CHICAGO (AdAge.com) -- How do you bring back a stale brand? By offering a free meal, decided Mark Chmiel, Denny's Corp. exec VP-chief marketing and concept innovation officer, when faced with that challenge.
The 55-year-old casual-dining brand, which enjoys about 95% awareness, had slipped in recent years from popular consciousness. Mr. Chmiel tried promotions, updated menu items and a breakfast-to-go program, but none of his efforts were generating trial.
Then last December, after ditching Publicis Groupe's Publicis MidAmerica for Goodby, Silverstein & Partners, he decided he needed to "grab consumers and shake them." The result was the chain's first Super Bowl ad buy, 2 million free breakfasts given away and what the company estimates was about $50 million in free publicity. Quite a feat for a chain that, according to TNS Media Intelligence, spent $63 million in measured media during 2007.
Since the January giveaway, Mr. Chmiel said some franchisees have reported an increase in same-store sales. The company doesn't report earnings until next month.
Mr. Chmiel, 54, arrived at Denny's in April 2007, as senior VP-concept innovation, charged with developing a fast-casual breakfast concept. The company maintains that the resulting "fresh express" has transformed the business model and brand. Since adding CMO to his title, Mr. Chmiel is credited with revamping the chain's late-night business, introducing B-fast 2 Go, as well as takeout and catering programs.
Mr. Chmiel was previously chief marketing strategist for Baja Fresh, which was a division of Wendy's at the time. With more than 25 years in the food-and-beverage industry, he has worked with a host of brands, including Burger King, Chi-Chi's, Dr Pepper, KFC, 7Up and M&Ms.
Still, it's a tough time to resurrect a casual-dining brand, even a well-loved concept like Denny's. A number of brands that were once Wall Street darlings are suffering as consumers continue to trade down to fast food, or even cook at home. The Cheesecake Factory's same-store sales fell 7% in the fourth quarter of 2008, while Applebee's and Chili's fell 5% and 4%, respectively. Denny's same-store sales were down 4% for the full year, which accelerated in the fourth quarter, with a 7% drop.
In an interview with Ad Age, Mr. Chmiel talked about the strategic reason behind the giveaway, winning customers back and why it's important to work "shoulder to shoulder" with your CEO.
Ad Age: What led you to do the breakfast giveaway?
Mr. Chmiel: We had a relatively successful end of 2007 and early 2008 in terms of programs and product introductions. However, the more we talked to consumers about some of the promotions we did, we felt we were getting enough trial, gaining enough awareness of recognition for the promotions. We realized we were in sort of a quagmire, with over 95% brand awareness, but that was almost our Achilles' heel. ... What does it mean if Denny's put a commercial out there? People would say, "Denny's, I already know about them." Given what we were facing, we felt we really had to grab the consumer by the lapels and shake him.
Ad Age: You say you picked a "disruption point."
Mr. Chmiel: The big disruption point -- something that generates significant trial -- was to get people to come back to the restaurants and see the new programs and the new products and the new [in-store displays], and the best way to do that is with "free." We started to look at the merits and [asked ourselves], "Can we afford to do [a giveaway]?" We have a brand called the Grand Slam that has almost 70% brand awareness in itself. It's literally loved. "So what if we gave the Grand Slam away?" we thought. Once we discussed it, we worked up the metrics, to see if it makes sense in additional purchases, with some people buying beverages, we could probably break even on overall promotion. ... Then we started thinking about how to get the word out and what the biggest megaphone would be, and it's the Super Bowl.
Ad Age: Did you meet with any resistance internally?
Mr. Chmiel: There was what I would call a high degree of skepticism on two different levels. First, what if nobody comes? What if you throw a party and no one wants to come? The other, opposite one was what to do about security. What if we have hundreds of people show up at each restaurant and it's a mob scene? ... We came together as a company and looked at every scenario, from ordering enough food to shipping it out to staffing to security to making sure it was the best possible guest experience.
Ad Age: What did you do to make the most of the traffic?
Mr. Chmiel: We wanted to have everything ready when people got there, our [in-store displays], placemats, bounceback coupons. ... Then we tried to set up so everything around them would make them go, "Wow, there's a skillet breakfast," and "There's breakfast-to-go." We looked for very possible way to show them what was new at Denny's.
Ad Age: How has business been since then?
Mr. Chmiel: Obviously, as a single day, it was a significant lift, but [overall guest count has continued to increase]. Anecdotally, I was speaking to a franchisee yesterday, and she said her stores are running double-digit same-store-sales increases.
Ad Age: What's been the biggest surprise?
Mr. Chmiel: The most amazing thing for us was that we didn't realize how much people would appreciate it. So many people wrote us. We had thousands of calls to our 900 number. They said, "Denny's gave America a big hug." ... People stood in line and shared tables with strangers. It was like a big tailgate party.
Ad Age: There have been a number of massive giveaways by IHOP, Quiznos and others since your free-breakfast offer. Is that flattering? Do you think it will work?
Mr. Chmiel: I look at our giveaway as just a big sample, and that's why we didn't look at ROI necessarily. We didn't look for a payback right then. The key when you talk about copycats is you have to look at strategic objective if all I'm doing is a giveaway. I saw a sub shop giving away subs. "Why? What is your reasoning?" I thought. There are copycats out there that will wind up being not that successful because they didn't have a strategic reason to do it.
Ad Age: What do you think of the state of CMO tenure?
Mr. Chmiel: When I see questions asked about why CMOs are changing jobs all of the time I always say that you have to be shoulder to shoulder with your CEO. There I've been very fortunate [with Nelson Marchioli]. ... He and I see eye to eye 98% of the time. He is engaged in marketing and understands that he and I are the brand managers.
Ad Age: This is a pretty tough time for the casual-dining industry. What are your biggest concerns? What's your strategy?
Mr. Chmiel: It's a very, very difficult economy, as is well-known. We have seen restaurant-industry data that suggest that over 50% of people who dine out said that they are a eating out less often. That's 50% of your occasions that are reducing. It was out of that concern that lead us last fall to really focus on our strategy, which is about stealing share. That's when we hired Goodby. I said we have to be in the consumer mind-set when we do go out.