After shuttering 88 restaurants in 2024, Denny’s said it may close just as many this year—if not slightly more.
The casual giant told investors it plans to remove between 70 and 90 restaurants in 2025, meaning the brand could shut down nearly 180 U.S. stores in two years. Previously, the brand said it would close 150 restaurants across 2024 and 2025.
The restaurants that closed in 2024 had an AUV of slightly under $1.1 million and were open on average for almost 30 years.
“In any mature brand, when restaurants have been open that long, it is natural that trade areas can shift over time,” said CFO Robert Verostek during the chain’s Q4 earnings call.
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Denny’s finished 2024 with 1,334 U.S. restaurants, with the highest concentration in California (354), Texas (194), Florida (117), and Arizona (80). It is the fourth-largest casual chain in America, following Waffle House, IHOP, and Applebee’s. The chain opened 14 franchise restaurants in 2024.
Verostek said accelerating the closure of lower-volume stores will improve franchisee cash flow and help operators reinvest in traffic-driving initiatives, like Denny’s ongoing remodel program.
Twenty-three remodels were completed last year. The program—a crucial part of Denny’s strategy to grow AUV and boost the guest experience—delivered a 6.4 percent sales lift and 6.5 percent traffic lift during testing. The average remodel investment is $250,000.
Remodels will help Denny’s pursue its goal of $2.2 million in AUV. In 2024, the chain earned $1.9 million in AUV. New units are opening at $2.3 million in AUV.
While the first six weeks of 2025 showed consumer stabilization—even with wildfires and snowstorms across the U.S.—Denny’s has felt a slowdown that began in the latter part of January and has accelerated in the past few weeks.
Denny’s domestic comps fell 0.7 percent in January, comprised of a 0.8 percent decline at franchise restaurants and a 1 percent rise at company-owned restaurants. The variation was due to more franchise outlets in the Midwest and Mid-Atlantic, two areas impacted by weather. Through the first two weeks of February, comps are down 5 percent—a 1 percent drop for corporate units and a 5 percent drop for franchise units.
“There is just a lot of uncertainty,” Verostek said. ” … We are going to control the things that we can control and we are highly confident in our initiatives.”
CEO Kelli Valade said the downturn is a temporary shift.
“We remain confident in our strategies and the long-term fundamentals of being America’s diner,” she said. “We are a great value leader, and we know how to leverage that strength to drive traffic and support our guest needs … While there is some near-term choppiness, we are confident that the steps we are taking will enable us to continue to meet the guests where they are and create shareholder value. We have a lot to look forward to.”
Denny’s U.S. same-store sales lifted 1.1 percent in Q4, a 120-basis-point improvement from Q3; this included strong performances in California and Florida. The chain outperformed the BBI Family Dining sales benchmark for the fourth consecutive quarter. Also, U.S. stores earned $38,900 in average weekly sales per unit—$2.02 million in annualized AUV—which is the highest mark since COVID.
For full-year 2024, domestic comps fell 0.2 percent, but rose 3.4 percent on a two-year stack. Throughout the year lunch mixed 37 percent, followed by breakfast (28 percent), dinner (19 percent), and late night (16 percent).
Off-premises mixed 21 percent in Q4 and 20 percent in fiscal 2024. The chain’s out-of-store sales were fueled by virtual brands like Banda Burrito, which is in more than 1,000 restaurants. It increased same-store sales by 70 basis points in Q3 and Q4, and was particularly helpful during the dinner and late-night dayparts. There is less than 1 percent overlap between guests who use the virtual brands and those who use the dining rooms, meaning they drive incremental sales and margins.
In combination with its off-premises efforts, the brand is improving the digital experience by optimizing its email creative and improving SEO to aid website traffic and conversion rates. Additionally, a new loyalty CRM program will launch in the back half of the year.
Denny’s also spent 2024 doubling down on value. In Q3, it relaunched its $2, $4, $6, $8 value menu, a promotion that’s provided a 2 percent to 2.5 percent sales lift with minimal impact on average check.
“We are living our values and executing our strategic initiatives, leaning into our brand strengths, winning in key occasions like breakfast with a renewed value emphasis and engaging the next generation of fans to drive meaningful results for our business,” Valade said.
