Denny’s to take Keke’s national
Orlando-founded Keke’s Breakfast Cafe could grow across the country after being bought by Denny’s, but fans shouldn’t be too concerned the pricier breakfast chain will turn into its new owner, an analyst said.
“Denny’s already owns the Denny’s concept. They don’t need Denny’s Jr. on top of that,” said Mark Kalinowski, owner of Kalinowski Equity Research, who follows Denny’s and other national restaurant chains. “They need something that’s differentiated.”
Spartanburg, South Carolina-based Denny’s revealed last week it was purchasing Keke’s for $82.5 million. Keke’s started in 2006 as Florida Waffle Shop on Conroy Road in Orlando and now has 52 restaurants, with 44 franchised and eight company-owned in Florida.
Denny’s CEO John Miller said on a May 3 earnings call the company believes it can grow Keke’s across several states with the goal of becoming the “a.m. eatery franchisor of choice.”
He said some of Keke’s growth could come from Denny’s franchisees who might want to expand in communities with higher incomes and different expectations.
“So, to have a brand be two things at the same time [is] a little more challenging,” Miller said. “It just made sense to have something that could fill in those markets.”
Keke’s entrée prices are about 20% higher than Denny’s, Miller said.
“The current founders have done a great job establishing a brand in a category frequently used by Millennials and Gen Z families with kids, whose household income levels skew above $75,000,” Miller said.
Unlike the around the clock business at Denny’s, Keke’s is open daily from 7 a.m. to 2:30 p.m. It serves a breakfast and lunch menu that includes waffles, French toast, burgers and sandwiches.
A banana split waffle at Keke’s costs $12.99, apple cinnamon French toast $10.99, a turkey burger $9.49, and a portabella panini $9.99.
For “super fan” Lynn Desjarlais, her biggest concern is whether Denny’s will keep Keke’s food distributors.
“Keke’s has a reputation for very high-quality ingredients,” Desjarlais said.
A 38-year-old Windermere resident, Desjarlais named her cat Keke and dressed up as one of the restaurant’s servers for Halloween. She likes the restaurant’s coffee and customer service.
“They’re fast, they’re efficient, they’re friendly,” said Desjarlais, who works in higher education including teaching business at Valencia College. “They are the Chick-fil-A of breakfast service for me.”
Denny’s spokesperson Pashen Black said everything that makes Keke’s a great place for guests will remain the same and that customers will continue to enjoy made-to-order offerings and high-quality ingredients.
“They will continue to enjoy the same great quality, taste, meal presentation and excellent service from their local Keke’s team in a welcoming and comfortable environment,” Black said in an email. “This is the foundation of Keke’s and we’re proud to continue delivering this great experience to guests.”
Black said Keke’s has eight corporate employees in Orlando. The chain’s learning and development, supply chain, marketing and operations functions will stay separate from Denny’s. The companies are expected to share finance, human resources, legal, development and information technology services.
Keke’s founders Kevin and Keith Mahen are expected to leave, but Keke’s vice president of operations Nate Martin is expected to stay on. The deal is slated to close late in the second quarter.
The brand’s direction will ultimately fall to Denny’s next CEO and president, Kelli Valade, who will take the helm on June 13. She is a familiar name in Central Florida as she resigned as CEO of Orlando-based Red Lobster, effective April 15, after less than a year on the job. Miller is set to retire from Denny’s in August.
“Denny’s and Keke’s is getting an experienced CEO,” said San Diego-based restaurant analyst John Gordon. “It’s up to the CEO to embrace the cultures of both organizations so that both companies can exist simultaneously to attract in new guests and that they can learn from one another but operate separately.”