Yesterday Denny’s had a huge special where they gave everyone in America a free Grand Slam breakfast. I thought I might stop in and have one. The offer began at 6am. I arrived about 6:40. I expected a line, especially considering how hard it was to find a parking spot. It was a tow truck driver’s dream come true! What I found was a line of people that at times during the day was a 3 hour wait.
Yesterday evening I took my girlfriend out to IHOP. As I chatted with the staff I found that IHOP had been incredibly busy until the afternoon. It seems that a lot of people weren’t willing to wait hours for their free food at Denny’s but came and paid for food at IHOP instead. They were waiting in line at IHOP for almost an hour according to the staff.
How is this a failure? Denny’s traded millions of dollars for short term buzz. Next month will Denny’s be any more on your mind than Waffle House or IHOP? Doubtful. Most people already have exposure to Denny’s because they are a fairly well known national chain. Who benefited from their ad? IHOP certainly experienced a boost in business and they weren’t giving anything away for free and perhaps other businesses profited as well. Denny’s will return to their previous status as just another unremarkable chain restuarant before long minus a few million dollars.
According to Denny’s they wanted to help those feeling the pinch of the harsh economy. Most of the folks who were in line weren’t spending $6 on breakfast any day of the week because they were jobless or didn’t have the income to spend on it. The free promotion drew the people who could afford the time to invest waiting on a free breakfast, but not the people who could convert into long term paying customers.
If Denny’s sells 12 million Grand Slam breakfasts a year and they gave out, as planned, 2 million yesterday why not just discount those 12 million meals with the $12 million from the 2 million free meals instead? Denny’s could have spent less money and created better connections with their customers by giving coupons for the free breakfasts out in stages. Then people would be more likely to connect a positive experience with Denny’s in their minds. Releasing the coupons in stages would maintain the buzz and result in the same level of exposure if not more. People would have been exposed to a better experience with the service at Denny’s since they would probably not have to wait in line so long, and they may have brought more friends or family who wanted something besides a Grand Slam and would be more likely to spend money. Personally, I think that Denny’s could have saved money and offered a promotion lasting a whole year with a promotion such as: buy any one meal and get a Grand Slam free.
Tons of free press coverage that only lasts a couple of days at the cost of an over $3 million Super Bowl ad and $12 million in free breakfasts. Was the short-term buzz worth it?
Picture via @pwbeninate.
Update: @thinkhammer is taking me out for a free Grand Slam Breakfast to applaud my blogging. 
Also Geoff Waserman has a great post echoing some of the things I’ve said and adding the idea of using a charity to boost the companies image.
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Chipotle does a special like this as well, at least they did at the University of Illinois. The first time it happened I went over there to see a line that went 3 blocks. After that I said forget it, they do it every semester, but I would just rather not eat there those days. In fact the next year all of the work guys were heading out for lunch. On a normal day Chipotle would fair well, but since this was free burrito day we actually skipped Chipotle, even though that was the agreed upon choice, in favor of a different restaurant. So I can see the IHOP effect happening. $6 is well worth the time saved by not eating at Chipotle or Dennys.
I will say, though, that it is a nice gesture and can potentially win some people over. I imagine that Chipotle gets a lot of student buzz on burrito day and that they may get an overall business boost because of the special, but on that day they loose business. Focus on making food people want to come and eat, that is probably a better business stunt.
Chipotle is great but free food stuff is best for grand openings and like you mentioned creating awareness among new students. It doesn’t help Denny’s reach the customer who they stated they’re trying to reach. And it doesn’t change the quality of the food. The local area effect like you suggested is probably a lot more powerful than a national campaign like this.
Good thoughts Doug. I made similar comments to a co-worker yesterday, ironically, on the way to IHOP, which turned into a trip to Henry’s. I am trying to temper my criticism realizing that every BIG event like this comes with associated risk. But at the same time, I’m not sure how well thought out it was. It’s almost as if they equated giving away free food with customer excitement. I think it would have been more effective if each restaurant had done it individually throughout the year, creating longer term buzz. (“Check out when the free grand slam is coming to your area.”) Good post.
Doug, I’m sorry but I disagree with you on this one.
I thought the marketing ploy was the best Denny’s ever done (which is not saying much, I realize!). The overflow business that went to other restaurants, as far as I’ve heard, was a positive thing only for most everyone involved. And Denny’s got themselves back on the national radar again, with a unique publicity stunt, who knows how many first-time “users”, and an action that can only be interpreted as “good will to all people”. We’ll see how things go, but I’m guessing this year’s going to be a good one for Denny’s.
My impression is that free food on a national level has mainly been avoided for cost reasons, not because it doesn’t work. A national stunt like this makes participants feel like they’re part of something big, not just a new local joint.
Just my two cents. Thanks for the strong, provocative opinion!
For me Denny’s is in the middle of IHOP and the Waffle House on the scale of quality. They’re location isn’t convenient for me or I might eat there more often. What I think shows as the biggest failure is the stated purpose from Denny’s and the people who were taking advantage of the offer. Denny’s wanted to show off the “value” of the $5.99 Grand Slam but the people taking advantage of the free breakfast were frequently out of work, not usually people who can afford to eat out for breakfast on a regular basis. Free food at a grand opening makes sense, on the national level, it just doesn’t seem like the best bang for the buck.
Doug,
I agree with the mess that they caused. I stopped by, as well and didn’t have the time to wait before work. However, one good things was that I was able to get a rain check. So now, my wife and I will go eat our free breakfast tomorrow morning when no one is there. The best of both worlds!
The rain checks were a great idea and apparently each store had 1500 on hand to give out. I still think the buzz is very short term though. Let me know how quiet they are!
Hey Doug:
I totally agree with you that this wasn’t very strategic. Perhaps Denny’s had improved its food significantly, and wanted to do some giveaways (also known as sampling) to have people discover the tasty new Denny’s.
But I doubt it. A scrambled egg is a scrambled egg.
Perhaps Denny’s wanted to stick it to its competitors. Sometimes, a giant corporation with deep pockets will lower its prices significantly to drive competitors out of the market. That’s called “predatory pricing,” and is technically illegal, unless it’s for a limited time and is careful framed. However, as you mentioned, this promo actually sent customers to the competition.
Another problem with a free meal is that the waitstaff isn’t too happy about it. What’s a 15% tip on zero dollars? I hope Denny’s gave a bonus to its waiters that day.
At the least, Denny’s should have focused its target. I would have said, “In gratitude for their service to this country, Denny’s is offering free breakfasts to active-duty service men and women and their families.” (Lots of military guys watch the Super Bowl.) Then the Denny’s brand would have earned a patriotic halo, plus potential patronage from veterans and patriotic non-military people.
I wouldn’t worry about the total cost — for a large corporation, $12 million is just a fraction of the overall marketing budget, and Denny’s did score more awareness than many campaigns of equal or even greater value. What it does with all that awareness now is the big question.
Freddy
In Denny’s defense, they took the opportunity to hand out coupon booklets to all the “customers” yesterday. That may create some future business…
I’ve heard of several people who didn’t tip.
The cost wasn’t so much my thought but could they have created a better awareness with $12 million? I think their stated purpose of showing “value” missed the mark. Awareness yes, but we were all pretty aware of Denny’s before. If they could turn the awareness into loyalty then I’d be impressed!
Have to disagree. A USAToday article valued/estimated Denny’s total media exposure from the giveaway at about $50 million – a huge ROI – which combined with an opportunity to connect or reconnect with hundreds of thousands of consumers … was a brilliant marketing strategy, in my humble opinion. I’m an iHOP guy who nearly forgot my local Dennys existed. I’m reminded now, and willing to give them a shot at my dining dollars. That being said, they have a tough job ahead to steal me away from iHOP
@Jeff the $12-15 million or whatever Denny’s spent turning into $50 million worth of press is great but the ROI doesn’t happen until they see results, a steady, long term uptick in traffic. I have a feeling that after a month goes by and we’re all talking about something else that Denny’s will have to do something to get our attention again. $15 million spent isn’t worth anything if you don’t make at least $15,000,001 from doing it. I think there are a lot of strategies that they could have spent $15 million on that would have won them more long term customers. Back to what they said their goal was “showing the value to people in this harsh economy” I think that’s where the real flaw is. They’re not going to generate new customers from the people who don’t have jobs by offering a one time freebie. They need to convince people who are already spending money on breakfast that Denny’s is where it’s at. As Freddy pointed out Denny’s hasn’t done anything new with the food, it’s the same breakfast they’ve had for years. There is a reason that you forgot about Denny’s
Doug, I’m with you on Denny’s quality – maybe I’m a breakfast snob, but I don’t really enjoy eating there, IHOP or Waffle House. Give me Stax Original, Soby’s on the Side, the Travelers Restaurant or the Fireside Pancake House.
My impression about the people who DO eat at these places regularly is that they pick one out of habit. The brilliance of this giveaway food scheme is not that their food is better, but that they’re giving people a chance to start a new habit. And they’re starting it off with a good memory (free food!). Love to see what happens from here. I have no interest in Denny’s taking over the world (:-), but to me, good return business for them would prove that creativity really does work.
Thanks for welcoming those of us with different opinions. I love a good conversation.
Another intelligent and thoughtful piece. Great points! Great post!
@will
Perhaps but some research shows that it takes a month to build a new habit or break an old habit effectively, so I don’t think it will have the effect of building anything new. People need more than a one time push to change behavior.
@mediaCheck
Thanks for being a loyal reader!
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