Denny's Embraces AARP Audience to Combat Sales Slump

Once Known as 20-Something Late-Night Hangout, Chain Faces Increased Competition Across Dayparts

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CHICAGO ( -- 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.

Starting this month, Denny's will offer $1 coffee to AARP members and 20% off their meals between 4 p.m. and 10 p.m. Bill Ruby, Denny's VP-media and field marketing, said the strategy is simply to reach out to consumers more than 50 years of age who have loved the brand their whole lives. He noted that Denny's itself is 57 years old.

"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."

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