Denny’s we hardly knew ye. This week, the popular restaurant chain announced that they would be taking the company private on the stock market. Denny’s is a part of a $620 million deal with TriArtisan Capital Advisors, Treville Capital, and Yadav Enterprises. That’s private equity for those of you playing at home. So, go ahead and get your funeral bibs out, because it’s likely that we might not have Denny’s for much longer. While some spectators, the fiscally-minded among us, might point to the declining sales for a place like Denny’s. It’s not hyperbole to start thinking about the brand’s demise as a result of these moves.
TriArtisan Capital Advisors doesn’t see it that way. Their co-founder an managing director Rohit Manocha put out a statement charting a new path forward for Denny’s in the months and years ahead. He said, “We look forward to working with (CEO) Kelli [Valade] and the rest of the Denny’s team and franchises to provide resources and support the Company’s long-term strategic growth plans.”
Now, all of that sounds nice. But, if you’ve been paying any attention at all to the general economy and retail environment for the past decade or so, you know that these types of private equity acquisitions rarely work out. Denny’s could be the latest in a long line of businesses who go under because of greed and fundamental misunderstandings of the consumer base for a product.
Denny’s sold for $620 million
In the beginning, this breakfast staple started out as a small donut shop in Lakewood, California. Danny’s Donuts was around in 1953. A subsequent name change to Denny’s Coffee Shops in 1959 would help build the brand that serves as crutch for your late-night shenanigans now. The New York Stock Exchange would begin publicly trading Denny’s in 1969. Normally this kind of long-running company just weaves itself into the fabric of a couple of cities. And, for a while it did…
Over the last 20+ years, Denny’s is basically one of the only options available on the late night tip across the country. Who among us hasn’t been drawn into the luminous glow of that yellow sign in a time of need? In the last economic crash, (2008 here lolsob) late night diners IHOP were even after “the club” meetup options in the popular Millennial memories of that dark era. Its loss would be disastrous, but it seems likely.
After 2020, the restaurant joined a host of other retailers in facing challenges from a changing economic climate. Many fast casual chains have felt the same tug. Heck, this shift is even affecting the movies. Last fall, the AP reported that Denny’s was closing 150 of their lowest-performing locations in an effort to keep things afloat. Now, with private equity involved, look for more corner cutting, and closures with a helping of sunny-side up eggs.
The most likely case for the restaurant now
All of this hinges on the shareholders at Denny’s approving the sale. But, a quick look at the economic climate in the United States of America right now paints a pretty harrowing picture. Anyone counting on those shareholders to do the right thing, They’re probably a little naive. I look toward the history of a company like Toys ‘R’ Us. Back in 2017, In These Times chronicled the private equity history of that company, and I think it can come into play here. (Mark Dunbar’s article is excellent and sadly little has changed!)
“The pattern followed by Toys “R” Us is typical in private equity takeovers,” Dunbar argues. “Management is bought off: John Eyler, CEO of Toys “R” Us, was compensated $65.3 million upon the buyout’s completion. Employees have no say in the matter. Then come the layoffs, debt transfers and shortsighted asset sales.”
Any of that sounding familiar? At this point, the private equity model has this exact playbook running like a well oiled machine. It doesn’t matter how beloved a brand is, or how integral it is to some people’s lives. All that matters is how much value can be extracted from a place or thing that used to provide utility for all of us. Denny’s might be dead, Long live Denny’s.
(featured image: Justin Sullivan/Getty Images/Denny’s)
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