News | May 19, 1999

Denny's To Revamp Restaurants

In what analysts call a bold but necessary move, the Denny's restaurant chain announced plans Monday to revamp its Grand Slam breakfast image into juke box rockin 1950s-style diners.

"In order to stay relevant with today's changing society you really do have to refresh your image on some consistent basis or you become really irrelevant," said John Romandetti, Denny's president and CEO.

Advantica Restaurant Group Inc., Denny's parent company, plans to spend more than $30 million this year to remodel 150 restaurants with stainless steel exteriors, neon lights, rotating pie cases and juke boxes. The company eventually wants to convert all 1,700 Denny's restaurants across the country, Romandetti said.

The first Denny's diner opened in North Myrtle Beach last summer. Other test markets have been in Florida and along the West Coast.

The menu and prices will largely be the same, with a few classic American additions such as chili, meatloaf, pot roast and open-face sandwiches, Romandetti said. Employees will sport colorful bowling-style shirts instead of the blue or white shirts they currently wear.

Denny's has been repairing its image after several lawsuits filed in recent years alleged racial discrimination. In 1994, the chain paid $45.7 million to settle a discrimination lawsuit by black customers. Other suits are pending. Denny's employees now are required to undergo sensitivity training. Romandetti said that the remodeling was overdue for many restaurants and that the timing has more to do with the company's improved financial situation than it's image.

"The decision to remodel, if you will, or re-image the restaurant has been made simply because we have many markets where we haven't done remodels in 15 years."

Spartanburg-based Advantica, which owns Denny's and other restaurant chains, emerged from bankruptcy protection last year with better financial structuring and the ability to remodel the restaurants, analysts said.

"Denny's probably needed some type of revamping because I don't think that it was attaining its potential," said Jerry Hirschberg, a S&P Ratings Services analyst. "If this '50s diner works it will be very nice for them. I think the only problem that could surface in the future is that this could turn out to be more of a fad."

Advantica stock closed up 3 1/8 cents, at $4.56 1/4 on the Nasdaq Stock Market.

More than half of the Denny's restaurants are company-owned. Franchise owners will be expected to follow suit with the company's changes, Romandetti said.

The idea is to appeal to a younger set of consumers who've shown interest in retro styles and music, such as swing, without losing existing customers, the company said.

"I don't want to change the image of a family-style restaurant that's open 24 hours a day because that really is our heritage," Romandetti said. "Our restaurants right now are really fairly sedate and when you put a jukebox in there and you put some very bright colors in there you change the energy level of the interior very quickly."