Wednesday, February 04, 2009

Denny's Hits a Grand Slam

I'm sure that everyone heard about Denny's free grand slam breakfast and some probably went out and got it.  The Wall Street Journal today had an interesting nugget about it when the CEO of Denny's said that they actually still broke even on the day because, in large part, of their margins on drinks.  That's a shocking piece of information.  The margins on drinks are really that high? 
The second piece of information, this one doesn't shock me, is that over 2 million people lined up for that free breakfast, some waiting an hour or more to get it.  While I love free stuff, I also try to be rational about it.  When Ben & Jerry's has their free scoop day, I avoid it.  When 7-Eleven does their free sample Slurpees, I avoid it.  The cost of either of those products is in the $1-2 range, and I'll wait in line 20 minutes to get one.  Meanwhile, I value my time at $35/hour, so it's costing me over $10 to get that "free" product.  It's the same thing with the grand slam.  I could wait in line for an hour, costing me $35, or I could just go get the thing another day and pay $6.  That's an easy call.  Even if the $6 was too much for me, I could halve that cost and do it myself.  It's not like they've got some sort of secret proprietary recipe for sausage and eggs and pancakes.  You could do the same thing yourself with Bisquik, eggs, and Jimmy Dean.


Scott said...

That's a good way of looking at it. People (myself included) rarely look at it that way.

Cheeth said...

Sure their margins on drinks are that high. They use cups that can be reused so many times they are practically a fixed asset, and the drinks themselves come in giant containers with economic scale. From what I hear, their coffee only costs whatever market fly ash prices dictate, too.

Anonymous said...

No way does Denny's use Jimmey Dean quality sausage. You give them far too much credit.