A Deep Dive into Denny's Expansion and Strategy
Explore how Denny's is strategically expanding its restaurant chain, optimizing operations through store closures and remodels, and enhancing sales strategies.
Strategic Growth and Expansion
Denny’s, a well-known player in the restaurant industry, continues to expand its presence by opening new locations. In the past year alone, the company added 14 new restaurants, with plans to open approximately 20 more this year. Ending 2024 with a total of 1,334 restaurants, Denny's focuses on strategic locations, with a significant portion of its domestic stores centralized in key states like California, Texas, Florida, and Arizona. This targeted approach allows Denny's to capitalize on high-traffic regions and maintain a strong market presence.
Store Closure Strategy
Facing the challenge of underperforming locations, Denny's implemented a meticulous store closure plan after evaluating 265 of its worst-performing restaurants. By focusing on rehabilitating viable locations and accelerating the closure of lower-volume restaurants, Denny's aims to enhance franchisee cash flow and redirect investments towards initiatives that drive traffic and revenue. This strategic move aligns with the evolving consumer preferences seen in the rise of Quick-Service Restaurants (QSRs), allowing Denny's to adapt to changing market dynamics.
Restaurant Remodel Program
To revitalize its brand and enhance customer experience, Denny's embarked on a comprehensive remodel program, completing 23 remodels, including facilities both company-owned and franchised. These remodels have proven to be instrumental in driving sales, with an average sales lift of 6.4% and a traffic increase of 6.5%. Despite the average investment of approximately $250,000 per remodel, these initiatives have been key in achieving Denny's long-term goal of $2.2 million in average unit volumes (AUVs), demonstrating the company's commitment to operational excellence and customer satisfaction.
Sales Performance and Future Outlook
Analyzing Denny's sales performance, the company reported a 1.1% increase in fourth-quarter systemwide same-store sales, while full-year comparable sales experienced a slight decrease of 0.2%. Notably, domestic franchised stores outperformed company-owned locations with a 1.2% same-store sales lift. Looking ahead to 2025, Denny's anticipates domestic comparable sales to range between negative 2% and positive 1%, showcasing a proactive approach to addressing market challenges and driving sustainable growth.