Denny’s Goes Private; Pizza Hut May Hit the Market
Denny’s, the iconic diner chain, has opted to go private after selling to a group of investors. This decision comes as part of a $322 million transaction, excluding its significant debt. The investors include TriArtisan Capital Advisors, known for owning P.F. Chang’s, along with Yadav Enterprises, a leading Denny’s franchisee.
Denny’s Transition to Private Ownership
The Denny’s board has sanctioned this deal, which will result in the company’s stock being delisted from Nasdaq. This marks the end of a nearly 60-year presence on public markets. Previously, Denny’s shares had dropped about one-third in value this year. However, the announcement caused a 50% surge in early trading after the sale was disclosed.
CEO Kelli Valade stated that the transaction serves the interests of stockholders effectively, emphasizing that it maximizes value. Denny’s had explored options with over 40 potential buyers before this agreement was reached.
Challenges Faced by Denny’s
The chain has encountered difficulties since the pandemic. Originally open around the clock, Denny’s had to halt this practice during peak COVID-19 times. As a result, about 25% of its 1,600 locations have not reverted to 24/7 service. Heightened competition from budget-friendly dining options and fast-food outlets has also posed challenges.
- Denny’s reported 180 closures in the last two years.
- Sales at locations open for at least a year declined by 2.9% in the last quarter.
- Only ten remodels were completed recently.
Pizza Hut Explores Sale Options
Simultaneously, Yum! Brands has initiated a review of strategic possibilities for Pizza Hut, which could include a potential sale. Chris Turner, CEO of Yum! Brands, noted that despite efforts to address business challenges, Pizza Hut’s performance indicates a need for new strategies.
As competitors like Domino’s continue to excel, Pizza Hut faces ongoing struggles. It recorded a 6% drop in same-store sales at US-based restaurants open for at least a year. Meanwhile, Yum! Brands’ other establishments performed better, with Taco Bell achieving a 7% increase in the same metric and KFC reporting a 2% rise up to September 30.
Current Market Dynamics
Both Denny’s and Pizza Hut reflect broader trends in the dining industry, facing pressing challenges posed by consumer behavior changes and increasing competition. The outcomes of their respective strategies remain to be seen as they navigate these turbulent waters.
