Thinking of Buying a Fast-Casual Franchise? Read this report first.

Tools | Quinn Bowman

Cell Strategies
Quick-serves are putting their ads right into young consumers’ hands by offering coupons through text messages.
Quick-serves are putting their ads right into young consumers' hands by offering coupons through text messages.

With more than 200 million cell phones nestled in pockets across the U.S., it seems natural that marketers would figure out a way to get their messages onto flip screens everywhere.

That strategy has been in practice for at least a year, as marketers try to figure out how to advertise on the cell phones that not only replace landlines, but are becoming more like pint-size computers capable of displaying full-color graphics and connecting to the Internet.

The trend is gaining popularity, and quick-service establishments are part of the reason why.

JupiterResearch reports that from 2002 to 2006, the percentage of young adults and teens that use cell phones for more than calls rose from 50 percent to 90 percent. While mobile coupons are largely untested, that research also suggests that more people, particularly younger people, are open to using their cell phones in new ways.

While traditional coupons printed on paper have been an advertising mainstay for years, the distribution and redemption of them declined in 2006. CMS, a coupon industry marketing company, reported in February that while $331 billion in savings were distributed to 142 million people, distribution was down 12 percent and redemptions were down 13 percent.

Enter a 21st century solution: mobile coupons. Cellfire, a San Jose, California-based company founded in January 2005, offers a cell phone application that serves as a coupon vehicle. Potential quick-serve or fast-casual customers can open the Cellfire application on their phone and search for coupons.

Cellfire, says vice president of marketing Dwight Moore, is the only nationwide cell phone coupon provider. The service is available on all cell phone carriers and most phone models, he says.

Merchants who want to advertise pay Cellfire an initial setup fee that pays for a graphic design and management. The Cellfire application, which can be downloaded or viewed via mobile Web, works like a Web site, Moore says. So customers can see multiple, full-color coupon offers from one restaurant on their phone. A distribution fee applies to coupons, depending on the demographics reached.

The company announced in August that Papa John’s will use the service in 50 of its location in the Dallas-Forth Worth area.

“Partnering with Cellfire is a great way to reach our customers beyond traditional advertising and print couponing methods,” says Jim Ensign, vice president, marketing communications for Papa John’s. “As Dallas is home to many mobile-savvy consumers it was an obvious choice to include in our first mobile coupon promotion.”

One of the main aspects that Cellfire and WHAMtext, a newer cell phone coupon marketing company that was beta testing its service at four colleges in October, stress is that the coupons aren’t sent to phones without the user asking for the message.

WHAMtext offers a call and response type of service, where customers text a search keyword or specific restaurant name to WHAMtext and receive a text message response, explains Jeff Lerner, WHAMtext’s vice president of sales and marketing. Customers include their age and zip code or college code, and WHAMtext responds with which coupons are available in the area and where the restaurants are located.

With both services, customers bring up the coupon on their cell phone screen and present it to the clerk to redeem the coupon.

With cell phone coupons, restaurants can learn a lot more information about who is asking for and redeeming coupons and can follow the coupon process from start to finish, as opposed to only keeping track of how many coupons go out and how many come back.

Cellfire shares demographic information with its merchant clients. Moore says it gives merchants the ability to almost look over a customer’s shoulder.

Lerner says his company’s service is filling a need for restaurant customers who want to have an active conversation with the business. They tell the business what they want and they get a response.

Text coupons are riding a shift in advertising toward a consumer-driven environment, he claims. “Consumers don’t want to be bombarded with ads all the time,” Lerner says. “Companies are getting into the mobile space for a certain demographic and psychographic.”

Text coupons allow a marketer to reach a potential customer mere minutes before they make a purchase because the cell phone is usually in a pocket or purse, with the person wherever he goes. Television and online advertising can’t offer that type of access to a customer, Lerner says.

Although a price scheme has not been established yet, Lerner says WHAMtext is considering a $19.99 a month fee or a pay-per-click model.

Lisa Brooks, director of marketing for Taco Bueno, says her company is testing the Cellfire service because it is a new way to reach customers. While she does not have any official numbers on the 80-store trial, she reports that the initial redemption of Cellfire coupons has been positive.

“Receiving discounts via mobile phones is a growing trend among consumers,” says Scott Terraciano-Spence, vice president of marketing for Taco Bueno. “What makes Cellfire appealing is that it’s simple to navigate and provides our customers with the discounts they want, stored in a place that’s easy to find.”

While traditional methods of reaching customers decline, Moore says that Cellfire aims to tie television and other advertising methods into their service by asking customers, through those ads, to text a keyword to a number. Taco Bueno, for example, has advertisements in its stores telling customers to text “bueno” to a designated number to receive a discount.

Although the future of these coupons is unclear, it is obvious that several companies are willing to bet that they can get cell phone users to look for food deals by using their favorite gadget.