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How Profitable is a Denny’s Franchise? Costs & Profits (2023)

Denny’s is an expensive franchise: you will need to invest on average $3,785,459 as a franchisee to open a new Denny’s restaurant. So you may wonder whether this is a good investment.

With over 1,700 restaurants worldwide, Denny’s is a popular franchise with a lot of advantages. But before you invest, make sure to understand the financials too.

In this article we’ll see how much profits you can realistically make with a Denny’s franchise and whether you should invest in this business. Let’s dive in!

Denny’s franchise: revenue, costs & profits

Franchise fee$70,000
Royalty fee5.75%
Marketing fee10.63%
Investment (mid-point)$3,785,459
Average annual sales$1,639,549
Investment to sales ratio0.4x
Investment payback*15.4 years (mediocre)
Minimum net worth$1,000,000
Minimum liquid capital$500,000
* using 15% net profit margin

🔎 How does Denny’s compare vs. other franchises? Check the ranking

What is Denny’s?

Denny’s is an American restaurant chain best known for its table-service diner style, with over 1,700 stores in the US and 14 other countries.

Denny’s was founded in 1953 by Harold Butler and Richard Jezak, who opened the first restaurant in Lakewood, California.

Originally, Denny’s opened as a coffee shop known as Danny’s Donuts. It then changed to Denny’s Coffee and later Denny’s, a name by which it is still known to date.

It serves mainly delicious breakfast, lunch, and dinner items.

Denny’s franchising journey started in 1963 and is operated by its parent company, Denny’s Inc., headquartered in Spartanburg, South Carolina, and today over 97% of its restaurants are franchise-owned.

Denny’s franchise: pros and cons

Before starting a Denny’s franchise, here are some of its advantages and disadvantages.

Pros

  • Family restaurant: Denny’s brand is known as one of the best American diners with its family-style full-table service. It is the best option for customers who love to hang out and enjoy tasty foods served directly at the table. Overall, it provides a great casual dining experience where customers can socialize as they enjoy their meals.
  • Brand popularity: The Denny’s franchise is well-known and loved by a large segment of the population. It has a presence in all 50 US states and internationally. Denny’s is a great option for families and friends who love hanging out for great dining experiences. New franchisees are guaranteed the opportunity to attract a lot of customers who already identify with the brand.
  • Training and support: the franchisor offers solid training and support for its franchisees to succeed. It trains new franchisees in restaurant management, food and safety, culinary management, and hospitality management.
  • Financing: The franchisor may, under some circumstances, finance the purchase of point-of-sale equipment for franchisees, though it is under no obligation to do this. In addition, Denny’s provides third-party financing arrangements for its franchisees, who may wish to be financed to fund franchise fees, startup costs, equipment, inventory, and expansion.
  • Marketing and advertising: Franchisees can greatly rely on their parent company to market and advertise their products. The brand is known locally and internationally and has a large customer base. New franchisees can take advantage of the company’s established advertising to promote and publicize their local restaurants. This is cheap and effective since franchises can reach huge populations at low costs.

Cons

  • Not a passive investment: The Denny’s franchise does not allow for absentee ownership. As a result, it is not a good investment for those seeking passive investment. The franchisor requires the owner to be fully involved in the operations of the restaurant.
  • No territory protection: The franchisor requires franchisees to operate their restaurants from only the locations it grants and approves. It, therefore, does not grant its franchisees any exclusive territory for operations.
  • Competition: The food and beverage industry is growing fast with new market players, and Denny’s brand faces a lot of competition. Some of its competitors are world leaders like Burger King and McDonald’s. Denny’s franchisees also face competition from franchises granted by or controlled by the parent company.

How much does a Denny’s franchise cost?

You would have to invest on average $1,877,482 to open a new Denny’s franchise restaurant. This is the investment for a traditional restaurant format: the “Denny’s Heritage 2.0”.

Indeed, there are 3 kinds of formats of restaurants you can choose from:

  • Denny’s Heritage 2.0: $1,877,482
  • The Den: $565,500
  • Denny’s Travel Center: $1,342,477

The investment amount is an average: indeed, it varies based on many factors such as land and building size, location and development needs; construction, equipment specifications etc.

For example, here is the full breakdown of costs for the most popular format, the Denny’s Heritage 2.0:

ExpenseLowHigh
Building and equipment cost$1,275,000$2,000,000
Training $0$36,000
Opening inventory$20,000$30,000
Working capital*$100,000$150,000
Other$33,425$110,540
Total$1,428,245$2,326,000
* 3 months

How much sales does a Denny’s franchise make?

On average, a Denny’s franchise makes $1,634,549 in sales per year. 

This is the average sales per restaurant for the 1,362 franchised restaurants operating in 2021. This also excludes “The Den” restaurants that are smaller in size, and therefore revenue (only 12 of them in 2021). 

Sales also recovered from their through in 2020 back to their level pre pandemic ($1.6 million).

Chart

YearSalesNumber of Restaurants
2019$1,655,4031,357
2020$1,220,0991,026
2021$1,639,5491,362
Source: 2022 FDD

How profitable is a Denny’s franchise?

On average, a Denny’s franchise makes $411,855 in profits per year. This represents a 25% adjusted EBITDA margin.

Yet it’s very important to note that EBITDA isn’t net profit. Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) is a profitability metric investors use to assess the “true profitability” of a business, excluding non-operating expenses like debt interest, corporate taxes and such.

If we were to look at the profits you will actually earn as a franchisee (and/or a shareholder), we would look at net profit instead.

As per the information available in the FDD, we obtained the following adjusted EBITDA margin:

Profit-and-lossAmount ($)As % of sales
Sales$1,639,549100%
COGS$(352,503)21.5%
Labor$(475,469)29.0%
Rent$(131,164)8.0%*
Royalty + marketing fees$(268,558)16.4%
Adjusted EBITDA$411,85525%
* industry average // Source: 2022 FDD

Note that 25% is slightly below the industry average (27-29%) as per our intelligence. This is due to a number of reasons, mainly the high royalty and marketing fees (16.4%).

Is a Denny’s franchise a good investment?

As explained earlier, Denny’s is a very expensive franchise. Indeed, it costs on average $3,785,459 to open a Denny’s franchise. So is it really worth the profits?

We saw that Denny’s have slightly below average profit margins. So if we were to compare the investment cost to net profits (assuming 15% of sales), we find that the payback period (as in, the period it takes to recoup your investment) is 15.4 years. No need to tell you 15 years payback period isn’t great.

As such, Denny’s isn’t the best franchise investment. If you want to open a Denny’s franchise, you should go for multi-unit instead or single-unit to improve your returns.

Yet, note that these numbers are calculated based on average numbers for all Denny’s franchises disclosed in their Franchise Disclosure Document. As such, it’s possible that your restaurant may turn out to be more profitable, and therefore a good investment.

Do you want to invest in a Denny’s franchise? Download our business plan and visualise a pre-built financial plan and many reports on breakeven, payback period, return on investment, and more.

Download the Denny’s business plan and get your franchise funded

Including a 5-year financial plan built with the latest Franchise Disclosure Document numbers

How does it compare vs. other franchises?

FranchiseInvestment ($)Sales ($)S/I RatioPayback (years)Min. net worth ($)Min. liquid capital ($)
Chick-Fil-Ahttps://sharpsheets.io/blog/chick-fil-a-franchise-costs-profits/Chicken1,363,5104,227,4173.12.2--
Dunkin' Donutshttps://sharpsheets.io/blog/dunkin-donuts-franchise-costs-profits/Donuts779,0001,056,5211.44.9500,000250,000
Domino'shttps://sharpsheets.io/blog/dominos-franchise-profits-costs/Pizza398,7251,286,4283.23.9250,00075,000
Krispy Kremehttps://sharpsheets.io/blog/krispy-kreme-franchise-costs-profits/Donuts824,0003,400,0004.11.62,000,000300,000
Little Caesarshttps://sharpsheets.io/blog/little-caesars-franchise-costs-profits/Pizza1,022,850798,1130.88.5350,000150,000
Wingstophttps://sharpsheets.io/blog/wingstop-franchise-costs-profits/Chicken631,6951,460,4592.32.91,200,000600,000
Steak 'n Shakehttps://sharpsheets.io/blog/steak-n-shake-franchise-costs-profits/Burger, Milshakes815,6261,346,3321.74.01,500,000500,000
Crumbl Cookieshttps://sharpsheets.io/blog/crumbl-cookie-franchise-cost-profits/Sweets507,2241,582,0903.12.1300,000150,000
Taco Bellhttps://sharpsheets.io/blog/taco-bell-franchise-costs-profits/Mexican462,4131,650,0003.61.91,500,000750,000
Popeyeshttps://sharpsheets.io/blog/popeyes-franchise-costs-profits/Chicken1,095,7831,444,6171.35.11,000,000500,000
Smoothie Kinghttps://sharpsheets.io/blog/smoothie-king-franchise-costs-profits/Smoothie688,108573,2690.88.0300,000100,000
Jersey Mike'shttps://sharpsheets.io/blog/jersey-mikes-franchise-costs-profits/Sandwich574,3231,220,5862.14.7300,000100,000
Nothing Bundt Cakeshttps://sharpsheets.io/blog/nothing-bundt-cakes-franchise-costs-profits/Sweets538,6501,307,2802.42.7600,000150,000
Jimmy John'shttps://sharpsheets.io/blog/jimmy-johns-franchise-costs-profits/Sandwich513,650874,8451.73.9300,00080,000
Texas Roadhousehttps://sharpsheets.io/blog/texas-roadhouse-franchise-costs-profits/Steakhouse4,209,5002,955,5340.79.5n.a.200,000
Kung Fu Teahttps://sharpsheets.io/blog/kung-fu-tea-franchise-costs-profits/Bubble tea250,125353,2371.44.7n.a.25,000
Wendy’shttps://sharpsheets.io/blog/wendys-franchise-cost-profits/Burger1,374,8331,791,2311.35.11,000,000500,000
Burger Kinghttps://sharpsheets.io/blog/burger-king-franchise-costs-profits/Burger1,242,9501,215,9701.06.81,500,000500,000
Sonic Drive-Inhttps://sharpsheets.io/blog/sonic-drive-in-franchise-costs-profits/Burger1,467,0831,617,0001.16.01,000,000500,000
Panera Breadhttps://sharpsheets.io/blog/panera-bread-franchise-costs-profits/Sandwich2,290,5002,599,4321.15.97,500,0003,000,000
Pizza Huthttps://sharpsheets.io/blog/pizza-hut-franchise-costs-profits/Pizza935,575906,9111.06.9700,000350,000
KFChttps://sharpsheets.io/blog/kfc-franchise-costs-profits/Chicken1,802,0501,567,4740.97.71,500,000750,000
Arby’shttps://sharpsheets.io/blog/arbys-franchise-costs-profits/Sandwich1,184,9751,126,2631.07.01,000,000500,000
Dairy Queenhttps://sharpsheets.io/blog/dairy-queen-franchise-costs-profits/Ice Cream1,404,2201,143,1800.88.2750,000400,000
Jack in the Boxhttps://sharpsheets.io/blog/jack-in-the-box-franchise-costs-profits/Burger2,195,8001,755,5030.812.51,000,000250,000
Papa John’shttps://sharpsheets.io/blog/papa-johns-franchise-costs-profits/Pizza353,6951,101,1273.12.1750,000250,000
Zaxby’shttps://sharpsheets.io/blog/zaxbys-franchise-costs-profits/Chicken534,7502,229,1874.22.41,000,000500,000
Hardee’shttps://sharpsheets.io/blog/hardees-franchise-costs-profits/Burger1,759,0001,147,9750.710.21,000,000300,000
Culver’shttps://sharpsheets.io/blog/culvers-franchise-costs-profits/Burger4,044,5003,051,7620.88.82,000,000350,000
Five Guyshttps://sharpsheets.io/blog/five-guys-franchise-costs-profits/Burger511,2251,203,3662.42.8500,000250,000
Carl’s Jr.https://sharpsheets.io/blog/carls-jr-franchise-costs-profits/Burger1,860,3351,419,5160.88.71,000,000500,000
Baskin-Robbinshttps://sharpsheets.io/blog/baskin-robbins-franchise-costs-profits/Ice Cream465,100316,8150.79.8250,000125,000
IHOPhttps://sharpsheets.io/blog/ihop-franchise-costs-profits/Pancakes2,058,3021,553,3110.88.81,500,000500,000
Applebee’shttps://sharpsheets.io/blog/applebees-franchise-costs-profits/Casual American5,137,9662,356,9650.514.51,000,000500,000
Denny'shttps://sharpsheets.io/blog/dennys-franchise-costs-profits/Casual American3,785,4591,639,5490.415.41,000,000500,000
Papa Murphy'shttps://sharpsheets.io/blog/papa-murphys-franchise-costs-profits/Pizza433,174580,4411.35.0275,000125,000
Auntie Anne'shttps://sharpsheets.io/blog/auntie-annes-franchise-costs-profits/Pretzels229,692343,1351.55.6300,000100,000
Firehouse Subshttps://sharpsheets.io/blog/firehouse-subs-franchise-costs-profits/Sandwich613,186888,3561.44.6350,000100,000
Tropical Smoothie Cafehttps://sharpsheets.io/blog/tropical-smoothie-cafe-franchise-costs-profits/Smoothie430,500961,9692.23.0350,000125,000
Marco’s Pizzahttps://sharpsheets.io/blog/marcos-pizza-franchises-costs-profits/Pizza437,625895,5232.03.3400,000100,000
Cinnabonhttps://sharpsheets.io/blog/cinnabon-franchises-costs-profits/Sweets276,062394,8971.45.8300,000120,000
Cold Stone Creameryhttps://sharpsheets.io/blog/cold-stone-creamery-franchise-costs-profits/Ice Cream310,956417,5881.35.0250,000100,000
Jambahttps://sharpsheets.io/blog/jamba-franchise-costs-profits/Smoothie414,562597,0281.47.7300,000100,000
Church’s Chickenhttps://sharpsheets.io/blog/churchs-texas-chicken-fees-sales-costs/Chicken1,195,1471,395,0881.25.71,000,000300,000
Moe’s Southwest Grillhttps://sharpsheets.io/blog/moes-southwest-grill-franchises-costs-profits/Mexican792,3701,013,3611.35.21,000,000100,000
Tim Hortonshttps://sharpsheets.io/blog/tim-hortons-franchises-costs-profits/Coffee1,242,7501,188,2401.07.0500,000100,000
Checkers & Rally'shttps://sharpsheets.io/blog/checkers-franchises-profits-sales-costs/Burger837,8471,039,7731.25.4750,000250,000
Charleys Philly Steakshttps://sharpsheets.io/blog/charleys-philly-steaks-costs-profits/Sandwich509,806786,2331.54.3500,000100,000
Buffalo Wild Wingshttps://sharpsheets.io/blog/buffalo-wild-wings-costs-profits/Chicken3,546,9002,534,1480.79.31,500,000750,000
Rita's Icehttps://sharpsheets.io/blog/ritas-ice-franchise-costs-profits/Ice Cream215,839248,3401.25.8300,000100,000
A&W Restaurantshttps://sharpsheets.io/blog/aw-restaurants-franchises-costs-profits/Burger786,750851,2121.16.2350,000150,000
Hungry Howie’s Pizzahttps://sharpsheets.io/blog/hungry-howies-pizza-franchise-costs-profits/Pizza419,682806,8991.93.5750,000200,000
Bojangleshttps://sharpsheets.io/blog/bojangles-franchise-costs-profits/Chicken1,658,0001,801,0571.16.11,000,000500,000
McAlister’s Delihttps://sharpsheets.io/blog/mcalister-deli-franchise-costs-profits/Sandwich1,424,9631,865,8611.35.11,000,000500,000
Round Table Pizzahttps://sharpsheets.io/blog/round-table-pizza-franchise-costs-profits/Pizza783,2501,037,8161.35.0500,000200,000
Qdoba Mexican Eatshttps://sharpsheets.io/blog/qdoba-mexican-eats-franchise-costs-profits/Mexican659,250972,9621.54.5
Freddy’shttps://sharpsheets.io/blog/freddys-franchise-costs-profits/Burger1,453,0401,792,9291.25.41,000,000400,000
Taco John’shttps://sharpsheets.io/blog/taco-johns-franchise-costs-profits/Mexican1,119,0001,124,9801.06.61,000,000400,000
Scooter’s Coffeehttps://sharpsheets.io/blog/scooters-coffee-franchise-costs-profits/Coffee1,143,250797,1010.79.6500,000200,000
Einstein Bros. Bagelshttps://sharpsheets.io/blog/einstein-bros-bagels-franchise-costs-profits/Sandwich750,075885,0111.25.71,000,000536,500
Great American Cookieshttps://sharpsheets.io/blog/great-american-cookies-franchise-costs-profits/Sweets385,275452,7711.25.7250,000100,000
Wienerschnitzelhttps://sharpsheets.io/blog/wienerschnitzel-franchise-costs-profits/Hot dogs873,300880,9801.06.6600,000250,000
Blaze Pizzahttps://sharpsheets.io/blog/blaze-pizza-franchise-costs-profits/Pizza865,4501,096,4321.37.9500,000300,000
Wetzel's Pretzelshttps://sharpsheets.io/blog/wetzels-pretzels-franchise-costs-profits/Pretzels377,571748,8572.03.4300,00050,000
Pizza Ranchhttps://sharpsheets.io/blog/pizza-ranch-franchise-costs-profits/Pizza3,268,3001,174,0880.418.61,000,000297,000
Del Tacohttps://sharpsheets.io/blog/del-taco-franchise-costs-profits/Mexican1,406,8501,345,3411.07.02,000,000500,000
Schlotzsky’shttps://sharpsheets.io/blog/schlotzskys-franchises-costs-profits/Healthy, Salads1,102,9331,053,3330.322.21,000,000300,000
Captain D’shttps://sharpsheets.io/blog/captain-ds-franchise-profits-costs/Seafood982,7781,067,8160.419.01,000,000350,000
Biggby Coffeehttps://sharpsheets.io/blog/biggby-coffee-franchise-profits-costs/Coffee310,575648,3520.320.0300,000100,000
Which Wichhttps://sharpsheets.io/blog/which-wich-franchises-profits-costs/Sandwich330,375281,8860.322.2500,000150,000
Marble Slab Creameryhttps://sharpsheets.io/blog/marble-slab-franchises-costs-profits/Ice Cream407,360251,0520.416.7250,000100,000
Mountain Mike's Pizzahttps://sharpsheets.io/blog/mountain-mikes-franchise-profits-costs/Pizza410,900865,7130.320.0300,000100,000
Huddle Househttps://sharpsheets.io/blog/huddle-house-franchise-cost-profits/Diner988,743712,4280.513.3600,000300,000
L&L Hawaiian Barbecuehttps://sharpsheets.io/blog/ll-hawaiian-barbecue-franchises-costs-profits/BBQ334,350612,9210.333.3500,000150,000
Chicken Salad Chickhttps://sharpsheets.io/blog/chicken-salad-chick-franchises-costs-profits/Healthy, Salads651,0001,202,0200.320.0750,000250,000
Golden Chickhttps://sharpsheets.io/blog/golden-chick-franchises-costs-profits/Chicken362,975917,6092.52.62,000,000425,000
Perkinshttps://sharpsheets.io/blog/perkins-franchise-costs-profits/Diner1,922,7281,729,2460.97.41,500,000500,000
Waba Grillhttps://sharpsheets.io/blog/waba-grill-franchises-costs-profits/Teryaki454,000466,5361.06.51,000,000250,000
Bruster’s Ice Creamhttps://sharpsheets.io/blog/brusters-franchises-profits-costs/Ice Cream663,925466,6960.79.5375,000150,000