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QSR freebies come at a price
August 9, 2009
The freebie offer has become commonplace as quick-serve restaurants fight to increase traffic during the economic recession and as a result are no longer the dramatic customer pull-in they once were, according to an article in Blue MauMau.
For example, McDonald's recently wrapped up its Mocha Mondays, in which it gave away samples of two Mocha offerings. Arby's also has featured a free item with purchase on Wednesdays for the past few months.
Such offers are still pulling in customers, but the crowds are smaller than those experienced by the Popeyes PayDay deep-discounted meal promotion in April that drew record numbers of people and caused some stores to run out of chicken. When Oprah mentioned the KFC downloadable coupon for a Kentucky Grilled Chicken meal in May, the response was so huge that the offer was rescinded and replaced with a rain check.
From Blue MauMau:
But psychology and business professor Kit Yarrow of Golden Gate University asserts that consumers have reached a point in which discount strategies are now so typical that they areno longer pullingin customers like they once did. Worse yet, she says consumers are expecting those lower prices to remain.
Franchisees can become burdened by such offers when discounted items cut into store profits — and the franchisor's royalty fee remains the same.
Such offers have to be done right in order to get the most out of a giveaway, including increase market share long term. While KFC drew much criticism for its grilled chicken coupon fiasco, the company recovered and gave credit ot the new product line for boosting sales in its most recent quarterly earnings.
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