Denny’s new concept in a crowded space
Tom Dougherty, CEO – Stealing Share
20 February 2015
Denny’s to open up The Den
We all love breakfast. There’s no getting around it that eggs, coffee and whatever else you want to include in that category is like nectar of the gods to many of us.
That’s why I lament that there’s not a Denny’s restaurant in town. That’s hard to believe in a city with a population of more than 270,000 people. I mean, Denny’s has more than 1,500 locations in the US. You’d think it could find a place in Greensboro, NC. (It did have one, out in the outskirts, but it closed.)
But maybe there’s one hidden here because the restaurant chain is taking advantage of the newest trend in the industry: Fast casual.
Denny’s is coming from the other direction from the fast food restaurants that are moving up from fast to casual. Denny’s is coming down to fast from casual with its new concept called The Den.
These fast-casual spots have been developed for college campuses and contract service providers (such as those in a large company’s cafeteria) but Denny’s plans on opening off-campus locations in the future. (It opened its first in San Diego recently.)
Denny’s is actually doing well, with same-store sales increasing nearly 5% for the fourth quarter, but opportunities in this category are few. In the fast food industry, chains have been aggressively attacking the breakfast daypart because lunch, dinner and late night are maxed out. (That’s why you see Taco Bell entering breakfast, for example.)
Denny’s has the permission to enter this fray because its bailiwick is breakfast. The Den will serve breakfast all day, something I’m sure is a hit on college campuses.
I’ve spoken a lot about brand permissions, what categories brands have permission to play in based on their equities. Denny’s has permission to play in this space because, even though it might claim otherwise, it is not so high class that consumers won’t see the transition as an emotional problem.
The issue is that the breakfast category is crowded. Everybody had entered that daypart or is planning on it. That means someone is going to lose and wonder where its next opportunity lies.
That’s the reason why fast food chains have gone fast casual, trying to make a better in-store experience rather than consumers just zipping through the drive-thru. (Studies have shown that you spend more if you go inside.)
My guess is that the Den, if properly marketed, will be a success but force out others entering the market. Now, if it can just enter the Greensboro market, I’ll be happy.
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