How Domino’s is marketing to student loan borrowers—and other brands’ value plays

Domino’s is proving that making an appeal to consumers burdened with newly resumed student loan payments can pay big dividends. But so far, the pizza chain’s restaurant competitors are mostly avoiding such a targeted approach and instead pushing more broad-based deal marketing. The diverging tactics illustrate how brands are using different ways to keep sales flowing as more consumers cut back their spending amid stubbornly high inflation. Ad Age A-List & Creativity Awards Final deadline approaching for annual program Enter here Domino’s has directly leaned into the potential hardships faced by millions of people who had to begin making student loan payments again in October after enjoying a more than three-year reprieve that started at the beginning of the pandemic. The chain on Oct. 25 began giving away $1 million worth of free pizza to customers whose student loan payments have resumed, equaling about 67,205 medium two-topping pizzas. Customers don’t have to be members of the chain’s loyalty program, but they do have to fill out an application with their name, email, graduation year and confirmation that they have student loans. Demand came fast: Domino’s saw 110,000 customers visit the application page in the first 24 hours, according to the chain’s agency of record, WorkInProgress. The 4,200 daily allocated free pizza codes were claimed within the first few hours. The next day, customers claimed all the daily codes within four minutes. Check out the latest restaurant marketing news “It has exceeded our expectations,” said Matt Talbot, co-founder and chief creative officer at WorkInProgress. “There’s no paid media behind it, we just did some social media posts.” @dominos Yup. We're giving away $1M in FREE Emergency Pizza to help soften the blow of student loan payments resuming. Apply for your chance to win at dominos.com/student-loans. AVAILABLE WHILE SUPPLIES LAST. Open to 50 U.S./D.C., 18+. Daily Offer Periods end at 11:59:59 pm ET, or when Offers are depleted. 4,200+ Offers per period. Limit 1 per person. Restrictions apply. Terms: www.dominosemergencypizzaforstudentloans.com/terms. ♬ original sound - Domino’s Domino’s isn’t alone in touting discounts. While deal marketing normally peaks in the first few months of the year, marketers aren’t waiting to act, according to Peter Saleh, managing director and senior restaurant analyst at BTIG, a financial services firm. “A lot of these brands have had these discounts available to consumers in some instance or another for several months, but the amount of advertising to highlight them to the guest has been turned up,” he said. Saleh added that marketing teams may not see student loan borrowers as a significant enough portion of a brand’s customer base, and that speaking to a wider audience can attract more customers. Domino’s is hoping that targeting student loan borrowers will help break through the noise. “You can put offers out that are broad, but it doesn’t break through,” said Domino’s Chief Brand Officer Kate Trumbull. “[Loan repayment] can be seen as a political or divisive topic, but as a brand you have to think about what you have the right to do and not over-promise. Other brands might be missing out on the opportunity to connect in an emotional way that builds loyalty.” Pizza Hut is among the brands taking a broader approach. The chain in late October rolled out a $7 Deal Lover’s Menu, allowing customers to choose from 17 menu items, with each costing $7 each when ordering two or more. To spread awareness, Pizza Hut featured “Saturday Night Live” cast member Ego Nwodim in ads and partnered with TikToker Anna Sitar. Sitar posted about the deal on her Instagram, playing into “Girl Math”—the TikTok trend where women justify their spending habits, such as the idea that items bought with a gift card or cash are free, or returning an item means making money. Read more about the ‘Girl Math’ TikTok trend “I think all of us can feel the effects that our customers are feeling,” Lindsay Morgan, chief marketing officer at Pizza Hut, said in an interview at the time the campaign launched. “We wanted to launch something that has a great value for customers at a time when they might be more strapped for cash.” Asked this week whether Pizza Hut has any plans to lean into the student loan issue, Morgan in a statement referred back to the $7 Deal Lover’s effort: “We believe any and all pizza lovers can benefit from a great pizza deal,” Morgan said. Carmen Bohoyo, a retail analyst at Kantar, says there is a fine balance between discounts and profit. The deals need to drive return visits, or, even better, loyalty sign-ups. Indeed, Domino’s goal is to ultimately drive customers to its loyalty program. “We are not just doing one program that offers more value,” Trumbull said. The student loan campaign “is one chapter in a story that we continue to tell—having our customers’ backs.” For instance, in early October Domino’s began its “Emergency Pizza” campaign, essentially a buy-one-get-one offer for customers who sign up for the Domino’s rewards program. Saleh points to instances of McDonald’s offering 20% off orders for first-time users of its app. “That’s almost all the profits the franchisee makes, but they are driving customers to the app and loyalty program, and those customers are more frequent than traditional customers,” he said. Also read: How McDonald’s and others are driving loyalty apps Other brands plugging broad-based deals lately include Chili’s, which is focusing on its three-for-me offering (a beverage, appetizer and entree starting at $10.99), and Denny’s, which is offering a discounted original Slam breakfast for $5.99. For fast food chains, higher inflation brings pros and cons. They can benefit from consumers trading down from more expensive nights out—a factor that has helped Taco Bell, according to David Gibbs, CEO of Yum Brands, which owns Taco Bell, along with Pizza Hut and other chains. “Our stores in lower-income trade areas are performing well with good transaction growth, just like our stores in high-income trade areas,” Gibbs told analysts during a Nov. 1 earnings call. “We’re probably benefiting a little bit from some trade down in those higher-income trade areas.” But chains still risk losing customers. McDonald’s for instance, reported strong third-quarter same-store sales due to price increases, but lower-income consumers are not visiting the Golden Arches as much as they used to. “We had a slight dip in traffic,” McDonald’s CEO Christopher Kempczinski told analysts on an Oct. 30 earnings call. “We’re just going to need to continue to keep a close eye on that $45,000-and-under consumer because of the pressure that they're feeling there and make sure that we’re offering value.” Ad Age World’s Largest Advertisers 2023 Ad spending, rankings and analysis for the top 100 advertisers Click here

How Domino’s is marketing to student loan borrowers—and other brands’ value plays

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