James B. Adamson, who joined Flagstar in February, led a six-month account review as Burger King Corp.'s CEO two years ago. During the Burger King review, Mr. Adamson apparently developed a fondness for Lowe, which lost in the final round to Ammirati & Puris/Lintas.
This time around, Lowe is the winner. Flagstar, a Hardee's franchisee, handed Lowe ad responsibilities for its 800 Hardee's restaurants this summer, and on Nov. 3 added the challenging Denny's assignment.
"There's a job to do to help them get their image back on track," said a Lowe spokesman. That image was profoundly damaged by charges of racial discrimination beginning two years ago, when six black Secret Service agents accused an Annapolis, Md., Denny's of refusing them service. Flagstar paid $54.4 million to settle claims filed by the agents and many other minority customers.
Equally responsible for Denny's sluggish sales-for the year to date, flat at $1.2 billion-is the changing landscape of casual dining. New competitors including Applebee's Neighborhood Grill & Bar and Chili's have materialized in recent years with splashier menus and prices not much higher than Denny's.
The chain has taken some steps to freshen its image, instituting the $1.99 Grand Slam breakfast deal and launching a remodeling project that has overhauled 260 stores to date. These moves helped boost same-store sales a modest 2% in the third quarter.
Helping shape that image will be a new marketing director. The 1,500-unit chain is close to announcing a replacement for VP-Marketing Nick Costaldo, who left last month to become president of El Pollo Tropicale.
Denny's previous agency, D'Arcy Masius Benton & Bowles, Greenville, S.C., and Lowe are involved in a separate review for media buying.