Denny’s Executive Summary
Denny’s unique “America’s Diner” brand positioning provides the promise of everyday value with craveable, indulgent products (comfort food) served around the clock in a friendly and welcoming atmosphere (come as you are). Denny’s wants to be known as the most admired and loved “local” family chain. Denny’s benefits from the popularity of breakfast for dinner (especially among younger consumers) and its goal is to leverage its unique 24/7 “On Demand” order platform (for take-out, curbside pick-up or delivery) in an effort to “age down the brand” and drive growth. Another goal is to convert very high brand awareness into trial and frequency by extending its menu positioning beyond breakfast all-day with trusted lunch/diner offers. The chain’s sales tailwinds include: a top priority of extending its operating hours with improved staffing levels; off-premise growth supported by digital upgrades; incremental virtual brand sales; improvements in foodservice & environment; upselling facilitated by Delight & Make It Right service model; remodeling; and better management of ticket times. Also, new kitchen & tech platform initiatives are designed to enhance the guest experience, drive operational efficiencies & enable the provision of enhanced menu offerings (crisper bacon, sausage more evenly browned & an improved bread baking process) across all dayparts (but particularly during dinner with new comfort food entrees, sides & desserts). Having said all that, it is notable that current economic pressures are most difficult on Denny’s core low-income demo and corporate recently reported that recent price hikes were not enough to offset cost inflation, contributing to a decline in the adjusted operating margins at company restaurants to 13.3% from 20.5% a year ago. In conclusion, while Denny’s management team is executing well around a very solid strategy, the brand is held captive to currently unfavorable economic conditions which are particularly hard on its core low-income demo and which also challenge Denny’s ability to execute around its key price value objective.