A Tale of Two Restaurants

As week two of Restaurant Week nears its end, it’s time for restaurants to weigh in on this event. I spoke with representatives of two of Boston’s finest restaurants, L’Espalier and Salts, on their decisions to participate or not. With several high end favorites participating this year, it was difficult to find restaurants abstaining from the promotion. Lauren Loschiavo, Marketing & Community Relations Manager for L’Espalier and Sel de la Terre, spoke with me, as did Executive Chef/Co-Owner Gabriel Bremer of Salts in Cambridge. While L’Espalier is participating, Salts is not. 

L’Espalier – Driving Customer Trial, Dispelling a Myth

L’Espalier’s Loschiavo enthusiastically supports Restaurant Week, which might surprise some given L’Espalier’s stature among local restaurants. Not only is the restaurant offering specials, but it’s done so for all of March. “We want the Restaurant Week crowd to come in and try us, so we created a menu – it’s fared really well,” Loschiavo said. L’Espalier is offering the $20.10 standard lunch deal and is an “unofficial” dinner participant because its dinner price point is $42.00.

The manager explained that at $33.10, profitability would be an issue, but the $42.00 price point is more palatable for the restaurant. The normal price tag for L’Espalier’s three-course dinner is $82.00, meaning quite a discount during March. “We wanted to offer something”  Loschiavo said.

“We’ve been booked up almost every night of the two weeks,” Loschiavo said. Under normal circumstances for this time of year, without the promotion, “traffic would be down – it would be typical for March, which is one of the slowest months of the year. L’Espalier was never affected by the economy at all. I would assume [traffic] would be down because of March. A lot of people travel in March – it’s an in between month after holidays and before warm weather.”

I asked Loschiavo whether the Restaurant Week crowd is a tough one, knowing that some think this promotion is akin to amateur night. “The good thing about Restaurant Week is that we get people in who aren’t our regular customers so we get them to try us – it’s probably one of the easiest ways to get new people in. In general, it’s hard to get people in to try because they assume it’s too expensive.”

Is that a fair assumption for diners? “I don’t think so – maybe for dinner, but for lunch all the time we run a prix fixe three courses for $24.00 per person – that’s just $4.00 above the Restaurant Week price – they’re still not quite as receptive to it as they should be.”  Loschiavo estimates that 20% of Restaurant Week diners return to L’Espalier after the promotion ends.

So why the lack of reception? “I think it’s driven by name and the perception of L’Espalier being only for special occasions or where you save up to go, or where it’s people with money that come in all the time. That’s one of the hardest things.” Loschiavo explained that the normal lunch menu is a “simpler version of the dinner menu” with a la carte offerings that are not offered during dinner. “We have sandwiches, we have a burger, the lobster BLT is a signature lunch item these days – it’s our twist on regular lunch fare.”

When it comes to working the actual event, Loschiavo says the more, the merrier. “The servers love it because it gives them revenue in what would otherwise be a slow month. . . It’s a great way to reach out to people who haven’t tried us before.” 

Salts: Offering Value Every Week of the Year

Management at Salts restaurant is concerned that participating in Restaurant Week would not provide a true representation of the restaurant’s offering.

Chef Gabriel Bremer says, “When you think about Restaurant Week, what you’re trying to achieve for customers is something kind of special and show a sense of value to entice people. That’s what we really try to do on daily basis – we have a vision of a level of service and a level of food that we try to achieve.”

Bremer emphasized that there is value in Salts everyday menu. “It’s not Restaurant Week, but our tasting menu is 5 courses for $75.00 and we actually give on top of that an amuse, pre-dessert and petit fours after, so it’s 7 courses for $75.00 and that’s what we give on a regular basis.”

In addition, Bremer says, Salts uses the same purveyors as restaurants like Per Se and The French Laundry, and farms its own produce “so we are bringing in the best of the best and trying to give tasting or à la carte menus that are still attainable for people. To do it for any less is impossible.”

Though the restaurant may seem out of reach to some, Bremer is constantly attentive to the idea of value in describing Salts dining experience. “We try to focus on constantly giving the best we can at an obtainable price and always have that sense of value,” he said. “One of our important talks when we were contemplating the restaurant and talking about what it is – we always have a sense of value, a sense of ‘yeah this is really worth it and I’d even pay more.’ “  

Restaurant Week wouldn’t allow the restaurant to remain a true to its offering, according to the Chef. “On a daily basis we try to give the same products in that atmosphere but at an obtainable price,” explained Bremer. “So to take a week or so and try to showcase what we do for any less than that, it really wouldn’t be representative of who we are and I wouldn’t want to go through all the work and have everybody come in and try to put forth something that’s really not an expression of what we do – if people come in and try you they really aren’t trying you.”

When the Chef describes what’s special about Salts, his answer was extremely inviting. “What sets us apart from other restaurants and especially larger restaurants, you’re really walking into our home,” Bremer said. “If I could throw a dinner party every night and actually make a living from it, that’s actually what we do. You’re getting the complete atmosphere as if you’re coming to our home and being honored as our dinner guest.”

Regardless of your dining out budget, and whether you get to try restaurants during Restaurant Week or any other week of the year, it’s nice to know how much thought that these establishments and others put into the offerings.

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Every March and August, I make a slew of restaurant reservations and invite my fellow foodies out to revel in a good meal – or a few – in honor of Restaurant Week. They know they can rely on me to remind them of the festivities, and I know there are two camps among my friends: the joiners and the abstainers. The former see the event as a bargain, a way to expand their restaurant horizons. The latter don’t see the bargain because to them, the occasion is more than just a $33.10 three-course meal once they add in wine, tip, and more food than they want or need. 

Restaurant Week started years ago as a way for restaurants to increase business during down weeks by offering three-course prix fixe lunches and dinners at special prices. At one point, the price was based on the year; I remember dinners costing $20.02 in 2002, though inflation has made this relationship less direct lately, so dinner prices are now in the $30.00 range. With Boston’s heavy student population, spring break is one factor in timing, and summer vacations and the last slow weeks before the back-to-school drive the August timing. At least that’s what I read when I first started enjoying restaurant week.

As an industry professional, I see both the bargain price allure and the overdoing it argument, but my desire to support the industry while eating good food wins out. Taking myself out of the equation, here are the two differing views courtesy of two members of my dining circle.

Foodie on a Budget

One peer I spoke to is a devoted student and lover of food who is in the midst of a career transition and not working full-time. While finances are a factor in her decision, she says that even when she was employed full time, Restaurant Week did not entice her. “I never do it. One or twice I’ve gone, but I just do not do it. To me it doesn’t seem like such a bargain; it feels like it’s a great way to lure you in and I spend more than I usually do for dinner. I don’t order three courses usually, so I just find it gets to be too much.”

This friend has done the math of adding in wine and the tip, which brings her tab to well over $33.00. She admits that it would be a good way to get to dine at out-of-reach restaurants. “I regret that I don’t think of it for those really pricey restaurants – that would be worth it. But at most of them, I could get away with not spending $60.00 by the time I am done. My perception is it’s a little bit of a rip off – at least for me. And I’m usually broke so I am the queen of meeting for apps and a glass of wine! I could enjoy any of these restaurants anyway – I still wouldn’t go out and spend that much.”

Dining Enthusiast

At the other end of the spectrum is the appreciative diner, who recognizes the bargain and is grateful for the opportunity. “I think it’s a great way to try out a restaurant you normally wouldn’t have thought of.”  This restaurant week, she went to Toscano, one of her local favorites on Boston’s Beacon Hill. “They always do a good job and especially in this economy it’s a great way to go out to dinner.” Her meal:  a smoked salmon crostini appetizer, a scallop, leek and spinach entree, and a white chocolate blueberry tart for dessert.

“We had dinner, and split a bottle of wine that was $30.00 so it was cheap, like $60.00 each. With tip it was $63.00 and I overtipped.” This diner is a former server at a high-end restaurant, and is conscious about tipping servers for good service, and based on regular prices when meals are on special. “If you live in Boston and you go to a restaurant of this caliber, that’s cheap. It was a great meal and the server was fantastic. If I were waiting tables it’d be amateur night” and again, this woman knows about difficult customers.  Based on Toscano’s regular prices, her appetizer and dinner would normally come to $47.00. Assuming a conservative dessert price of $9.00 as no menu listing is available, the pricetag would total $56.00 vs. the $33.10 she paid.

Restaurant Week Math

Savvy consumer that I am, I know there are restaurants that are not a bargain for this auspicious week (hint – if you order salad, pasta and a dessert during Restaurant Week, you are not getting a large discount). However, so far this restaurant week, my meals have fallen into the bargain category.

On Monday night I visited Olives restaurant, where there were more selections on the restaurant week menu than the regular menu. I ordered Lobster Bisque, Crispy Confit Duck, and a Chocolate Tart. Based on their normal prices a three course meal would range from $48.50 for the lowest-priced menu items, to $59.45 for the highest.

On Tuesday, I had lunch at Caliterra in downtown Boston, and the meal was less for all three courses than it would have been for just one entrée on the regular menu. I ordered Lobster Bisque (yes, again), Scallops, and Chocolate Truffle Cake (yes, more chocolate, too). Caliterra’s seafood entrées are regularly $26.00 to $28.00, and the three-course lunch was $20.10. If I had ordered an appetizer for $12.00, my bill for two courses would be $40.00, and with dessert, closer to the $50.00 mark. 

While it can be tough for our wallets and waistlines to accommodate eating like this as a rule, Restaurant Week provides several reasons for those looking for excuses to celebrate.

Everyone Loves a Deal

March 11, 2010

© 2010 L. Kerr

Free this, all you can eat that. 2 for $20; 15 under $15; starter, entrée and dessert for $12.99. Small cravings. Small plates and snacks. $1 coffees; $1.00 menu;  $5 lunch. And the list goes on – you can’t turn around without reading about specials at restaurants everywhere. It’s deal madness.

Don’t you love it?

And I don’t just mean customers – restaurants have to love them as well. They don’t have a choice.

For cost-conscious customers, as times stay tough and cost cutting is a must, a simple, casual meal out moves down on the priority list, if not off the list entirely. A night out is a true luxury compared to say, the electric bill. So deals are a necessary enticement. And it’s not  just customers who need the deals; restaurants must rely on them as well.

It used to be that many operators tried to avoid offering deals, citing a well-known list of arguments against them:

  • Don’t train guests to be more price sensitive
  • Limited time offers wreak operational havoc
  • Price cuts bite into margins
  • Competing on price just leads to price wars

But desperate times mean restaurants can’t afford not to offer deals.

I remember when operators could focus on growing revenues by pure and noble means – by adding customers and building check. And by building check, I don’t mean via price increases. It came down to such basics as getting customers to come in more often, and to consume more during those visits – simple, right? Of course new products were crucial, but that’s a tough game. All that R&D, maybe some new equipment, the sell-in, the resistance, and the pressure on each new product to be the next great thing. And if sales saw only a temporary, modest blip, and new items didn’t take off like gangbusters, there were post mortems, lessons learned, and disappointment. It’s a tough game, that quest for new news.

But these days the new news is the deals, and while it’s easy for critics to declare that price cuts are damaging, they should keep in mind how much further sales could be down without these dastardly deals – a difficult calculation to make. On the plus side, deals have sparked some menu creativity and consumer excitement. And some of the associated smaller portions benefit chains and their patrons by promoting health and value, or the perceptions thereof.

We don’t yet know to what degree consumers will retain price sensitivity when prosperous times return. With the pace of store closings and the financial pressure bearing down on everyone from guests to shareholders, it’s hard for operators to think about that now.

So until the smattering of good news we have seen lately about positive performance becomes the norm, the reality is that everyone will continue to love and need a deal, including operators.

Pei Wei Means Big Value

March 4, 2010

Photo: L. Kerr

At long last, I got to try Pei Wei, the Asian Diner little sister of P.F. Chang’s, and it far exceeded my expectations. Pei Wei exemplifies the value equation with a great customer experience at a very fair price. Most commonly, the restaurant value equation is Experience/Price = Value, but I’ve rearranged the components for Pei Wei to this: Tasty Food + Reasonable Prices + Pleasing Portions + Great Service + Nice Environment = VALUE.

I was in Dallas for a 12:30 meeting so planned to eat around 11, which was fine with my east coast stomach. I knew there’d be a million restaurants to choose from, and was thrilled to see Pei Wei pop up on my GPS (I’d be lost without that thing). Not knowing much about the concept other than that it’s small and growing, and it’s fun to pronounce, I pointed my car in Pei Wei’s direction. I wanted to eat healthy and I had a yen for Asian, if you will, but little did I know there was so much more waiting for me.

Arriving at about 11:10, I assumed I would be okay on time, and their fast casual service model worked perfectly. I saw several tables already seated, and followed the instructions to order before sitting. Perfect, no delays there. The menu is easy to read – there are digital flat screens posted, and an Asian Chopped Chicken Salad was $6.95. Figuring it would be on the smaller side, I decided to order an appetizer – Chicken Lettuce Wraps for $6.25. Then I decided to make it a feast, and added Dan Dan Noodles for $6.75. I figured I’d treat it like Asian tapas, a smattering of tastes for myself. I knew I was ordering more than I needed, but just how much more, I couldn’t tell, aligning my expectations for the portion with the prices posted. This was definitely enough for 2, and might have been sufficient for 3 people. So while the quantity wasn’t exactly appropriate, I exercised some rare will power! After all, I had a blog to write, and 2 items would have been skimpy. My bill was $21.60. I’ll say it again – my bill for 3 items was under $22.

I sat down, pulled out some reading, and soon I had my lettuce cups – they seemed identical to those at P.F. Chang’s ($7.95 on their menu). Unlike some fast casual concepts, Pei Wei brings you your food rather than having you pick it up yourself. I tried not to fill up on the wraps, and then came my noodles, which were great. On their own they would be enough for a full meal, so I eased off on them, begrudgingly. Last came my salad, which was delicious. Salad snob that I am, I could not find fault with this one at all. It was very nicely presented and the portion was excellent, with plenty of chicken. And the dressing was great, with a pleasing consistency and just-right coverage (I should have been a salad critic). It would have been enough all by itself, which shocked me at that price point. I can’t remember the last time I got one for lunch at what I thought was a fair price. At my favorite Boston lunch haunts, the range is $7.50 to $9 for a much less exotic version at a quick serve establishment, and more like $12 to $14 at full-service locales. My $22 meal would have easily been enough to two, and in fact, on a recent lunch at P.F. Chang’s, a similar order of 1 appetizer and 2 lunch entrées came to just under $28.

By 11:30 the place continued to fill up and I watched a constant stream of runners hustling to deliver food and clean tables as I ate, surrounded by too much food. When I left at noon it was full on busy, and I passed a table being greeted by a manager, who asked how the party’s meal was and if she could refill their waters. This had all the makings of full service but was actually a limited service model at noticeably reduced prices – amazing. I do have one recommendation for the restaurant: could you work on the temperature in your ladies room? It was noticeably warmer than the dining room.

Pei Wei’s website notes that it is a faster, more casual version of P.F. Chang’s, and that all menu items are under $10. Combine the delicious, well-presented food with the nicely-themed environment, the quick service, the clean establishment, the portions, and the pricing, and this is a winner. Too bad I can’t get there more easily. Way to go, Pei Wei!

Can we talk about pricing?

February 25, 2010

At this year’s NRA Show, I will be giving an educational session on pricing, which will cover strategies for a successful pricing process, lessons learned during my tenure in restaurant pricing, and tips for anyone who has anything to do with managing pricing. But why limit the fun to NRA Show attendees? This blog is another forum where I’ll share some advice in hopes of helping any operators who would appreciate some guidance. The first lesson I’ll impart: my take on talking about pricing in the restaurant environment.

I have found that the issue of what we can talk about is one of the most uncomfortable for my restaurant colleagues, often resulting in a see no evil, hear no evil, speak no evil mindset. So I’ll share my experience with this in hopes of creating a comfort zone. The bottom line: you CAN talk about pricing, as long as you do it in a legal way. Is that clear as mud?

I have often heard my marketing, finance, and operations compatriots declare “we can’t talk about pricing” and change the subject. My usual response to this is “yes, we can talk about pricing, we just can’t price fix,” and then provide a bit of context. 

Every company should consult its legal team to develop and share (ad nauseum) a clear policy regarding the communication of pricing information. I am not a lawyer, nor do I play one on tv, so my layperson’s advice is just that. I repeat: consult your attorney after you read this.

Simply put, price fixing involves intentional or unintentional collusion among competitors that harms consumers and favors the colluding parties. The terms and behaviors that antitrust law covers can be ambiguous, especially in franchised environments, where franchisees can be viewed as competitors and could therefore be colluding without knowing it. There are also implications for the franchisor-franchisee dynamic. This is more clear-cut: franchisees, not franchisors, are responsible for making pricing decisions, so franchisors are limited to recommending prices to franchisees. It’s that simple: a franchisor dictating menu prices to a franchisee constitutes price-fixing. Company-owned restaurants therefore have it easier from a price recommendation/compliance standpoint, though they are not immune to potentially collusive situations. There are finer points about what’s allowable, such as whether or not franchisors can dictate maximum prices to franchisees. This is often covered in the actual contract between a franchisee and franchisor, and has arisen as a key point in the recent Burger King $1 Double Cheeseburger controversy, as Ron Ruggless has written in Nation’s Restaurant News.

Anyone who has dabbled in pricing knows that price fixing is illegal, and the way many companies have avoided breaking the law is by avoiding any discussion of price whatsoever, hence tactics such as having certain parties leave the room during pricing conversations so as not to participate (the corporate equivalent of covering one’s ears and singing).

Some examples of discussions that do not constitute price-fixing might help:

  • Making a price recommendation is not price fixing
  • Explaining the rationale behind price recommendations is not price fixing
    • Analyzing profit at a specific price point is part of the rationale
    • So are projecting sales and traffic
  • Evaluating a promotion in terms of how it impacted customer counts, sales, and guest perceptions is yet another type of analysis

It’s ironic that in an environment where the goal is a consistent customer experience, a discussion of consistency in pricing would be illegal. But we can’t change that, so we just work within the rules. If you believe that the franchisee is a key customer of the franchisor, it should follow that the franchisor should support its customer. This means providing business analysis, promotional programs, and training/tools, to franchisees. So don’t be afraid to talk about pricing, just understand exactly how to talk about it. This is perfectly appropriate – just ask your lawyer.

My mother will be disappointed to learn this, but I once told a valentine not to buy me flowers on Valentine’s Day, and if he must, not to buy me roses. Despite Mom’s best efforts, my practical nature sometimes gets the better of me. I know roses cost more around February 14th, and I just can’t tolerate the price hike.  

Last week, reading articles and advertisements for Valentine’s Day meals, I was of course was glad to see restaurants projecting positive sales. But I couldn’t ignore the economics of it, and wondered how others view the business of Valentine’s Day dinners. And if you’re reading this, you probably know that I conducted some well-timed research to find out what people think à la the rip-off factor. To everyone who responded to the survey, thank you, and here is the skinny.

I surveyed colleagues and friends via Facebook, Twitter, and emails asking them to respond and recruit others. So while it’s not a random sample, it’s relevant for my purposes. It ran from Thursday night, February 12 until the morning of February 14th, when I had reached 100 responses – 103, actually.  I have to say, I enjoyed learning about others’ views of the occasion via the non-price-related questions, but as a pricing nerd, I care most about the views on costs and value. So without further ado:

  • 40% of respondents believe prices are more expensive on Valentine’s Day than other nights of the year
  • 33% believe prices are similar to those on other nights
  • 20% don’t know or aren’t sure
  • 4% think prices are discounted on this night
  • 5% responded “other,” noting specials and pairings that are available, with no note as to expense

Big aha: more people think dining out on Valentine’s Day is similarly-priced or cheaper than other nights than think it’s more expensive. Restaurateurs, I am happy to be the bearer of good news.

Is Valentine’s Day a special occasion worth the splurge? Is it a hassle to go out for Valentine’s Day? Respondents rated these affirmative statements on a 6-point scale where 1 means strongly agree and 6 means strongly disagree:

  • For both statements, the average score was 2.9
  • No answers were given for either statement in the disagree range of 4 to 6

So people value this occasion and are willing to put up with the crowds, pressure, opportunity to be exploited, and mandatory fun (their words, not mine) because they appreciate the time with their loved one, adult conversation, dessert and lack of dirty dishes (as reported in open ended questions). Again, operators, rejoice!

One Restaurant’s Point of View

To understand the restaurant perspective, I spoke with Byron Lepine, Manager at Kingston Station, a downtown Boston lunch favorite of mine. I had received an email with their V-day specials – a $50 3-course prix fixe menu, $70 with wine pairings. Byron sounded like the host with the most as he described the restaurant’s philosophy. “We want to make sure guests have a memorable evening and go home feeling good about it.” He waxed poetic about the planning and regretted not repeating last year’s late-night anti-V-day party for singles this year.

Lepine knew his menu inside and out, explaining that both customer favorites and special items were among the selections. When he mentioned that one of the items was a $26 entree, I was quick to ask how $24 for a first course and dessert meant a value, and he quickly recited the value and economics behind their meals. He clearly does his homework. “What you pay for an entree doesn’t reflect the food cost. We have a terrible [cost] on skirt steak and should probably charge $35 or $40,” though it’s less. “We eat the cost.” He used the example of the Valentine’s Day special prime rib, a $36 entree, along with two $9 courses, for the $50 package. While I don’t consider a couple of dollars a bargain, his points about the fair market price are well-taken. And those of us in the biz know that not all items’ profitability is created equal.

Side note: I reviewed the restaurant’s typical prices for items on the Valentine’s Day menu, and using these to calculate V-day value is a bit less favorable than using Lepine’s reference points of what the restaurant “should charge.” My calculations do not, however, include the factors he mentioned, like fresh flowers and special atmosphere, as well as the difficulty of handling many more tables in a night. And as we say, value is not just price. And as we also say, the laws of supply and demand hold true, so as demand goes through the roof on Valentine’s Day, it’s fair that prices do, too. So while the wise consumer in me has a narrower view around the pricing, the businesswoman in me says Kingston Station is conducting smart business.

I also asked Byron about the wine pairing, thinking that the extra $20 would not be such a bargain, but when he told me it was a glass of wine with each of the 3 courses, I knew that was a good deal. He estimated $9 price tags for the wines selected. I don’t know about you, but I often see them for more than this. Indeed, many wines on Kingston’s menu are $8 and $9 a glass. So I like that math. And while Kingston’s menu suggested the wine for each course, the restaurant would not hold guests to the recommendation, adding to the value quotient. This left me with a good feeling about Kingston’s wish to spread the good feeling.

A Diner Weighs In

My optimism was tempered when I learned that the warm glow of a Valentine’s value was sadly lacking by a friend who visited a suburban Boston restaurant on this auspicious occasion. Her summation: “Last night’s dinner was the biggest f-*^ing rip-off, it was ridiculous.”

The culprit? Prix fixe menus. This restaurant, like Kingston Station, required guests seated at tables to order the prix fixe dinner, which is how restaurants increase their checks on this night o’ couples. However, my friend noticed that the restaurant allowed those at the bar to order à la carte, which ended up being less money for the same meal served as a “special.” Her dinner deal was a $75 ticket, and she calculated that ordering the selections separately “didn’t even come close to $75.”  Her reaction: “I think I now will officially spend both New Year’s Eve and Valentine’s Day dinner at home. I loved spending the evening with my guy, and the food was good, but it was ridiculous how it was priced.”

So what can I conclude from these various sources of data? If you’re in the camp that wants to splurge, or you don’t mind the hassle, or you can finish 3 courses and 3 glasses of wine, the deals may feel better. If you are restaurant catering to a house full of two-tops, you have to earn your money and manage the crowds, but luckily their price/value perceptions are in your favor.

And if you’re me, you get to take surveys and observe it all in the name of work!

A Few More Survey Findings:

  • 47% of respondents prefer to go out, while 34% prefer an evening at home; 15% want to treat it like any other night
  • Fine dining is the winner for those who want to go out, preferred by 41%, while independent restaurants claim 35% of respondents
  • Respondents who prefer a night at home overwhelmingly want to make a special meal, with 66% opting for this choice; the next most popular option: takeout at 10%
  • 60% of respondents were women, 35% men, and 5% did not indicate their gender.

 

Photo: L Kerr

Anyone paying attention to Facebook, Twitter, Superbowl ads and newspapers knew all about Denny’s Grand Slam giveaway this week. Can you read one more article on it? For me, this had the makings of a field day, getting to watch from the sidelines and not having to work the event (as a veteran of Baskin-Robbins’ Free Scoop Day and the Scooper Bowl, I know the madness these events cause among deal-happy consumers). 

With the Burger King $1 Double Cheeseburger controversy still smoking, I saw this as the anti-BK promo, with Denny’s not just reducing the price, but giving a substantial item away to millions. I couldn’t wait to talk to customers, get their take on what this means to their loyalty and frequency, and start quantifying results.  

Arriving at Denny’s in Lawrence, MA (a working class town featured in Tuesday’s Boston Globe for its near bankruptcy and the mayor’s double dipping salary controversy) I braced myself for the lines, the crowds, and the excitement, and I got surprise #1. There were no customers spilling out of the restaurant – something I had expected based on last year’s PR reels, which featured out-of-work customers shedding tears of gratitude for the gift of a meal out. “Doesn’t anyone want a free meal or two or three in Massachusetts?” I wondered. 

Outside, I first ran into Lenny, who assured me it was packed inside and indulged me in a few questions though he was supposed to be at work. His reaction to the giveaway and the impact it has on his future visits: “I like it. If people do something like this, it does draft you to come back more often.” In Lenny’s case, that’s about once a month, at a cost of $6 per trip for him. 

Then I met Dee, a Denny’s regular who said “I’m so there” when she saw Superbowl ads. “I’m always here,” Dee told me, estimating $20 to $30 each week for breakfast for two. What will she do going forward? She’ll continue the habit, which she calls a treat for herself. 

Lenny was right – when I got inside, the lobby was full of patiently waiting guests. But Dana and Amanda, a husband and wife on their way out, were not guests – they were off-duty crewmembers who explained to incredulous customers why they were not putting in their names: they are ineligible for the giveaway. They were scheduled to work that night, and Dana was especially happy not to be in the kitchen, since “It’s crazy. But it’s good for business.” 

I heard the manager taking customer names, quoting a 30 minute wait, and offering rainchecks to anyone who could not or did not want to wait. Surprise #2 – great contingency planning which actually reduced the the burden on Denny’s in the moment. . . you are smart, Denny’s. 

Customers were happy, and even surprised – Al and Mady, who “just wanted French Toast,” and had no idea about the giveaway, said they would still buy the French Toast, but might take the Grand Slam also. While they didn’t come for the promotion, Al thought it was “awesome. I know Denny’s is always doing nice things.” The pair, who “just started on a Denny’s Binge” come once a week and spend $20 to $25, which they think is “not bad.” 

Surprise #3: Store managers were willing and happy to speak with me. I wouldn’t have dared commit the cardinal sin of bothering them had it been chaotic, but GM Keith Tinker and Assistant Manager Morgan Livingston, manning the hostess stand, were cool, calm and collected. They said the event was going much more smoothly than last year, attributing this to good planning, strong corporate support, and more customer patience this year. “We really crewed up,” Livingston said. “I thought it was overkill, but it’s not – it’s going well.” 

At one point, an official-looking man came in, said something to the managers, and proceeded to walk through the store. Figuring he was part of a Denny’s or franchisee management team, I returned to observer mode. Later I asked Keith about him, and he said the man was either a principal or truant officer, doing rounds to find any AWOL students. Laugh #1

When the coast was clear, I spoke with Keith about his view of the giveaway. “This works because we’re a franchisee – working together with corporate – they give us everything we need to do it right and it shows.” What does the store get out of this investment? “Happy customers who will repeat, and a lot of buzz. Everyone is so positive and the buzz will last a month. There is so much goodwill. It’s about what we can do to give it to [customers], not what we can do to not give it to them. It’s worth every penny.” 

Surprise #4 – have I ever heard a franchisee talk like that about corporate? Very rarely. 

So for now, business case, schmusiness case –  instead of crunching numbers, I’ll let Keith’s analysis speak for itself.