Math says Denny's free breakfast a good deal for the company, too


As Zac Bissonette blogged here earlier, Denny's restaurants announced during yesterday's Superbowl that it will give away free Grand Slam breakfasts to one and all on Tuesday, February 3rd (tomorrow) from 6 a.m. to 2 p.m. How, you might ask, can it afford to do this?

I've done some back-of-the-envelope calculations, and the results are surprising. According to the company's Annual report, there are 1,152 Denny's seating an average of 140 people per. If we assume an average of a half-an-hour per diner, then in an eight-hour window the restaurants could serve a maximum of 2,580,480.
1,152 restaurants x
x 140 people seated per restaurant
x 2 diners per hour
x 8 hours =
2,580,480 free Grand Slam breakfasts

A Grand Slam breakfast retails in my area for $5.99, so the maximum retail value of this giveaway would be around $15,457,075. Wow!

However, the cost of the food to prepare a menu item typically runs around 25-30%, so the actual cost for food for this giveaway, at a generous 30%, would be more like $4,637,122.

Now, how many of these diner do you suppose would eat a breakfast without something to drink? My guess is very few. Suppose 2,500,000 ordered coffee, juice or a soft drink. Restaurants typically make around 85% on drink orders, so on an average $2 per drink basis, the company should net around $1,70 per, or $4,250,000 in drink revenue.

If this is the case, the entire promotion cost is now down to around $400,000. The value of the free press surrounding this promotion? Easily worth ten times that.

Certainly, these figures are very incomplete, ignoring the sacrifice of normal sales, the cost of extra staffing and and the cost of managing the promotion. Nonetheless, I believe they are illustrative of how an imaginative company can enhance its image, drive customers to try its product, and get a ton of free advertising by stepping outside the normal marketing channels.

PS- Don't forget to tip according to the menu item's everyday cost. The wait staff has to eat, too. And save a seat for me.