Denny’s Renaissance: How CEO Kelli Valade is Renewing Relevance at the 70-Year-Old Breakfast Giant

Renewing relevance and getting back to 24/7

When first looking at the opportunity to join Denny’s, Valade recalls noticing the massive potential of the breakfast giant. “I could see a yes, mature brand, but one that was being invested in.”

The casual-breakfast dining chain recently invested more than $25 million to improve and upgrade kitchen equipment, propelling the development of menu innovation while increasing efficiency and reducing waste. After completing the initiative, the brand also launched a new menu featuring a custom augmented reality experience. 

On the menu innovation side, recent additions like Mac N' Brisket Sizzlin' Skillet, Oven-Baked Lasagna, and Caramel Apple Pie Crisp are resonating with guests and outperforming expectations, leading to an 8.4 percent increase in systemwide same-store sales in the first quarter of 2023—the strongest new dinner product launch since prior to the pandemic. Plus, a new conversion to a common network service provider will improve kitchen verification systems, server tablets, and QR pay. Denny’s is also making progress on its “big three” near-term initiatives, which include staffing, 24/7 operations, and value.

“Yes, it's a 70-year-old brand, and there's some relevance and up-to-date elements to that model,” Valade notes—yet she also loves the clear positioning of the Denny's brand. “We say we're America's Diner for today's America, and how can you not love that? We uniquely hold that position, and in a crowded segment, whether it's family dining or casual dining, full-service restaurants, the point of difference can mean everything to people. And just leaning into and being the best version of yourselves is sometimes the best strategy.”

Part of Denny’s core identity goes back to when it was first founded as a coffee shop and open 24 hours a day serving breakfast, lunch, and dinner. When Denny’s started franchising in 1963, most franchise agreements required 24/7 service in most locations. But when COVID hit, many Denny’s had to close for the first time, and some still have limited hours of operation.

Nearly 72 percent of Denny’s restaurants are back to 24/7 operations, Valade says, which is the result of partnering with franchisees to help support them any way the brand can. “We’ve also continued to get more and more research that says, ‘look, your customer does want to know that we’re open, they do want to know they can count on Denny’s for that unique core equity for this brand,’” she adds. “Just that education of that and just watching the consumer come back to that normal behavior, that true recovery now in place in 2023, is helping build that business case. More and more every day get back open, and we’re really excited about that.”

We asked Valade her thoughts on Denny's key areas of growth, the future, and where it all goes from here:

On winning with franchisees

“I love the kind of franchisor that we strive to be. We say we only win if our franchisees win,” Valade says. “I could see that both from a distance and I could see it up close and the way we collaborate with our franchisees, in the way we speak about their businesses [and] the amount of respect we have for their businesses. In many cases, this is their livelihood, their life savings. In many cases, it's a family business. And that matters, that truly at my core matters.”

On appealing to a younger generation and virtual brands

“In the last four years, we now skew much younger than you would imagine and have 45 percent of our consumers are Gen Z or millennial, whether that’s coming in late night or ordering through our virtual brands, or really just appealing to those coming in to study or wanting to be seen in a restaurant while they’re doing some work. Over 50 percent of our guests are diverse. And back to being about today’s America, we’ve got that over and over again. And just leaning into that, and then wanting to make sure to tap into that. Coming in, we’ve done a lot of research about our consumer … it was a question of, do we really know, and is it time to refresh what matters most to our consumer, our core? Why do they love us, and how do we help them love us more? And we’ve focused on that.”

“It doesn’t matter what age, truly—it is about the nostalgia of a diner, and the comfort of a diner. Our latest marketing campaign is called Diner Time, we just launched that in March with free coffee during daylight savings time. There's a cultural crack we're leaning into at a time where people do want to be able to rely on something, people do want to go out and be seen, and they do want the comfort that we can provide in a diner. Young or old, whatever the reason, people do know what a diner conjures up, they do have a sense for this really almost warm feeling about that. And so our new ‘It’s Diner Time’ campaign is doing really well, but it's meant to say, if you are studying late night, if ‘adulting’ is hard today, it's diner time; come see us and we'll meet that need for you. And then comfort food along with it, new food that we've launched, that really does target all generations.”

“I will say in particular our virtual brands and then our kind of late night day part is where you see a lot of the younger generations are enjoying us then. And those virtual brands, as you can imagine, are a sweet spot for us. And there's something we can continue to do really well. Virtual brands and ghost kitchens and host kitchens became something really popular during the pandemic, and many have walked away from it now saying, ‘Yeah, that was good when I needed to just get food into people's hands.’ And while we are always focused on the experience in the restaurant, we also have close to 22 percent of our sales coming from those virtual brands and just off-premises takeout as a whole. And that's a sweet spot for us, we think, because we are open late night, we are returning to 24/7, we are where people want us when they want us. And yet, we've got this really cool thing that we can do, and reaching different audiences through off-premises and through on-demand. So that's pretty exciting for us, too.”

On Denny’s 53-foot mobile relief diner

“I'm super proud of the purpose of this brand that goes back 70 years to 1953. The purpose of the brand is we say we love to feed people, bodies, minds and souls. And so ‘we love to feed people’ came from Harold Butler, the first Danny's Donuts and coffee shop in California. That's how it started. And the story goes that we called him many years later and said, ‘What made you want to open a diner that was 24/7? That's a lot of work.’ And his simple answer was, ‘well, because I love to feed people.’”

“Feeding bodies, nutrition feeds bodies, there’s sustenance there, but it's bigger than that. Minds and souls say it's bigger than that. We've got a mobile relief diner that gives free meals to people. It's a 53-foot restaurant on wheels that travels around the country at times of need when people need us, whether it's a hurricane in a state like Florida or something else that happens that's a catastrophe, we literally deploy that mobile relief diner. We've given $12.5 million to No Kid Hungry over the last basically decade. We're fundraising for the United Way right now. So we give back a lot, and our connectivity to the communities is big.” 

On employee mental health benefits

“Recently we did a kickoff to May, Mental Health Awareness Month, and we're literally adding more mental health benefits to our employee base as we speak, but we kicked off a summit where we brought in experts in the area we brought in doctors, we brought in a nutritionist, we held it at USC University of South Carolina, upstate in Spartanburg, three weeks ago, brought the best thinking together but basically just to say, how can we be better at this?”

“And why wouldn't we put our name on that if we're about today's America, and our employee base is incredibly diverse? People are lonely today, people are needing that connectivity and to just talk about it. I've actually had people come up to me and say, ‘you know, I was struggling a bit because we're talking about it, I'm raising my hand and saying I'll take the help or I'll have a conversation that sounds different.’ So proud moments like that take on a whole new meaning when you think about the fact that somebody may need that story, that solution, that conversation, and you'd never know otherwise. It’s health equity, and at a time where our country, our world, needs it.”

“It's also about 18- to 24-year-olds. They are now saying that that age group is the loneliest, not baby boomers, but the younger generation, and that's our employee base. Those are the people that come to us, like I did at 16 and say, ‘I'm going to make a career out of this,’ and if they're struggling, this is a place where we can really say it can be different here and you belong to something bigger, you belong to this family, and we'll take care of the whole person here. So I can get pretty excited about that, as maybe is obvious, but I'm really proud. We just did that and that's the first of what we will do to add better offerings to our teams, but then also to engage the community in the conversation about mental health. It's conversation that needs to happen so why not us; it fits with everything we do.”

On her leadership style

“I am really fair, and a bit competitive, I think in a good way where I love bringing teams together, bringing our franchisees together. We have amazing franchisees, and I'm someone who seeks out the stories and is a storyteller, so a bit of my leadership style is really about telling stories and really kind of leading a lot through alignment and clarity that way.”

“I think people will tell you I care an awful lot about this business. And so part of my leadership style is just that I profoundly care about this industry. At my core, it's an industry that has been incredibly good to me, and it's an industry where you can do pretty amazing things. And again, our franchisees have some of those same but better stories of what this industry has allowed them to do.”

“I care a lot about our team members, they are on the frontlines—we learned that in the pandemic, if nothing else. It's not easy sometimes and when we get it right, and the guest loves us for it, it's amazing, but there were hard times for people in the restaurant space during the pandemic, so I'm grateful for what they do every single day, and that's part of the storytelling that needs to continue to happen as well, just how we take care of our employees really well here. And again, leaning into that even more so coming out of the pandemic, just recognizing what they've all been through. 

So in a nutshell, I think [my leadership style] is caring, competitive in a fun way, [and] trying to galvanize lots of folks around one common goal and what we're trying to do.”

On her favorite menu items at Denny’s

“There’s when I’m being good, and then there’s when I’m really like, who cares, I’ve had a good workout and I’m feeling like I can handle a couple Moons Over My Hammy, which is truly my go-to. (Ham and scrambled egg sandwich with Swiss & American cheeses on grilled artisan bread, served with hash browns.) I’ve reintroduced my adult children to it and they’re like, how did we grow up and not ever try this sandwich before.”

“And when I’m being good, the Fit Slam is an awesome go-to for a great, healthier alternative if you’re looking for it. (Egg whites scrambled together with fresh spinach and grape tomatoes, plus turkey bacon strips, an English muffin, and seasonal fruit.) So one indulgence and one that has a healthy halo. We’ve got both.”