Iconic national restaurant chain closing dozens of locations | Official Website of Louis Velazquez, entrepreneur, finance guy and tech innovator

Unless you’re in Las Vegas, it becomes fairly hard to eat in most American cities after 11 p.m. Things might stay open a little later in New York (the so-called “City that doesn’t sleep” but once you get into the late-night hours, your choices get pretty slim.

Most Domino’s locations will deliver pizza until 2 a.m. That’s great for college kids and people who made some bad decisions regarding alcohol, but it’s not a restaurant experience.

Waffle House operates 24/7 in most markets, but that chain has generally been a southern tradition and not a national one. You can hit a McDonald’s or Wendy’s drive-through until 2 a.m. in many markets, but that’s a lot like the Domino’s option, where it fills your need to eat but does not offer the communal late-night dining experience.

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Some cities have diners that stay open all night, but even in New York and New Jersey (the diner capitals of the world) that has become even more rare.

It’s expensive to keep a business open 24.7. Workers cost more at night, and, in many markets, there’s just not that much demand. That demand has also been impacted by improving food quality at convenience store chains like WaWa and 7-Eleven, which are generally open late at night.

For some restaurants that have built their business around the 24/7 model, this has caused significant problems.

America’s Diner closing dozens of stores

Denny’s (DENN) has been making major changes to its business. That included opening limited new locations and closing nearly 100 locations in 2024.

“Denny’s opened four franchise restaurants during the quarter and 14 for the full year. And as part of our previously communicated strategy to accelerate the closure of lower-volume restaurants, Denny’s closed 30 restaurants during the fourth quarter and 88 for the full year. These closures had an average unit volume of slightly under $1.1 million and were open on average for nearly 30 years,” shared CFO Robert Verostek during the chain’s fourth-quarter earnings call.

The CFO tried to explain the closures as being at least partly due to shifting populations.

Restaurant bankruptcies:

“In any mature brand, when restaurants have been open that long, it is natural that trade areas can shift over time. Accelerating the closure of lower-volume restaurants will improve franchisee cash flow and allow them to reinvest into traffic-driving initiatives like our tested and proven remodel program,” he added.

The problem is that Denny’s woes go beyond just closing some older locations.

Denny’s closing more locations, making another huge change

Denny’s closures have not stopped and about 75 more are planned in 2025. The chain, however, has struggled, but it’s not in a dire position.

In its full 2024 fiscal year, the chain saw operating revenue drop to $452.3 million compared to $463.9 million for the prior year. It also saw same-store sales drop by 0.2% while its sister chain, the breakfast and lunch restaurant, Keke’s, dropped by 1.7%.

The chain still made a profit for the year.

“Adjusted net income and adjusted net income per share were $28.6 million and $0.54, respectively,” according to its earnings release.

Denny’s CEO Kelli Valade knows the company needs to keep shrinking to get healthier. The chains plans another 75 or so closings in 2025.

“We believe this is absolutely the right thing to do to make our system stronger,” she said during Denny’s investor’s day.

The chain has also allowed some locations to make a once unthinkable change.

About 25% of Denny’s locations have dropped being open 24/7. In some cases, that means closing during overnight hours during the week, but keeping them on weekends. In other, it has simply decided to close and not operate during late-night hours.

That’s a change from the company’s original post-pandemic goal of returning all Denny’s locations to 24/7 operation.