Denny's Free Grandslam Is Truly Super... Super-Risky

During the Superbowl, I spent much of my time evaluating the commercials and trying to decide what was working. I was checking Google Trends, to see what people were searching for. After the first quarter, the most popular search was for David Abernathy, the guy from the cars.com commercial. I didn’t even think that ad was that good, but I guess it peaked some curiosity. Doubt it stuck, though, or worked. No one is buying cars. To further my research, after good commercials, I’d go to the websites, to see if they still functioned. After the Visio ad, the Visio site was down. And after the Denny’s ad for a Free Grand Slam breakfast, their site was down as well. And a little while later, after Google Trends updated, “Denny’s Grand Slam Breakfast” was the number 1 search in the land. So, guess it worked… sort of. Cause this may end up being the most expensive promotion of all time.

As of this morning, CNN.com had a story giving some of the details on the results of the campaign. Denny’s served up free Grand Slam Breakfasts to patrons in 1,500 locations in the US, Canada and Puerto Rico… for 8 hours! Sounds like, on average, these breakfasts normally cost about $6 a piece. One restaurant said they had 2,400 eggs in stock that day for the promotion. So, let’s do some math (HOORAY – MATH!!): 

Yup, Denny’s spent around $12 MILLION dollars on a breakfast promotion. And given their margins are maybe 20% if they’re lucky, that means they’d have to sell an incremental $60,000,000 (!!!) dollars worth of breakfasts this year to pay for the thing. And I’m excluding all the other costs like putting the ad campaign together.

Was this a good idea? Gosh, I think it’s a great brand campaign, I really do. And I think Denny’s could really thrive at a time like this, given the amount of value you get for $5.99. But DENN has a Market Cap of $180 MM dollars. How on earth do you spend $12 MM bucks on a Superbowl ad when you’re company is only worth $180 MM? Furthermore, Denny’s had a total global revenue in Q3 of $940 MM in their last reported year, so they need to increase their revenues by 7% just to break-even on the ad, and this is during the biggest recession since the depression? Umm… sounds a little risky, fellas.

But, I do like free breakfast. Yay privately funded stimulus packages!! Hope it pays of for them. Could mean a lot more free stuff for us.