Denny's Restaurant Chain - Essay Example

? Denny’s Restaurant Chain (Add (Add (Add Denny’s Restaurant Chain Denny’s restaurant chain was founded by HaroldButler in Lakewood, California in the year 1953. At first, it was named Danny’s Donuts. By the year 1959, the number of restaurants increased to 20, and the chain was renamed as Denny’s. The growth of the business was considerable and by 1981, there were nearly 1000 restaurants in 50 U.S sates. The specialty of Denny’s restaurants is their round the clock service throughout the year. So, Denny’s restaurants are often situated in areas near to freeway exits, bars and service areas. The restaurants never close except when legally necessary. Denny’s offers breakfast, lunch, dinner and salads. It was in the year 1977 that the company started its Grand Slam breakfast. In 1987, Trans World Corporation bought the Denny’s and soon, in 1991, the headquarters of Denny’s was moved to Spartanburg, South Carolina. Soon, Kohlberg Kravis Roberts bought a considerable amount of share in Trans World Corporation and then, forced the company to sell its many unimportant projects. Thus, Denny’s hotel chain became its primary business. Soon, Trans World Corporation renamed itself to Denny’s Corporation. Presently, the company trades under the symbol NASDQ: DENN. Today, the company operates through 1600 restaurants throughout 50 US states, Canada and Mexico. In addition, there are 578 Denny’s restaurants in Japan operated by a subsidiary of Seven & I Holdings, and there are seven Denny’s restaurants in New Zealand. Admittedly, the company has a large number of special offers and gift programs that help keep the customers loyal and interested. One such activity is its practice of offering free meal to everyone who visits the restaurant on his or her birthday. Though this activity of promotion was dropped by the company in 1993, many individual franchisees even now continue this practice. Also, the company uses the latest technology so that every time it updates its menu, its franchisees easily manage to get the latest version in no time (Hughes Network Systems, 2011). In fact, a point that keeps the company afloat in the present diminishing economic situation is the quality and care it offers. To illustrate, the Dateline NBC conducted a thorough survey of 10 most popular dining chains in the US in the year 2004. In the survey, it was found that Denny’s had the lowest number of violations of health standards. According to the company, the reason behind this success in protecting the health of customers is the strict adherence to Hazard Analysis and Critical Control Points. Though there arose many allegations of racial discrimination against the company, the company managed to improve its position and presently employs a considerable proportion of ethnic and minority staff. As of 2010, minorities represent 62% of the company’s total workforce and 41% of the overall management. In addition, 40% of all the franchisees are owned by minorities, and nearly half of the Board of Directors is minorities and women. Thus, for two consecutive years, the company entered Fortune’s ‘America’s 50 Best Corporations for Minorities’ list (Dennys.com, n.d). Like many other major restaurants that are primarily dependent on blue-collar consumers, Denny’s too has been hit by recession. For example, in the fourth quarter of the year 2008, sales fell by 6.1%. For the year, fall was 3.7%. As a result, the company stock price plunged 30.5% in a period of one year. However, Denny’s was not ready to succumb to the recession. It started aggressive plans to meet the hard times. To attract the customers in the time of recession, Denny’s has adopted an aggressive strategy. The strategy is to practically give away the company. To illustrate, the company aired a commercial in February that offered free Grand Slam breakfasts to all who walk into the restaurant any time between 6 am and 2 pm, in the name Super Bowl. Admittedly, there was a rush and nearly 2 million free meals were served. Then, the company adopted the next step by offering two-for-one food sales. Admittedly, there are people who believe that such promotions will only make the position of the company even weaker. However, the company CEO Marchioli gives another picture. It is claimed that the customers buy additional things like juice and coffee along with their free meals. In addition, such offers ensure repeat visits, thus making a profit that is not so less. There are people like Rob Frankel who believe that the company is panicking and doing such things that can backfire. It is pointed out that encouraging freebies will have an adverse impact on the image the company has created. The things which were priced highly so far are now offered free of cost. This raises serious questions about the quality of the products and the credibility of the company. In total, as Gregory and Avenel (2009) commented, what happens is that the company loses its image and presents itself as a cheap brand. However, the interview with the General Manger Joe Stark provided a picture that is in sharp contradiction with what Frankel said. Joe Stark pointed out that though there was drop in business as a result of the recession, the company managed a come back and had two of the best months of business, and expressed belief that as far as the company does not move away from its tradition, it does not need to worry (Interview). However, media shows a Denny’s that makes radical changes. Denny’s introduces a large number of new offers in order to cope up with the recession. In April, 2009, it introduced buy-one-get-one free deal, and it would be followed by offers like baseball-themed food at the end of the NCAA basketball tournament. Also, the company had to concentrate on the ‘broke kids’ who do not have sufficient to pay for clubs or movies. It is this group of afterhour visitors who made the company launch ‘Denny’s All Nighter’. Admittedly, there is an influx of the hungry folks, and to meet their needs, the company also rearranged its menu with value meals. As a part of this strategy, the company allows rock bands to come and play in the restaurant live between 10 pm and 5 am. The reason is that the bands will bring their fans with them. The U.S Foodservice Landscape 2010 dated May 2010 provides an insight into the way recession hit Denny’s in the US. The Study was conducted by a market research group named Packaged Facts (The U. S. Foodservice Landscape, 2010). According to the company, the challenges brought by the recession are plenty. The first point is that as its considerable proportion of restaurants are located in California, Florida and Arizona; the states which are hard hit by recession, the company is seriously influenced by the macroeconomic weakness. Secondly, younger, third-shift workers who were the late night visitors to the restaurants and were responsible for 25% of the total sales are seriously hit by the recession. So, the company primarily aims to retain its existing demography of customers and to increase the guest count by reducing profit margins. Thus programs like All Nighter, Build Your Own Grand Slam, Everyday Value Slam, and Better For You menu took birth. Thus, if someone thinks things went wrong for the company in total, they are seriously erred. In the year 2008, the company had a turnover of $ 20 million, showing a 90% rise from its 2007 performance. According to the company’s CEO Marchioli, the reason is simple: Denny’s added specialty items, developed a new image and revamped its menu. Thus, Marchioli claims that the economic situation is perfect time for some strategic business (Moldova.org, 2009). Thus, in total, the company reported its third quarter financial results in 2011. According to the reports, the system-wide same-store sales increased by 0.8% at franchisees and 1.1% at company-owned units, thus showing the second consecutive quarter with franchisee and company sales growth. Thus, the income increased by 28%, reaching $ 12 million (Yahoo Finance, 2011). Thus, Mark Wolfinger, Chief Administrative Officer and Chief Financial Officer of the company claims that the company’s efforts to improve business have become fruitful as there is increase in profitability and same-store sales. In total, it becomes evident that the company has managed to struggle through the difficult times of recession by introducing radically new value added strategies that allow its consumers to continue their purchases despite reduced income. To sum up, Denny’s has proved that old dog will learn new tricks out of necessity. References Dennys.com. (n.d). Menu. Retrieved from http://www.dennys.com/#/menu Gregory, S & Avenel, N. J. (11 April 2009). Denny’s: Where the food is free and drunks can pee. The Business. Retrieved from http://www.time.com/time/business/article/0,8599,1890709,00.html Hughes Network Systems. (2011). Denny’s restaurant franchise: Denny’s franchise owner saves time and money with HughesNet. Retrieved from http://www.hughes.com/NewsEvents/CaseStudies/Restaurant/Pages/DennysRestaurant.aspx Moldova.org. (2009). Denny’s finds recession good for business. Retrieved from http://economie.moldova.org/news/dennys-finds-recession-good-for-business-176099-eng.html The U. S. Foodservice Landscape 2010. (2010). Restaurant industry and consumer trends, momentum and migration. Packaged Facts. Retrieved from http://www.packagedfacts.com/docs/PF_Foodservice_Landscape_2010_Sample_Pages.pdf Yahoo Finance. (2011). Denny’s third quarter earnings sneak peek. Retrieved from http://finance.yahoo.com/news/Denny-Corp-Third-Quarter-wscheats-3642400805.html Read More