Denny’s Uses A Loss Leader To Bring Back Customers

This offer was inspired.

Denny’s, long relegated to the forgotten breakfast anytime nook of the restaurant scale, popped for a Super Bowl ad.  The restaurant chain went for more than awareness.  This advertisement came with a special offer:  show up between 6 a.m. and 2 p.m., the chain promised, and we’ll give you a free “Grand Slam” breakfast. The Grand Slam is a portion controlled but large breakfast plate with pancakes, bacon, eggs and sausage.

The store in tiny Ukiah, California pumped out 1,800 free meals according to the local paper.  The town only has 15,500 inhabitants so the question for marketers anywhere is this:  When did you last do an offer that converted at 11.6% of the addressable market when the offer required them to drive somewhere?

Mind you, this isn’t a free offer like a flat screen television or even a portable CD player.    The Grand Slam retails for less than six bucks.  If you went with someone, you save twelve dollars, but then needed to factor in the cost of the tip (hopefully you tipped at least a couple of dollars), gas to get to the restaurant and time.

11.6% in Ukiah.

Similar numbers poured in from all over the country.  By the end of the promotion, Advertising Age quoted Denny’s officials as saying two million free meals were served at a cost of 5 million dollars.   Of course, there were offsets and five million likely isn’t the real number.  But the total U.S. market is roughly 300 million. That means 0.6% of all Americans had a free meal, or more likely, a number representing that total had a free six dollar meal today.

Some will undoubtedly return to Denny’s, and it doesn’t take many of two million restaurant customers returning to quickly make up five million dollars.    There were also undoubtedly add-on items, and although I can find no proof, any Denny’s manager who didn’t use a sign-in sheet with contact information should be beaten with a spatula used to cook one of those Grand Slams.

Even Seth Godin would undoubtedly agree that a free mail is worth some form of permission marketing. Two million people looks like this:   2,000,000.    Convert 0.5% of them into regular customers, and you’ve just increased your loyal customer base by 100,000.  That’s genius.

No one will ever know how much the collapsing economy contributed to the day’s success, but two million anything is a lot for a five million dollar investment.

What Your Online Marketing Agency Should Be Telling You About Today

Google has long had some unique and interesting ideas on what words advertisers can use in their ads and what words they could bid on.  If I ran a restaurant today, chances are quite good I could have bid for the term “Grand Slam breakfast” and ran an ad for my own business.  Technology legal blog is reporting that Tribunal de Grande Instance de Paris has fined Google 350,000 euros — about a half a million dollars with court costs — for trademark infringement for this practice.  Google is appealing the ruling, of course, but you need to ask your online advertising firm what trademarked terms are being used for your advertising and why.  We rarely find a compelling reason for the practice.

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