Denny’s Corporation announced plans to close 150 underperforming restaurants by the end of 2025 as part of a strategic initiative to strengthen its financial performance and prepare for future growth. The decision was disclosed during an earnings call on Oct. 22, where company executives discussed third-quarter results and outlined their vision for the brand’s evolution.
Steve Dunn, Denny’s executive vice president and chief global development officer, emphasized the importance of optimizing the company’s restaurant portfolio.
“The first thing I’ll say is it’s never easy to close restaurants,” Dunn said during the call on Tuesday. “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 closing underperforming restaurants is strategically advantageous to a number of our franchisees as it strengthens the bottom line cash flow for the long term.”
The closures focus on the bottom quintile of restaurants, which have seen significant traffic shifts and changes in consumer behavior, particularly since the pandemic. As of Sept. 25, the company has 1,525 global restaurants.
“We’ve made significant progress towards this goal, and this cleans up our portfolio and prepares us truly for growth,” Dunn noted. While specific locations were not disclosed, the closures are expected to be completed by the end of 2025.
In addition to closing select locations, Denny’s has reevaluated its commitment to 24/7 operations at some restaurants.
CEO Kelli Valade explained that the company has been working closely with franchisees to assess profitability during late-night hours.
“We really did sit down with our franchisees, and we’ve done profitability analysis. We’ve done everything we can to really understand the profitability and the foot traffic in those dinner and late-night hours,” Valade said.
She added that about 75 percent of Denny’s restaurants currently operate around the clock. However, shifts in consumer behavior and decreased foot traffic during late-night hours have led some franchisees to reduce their operating hours.
“It’s a contraction that happened for everyone,” Valade said, acknowledging industry-wide changes post-pandemic. She added the company is constantly working with owners to see if there are opportunities to return to 24/7 operations at locations that have not yet returned to that model.
Despite the closures and operational adjustments, the company is aiming to modernize existing restaurants with a fresh, updated look both inside and out. The remodels have been tested in more than 35 restaurants, showing promising results in sales and traffic, officials said.
“We are very confident that this will have a major positive impact on the system,” Dunn stated. “We’re very proud about that and looking to get this more actively engaged with our franchisees on a daily basis.”
To support franchisees with the remodels, Denny’s has introduced financial support programs, including a remodel loan pool and an acceleration program to facilitate access to capital.
Overall, third-quarter financial results reflected some challenges but also signs of progress. Total operating revenue was $111.8 million, compared with $114.2 million in the same period last year. Domestic system-wide same-restaurant sales decreased by 0.1 percent compared with 2023. Operating income stood at $11.7 million, down from $14 million in the prior-year quarter.
Valade remained optimistic about the company’s trajectory.
“Our third-quarter sales results directly reflect ongoing brand investments and dedicated focus on value that resulted in outpacing the category,” she said.
The company also plans to relaunch its $2 $4 $6 $8 Value Menu. The expansion of off-premise offerings such as online orders were cited as key drivers in maintaining customer engagement.
