South Lake Tahoe, CA – Monday, [December 6, 2023] In a surprising turn of events on Monday morning, employees of the iconic Denny’s in South Lake Tahoe were met with unexpected news—the beloved establishment, which had been a staple for over 40 years, would be closing its doors that very day. Franchise owner Paul Schmidt cited a confluence of factors, with the impact of COVID-19 being the initial blow followed by the disruptive Caldor Fire.
Schmidt, who had been the franchise owner for a quarter of a century, expressed the challenges faced by the restaurant, noting a decline in sales since the onset of the pandemic. Despite weathering the storm until COVID hit, the subsequent decline in visitors to South Lake Tahoe, exacerbated by the Caldor Fire, proved insurmountable for the Denny’s.
“It’s not one reason, there are many reasons,” Schmidt explained, pointing to the intricate interplay of economic challenges, environmental crises, and shifts in consumer behavior.
One significant factor contributing to the closure was the expiration of Schmidt’s lease at the end of 2023. Despite a willingness from the landlord to reduce rent, Schmidt found it untenable to sustain further losses. The South Lake Tahoe location, while having a smaller local customer base than his Denny’s in Carson City, heavily relied on tourism. Unforeseen events such as wildfires, the pandemic, and unpredictable weather significantly impacted the flow of tourists, hitting businesses like his hard.
“In a resort town, you’re depending on tourists,” Schmidt lamented. “You hang on for the locals, but if prices go too high, they can’t afford to go out to eat.”
Compounding these challenges were broader economic shifts, including the forthcoming changes in 2024, such as an increase in the minimum wage. Passing on rising costs to customers proved to have limits, and coupled with difficulties in finding and retaining staff in a high-cost living area, the Denny’s faced an uphill battle.
A poignant note on the restaurant’s door expressed gratitude to customers for their decades-long support. Approximately 20 employees were affected by the closure.
Schmidt also highlighted the departure of a nearby Rite-Aid as an unforeseen hit. The impending closure of Rite-Aid by December 10 would further reduce foot traffic into the shopping center, compounding the challenges faced by businesses in the area.
Reflecting on the broader business landscape in Tahoe, Schmidt shared, “The problem with Tahoe is all the red tape, high cost of everything just to try to turn a penny profit.” He emphasized the remarkable longevity of the South Lake Tahoe Denny’s, lasting 15 times longer than most businesses in the area.
