For the restaurants open 24/7, Miller said consumers are being reintroduced to the brand, especially during the late-night daypart. Quick-service category sales held steady throughout pandemic, thanks in large part to the drive-thru and delivery/takeout acceptance among consumers. But coming out of the past year and a half, guests are ready to indulge in more full-service experience again.
“With that comes a little bit more of a cabin fever or an interest to try some full-service meals that are maybe different than a handheld drive-thru type of meal,” Miller said. “So with that, I think we have some stickiness that remains post-pandemic that's driving this transaction.”
The off-premises sales Denny’s acquired throughout the pandemic may very well stick: takeout went from 12 percent to more than 20 percent from 2019 to 2021, although the Q2 season brought the metric down a bit.
“We expect that a considerable amount of that continues to persist as part of the new normal of how people trade their meals from takeout, delivery, and dine out away from home,” Miller said. “We expected some of this as people dine in a little bit more, but we do expect it to be really sticky.”
Same-store sales still vary regionally, but California is no longer a burden to the overall comparative performance of the brand like it was in early days of the pandemic. For the past weeks, California was the No. 1 state in performance, with Nevada, Colorado, Texas, Florida, and Hawaii leading the pack as well.
READ MORE: Denny’s is Entering the Virtual Brand Wars
This year, Denny’s joined the extensive list of restaurants entering the virtual brand market. For Denny’s, this meant the launch of The Burger Den and The Meltdown, which together brought an incremental 3 percent boost of average weekly sales. Burger Den is Denny’s first try at a virtual brand. Live in more than 1,100 locations, The Burger Den uses ingredients already available in Denny’s pantries. Launched in April to half of domestic stores, The Meltdown is a DoorDash exclusive sandwich melt brand in about 700 locations.
The Meltdown generates roughly $1,200 in average weekly sales per restaurant, while The Burger Den brings in around $600 weekly per restaurant.
“We're highly confident these are brands that will endure a while, and they're not just a flash to sell some burgers and melts for a short period of time,” Miller said. “They're quite popular, and we get high marks from our third-party delivery vendors saying, this is the kind of product line they're looking for.”
Denny’s virtual brands leverage underutilized labor to maximize kitchen efficiency, Miller said. Denny’s sees a sales increase from the brands particularly during the week and in dinner and late-night dayparts.
About 70 percent of transactions from The Burger Den and 60 percent of transactions from The Meltdown occurred during these dayparts compared to 35 percent of transactions from Denny’s base brand. The virtual concepts also saw around 75 percent of transactions during the weekdays compared to about 65 percent for Denny’s.