The month of February tends to be difficult (it's winter's last poke at us) and hard to spell. (What's with that one pesky "r"?) But it looks like some McDonald's (NYSE:MCD) stores are making it easier (free coffee) yet even more difficult to spell or pronounce ("Freebruary").
The "Freebruary" campaign at McDonald's isn't well-publicized and isn't even taking place at all McDonald's restaurants, so it's more than a little bit stealthy. However, it sounds as if some McDonald's outlets are offering free coffees to patrons between the hours of 5 a.m. and 9 a.m. for the month of February. (An MSN Blogs post pointed out the best way to find out what's what is to simply call your local McDonald's and ask whether it's participating in the promotion.)
Needless to say, this could be good for McDonald's for two reasons: First, it may get people who might not have done so otherwise to try McDonald's coffee, and second, a lot of people might just go ahead and order some kind of hash brown or Egg McMuffin as long as they're getting free java.
Free coffee may seem a bit shocking to us investors, but let's face it, the deadly serious recession we're in has driven some companies to pretty flamboyant measures to lure traffic or gain consumer goodwill.
For example, Denny's (NASDAQ:DENN) made good on its Super Bowl ad that promised free Grand Slam breakfasts on Feb. 3. CEO Nelson Marchioli told CNN that rivals had taken market share, whether it was being ceded to Starbucks (NASDAQ:SBUX) or McDonald's, and he wanted to take some of that back, while reminding consumers that Denny's is all about good food and good value.
Free stuff isn't great for profit margins -- all companies are trying to sell stuff at as much profit as possible, of course -- but then again, if it drives purchases of other goods, it can be a winning move for a company. (And of course, some companies like Amazon.com (NASDAQ:AMZN) and Costco (NASDAQ:COST) routinely sacrifice margins but tend to make up for it in volume.) We investors may balk a bit, but given the economy's headwinds, I'm thinking we're willing to give companies a chance to lure some customer goodwill in creative ways.
And in this dog-eat-dog economy, it looks pretty clear that consumers will see lots of cases where companies may offer them something for nothing -- or almost nothing -- in the hopes that that will translate into loyalty later. Hold on tight -- it's going to get interesting.
