If, like me, you’re a big fan of diner food…then I have bad news.
Because they’ve been dropping like flies for the last several years.
And that has, unfortunately, culminated in perhaps the greatest disappointment of all – Denny’s, known as “America’s Diner” (it’s literally on the signs), has thrown in the towel and announced 150 restaurants are closing.
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Denny’s has been hit by a bunch of issues (which we’ll get to in a minute), which is leading the chain to dramatically reduce its store count.
More specifically, Denny’s recently announced that, in addition to closing 88 restaurants last year, they’re closing between 70 and 90 this year as well.
That’s 158-178 restaurants, which is more than 10% of Denny’s total store count.
It’s a huge blow to lots of longtime, loyal communities that have supported the company for decades.
And the pain probably isn’t going to stop there, unfortunately…
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Diners like Denny’s have been struggling under the burden of a number of difficult situations over the past several years.
The 2020 pandemic, of course, was a huge blow to countless restaurants.
Independent estimates differ, but they range from a low of “just” 16,000 restaurants wiped out…to as many as 90,000.
In any scenario, though, of course that was a massive impact.
(In fact, it even managed to wipe out a beloved restaurant featured on “Diners, Drive-Ins, & Dives” that had been a community pillar for 30+ years.)
And of course…
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We’ve seen a trifecta of more recent issues:
– Labor shortages (exacerbated by recent ICE raids)
– Inflation (which has compressed margins)
– The looming threat of tariffs (which threaten to further compress margins)
But even leaving all of those aside…there’s a big shift happening that is directly impacting diners like Denny’s.
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Diner food is not…exactly…healthy, generally speaking.
I mean, that’s part of why I think lots of us love it so much!
Greasy, filling, good, traditional food is just…awesome. Breakfast at all hours? Yes please!
But the fact of the matter is that America’s overall food tendencies are shifting…
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Gen-Z in particular is really focused on eating healthier – to the detriment of places like Denny’s.
And they’re also pushing for more innovative concepts, like fusion and other newer kinds of dining.
That leaves old-fashioned, traditional places like Denny’s looking…a little out of step, unfortunately.
Plus, there’s also the matter of…
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Fewer and fewer people are eating inside restaurants, with the clear majority (about 60%) of food orders now coming through takeout.
Delivery services like DoorDash and UberEats have made this super easy.
And while, of course, Denny’s plays on delivery apps…
The point of diner food is that you eat it at the diner. There’s a community and a camaraderie there.
It’s just not the same when it’s on your couch.
And of course, there’s another bigger issue:
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The combination of delivery apps and more people opting for takeout has forced restaurants onto a pretty even playing field.
It’s no longer good enough to be the most nearby place, or the one in the great location downtown…
Because, if it’s all being delivered anyway, who cares?
That’s leaving longtime incumbents like Denny’s at a severe disadvantage.
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Even leaving all of that aside, Denny’s is facing specific issues…
Namely, its direct competitors are working very hard to step up their game.
Cracker Barrel has reinvented its menu and is aggressively courting new diners…
And Denny’s is increasingly being pinched by lots of smaller competitors who are coming after its crown.
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I also want to call out here that Denny’s has made some…let’s call them “interesting” moves for a company that’s struggling to retain customers and attract new ones.
For one, they’ve gotten rid of all kinds of traditional fan favorites…essentially telling longtime, loyal customers that they’re not wanted anymore.
And then, in response to the huge egg shortages earlier this year…they slapped a surcharge on eggs!
Put simply: These were not customer-friendly moves.
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Denny’s is focusing on closing or rehabbing over 250 of its nearly 1,500 restaurants, so there’s a big brand transformation in the works.
Whether they ultimately exit this tough phase stronger and rejuvenated…or weaker and sliding toward bankruptcy…really depends on how well they execute from here.
And also on how customers respond.
And to that end…
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I’m of course concerned about Denny’s specifically as a brand.
But more broadly, I’m worried about diners and restaurants as a whole.
What are you doing to support your local stores?
Share your best ideas in the comments!
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