Denny's Mass Overhaul and Closures

[ClownLoach]

The removal of 24/7 and slashing the menu sounds to me like they are afraid they're going to lose more than 150 restaurants as franchisees revolt. I don't think they really have any control over the closure situation and this is all PR to shift the public perception so they aren't surprised when they see closures in their neighborhood. Behind the scenes they'll probably shop around the planned closures to new franchisees and try to minimize the impact except at the locations they described as "too old to remodel" which are obsolete.

Those two decisions are clearly going to be very beneficial to those franchisees as their costs will go way down. Denny’s could do just fine with their breakfast menu and a few hamburgers or sandwiches. They don't need a big menu with slow sellers of dubious quality like their Lasagna, Brisket Mac, and Salmon. Eliminating that slow moving stuff will lead to better food quality too. I assume they're also going to get rid of all the other weird food they're making for ghost kitchens, many chains are eliminating those practices entirely as they recognize the labor and food cost doesn't pan out.

I wonder if it is one or those franchise operations where the parent owns the assets, owns the building etc. And all the labor and other expenses come from the franchisee.

Franchise fast food/restaurant business has become extremely difficult. The cost increases on food and labor combined with a customer base that is not very receptive to price increases has created difficult conditions. Increased costs for rent and equipment repair/maintenance has also been very painful to restaurant operators. Pile on franchisor required "remodel" programs where you are forced to remodel locations that should be closed and ridiculous programs like "new breakfast" (that we have to make effort to give away let alone turn a profit on) or 24 hour operations and it gets even more difficult.

I think it is a positive Denny's is going to simplify operations for its franchisees. I just hope this doesn't cause too much of a customer backlash with the menu changes... I am thinking of what Steak N Shake did...

I thought Denny's had more corporate restaurants so I wonder if some are corporate owned/franchisee operated.

Ironically in Reno area there have been some "new" Denny's that popped up over the years; the new locations closed but the older locations remain open.

Add to all that a serious dearth of talent amongst franchisees!

It's just more evidence that the franchise model is dying. Too many mouths to feed, and independent operators cannot get the low cost credit that big corporations can. They have to cut corners to stay afloat.

But I also think that the operators who don't care about the way their workers are treated push franchising to insulate themselves. They know that the skeleton crew of 3 people can't run the restaurant properly so wage theft and other issues happen. The restaurant gets caught and the parent company shrugs and says "we have a zero tolerance program for operators that treat people that way." Yet their corporate people come out and inspect, they probably have a District Manager who does visits and is supposed to talk to people, etc. but somehow these charges will always be a "shock" and "unique to that location."