Denny’s “Heritage” remodel program has anchored its revitalization. The modern, comfortable look is now visible in nearly 85 percent of the brand’s locations, with 40 refreshes completed in the second quarter of fiscal 2019 alone.
How big of a flip has it been? Denny’s chief brand officer previously said updated units were providing mid-single-digital sales lifts over legacy scores, and leading to better guest ratings across all dayparts and rating ticks, from customer experience to food scores. “It even makes the food taste better,” he told FSR.
At its heart, the Heritage design gives outlets a more old-fashioned-diner feel—something that’s helped open up the dinner daypart. It’s also central to Denny’s more-recent movement aimed at re-introducing customers to the brand. Whether through zany social media or a marketing campaign directed at diversity, not to mention off-premises and digital efforts coupled with a menu overhaul that touched nearly 80 percent of its core entrees, the chain wants to invite guests back to experience improvements. And if the stores themselves don’t reflect that energy, the message and the reality won’t be synched. Simply, it’s hard to convince guests something new is going on if it doesn’t look that way.
For operators, it’s a race to get those aforementioned returns and also just to operate restaurants they feel better about. Conversions have played a role, too. In one example, Mike Rommel turned over four locations in one calendar year. He now operates nine locations across Maryland. In that fleet, one store was once a Uno’s Pizzeria. Another a Ruby Tuesday’s. One restaurant was even a local rib joint. Conversions allowed Rommel to turn each of the spots into a Denny’s within 75 days.
Rommel took some time to chat with FSR about the Heritage remodel program and what’s it’s been like to be a part of Denny’s revamp from the ground level.
We’ve heard a lot about the Heritage remodel program from the corporate level. As a franchisee, what are some of the direct changes that make the biggest impact?
From my perspective, I’d say one of the most impactful benefits to the remodels has been how our employees have responded to the updated look and feel and ultimately, how that passion and excitement for these updated restaurants transcends to our guests—it really does come full circle. The Heritage locations capture the true essence of Denny’s with classic diner elements, but with a contemporary twist.
When our employees are engaged and feel motivated by their workplace and in this case, their workspace, it shows. In my 33 years in the restaurant business, I’ve noticed there’s a direct correlation between happy employees and satisfied customers. Especially now in the competitive foodservice landscape. It’s important that we continue to attain our diner’s attention, which is no simple feat, but offering great food in a restaurant that’s vibrant and full of passionate employees, it certainly helps us to reach that goal.
In stores you’ve remodeled, what features have resonated the most?
As soon as guests walk in, they are completely blown away by the ambiance of the Heritage design. The warm and welcoming modern features truly offer a unique dining experience for both new and returning guests. With Denny’s iconic yellow and red colors incorporated throughout the restaurant, the bright-yellow light fixtures draw the most attention and are a great conversation starter once they are seated in a booth, which is another feature that our diners frequently comment on. The contemporary booths and tables are really tied together with the new updated hardwood floor tiles. When diners eat out, it’s important that we provide a full-sensory experience and our Heritage restaurants deliver on all aspects. And as we already know, consumers like to shop and eat at establishments where they have an emotional connection, so it’s essential for us to establish that when we have the opportunity to show new and returning diners about the progression and revitalization of the Denny’s brand in their own community.
Talk about the conversion process and why that’s been effective? How did you manage to revamp a store in three months? Renovating four restaurants in one year is no small feat. What are some ways you were able to accomplish this? And how important was it to the store’s future performance?
Good planning and having knowledgeable local partners are extremely vital to having an efficient construction process, no matter what the estimated timeframe for completion is. As a restaurant operator and developer, my recipe for success with undertaking a conversion project involves gathering the right resources and information—this is where enlisting the help from local architects comes into play. Their expertise, vast network and knowledge of the local planning and permitting processes has proven to be instrumental for all of my projects with Denny’s. It’s also important as a business owner to trust your partners throughout the process. In my experience, collaboration and guidance from seasoned construction professionals (both the local and Denny’s corporate teams) will help to ensure the project can be executed in a timely-manner, especially when you’re juggling more than one project at a time. All in all, when a restaurant is closed and under construction for an extended period of time, this means that our loyal customers are of course, prone to dining elsewhere. Knowing and understanding how invaluable loyalists are to the success of your business is a key-driver to any restaurant opening and its overall performance.
What are some ways you’d like to see the remodel program evolve?
Denny’s has a number of competitor strengths as a franchisor and I truly believe that the Denny’s Heritage remodel program is one of them. Our leadership team is highly-knowledgeable and I’m pleased with how the Heritage remodel program has continued to develop since its inception in 2013. The ongoing enhancements to our food and atmosphere continue to receive favorable feedback from guests and from a franchisee standpoint, a positive guest experience and increase in sales is highly viable as a business owner.
What does the return on updated units look like compared to legacy ones?
As a franchisee, the remodel package offers an attractive ROI with mid-single sales increases.
From a broader perspective, what is the ground-level experience like competing in family dining right now? How much is it changing and what are you doing to stay ahead?
Denny’s is uniquely positioned as one of the most iconic “value driven” brands that focuses on hospitality and offers consumers a variety of food options at an affordable price. The brand’s ability to transform our image while keeping the value aspect of our business has been key to motivating our guests to see Denny’s as a relevant brand and satisfying their cravings for diner favorites. Coupled together with other in-restaurant and digital marketing initiatives, like our ‘Denny’s on Demand’ platform, makes for a solid strategy to keep the brand ahead of the game. As long as our guests understand our ongoing commitment to Denny’s food quality, value and how we ultimately share these experiences with them, the brand can continue to thrive in this competitive market.
How has technology changed the way your stores do business?
Absolutely. As a legacy brand, technology advancements have allowed for Denny’s to become a more “modern” brand. Especially now with all generations (Baby Boomers, Millennials and Gen Z) typically consuming some sort of virtual technology on a daily basis, we’re able to leverage this trend to reach a wider audience. Over the past few years, we’ve seen off-premises delivery and mobile ordering becoming more and more popular with consumers, so we had to keep up. As a 24/7 in-restaurant concept, this really meant we had to evolve to expand to also include a 24/7 digital model for ordering online and through your phone or desktop. In 2017, the brand completely revamped our mobile app to offer both takeout and delivery options 24 hours a day, seven days a week and to date, around 79 percent of the domestic system is actively engaged with one or more delivery service options. I believe there’s still a lot of potential to grow within this space.
Lastly, talk about labor. It’s the hot-button issue for restaurants right now. How do you approach the challenge as a franchisee?
Retaining great employees in today’s scarce labor market is the ultimate goal as a franchisee. Dealing with employee-related issues can be seen as one of the greatest challenges in franchising, or really any business model, but at the end of the day, it’s about making sure that all of your employees are taken care of and are treated fairly in their work environment.