ST. LOUIS Looking to grow sales and cut costs, 1,945-unit Hardee's, based here, is offering buy-one-get-one-free deals to consumers in Indianapolis and St. Louis who use the Cellfire Inc. mobile-coupon service for cell phones and wireless-computing devices.
Customers of the 114 participating Hardee's restaurants have access to digital coupons via their Web-enabled phones or wireless PDAs after downloading free software atwww.cellfire.comor surfing the ancillary "Cellfire Express" Web page found at that URL. They need only show a cashier the code on their mobile-device screen to redeem coupons for Hardee's Buffalo Chicken Sandwich, Monster Biscuit or Large Chili Fries.
"We're always interested in trying to gain experience with new technologies," Hardee's executive vice president of marketing Brad Haley said of why the chain is "evaluating" mobile coupons. Asked about consumer response to the mobile coupon promotion that launched Feb. 19, he said, "It is too soon to tell. This is something we'll probably be testing over a matter of months, not weeks."
Jeff Chasney, chief information officer for Hardee's parent CKE Restaurants Inc. of Carpinteria, Calif., said security aimed at thwarting coupon counterfeiting is likely to become a bigger issue if the sandwich chain moves beyond the test stage. Sources at San Jose, Calif.-based Cellfire said the company takes multiple steps to prevent such fraud.
Selected branches of the T.G.I. Friday's casual-dining chain since mid-2006 have accepted mobile coupons distributed by Cellfire. And Domino's Pizza outlets in the San Francisco Bay Area earlier this month began accepting them, as well. That company's arrangement permits consumers holding the mobile coupons to simply click on a link to have their cell phones dial the nearest Domino's store for the purpose of placing an order.
In late 2005, for 18 days, more than 600 Southern California McDonald's restaurants accepted mobile coupons for free McFlurry dessert items redeemed by consumers who requested those virtual discounts via text message. Gamut Industries provided the underlying technology and services for that campaign, as well as another in 2006 for McDonald's users in Washington and Oregon.
Haley said that two things about mobile coupons interest Hardee's: "One is the sales-building potential, and the other is the cost-avoidance piece," or elimination of expenses tied to printing and distributing conventional coupons, he said.
Hardee's found Cellfire's technology "intriguing," Haley said, because "it delivers coupons to a group that does not traditionally respond to printed coupons – younger males." He said the mobile coupons have been promoted using publicity and public relations, such as an in-restaurant event featuring a ketchup-filled dunking tank. Cellfire sources added that Hardee's also is using printed bag stuffers to spread the word.
"About 63 percent of our consumer base is between 13 and 34 [years old]," Cellfire chief executive Brent Dusing said of why restaurant companies — and quick-service chains in particular — might have an interest in his company's technology. What's more, he said, it's less expensive to put a coupon on someone's cell phone than to deliver a paper enticement to their mailbox, and "we pass that savings onto our customers."
The results of initial mobile coupon campaigns, too, might interest some foodservice business owners, according to Dusing. "We're seeing redemption rates as high as 10 to 15 percent, while the industry average paper response is .63, or less than 1 percent," he said.
Another compelling aspect of mobile coupon distribution, Dusing said, is that it can serve as a platform for customer relationship management activities and generate data useful for creating or fine-tuning marketing and promotional initiatives. The Cellfire registration process creates a one-to-one link with consumers, who almost always have their cell phones or PDAs with them, and consumer use of the technology to search out, retrieve and redeem mobile coupons creates a telling, data-rich "click stream," he explained.
The technology supporting Cellfire's mobile coupons appears to have "good back-end controls to verify redemptions," Haley of Hardee's said. Dusing added that his company's security features include "disappearing coupons," or coupons that are erased from a user's cell phone by Cellfire's software after a predetermined number of uses; coupon expiration dates; graphics and logos that serve as watermarks of sorts; and the data trails that are a natural by-product of the underlying technology.
CKE CIO Chasney has done a preliminary analysis of possible digital coupon counterfeiting tactics. He said that even with Cellfire's security measures in place, "we would likely need some [additional] safeguards" if Hardee's were to expand mobile couponing.
"Marketing is first performing a proof-of-concept. Should it appear that cell phone coupons become attractive, we will then address the technology and fraud-prevention aspects," said Chasney, who also is CKE's executive vice president of strategic planning.
Though Haley declined to discuss the specific costs associated with the two-market test of mobile coupons, he emphasized that the agreement with Cellfire is "pretty much a pay for performance" arrangement. He added, "We don't pay for distribution of [digital] coupons; we pay on redemptions."
Haley is also executive vice president of marketing at Carl's Jr., CKE Restaurants' other quick-service sandwich chain.
The Hardee's mobile coupon experiment comes on the heels of last year's cellular-phone-based "Burger Slayer" promotion involving both Hardee's and Carl's Jr. And it is running at the same time as a promotion of the Buffalo Chicken Sandwich at Carl's and Hardee's.
The Buffalo Chicken Sandwich marketing effort features a micro website atwww.spicybuffalo.com, where visitors can program a virtual waitress to extend to friends a customized e-mail video invitation to dine together.
Mobile coupons being accepted by some T.G.I. Friday's sites offer users a free appetizer with the purchase of two entrees or $5 off on any food purchase of $15 or more. The mobile coupons being accepted at Bay Area Domino's Pizza stores feature offers such as "The Perfect Meal," or a medium-sized, two-topping pizza, 2-liter bottle of a soft drink and a bread item, for $20.99, and a small, three-topping pizza and 10 Buffalo Wings for $15.99.