Denny’s has ordered franchisees to keep their doors open 24/7 after half of them slashed their hours during the pandemic — and for those who are still closing up at night, “carrots and sticks” are on the menu.
The family friendly chain — long known for serving breakfast, lunch and dinner 24 hours a day, seven days a week — hasn’t been living up to its reputation since the pandemic. According to the company, only 870 of its 1,592 eateries are open around the clock.
That’s down from about 95% of the chain being open 24/7 before COVID-19. Denny’s Corp. management is looking to get the figure back to at least 90% of the Spartanburg, SC-based chain’s locations nationwide, Chief Executive Kelli Valade said on a Tuesday conference call.
To make that happen, Valade said Denny’s is offering “modest” financial incentives right now to franchise owners who increase their hours. But starting next year, those “carrots” will be replaced by a “stick” to coax the holdouts, chief financial officer Robert Verostek said on the earnings call.
“If you use the analogy, we’re in the ‘carrot’ timeframe of our incentive with a potential ‘stick,’ or accountability to use a better word, in 2023,” Verostek said. “It is a requirement to be open 24/7.”
In response to questions from analysts, Verostek didn’t elaborate on the consequences for not complying. The company didn’t immediately respond to The Post’s requests for comment.
Denny’s management argues that diners are clamoring for late night hours and that its 870 eateries that have resumed business as usual are reaping the rewards with higher overall sales.
The company is having “one-on-one discussions with every franchisee,” former chief executive and board member John Miller said on the call. “This is something that we’re pretty relentless in our focus on.”
Denny’s is struggling to buck a nationwide trend towards reduced hours, said restaurant analyst Mark Kalinowski.
“It’s very clear that the number of hours restaurants are in operation is down in aggregate,” as restaurants struggle to hire enough workers, Kalinowsi told The Post.
Denny’s is rare among large restaurant chains for staying open all night – and it clearly doesn’t want to lose market share to some of its competitors like IHOP, expert said.
Known for its ‘All American Slam’ breakfast, which features three scrambled eggs with cheddar cheese, two bacon strips and two sausage links, hash browns and bread,. Denny’s hasn’t always gotten its marketing message right.
In 2017, it launched a new mascot – a smiling breakfast sausage link – that critics likened to a turd.
Management is eager to jumpstart the company’s growth. In the quarter ended Sept. 28, comparable store sales rose just 1.5% at its franchised eateries compared to the same period in 2021. Total revenue was up 13% to 117.5 million in the quarter.
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