will spike the average unit volumes along with net unit growth moving forward.
The ingenuity behind this method, Denny’s Corporation posits, lies in the ultimate improvement it would bring to the health of the brand. The replacement of lower volume restaurants with ones of higher volume would allow this gastronomic giant to maintain its position in the industry. With this move, Denny’s Corporation also foresees an increase in its average unit volumes (AUVs) and a spur in future net unit growth.
By 2024, Denny’s Corporation has projected to add 30-40 more restaurant outlets to its flourishing businesses. This expansion plan envelops both Denny’s and Keke’s Breakfast Cafe brands, but the company also predicts a consolidated net decrease of 45 to 55 in its existing counters during this period.
Included in these anticipated fresh outlets are 12 to 16 new Keke’s locations. The company is optimistic about extending this specific brand, which has a solid standing in the breakfast-cafe space. A testament to this popularity is the 61 operational Keke’s restaurants at the end of September, an upsurge they expect to continue.
When it convened for the investor day, Denny’s Corporation also released its recent third-quarter financial results. The company disclosed its operational revenue earnings during this quarter, which replaced its financial data of the previous quarter.
In the list of disclosures made, an important revelation was the $111.76 million in operating revenue the organization managed to rake in for this quarter. When juxtaposed with the corresponding duration from last year, however, a 2.1% decline can be perceived.
The company’s net income also witnessed a contraction. Eventually settling at $6.52 million, Denny’s Corporation unraveled this fact as part of its quarterly financial disclosures. Given these figures, the company is setting a measured course as it sails into the next fiscal periods.
Retrospectively, as the year ends, Denny’s Corporation has projected an adjusted income before interest, taxes, depreciation, and amortization of $81 to $84 million. This expected income symbolizes the company’s forecast and planning specifically created for the full financial course of this year.
This, however, was not their initial forecast. Previously, they had set their expectations at an estimated earnings before interest, taxes, depreciation, and amortization range of $83 to $87 million. But, as the corporation moves into future quarters, it has revised this estimation downwards.
Denny’s Corporation’s strategy is clear cut: by phasing out underproductive outlets and investing in fresh, potential-oozing ones, the company aims to sustain the brand’s strength and appeal. The brand is certainly not rearing backwards, but instead, pivoting and readjusting, focusing on strategies to sustain and grow in the ever-competitive market.
Despite the closure of some outlets and decrease in net sums, the Corporation is steadfast in bolstering the integrity of their assets and delivering quality experience to their esteemed customers. Unfazed by short-term setbacks, Denny’s Corporation maintains its commitment to pragmatic growth strategies and customer satisfaction in the long run.