Denny's is closing 150 restaurants over the next year

NEW YORK -- Denny's is closing 150 restaurants over the next year, and the 71-year-old diner chain is mulling a major change to its 24/7 operating hours.

Fifty locations are set to close by the end of 2024, while the remaining 100 will shutter in 2025, Denny's announced in an earnings call Tuesday. That amounts to a tenth of its restaurants, leaving 1,375 locations once completed. A specific list of closing restaurants wasn't immediately announced.

Denny's is targeting "underperforming restaurants" that are weighing down the company's financial performance, according to Steve Dunn, Denny's executive vice president and chief global development officer. The affected locations are either too old to be remodeled or in areas that have become unprofitable.

The chain, best known for never closing its doors, is also making a major concession with its franchisees over the requirement of remaining open 24/7. Since the pandemic, about a quarter of its restaurants have not returned to those around-the-clock hours, so Denny's is easing up on the requirement for a franchise to do so.

Denny's joins a broader trend of restaurants slashing hours since the pandemic. Major shifts in customer behavior, including earlier dinner times and drinking less alcohol late into the evenings, have held back a return to pre-pandemic patterns. Higher labor and food costs have also led restaurants to close earlier.

For Denny's, Dunn admitted that 24/7 operating hours are a "contraction that happened for everyone" and that less foot traffic during those off hours means it "didn't make sense" for a restaurant to remain open.

Other changes at Denny's include a slimmed-down menu, with the number of options whittled down to 46 from 97. The chain also noticed that cash-strapped adults were increasingly ordering off its kid's menu to save money.

Denny's (DENN) shares dropped 17% Tuesday after earnings missed analysts' expectations. The stock is down 50% for the year.