In the past eight years, Denny’s has returned to the NASDAQ, increased same-store sales, and found new ways to incentivize franchisees to invest both their capital and time into owning their own restaurants. In 2007 the company launched the Franchise Growth Initiative (FGI), which shifted its company-owned and franchise-owned mix to 20% and 80%, respectively.
Despite the ownership change of nearly 209 of its restaurants, the Denny’s corporation continues to support its franchisees by finding ways to boost sales through technology, menu upgrades, and facilities improvements. According to Steve Dunn, vice president of development, these are some perfect examples of how Denny’s continues to build on its innovative history.
“People aren’t aware of the innovation that goes into the brand and what keeps Denny’s relevant today,” he said. “A lot goes on behind the scenes.”
Building the brand
Denny’s began in the 1950s under the name Danny’s Donuts in Lakewood, Calif. Over time, the original store morphed into more of a coffee shop, and soon founder Harold Butler was inundated with requests to expand the menu.
When looking to add a new location, Butler was forced to change the name, and he unceremoniously chose Denny’s. From that point on, the company’s brand and footprint exploded right along with the nation’s burgeoning interstate highway system thanks to a 24-hour coffee shop and full-restaurant concept.
“At that time, the market was really only captured by local restaurants that weren’t on the highways,” said Dunn. “The 24-hour, full-service highway restaurant concept was one that Denny’s created.”
Dunn said Denny’s has continued to solidify that market leadership position over the past two years by developing a partnership with Pilot Travel Centers, which are located on interstates and highways nationwide. The partnership enables Denny’s to put its full-service, 24/7 restaurants inside of truck stops that normally house only fast food chains.
“When people are traveling, they like the familiarity of a brand that offers more than fast food,” said Dunn. “We satisfy that need when it comes to the family dining experience.”
Rock star style
With the birth of the 24/7 restaurant came the birth of the 24/7 customer. Over the years, it became obvious that customers coming to Denny’s late night had different appetites than those visiting on a Sunday morning or a Wednesday afternoon for lunch.
“Through our research and consumer testing, we realized the late-night consumers are younger and often want different food,” said Dunn. With that information in hand, the team at Denny’s went to work to develop menu alternatives to better suit the needs of its younger patrons.
Rather than trying to decide what consumers wanted, Denny’s approached rock bands such as the Plain White T’s, Boys Like Girls, Taking Back Sunday, and Hoobastank to design Rockstar Favorites, a new twist on some of Denny’s old menu favorites. Menu items include the Hooburrito, which includes chicken strips, onion crispers, pepper jack cheese, cheese sauce, and barbeque sauce and is served with tortilla chips.
Other items include Taking Back Sunday’s Grilled Chicken and Sausage Quesadilla, Taking Back Bacon Burger Fries, and the Plain White Shake, which includes vanilla ice cream, cheesecake, whipped cream, and white chocolate chips. “The bands actually came into our restaurants, stood at the grille, tinkered with the food, and came up with things they liked,” said Dunn. “One of the menu items even won an award this year for creativity.”
Denny’s also has a full “AllNighter” menu that includes munchies, burgers, dinners, sandwiches, and breakfast favorites. But that doesn’t mean the company has forgotten about its older demographics. The regular Denny’s menu includes items for guests aged 55 and older, with reduced prices ranging from $4.29 to $7.29.
A look you love
In addition to renovating its menu options, Denny’s rolled out a more contemporary décor in 2006. Since that time, more than 300 of its locations have removed the purples, bright greens, and pale pinks of the past and replaced them with what the company calls its “Sunrise” style.
Before jumping into the remodels, Denny’s hired a research company and conducted focus groups. So far, the contemporary feel that has replaced metal chairs and surfaces with wood and softer lighting has gone over well. “Customers feel it is more relevant to what they’re looking for in a full-service restaurant today,” said Dunn.
Denny’s brand and remodels rotate on a seven-year cycle, meaning a new concept is rolled out every seven years, so not all restaurants will be changing to this new look. And because the remodels can range anywhere from $150,000 to $250,000 per location, not forcing each franchisee to remodel is just another way Denny’s strives to make its relationship with its restaurant owners a healthy and prosperous one.
“Everyone that is due to remodel in the next two or three years will remodel to this image,” said Dunn. “If we change the image in three or four years, those restaurants will fit with the image we roll out at that time.”
Even with these myriad changes, one thing that won’t change when customers walk into any Denny’s location is an illustration of the company’s promise to deliver those dishes that people have grown to love. “The French Toast Slam” isn’t going anywhere, and neither is the infamous “Moons Over My Hammy.”
“The whole menu has been reviewed by various focus groups for our lunch, dinner, and late-night diners, and we really appeal to those individual customers,” said Dunn. “However, at the end of the day, we’re still the same restaurant customers have known and loved for more than half a century.”