Dive Brief:
- Denny’s will serve its Banda Burrito virtual brand from more than 1,000 stores by the end of August, according to a Wednesday press release. The chain has about 1,370 stores in the U.S.
- The move more than triples the number of stores serving Banda Burrito, which was roughly 300 at the time of Denny’s Q2 earnings call in late July.
- Denny’s expansion of virtual brands, including The Burger Den and the Melt Down, stand in contrast to other casual dining companies, like Red Robin and Brinker, that have retreated from their concepts in the last year or so.
Dive Insight:
Banda Burrito is intended to help boost Denny’s traffic during late night hours and to appeal to younger consumers looking for delivery options, according to the press release. That sales lift could be particularly important, given the 0.6% decrease in same-store sales the chain reported last quarter.
On the chain’s most recent earnings call, President and CEO Kelli Valade said the strategy of expanding virtual brands focused on sluggish dayparts “helps maximize labor productivity” while also “providing convenience and meeting guests where they are.”
Valade said the company expects the brand to deliver similar margins and volumes to its other virtual brands. Denny’s, in its 10-Q and earnings release, does not break out virtual brand sales from overall sales, but Chief Financial Officer Robert Verostek has said that off-premise sales comprise about 20% of Denny’s overall sales.
The company said in the press release that the brand presents “a significant growth opportunity for Denny’s in new markets such as Arizona, Florida, Illinois, New Mexico, Nevada, Maryland, Pennsylvania, Texas, and Washington state.”
Late last year, Denny’s expanded the brand from 10 initial restaurants to another 80 locations in California, in an effort to offset anticipated increases in labor costs in that state.
Denny’s reliance on virtual brands is unique. Other casual dining companies, like Brinker, have pumped the brakes on virtual brands. Brinker phased out Maggiano’s Italian Classics last year and integrated It’s Just Wings into Chili’s core menu. Dine Brands recently saw its virtual brands close when provider Nextbite went under.
