Denny’s is planning to close nearly 30 more restaurants than previously announced as stubborn inflation threatens the 72-year-old chain’s survival.
During a call with investors earlier this week, Robert Verostek, the company’s chief financial officer, said the Denny’s is set to shutter as many as 90 restaurants this year.
In October, Denny’s had disclosed plans to shut down 150 of its nearly 1,500 locations around the country. The company ended up closing 88 locations last year.
The top of Verostek’s new estimate could bring the total closures to 178 restaurants.
“In any mature brand, when restaurants have been open that long, it is natural that trade areas can shift over time,” Denny’s CEO Kelli Valade said during the earnings call.
“Accelerating the closure of lower-volume restaurants will improve franchisee cash flow and allow them to reinvest into traffic-driving initiatives like our tested and proven remodel program.”
Denny’s did not specify which locations would be closing.
The Spartanburg, SC-based company is also planning to open between 25 to 40 restaurants this year, about half of which will be Denny’s locations. The others will be Keke’s Breakfast Cafe locations, which Denny’s acquired in 2022.
Executives blamed sticky inflation for a pullback in sales. Inflation heated back up in January as the Consumer Price Index rose to 3%, the Bureau of Labor Statistics said on Wednesday.
Severe weather, including the devastating California wildfires and heavy snowstorms across the the US, also hurt sales, Verostek said.
“There is just a lot of uncertainty,” Verostek added, as companies have been trying to measure the impact of President Trump’s policies, like tariffs and mass deportations.
A rampant national bird flu outbreak has also forced some chains – especially breakfast restaurants – to hike their menu prices as egg shortages send prices soaring.
The cost of eggs jumped 15.2% last month – the largest increase since June 2015, according to the Labor Department.
Earlier this month, Denny’s rival Waffle House announced a 50-cent surcharge per egg to counter the rising costs.
Denny’s is “working closely with our suppliers to ensure minimal disruptions,” Verostek said, calling concerns about these impacts “valid.”
The global chain sprouted from a coffee and doughnut shop in Lakewood, Calif., that first opened in 1953.
Credit: Source link
