Irvine, Calif, Aug 20 - Denny's Corp, best known for its round-the-clock diners and all-day breakfast, is doubling down on its core business in a bid to reinvigorate the 55-year-old chain.
"We're going back to who we are," Chief Executive Nelson Marchioli told Reuters in an interview Tuesday.
Breakfast entrees already account for 55 percent of all entrees sold at the chain of around 1,500 restaurants and Marchioli wants to build off that base.
Denny's shares have dropped 30 percent year-to-date, and the company expects sales at many established restaurants to fall this year as its customers, who typically make $25,000 to $50,000 a year, wrestle with the tough economy while fast-food chains beef up breakfast menus.
Fighting back, Denny's is pushing take-out breakfast, rolling out new menu items like $5.99 fajita-inspired breakfast skillets, and testing a line of breakfast sandwiches including the Grandslamwich -- inspired by its signature Grand Slam breakfast.
The company is also amplifying youthful vibes in its late night business and testing a restaurant design dubbed "Fresh Express" in a handful of Dallas stores.
Those stores have a traditional sit-down restaurant as well as a separate section that handles take-out and limited-service dining, which executives think would be a good fit for airports and universities.
BREAKFAST LEADING THE WAY
The battle to own the $81 billion U.S. breakfast market has changed significantly in recent years, as McDonald's Corp and other fast-food companies have entered the fray -- selling portable and low-priced fare and coffee.
Fast-food giant McDonald's, with its nearly 14,000 U.S. locations, has taken breakfast by storm. Breakfast is the company's fastest growing business, fueled recently by its new Southern-style chicken biscuit and coffee.
Bob Goldin, executive vice president at restaurant consulting firm Technomic, said Denny's faces an uphill climb because it has fewer units than McDonald's and no drive-throughs -- except for one being tested in Indianapolis.
"McDonald's has such an iron grip, at least during weekdays," said Goldin.
"Promoting breakfast around the clock is a good idea. There's growing demand for that," said Goldin, who gives the company credit for trying new things as fast-food restaurants nibble away at the low end of the market.
The efforts from the Spartanburg, South Carolina-based eatery come as it is forecasting 2008 same-store sales that are flat to down 2 percent at company-owned stores and franchise same-store sales that are down 2 percent to 4 percent.
Denny's and its rivals are working hard to lure customers as they eat at home more often due to soaring food and fuel prices during the housing-led U.S. economic downturn.
At the same time, competition among restaurant chains has intensified and food and other costs are up dramatically.
Still, Marchioli said Denny's -- which emerged as a stand-alone company after its former parent Flagstar Cos filed Chapter 11 bankruptcy in 1997 -- is stronger financially than it has been in 20 years.
Denny's gets more than half of its overall business from noon on Friday until 3 p.m on Sunday. It recently started targeting weekday commuters by selling take-out breakfast in a compartmentalized container designed to keep pancakes warm and fluffy and bacon hot and crisp.
"We miss out on that commute and we need to figure out how to get that," Marchioli said.
"They've been flat for years," Goldin said. "Their challenge is demographics. It's an old consumer base."
To appeal to 18- to 24-year-olds who make up about half of its late-night customers, Denny's has introduced new shareable dishes during those hours and value menu items priced at $3.99. It also plays alternative rock late at night and allows servers to dress in jeans and T-shirts.
Denny's has also recruited music groups like the Eagles of Death Metal and the All-American Rejects to dream up new menu items.
Denny's shares fell 14 cents, or 5.14 percent, to close at $2.64 on the New York Stock Exchange, down about 30 percent from $3.75 on Dec. 31.