Denny's will close up between 70 and 90 additional restaurants in 2025
Denny's plans to close up between 70 and 90 additional underperforming restaurants by the end of 2025, aiming to optimize operations amid economic challenges and shifting consumer behaviors.
In a significant move reflecting the current economic climate, Denny's has announced plans to shutter between 70 and 90 underperforming restaurants by the end of 2025. This decision comes on the heels of the 88 locations closed in 2024, bringing the total number of closures to potentially 178 within a two-year span. The Spartanburg, South Carolina-based chain, known for its 24/7 service and extensive menu, is undertaking these closures as part of a broader strategy to optimize its portfolio and enhance profitability.
The affected restaurants, many of which have been operational for nearly three decades, are being closed due to factors such as expiring leases and shifting trade areas. Denny's executives emphasize that accelerating the closure of these lower-volume establishments will improve franchisee cash flow and allow for reinvestment into initiatives like their remodel program. This approach aims to rejuvenate the brand and adapt to the evolving preferences of the dining public.
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Economic pressures and industry trends
The restaurant industry has been grappling with various challenges, including persistent inflation and rising food costs. Denny's, in particular, has felt the impact of these economic pressures, which have influenced consumer spending habits and operational costs. The decision to close additional locations is a strategic response to these challenges, aiming to streamline operations and focus on more profitable units.
This trend is not isolated to Denny's. The broader retail and dining sectors are experiencing a wave of closures, with analysts projecting that up to 45,000 retail stores in the U.S. could shut down over the next five years. Factors contributing to this trend include the rise of e-commerce, changes in consumer behavior, and economic uncertainties. Denny's proactive approach in addressing underperforming locations aligns with industry-wide efforts to adapt to these shifting dynamics.
Denny's Could Close up to 90 Stores in 2025. Photo: FSR Magazine.
Strategic initiatives and future outlook
Despite the closures, Denny's is not retreating from growth opportunities. The company plans to open between 25 and 40 new restaurants in 2025, with approximately half of these being Denny's locations and the remainder under the Keke's Breakfast Café brand, which Denny's acquired in 2022. This expansion reflects a strategic pivot towards markets and concepts with higher growth potential.
Additionally, Denny's is revitalizing its value proposition by reintroducing the popular $2-$4-$6-$8 value menu. This move aims to attract cost-conscious consumers seeking affordable dining options. The company is also investing in remodeling existing locations to enhance the customer experience and align with contemporary dining trends. These efforts are designed to strengthen the brand's competitive position and drive traffic to its restaurants.
Impact on Denny’s employees and communities
The closure of up to 90 additional restaurants will inevitably affect employees and the communities they serve. While specific details about job losses have not been disclosed, Denny's has indicated that it will work closely with franchisees to support affected staff. The company aims to provide opportunities for relocation to other Denny's locations or assist with transitions where possible. Communities losing a Denny's restaurant may experience both economic and social impacts, as these establishments often serve as local gathering spots.
Denny's decision to close a significant number of its restaurants underscores the challenges facing the casual dining industry amid economic pressures and changing consumer behaviors. By focusing on strategic closures, remodeling efforts, and expansion into promising markets, Denny's is positioning itself to navigate the current landscape and emerge more resilient. The company's commitment to adapting its business model reflects a broader trend within the industry, as brands strive to meet evolving customer expectations while maintaining financial viability.