FSR August 2023

DENNY’S RENAISSANCE

FROM CONTINUED SUCCESS IN THE VIRTUAL BRAND SPACE TO LATE NIGHT MENU INNOVATION, DENNY’S IS ATTRACTING A YOUNGER CUSTOMER BASE.

DFO, LLC (3)

itive impact at Denny’s and ensure the 70-year-old breakfast giant stays rele vant for young diners. RENEWING RELEVANCE AND GETTING BACK TO 24/7 When first looking at the opportunity to join Denny’s, Valade recalls noticing the massive potential of the breakfast giant. “I could see a yes, mature brand, but one that was being invested in.” The casual-breakfast dining chain recently invested more than $25 million to improve and upgrade kitchen equip ment, propelling the development of menu innovation while increasing effi ciency and reducing waste. After com pleting the initiative, the brand also launched a new menu featuring a cus tom augmented reality experience. On the menu innovation side, recent additions like Mac N' Brisket Sizzlin' Skillet, Oven-Baked Lasagna, and Car amel Apple Pie Crisp are resonating with guests and outperforming expectations, leading to an 8.4 percent increase in sys temwide same-store sales in the first quarter of 2023—the strongest new dinner product launch since prior to the pandemic. Plus, a new conversion to a

common network service provider will improve kitchen verification systems, server tablets, and QR pay. Denny’s is also making progress on its “big three” near-term initiatives, which include staffing, 24/7 operations, and value. “Yes, it's a 70-year-old brand, and there's some relevance and up-to-date elements to that model,” Valade notes— yet she also loves the clear positioning of the Denny's brand. “We say we're Amer ica's Diner for today's America, and how can you not love that? We uniquely hold that position, and in a crowded segment, whether it's family dining or casual din ing, full-service restaurants, the point of difference can mean everything to peo ple. And just leaning into and being the best version of yourselves is sometimes the best strategy.” Part of Denny’s core identity goes back to when it was first founded as a cof fee shop and open 24 hours a day serving breakfast, lunch, and dinner. When Den ny’s started franchising in 1963, most franchise agreements required 24/7 ser vice in most locations. But when COVID hit, many Denny’s had to close for the first time, and some still have limited hours of operation. Nearly 72 percent of Denny’s restau

rants are back to 24/7 operations, Valade says, which is the result of partnering with franchisees to help support them any way the brand can. “We’ve also con tinued to get more and more research that says, ‘look, your customer does want to know that we’re open, they do want to know they can count on Denny’s for that unique core equity for this brand,’” she adds. “Just watching the consumer come back to that normal behavior, that true recovery now in place in 2023, is help ing build that business case. More and more every day get back open.” In the last four years, Denny’s con sumer base has skewed “much younger than you would imagine,” Valade notes; 45 percent of the chain’s consumers are Gen Z or millennials, who typically fre quent the brand’s late-night day part and virtual brands. “And those virtual brands, as you can imagine, are a sweet spot for us. It’s something we can continue to do really well,” she adds. “And while we are always focused on the experience in the restau rant, we also have close to 22 percent of our sales coming from those virtual brands and just off-premises takeout as a whole … So that's pretty exciting for us, too.”

AUGUST 2023

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