Dickey’s discounting strategy is burning profits, franchisees say

Core Insights - Dickey's franchisees are facing significant financial challenges due to a heavy reliance on discounting strategies, which are diluting the brand's identity and pushing some operators to the brink of financial instability [5][8][48] - The brand's marketing strategy, which includes extensive use of loyalty programs and discounts, is attracting a customer base that primarily seeks low-cost options rather than full-price purchases, leading to concerns about long-term profitability [11][22][41] Discounting Strategy - Franchisees report that the current discounting practices, including free sandwich promotions and loyalty rewards, are unsustainable and negatively impacting profit margins [5][15][34] - Dickey's has encouraged franchisees to distribute "Be My Guest Cards" for free sandwiches, which can lead to significant financial losses for operators if redeemed in large quantities [10][17][18] - The brand's digital channels and third-party delivery services are also contributing to the discounting issue, with many orders being discounted without franchisees' prior knowledge [23][24][26] Financial Performance - In 2024, Dickey's franchise system saw a net closure of 83 restaurants, reducing the total unit count to 385, with further declines noted in 2025 [8][9][48] - Franchisees estimate that the average unit volume for Dickey's is around $500,000, which is significantly lower than competitors like Famous Dave's, which averages about $2.6 million [47] - The expectation for franchisees to achieve a 15% margin is considered unrealistic by some operators, given the high costs associated with discounting and the operational challenges they face [44][45] Customer Acquisition and Loyalty Programs - The frequency of discounts and loyalty promotions is leading to a customer base that primarily consists of "couponers," which undermines the brand's value proposition [22][39] - Dickey's loyalty program has been criticized for training consumers to expect discounts, which can harm the brand's premium positioning in the market [35][36] - Franchisees have expressed concerns that the brand's marketing strategies are not effectively attracting new customers but rather incentivizing repeat visits from discount-seeking consumers [22][41] Brand Identity and Market Position - Franchisees have described Dickey's as having become a "discounted brand," with many customers unwilling to pay full price for menu items [11][39] - The brand's average ticket price is reported to be around $38, but franchisees argue that this figure does not reflect the reality of their sales, which are heavily influenced by discounting practices [43][40] - There is a growing concern among franchisees that the brand's current trajectory could lead to further erosion of its market position if discounting practices continue unabated [10][48]