Dive Brief:
- Denny’s plans to relaunch its $2, $4, $6, $8 menu in a few weeks with the addition of a $10 category, CEO Kelli Valade said Wednesday during an earnings call.
- This value platform was part of the chain’s menu a few years ago and had “amazing results,” she said. The menu is expected to drive traffic after “extensive testing and reengineering.”
- The casual chain has been leaning heavily on its menu to bolster slumping sales — same-store sales were down 0.6% during the second quarter. The chain added several permanent menu items last year and is expanding its third virtual brand, Banda Burrito, into additional restaurants this year.
Dive Insight:
Testing revealed that Denny's inclusion of multiple options within the value menu increases the chance that customers will order at Denny’s due to “positive perceptions around value, relative value and the inclusion of fresh, high-quality ingredients,” Valade said. The menu also protects profitability and doesn't lead to any margin erosion.
“There’s no doubt it’s kind of a value war out there with everybody just racing to get to just the next offering that might really ignite some new customer trial and get them from grocery,” Valade said. “For us, $2, $4, $6, $8 by far was … a true equity for us. People know the Denny’s brand for that offering … We do think this could be the value platform that signifies the strength we have always had in value, but that we now have an everyday value platform.”
The menu is seeing sales mix in the mid-teens with some test markets seeing higher mixes, Valade said. The $2 and $4 categories become more add-ons that have been helping the mix, she said. She said the chain also has a decent pantry and can develop different items if the value platform doesn’t deliver.
Other casual chains have had success by expanding or launching value menus. Chili’s, which expanded its “3 for Me” platform in April, had elevated traffic in the double-digits in May, per Placer.ai data. Buffalo Wild Wings offered $20 unlimited boneless chicken wings Mondays and Wednesday from May through July 10 and saw nearly 50% increases in traffic on those two days.
