No sector of the restaurant business has suffered more in recent years than family dining, segment leader Denny’s reminded investors at the end of 2024. But that’s not why 30-year franchisee Vince Eupierre wishes he could turn back the clock.
“I think Denny’s is in the right place at the right time,” says Eupierre, an operator of 45 stores in three states. “My only wish about the business is that I was 25 years younger, because of the opportunities.”
His enthusiasm may be a surprise to anyone who’s been watching the segment-leading brand as it contends with a slowdown that’s cost all of family dining what Denny’s pegs as 20% of sales. In airing the figure to investors, CEO Kelli Valade noted that it includes revenues from the hot sub-segment of breakfast-and-lunch-only concepts like First Watch, meaning traditional three-daypart players like Denny’s have been walloped particularly hard.
But Eupierre says his enthusiasm for the brand has been stoked by the turnaround plan Valade and her revised senior team are implementing.
In some respects, the strategy sounds like Eupierre is getting his wish to travel back in time. A key component has been revamping the diner chain’s menu, in part by bringing back proven draws from the 71-year-old concept’s past.
Among the items returned to the bill of fare was a menu-within-a-menu of items priced at tiers of $2, $4, $6 and $8.
The objective was to provide more bargain-priced items as inflation prompted more consumers to cook at home rather than venture out for breakfast.
Similarly, the Grand Slam—arguably Denny’s best-known menu item—was reintroduced at a temporary price of $5.99.
A promotional spotlight was recently turned on what the chain touts on its website as "new big skillets," apparently a heftier version of a family-dining staple. The serving size speaks to consumers' heightened sensitivity to value.
An executive has revealed that a burrito version of the Grand Slam is also in the works, but did not indicate if the new item will be sold via Denny's, the chain's Banda Burrito virtual concept or both channels.
The back-to-the-future approach hasn’t ended with the menu. In September, Denny’s rehired Chris Bode as COO, the post he’d vacated two years earlier to become president of Hardee’s USA, and assigned him the additional role of brand president. The president’s duties had been handled by Valade since John Dillon was fired from the post in August 2023.
Chris Bode. | Photo courtesy of Denny's
Eupierre isn’t the only franchisee who applauds Valade’s openness to bringing back what (and who) has brought success to Denny’s in the past.
“Kudos to her for bringing back the things we know would work,” says Jon Lussier, a seven-store franchisee in the Raleigh, North Carolina, area. "The menu innovation, they have really gotten that back together. Breakfast has come back, and late night is better than it’s ever been."
Yet it’s not all about reviving the past. Denny’s has traditionally been a 24-hour concept, but the franchisor revealed during its investors’ day in late 2024 that stores will no longer be expected to operate around the clock. According to Valade, about 25% of the chain has already dropped the overnight shift. Others can opt out if recruitment of the overnight shift proves too difficult or the sales don’t justify the extended hours.
Similarly, no longer is the company pushing development within nontraditional sites of a scaled-down spinoff called The Den by Denny’s.
But the Denny’s concept will get “a little bit smaller,” says new President Bode. “The takeout areas will be a little bit bigger,” he says. “The dining area will be a little bit smaller.”
The smaller stores dovetail with Denny’s efforts to grow its off-premise business, or what Bode and Valade have set as a key component of the revitalization plan. That effort will include “leaning into” catering in a considerable way this year, says Bode, noting “it’s not a large piece of the business” at present.
The chain also remains gung-ho on the use of virtual concepts. Denny’s currently has three: The Meltdown, specializing in grilled cheese; The Burger Den; and Banda Burritos, the newest addition. The trio has generated $77 million in sales to date, according to Chief Brand Officer Patty Trevino.
Many proponents of virtual concepts—delivery-only brands offered out of a traditional stick-and-mortar operation—have backed away from their ventures. “We’re leaning in,” says Bode. “What happens is, you get those customers. They look for you.”
He also voices optimism that a renewed emphasis on technology will help Denny’s capture more off-premise business.
Bode expects Denny’s to open 30 to 40 brick-and-mortar restaurants per year, though Valade has projected that another year may be needed for a net gain in the chain’s unit count. She shocked the investment community by revealing during investors’ day that about 150 underperforming stores will have to be shut before openings once again outnumber closings.
Bode suggests the industry's reaction may have been overblown. “We’ve already closed about 60 of them,” he says. A unit-by-unit review is underway, with the downsizing expected to be completed in 2025.
Nor is it the body blow to the system that some suggested, he contends. One of the objectives management has set for Denny’s is raising the chain’s average annual unit sales to $2.2 million from the current mean of $1.9 million. The latter figure, says Bode, reflects the inclusion of stores at the low end of the system’s sales rankings.
“Our new restaurants are doing great volumes,” Bode says. “It’s the older ones that are the issue.” The projected shutdowns represent about a tenth of the 1,525-unit system in total.
The quest to hit $2.2 million per unit is also hampered by a wide variation in store appearances, according to Valade. She described the inconsistency as Denny’s “Achilles’ heel.” Pruning the system of outliers will bring more uniformity, she stressed.
Franchisees will be offered grants of up to $100,000 from the franchisor to update the stores that remain in operation. In exchange, they agree to pay Denny’s what management described as a slightly higher royalty. The scale was not divulged.
Franchisees Eupierre and Lussier independently attest that communication between the field and Denny’s corporate offices has never been better. "There’s nothing that has me saying, ‘Dammit, Denny’s, why don’t you look at that?’” says Lussier.
He applauds the home office for looking at profitability as well as sales, the basis for the royalties it collects.
"The piece that they are working on, the project that they are kick-starting, it’s to look at food costs," says Lussier. "What menu items we have, what menu items we have that put on undue stress on our food costs."
Speaking in the wake of collapses by the old-guard casual-dining chains TGI Fridays and Red Lobster, Bode acknowledges that brands with a long heritage face special challenges.
“Legacy brands have to continue to evolve, and that’s what we’re doing,” he says. “Brands that look good, [that] feel good, are going to do good.
“We now have some third generations running restaurants,” he continues. “We need to allow the sixth generation to be successful.”