Denny's AARP Pact Is Generating Results
by Karlene Lukovitz, Wednesday, June 16, 2010, 4:58 PM
While it's still early in the game, Denny's is seeing "excellent" results thus far from its new program offering exclusive discounts to AARP members, according to John Dillon, VP, marketing and product development for Denny's Corp.
Denny's implemented its AARP discount program in late March, with two special member offers effective through 2010. Members who show their AARP cards at participating Denny's locations nationwide on any day of the week between 4 and 10 p.m. are eligible to receive 20% off the total check amount for themselves and their guests. In addition, the card entitles AARP members and their guests, on a 24/7 basis, to a standing price of $1 for a cup of coffee.
The move made Denny's the first restaurant chain to offer the association's nearly 40 million members dining discounts on an on-premises, show-your-card basis. Subsequently, on June 1, Denny's signed a three-year agreement with AARP committing to offering AARP members exclusive dining benefits through the agreement's term, although it is not yet determined whether the current discount offers will be continued or whether other deals will be offered starting next January.
Denny's elected to promote the launch of the initial deal offers with a full-page, four-color ad in the May/June issue of AARP The Magazine -- which was received by readers about the same time the deals became effective -- to reach the magazine's 23.5 million subscriber circulation rate base (the largest magazine circulation in the U.S.). While Dillon declines to discuss the cost, the publication's rate card lists a full circulation run, four-color full page at $532,600.
That's no small out-of-the-box marketing investment in and of itself, but the prominent, direct exposure to the association's membership was key in generating what are so far proving to be "very encouraging" results, Dillon confirms. The offers "are clearly resonating with AARP's membership," he says. "We're seeing redemptions increase week by week in these initial stages, and we've gotten great feedback from the members."
Denny's had been considering a partnership with AARP for some time, notes Dillon. The restaurant brand has long had a "strong relationship" with diners in the 50+ demographic, who are already an important part of its customer base, and the rapid growth of this population segment represents opportunities to build on this dynamic, he points out.
"We want to ensure that we are paying attention to and meeting the needs of this valuable customer base," Dillon sums up. "The AARP partnership provides a clear opportunity to foster loyalty and repeat business."
Clearly Denny's, along with many other restaurant chains, also has an eye on attracting first-time 50+ diners who can be won over as regulars.
While Denny's is still finalizing its overall marketing plans for the AARP discount program, Dillon says that efforts will definitely include "more communications to the AARP membership," as well as on-premises awareness-building activities such as highly visible register-toppers promoting the deals.
Many types of companies -- financial/insurance, travel, car rental, retailers and others -- offer exclusive product/services deals to AARP members through the association's two commercial services subsidiaries, AARP Services Inc. and AARP Financial Inc.
However, up to this point, restaurants have made their offers only through an online Restaurant Discount Center on AARP's site, where members can locate participating restaurants (from among about 15,000 nationwide) by geographic area and buy dining certificates at a discount of 70% or more.
These third-party companies are responsible for their own marketing plans/media costs for AARP offers -- meaning their product/services relationships with AARP do not include or require buying ad space in AARP The Magazine or its other publications (AARP Bulletin and Spanish/English-language magazine AARP Viva), according to Jim Fishman, SVP, media sales for AARP.
In line with restrictions on nonprofit entities, AARP limits mentions of commercial partners to the organization's online member benefits listings area and squibs highlighting a few third-party services companies that run occasionally in its print publications, Fishman says.
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Denny's Embraces AARP Audience to Combat Sales Slump
Once Known as 20-Something Late-Night Hangout, Chain Faces Increased Competition Across Dayparts
CHICAGO (AdAge.com) -- Denny's, the All-American 24-hour-dining chain, is casting about for an identity. And while a decade ago it was the late-night safe-haven for 20-somethings, it's now making a bet on the AARP crowd.
"We're embracing -- because we're open 24 hours -- [that] different dayparts lend themselves to different segments," Mr. Ruby said. "If you look at AARP offers, they're primarily during the week." Weekend late-nights, meanwhile, are intended for young partiers.
Jim Fishman, senior VP and group publisher-AARP Media Sales, in a statement said, "AARP's boomer-plus membership is more likely to visit casual-dining restaurants on a weekly basis than the general population. It makes total sense for AARP members to build a strong relationship with one of the biggest restaurant chains in America, since everybody benefits."
Late-night competition
Only two years ago, Denny's launched a "All Nighter" menu, with items like "potachoes" and dessert nachos, for middle-of-the-night diners with the munchies. But same-store sales have suffered at Denny's, disproportionately to peers, during the recession. This year, the chain is battling shareholders over its spending, in particular its recent Super Bowl advertising promotions. The chain in the past two years has promoted free Grand Slam breakfasts following the game. Denny's is also searching for a new CEO in response to investor unrest.
The chain seems to have slipped with younger consumers in recent years, as fast-food chains have promoted late-night hours and menu items, and brands such as Buffalo Wild Wings have expanded. The wing chain, for instance, offers a full bar, dozens of TVs for any imaginable sporting show and even gaming.
Darren Tristano, exec VP at Technomic, noted that the chain also faces increased competition from upstart breakfast-and-lunch chains such as Egg Harbor Cafe and Five Guys Burgers and Fries, now one of the fastest-growing chains in the restaurant industry.
Sales suffering
Last year, Denny's same-store sales fell 4% at company stores and 5% at franchised stores. During the first quarter of 2010, company-run and franchised restaurants both declined 6%. Although it was the worst year for the restaurant category in a generation, the loss might be particularly troubling to Denny's because the brand launched what was expected to be a brand reinvention around the Super Bowl, with then-new agency Goodby Silverstein & Partners. But despite a strong increase in overall brand buzz, the chain's same-store sales continued to decline.
Moving forward, Mr. Ruby said, Denny's will need to craft promotions and communications that are "laser focused." After all, he said, Denny's doesn't have to be "everything to everyone all of the time."
Mr. Tristano of Technomic described Denny's as a brand "without a clear understanding of what direction they're heading." He noted that Denny's, like other chains, has focused on operations and cost-cutting measures, "but in terms of marketing in order to get more customers in their doors ... it's a difficult time to do that."
