Denny’s announced it’s shuttering approximately 30 more eateries than previously planned this year as part of its plan to right its ship.
The struggling diner chain said last year that it was shutting 150 locations. In an earnings release Wednesday, the company disclosed it eliminated 88 locations in 2024 and will shutter up to 90 in 2025, bringing the total closer to 180.
“In any mature brand, when restaurants have been open that long, it is natural that trade areas can shift over time,” CFO Robert Verostek said on an earnings call. Denny’s has existed in its current form since the 1960s. “Accelerating the closure of lower-volume restaurants will improve franchisee cash flow and allow them to reinvest into traffic-driving initiatives.”
Verostek said remodeled restaurants saw a 6.5% increase in traffic over the year. However, the company renovated only 23 outlets in 2024, out of 1,300 U.S. locations.
Denny’s faces many of the same economic pressures that are leading to other restaurant closures, said Alfred Goldberg, president of Tampa-based Absolute Marketing Solutions.
Goldberg, who specializes in restaurant and hospitality branding, says Denny’s bottom line has sagged due to high labor costs, competition from the gig economy, and supply costs. It also faces increased rents and higher taxes in many markets, he added.
Sit-down restaurants have struggled this year, with Chili’s a notable exception. Lasandra Barksdale, founder and principal of Kompass Customer Solutions, said Denny’s has lost its identity, stuck somewhere between fast food and more buzzy chains like Chili’s and Chuy’s.
“When you think of the war between price and quality, fast food wins on price and fast casual wins on quality, so Denny’s is stuck in the middle,” Barksdale said. She added that for Denny’s to reclaim its cultural spot, it must embrace what drive-thrus don’t offer: warmth, humor, and eating with friends at midnight.
The post Denny’s is closing stores as it’s squeezed between fast food and Chili’s appeared first on Quartz.
