A shift by customers toward higher priced items on Denny’s menu drove traffic and sales gains during the first quarter, company officials said Monday.
Spartanburg, S.C.-based Denny’s Corp. reported a systemwide domestic same-store sales increase of 7.2 percent for the first quarter ended April 1, the highest quarterly results in a decade.
The increase included a 1.7-percent rise in traffic, as well as a 5.4-percent increase in average check, including the benefits of menu price increases and a shift in menu mix, executives said during a call with analysts Monday following the report.
Denny’s president and CEO John Miller attributed the strong results to a brand revitalization effort that is still in its early stages, as well as the improving macroeconomic environment.
“The execution of our brand revitalization strategy focused on improving the food, service and atmosphere of our restaurants, and that positions Denny’s to benefit from the improving consumer economic environment,” Miller said. “The growth in guest traffic demonstrates how we’re truly benefitting from solid execution of our initiatives to deliver a differentiated experience, making the brand more relevant every day with every shift to every guest.”
Menu improvements, as well as showcasing fresh ingredients with more pictures on the menu and upselling by servers, has helped, Miller said.
Customers are shifting away from the chain’s “$2 $4 $6 $8 Value Menu” and instead ordering more appetizers and higher-priced entrées on the core menu, as well as limited-time offers, he said.
In June, the family-dining chain is planning another menu update that will include new items and some menu deletions, with a focus on “showcasing fewer but harder-working options, offering traffic-driving appeal as well as operational efficiencies,” Miller said.
During the first quarter, the chain featured a “Skillets Across America” promotion of skillet dinners with regional flavors. The current spring menu is “Denny’s with a Twist,” spotlighting comfort foods with sweet or spicy flavors, like the Banana Bread French Toast Slam and Sriracha Spicy Super Chick’n.
Denny’s revitalization plan also includes remodeling. Fewer than 20 percent of the chain’s 1,694 restaurants have been reworked with the new “Heritage” design. Miller said another 50 restaurants will be remodeled before the end of the year.
Remodeled units are showing higher sales averages. Miller said the company’s 160 restaurants, which include more remodeled locations, average about $2 million in annual sales, compared with $1.5 million systemwide.