Voice of the Restaurant Industry
Woke up this morning to find Wimpy trending on Twitter, comments and pics on Facebook and even a couple of Foursquare check-ins. What had they done? Stolen someone’s Cinnamon Cola recipe, asked a lady and her guide dog to leave one of their stores, offended the ruling party in Zimbabwe, just invented a cure for cancer or “E” all of the above?
Turns out it was none of the above, all they had to do to get the stores full and everyone talking about them was give away a couple of million Rands worth of breakfasts country wide. Suddenly my inbox started to fill up with questions and comments about this ploy… Why where they doing it, how could they do it, will it work, how long will they keep it up and who was going to pay for all that.
I am not employed by Famous Brands, never have been and am pretty certain I never will be, so the opinions expressed herein are entirely my own and based on nothing more than 25 years of experience in the food industry. I make no claim that my assumptions or opinions are fact and would like to stress that they are just that… Assumptions and Opinions. With that said, here we go. PS I am not employed by Spur either.
So let me begin with the why… that is pretty simple, Spur’s Unreal R19.95 Breakfast has been giving them sleepless nights and empty tables. You get 2 fried eggs, 2 rashers of bacon, fried tomato, chips, two slices of toast with jam and butter. Actually unbeatable and if there is any profit in that I will eat humble pie (available for R19.95 anytime BUT breakfast). Back to Wimpy, you see when you are not sleeping at night you have lots and lots of time to dream up stuff like “Hey, let’s give the breakfast away! Nobody can beat that price. We’ll teach Spur a lesson”
Do you remember the movie “Out Of Africa”? There is a scene where Karen Blixon has just chased a lion away from one of her cows and her man servant Farah says to her “Msabu’s bleeding. She does not have this ox. This lion is hungry. He does not have this ox. This wagon is heavy. It doesn’t have this ox. God is happy, msabu. He plays with us.”
So Spur is not happy, they do not have this business, the Wimpy Franchisees are not happy, they do not have this money, many other restaurants are not happy, they don’t have any customers, the waiters are not happy, they don’t have any tips but the public has breakfast, they are happy!
Many moons ago when Mugg & Bean was but a young upstart finding its way in the world, I held the position of marketing manager and I too used to “dream stuff up.” I once dreamed up a promotion with MasterCard that cost me my sanity and almost cost me my life. Use your MasterCard to pay and you walk off with a FREE bottomless coffee on your next visit. The logic behind it was quite simple “We would rather have you sitting in our restaurant drinking free coffee than sitting in the competition paying for it” You see while you were sitting in the Mugg, you could not see the other restaurants menus. Waitresses, food, specials etc
Customers loved it, Franchisees hated it but Mugg & Bean was soon a household name and everyone was “meeting at The Mugg”. Wimpy on the other hand are already a household name, there is surely not a single Souf Effriken who has not eaten in one, passed one on the road or at least heard of one. So this cannot be seen as a brand building exercise. There is an old cowboy expression, when you go out looking for revenge Dig Two Graves… Nobody wins a price war!
Now, the $64 000 question is, who is gonna pay for this? And if you, as the general breakfast eating public, are not asking this question, trust me, the Wimpy franchisees are! At a guess (an educated one, I think) head office have probably done a MAJOR deal with a couple of suppliers and will reimburse the franchisees at cost price (at least that’s how I would have tried to set it up.) So although this MAY not cost the franchisees anything in raw material there is still the question of staff and operating costs to take into account. How will the whole operation be handled from a VAT point of view?
Now I am a fan of Wimpy’s and my favourite on the road meal is the toasted cheese, hold the tomato on white bread with chips, BUT I can only eat in a Wimpy once a day and if I get to choose it will be when I am not getting a bill. So my thought is that anyone who had the Free Breakfast did not come back again today and maybe not even tomorrow unless it is for the Free Breakfast again. So there is all that lost revenue to account for.
What will happen when the promotion ends, will I suddenly be prepared to pay for my breakfast again? Not at your old price I won’t. Even if I was prepared to forgo my Spur R19.95 breakfast for a free one, I sure aint gonna forgo it for a more expensive one. What next Wimpy, you are going to have to match the Spur breakfast after this… for ever. Spur’s ticket average throughout the day must make Wimpy’s pale into insignificance so they can afford to break even on breakfast and make up for it at lunch and dinner. I am not certain Wimpy has the same margin for discount.
If you are wondering how long they will keep this up, I would guess (again) that it will run until the end of the month… Just kidding! Any more than one day and there will be blood on the streets, I honestly don’t think they could possibly keep it up any longer without a Franchisee Revolt. I would love to be a fly on the wall the next time a couple of Wimpy franchisees share a moment together (maybe over a Spur UNREAL Breakfast… Just kidding). In fact I just had an evil thought, Spur sends 1000’s of waiters to eat at Wimpy as a thank you.
Anyway, evil thoughts aside, desperate times call for desperate measures and no one is really sure how this will play out in the long run. It is a gutsy move and I take my hat off to the management team who made the decision and to the field consultants who have had to deal with it. Well done Wimpy, breakfast may never be the same again.