Denny’s, otherwise known as America’s favorite diner, will be closing 15 locations across the United States as the chain says they are battling rising costs and falling sales.
The late-night diner is just not as popular as it once was. The chain has reported a substantial drop in customers ever since the Covid-19 pandemic shut down dining rooms across the country. Since costs have risen due to inflation and supply chain issues, people are even less likely to eat out.
Several Other Large Closures
In the past year, the restaurant closed 57 other locations.
The famous chain was also forced to eliminate a whopping 60 stores in 2022, which took a massive hit to their revenue stream.
Sales Are Down
The chain reported that same-store sales were down 0.6 percent from the same time last year.
With the increase in prices across the many, this means that the restaurants saw an even bigger reduction in customer numbers that account for the relatively small loss.
The Chain Is Blaming Inflation
Denny’s executive vice president and chief financial officer, Robert Verostek, blamed inflation as one of the biggest factors in the closure of several locations.
He spoke with investors in February about the company’s ongoing issues. He also had some good news for shareholders. The breakeven point for a restaurant open had jumped slightly from $1 million to $1.2 million due to higher costs for food and wages.
Value Wars
In an attempt to draw in much-needed customers, Denny’s, like other restaurant chains, has chosen to take part in the ‘value war’, where each company sees how they can draw in customers with different value offers.
Value options have erupted as restaurants and businesses try to lure back in inflation-weary customers who have cut back on dining out and tipping experiences.
Denny’s Is Excited About New Value Meals
Kelli Valade, Denny’s CEO, told investors that the return of the classic meal deals will appeal to loyal customers. The chain will relaunch the once-loved $2-$4-$6-$8 value meal later this summer.
‘This was a value platform unique to Denny’s that launched years ago to amazing results, and it’s a unique equity only we have,’ Valade said on the call.
Spending Money to Make Money
‘We’re thrilled to bring back this consumer-friendly traffic-driving platform based on extensive testing and reengineering,’ Valade added.
While company’s often struggle to bring in customers, they still find value in spending money and resources of studies and tests to show what could boost their sales.
Other Chains Are Following
Another chain restaurant that has struggled to keep sales up in the face of inflation is Applebee’s.
This summer, they also released a value deal as it faced massive closures across the country. The large company has been forced to lose 35 locations this year.
Applebee’s Big Value Meal
In an attempt to win back some of their loyal customers who are used to much lower prices, Applebee’s introduced a new burger and fry combo for $9.99.
The executives at the company hope that a more reasonably priced item will bring back customers who are loyal to items like the $2 margarita.
Chilli’s Also Struggling to Keep Up
Super popular casual dining brand Chilli’s has also failed to keep up with super high inflation and low customer demand.
The company recently launched a $10.99 burger meal that is bigger and cheaper than a Big Mac from McDonalds that can cost as much as $18 in some big cities.
Why Did the Cost of Food Rise So Much?
Forbes conducted a study on why the cost of food rose so suddenly in 2023 and 2024.
The study concluded that extreme weather events, global supply chain issues, geopolitical instability, high energy costs, and relatively low foreign dollars compared to the U.S. were impossible to control, but all made food more expensive.
The Rise of the $15 Fast Food Meal
It probably won’t come as a surprise to most to find out that a Big Mac meal now costs roughly $15, and more in bigger cities, while Shake Shack, Five Guys, and Wendy’s all have burger meals well over $12.
However, much of those costs are caused by inflation, and many people are still blaming corporate greed for the drastic increase. In recent years, Mcdonald’s and other large companies have recorded record profits and paid out millions to CEOs.
