Denny’s is shutting down 150 stores to boost cash flow amid declining sales
Twenty-four-hour diner and breakfast restaurant Denny's recently announced the closure of 150 branches out of its 1,700 locations worldwide – 50 store closures by the end of this year and the remaining 100 locations will be shut in 2025.
According to a Securities and Exchange filing from the chain on Tuesday, Oct. 22, the company aims to strengthen its cash flow as the chain will try to reach a goal of growing annual unit volume sales to $2.2 million.
"We believe this is absolutely the right thing to do to make our system stronger," Denny's CEO Kelli Valade said.
The more than a hundred branches that will be shut make for roughly 10 percent of Denny's stores. It has not yet been announced which locations will close down but Valade said that it is the "underperforming" restaurants that would stop operations. Among the restaurants closing are older locations that are too old to remodel or are based in unprofitable locations, said its Executive Vice President and Chief Global Development Officer Stephen Dunn.
"Some of these restaurants can be very old. So, when you think of a 70-year-old plus brand, you have a lot of restaurants that have been out there for a very long time," he told investors at the meeting.
Meanwhile, Denny's reported its fifth straight quarter of declines in sales at locations that were open for at least a year. Since the Wuhan coronavirus (COVID-19) pandemic, the restaurant has not returned to its usual around-the-clock hours in around a quarter of its locations. Because of this, the chain has now officially slashed its hours. This came after Dunn said it "didn't make sense" especially since foot traffic and changing consumer behaviors continue to show as effects from the pandemic.
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