Denny’s, the national diner chain, has announced plans to close more restaurants this year than initially expected.
Increased Restaurant Closures
In a call with investors on February 12, Chief Financial Officer Robert Verostek revealed that the company plans to shut down between 70 and 90 locations in 2025. This includes closures tied to lease expirations.
Earlier, Denny’s had announced its intention to close 150 locations over the course of the year. With the closure of 88 restaurants in 2024, if the company proceeds with its maximum estimate of 90 closures, it will exceed its earlier target by nearly 30 locations.
Reasons Behind the Closures
Denny’s CEO Kelli Valade explained that the decision to close more restaurants was a natural step for a mature brand. “When restaurants have been open for a long time, trade areas can shift over time,” she said.
She added that accelerating the closure of low-volume locations would improve cash flow for franchisees, allowing them to reinvest in initiatives that drive traffic, such as the brand’s successful remodel program.
Expansion Amid Closures
Despite the closures, Denny’s also plans to open between 25 and 40 new locations in the coming year. About half of these will be Denny’s locations, while the other half will be Keke’s Breakfast Cafe locations. Denny’s acquired Keke’s in 2022.
Impact of Inflation and External Factors
Rising inflation has had a noticeable effect on consumer behavior. In January, the annual inflation rate reached 3%, higher than expected, according to the Bureau of Labor Statistics.
Verostek also pointed to the impact of major weather events, including the recent California wildfires and severe snowstorms across the U.S., on consumer spending. He noted, “There is just a lot of uncertainty.”
In addition, concerns around bird flu and tariffs, along with rising egg prices, have affected the industry. For example, rival breakfast chain Waffle House introduced a $1 surcharge on eggs earlier this month due to soaring egg prices.
Company’s Response
While acknowledging the validity of concerns surrounding external factors, Verostek reassured investors that Denny’s is working closely with its suppliers to ensure minimal disruptions.
Denny’s did not provide specific details about which locations will be closing, as the company typically does not give advance notice of restaurant closures. With more than 1,500 locations nationwide, Denny’s continues to navigate these challenges while adapting its business strategy.
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