Denny’s Says It Plans To Have ‘Net Unit Growth’ by 2026

Denny’s has a plan to turn its proverbial ship around, and those plans anticipate that the company will have “net unit growth” by this time next year.

Nation’s Restaurant News reports that the slide accompanying Denny’s CEO Kelli Valade’s recent ICR Conference presentation in Orlando, Florida, was headlined “Rise of a New Day.” Despite the company’s current plan to reduce up to 150 underperforming locations, the presentation itself was undeniably positive.

“For Denny’s, a reset was needed coming out of the pandemic. We’ve been evaluating the portfolio every way you can imagine and identified a group that couldn’t be rehabilitated,” Valade said. “It’s tough work we know we have to do.”

She added that the company is expected to return to net growth by 2026. The long-term forecast projects net unit growth of flat to 1% annually, unit volumes reaching $2.2 million (up from $1.9 million in 2023, per Technomic), and corporate margins in the mid-teens. Factoring in Keke’s Breakfast Cafe, acquired by Denny’s in 2022, the outlook becomes even more promising, with general and administrative costs decreasing by 5% to 6%, net unit growth of 3%, same-store restaurant sales remaining stable or slightly increasing, adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) rising by 5% to 7% each year, and debt leverage ranging from 2.5x to 3.5x.

“(Consumers) came back to life in the back half of the year,” Valade said. “I’m thrilled with the positive comps, but also the sequential improvement is important.”

Valade credited the casual dining chain’s loyalty program and new discounted menu for the proverbial ship turning around.

Denny’s Will Close 150 Locations by the End of the Year

Valade’s positive outlook goes against the recent announcement that the casual dining chain will close 150 locations by the end of the year.

Denny’s sites set for closure are either too old to refurbish or unprofitable. The restaurant business is yet to announce which locations will be affected, though according to Nation’s Restaurant News, 88 already closed in 2024.

“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,” said Denny’s Chief Global Development Officer Stephen Dunn, per USA Today.

The 150 closures account for around 10% of all Denny’s restaurant locations. Once the stores are closed, the business will have approximately 1,375 outlets remaining, the majority of which will be in the United States.