Denny’s Goes Private; Pizza Hut May Hit Market

Bassyonni

ago 2 hours

Denny’s Goes Private; Pizza Hut May Hit Market

Denny’s, a well-known diner chain with a history spanning over 70 years, is transitioning to private ownership. The company has entered into a $322 million agreement with TriArtisan Capital Advisors and Yadav Enterprises, a significant Denny’s franchisee. This deal is set to take Denny’s off the public stock market, marking the end of its nearly 60-year presence on Nasdaq.

Denny’s Transition to Private Ownership

On Monday, Denny’s announced the successful approval of the deal by its board. The acquisition is pending shareholder acceptance. After the announcement, Denny’s stock surged by 50% in early trading. However, prior to this news, the company’s stock had already seen a decline of nearly 33% this year.

CEO Kelli Valade stated that the decision came after talks with over 40 potential buyers. The management believes this transaction maximizes shareholder value and is the best strategic move for the company.

Challenges Faced by Denny’s

Denny’s began experiencing significant challenges amid the COVID-19 pandemic.
The chain, known for its 24-hour service, had to alter operations during peak pandemic times.
About 25% of its 1,600 locations have not returned to full-time operations since the pandemic.
The company has closed 180 locations in the last two years as part of a turnaround effort.
Sales at locations open for at least a year have fallen by 2.9% in the most recent quarter.

In response to declining traffic, Denny’s is implementing remodels and new menu items, but has only completed ten remodels so far.

Pizza Hut’s Strategic Review

In a related development, Yum! Brands, parent of Pizza Hut, has initiated a formal review of strategic options, including a potential sale of the brand. This comes as Pizza Hut faces declining sales and intensifying competition from other pizza chains, notably Domino’s and Papa John’s.

Pizza Hut’s Sales Struggles

Yum! Brands reported a 6% decline in same-store sales for Pizza Hut in Q3.
The brand has been attempting to recover by introducing new value-oriented menu items.

Yum! Brands CEO Chris Turner emphasized that further action is necessary to maximize Pizza Hut’s value. While no deadline has been set for the review, Yum!’s other brands, such as Taco Bell and KFC, showed promising performance with increases in sales.

As the restaurant sector continues to evolve, both Denny’s and Pizza Hut are seeking viable strategies to enhance their positions in a highly competitive market.