Who could refuse the offer of a 25% discount on a restaurant meal?

That is what Transmedia Network Inc. is all about, and its increasingly popular discount dining card is becoming a major influence on credit card usage in some markets.

For a $50 annual fee, 310,000 holders of the Transmedia card can dine at any of 3,300 participating restaurants across the nation and in London for 25% off the bill, excluding tax and tip. There are no cumbersome restrictions, like day or time, that make other discount dining programs confusing.

The costs of meals taken by Transmedia members are charged as authorized to credit card accounts.

Transmedia has doubled its membership since September 1993 through marketing partnerships with The New York Times and the Financial Times in London.

Healthy Profits

Revenues have also been growing at a healthy clip - 44% in fiscal 1993, to $36.8 million, and 43% in the half that ended March 31, to $22.9 million. Net income in those periods rose 57% to $2.7 million and again 57% to $1.6 million, respectively.

Giving the first year free to members of large affinity groups, like newspaper subscribers, and tying those programs in with discounts at nonfood establishments, pays off with an 80% renewal rate. The company is adding new members at the rate of 10,000 a month. What's in it for a restaurant? "The two things that restaurants need are diners and dollars. We give them both," said Melvin Chasen, the Brooklyn-born president and chief executive of Transmedia Network.

Transmedia goes where banks don't care to travel, giving dining establishments money in exchange for double the dollar value in food and beverage credits. Transmedia then sells the food credits to cardmembers, getting its money back while passing on a savings to the consumer.

"They get our dollars up front," Mr. Chasen said of the restaurants. "If we don't get them diners, they have nothing to lose."

The restaurant gets a cash infusion with no interest payments, Transmedia makes a profit, and the consumer gets a discount. Sounds like a good deal for everyone.

Banks get their payoff from incremental credit card charges, said Terrence McEvoy, an analyst who is vice president of research at Janney Montgomery Scott in New York. The tie-in with MasterCard, Visa, and Discover accounts guarantees that credit cards will be used in the restaurants instead of cash.

Although the Transmedia card is used to record the transaction at the point of sale, Transmedia bills the entire cost of the meal to the designated credit card. The 25% discount shows up as a credit on the account. Transmedia takes the role of merchant in the transaction.

Adding Value

Edward Tavlin, a stock analyst with Fahnestock Christopher in Florida, called it a mutually beneficial arrangement.

He pointed out that banks are looking for opportunities to improve service or give something extra to the cardholder. If they can introduce the customer to a discount, they arc adding value.

The bank credit card establishment generally sees Transmedia as a benefit, particularly in its attempt to build restaurant sales volumes.

The value that Transmedia sells "fits into MasterCard's positioning," said Ellen Alexander, vice president of travel and entertainment industries at Mastercard International.

"MasterCard has a role [in Transmedia] in that it is the credit vehicle," she said. $180 Billion-a-Year Business -- Thomas C. Edwards, vice president of travel and entertainment marketing at -Visa U.S.A., said anything to boost awareness and increase spending in the restaurant business is good for restaurateurs and for Visa's member institutions. He noted that the restaurant business earns $180 billion a year.

Most bankers do not see Transmedia as a threat, but John A. Mazzorana, senior vice president of Command Credit Corp., a Long Island-based affinity program marketer, said, "Whenever you have a third party involved, you lose some control.

"If they did it on a cobranded basis, it would be better for banks," Mr. Mazzorana said.

Mr. Chasen agreed. "From the day we started this business," he said, "we felt the Transmedia card would make a great value-added feature with Visa and MasterCard."

For technical reasons, including software limitations that make it impossible for bank systems to separate tax and tip from the food and beverage portion of a restaurant bill, cobranding remains in the future.

Marketing Partnerships

Even so, Transmedia has at times pursued joint marketing arrangements with National Westminster Bank, Chemical Bank, and Chase Manhattan.

The card company is currently involved in a test program with MBNA Corp., but Mr. Chasen would not elaborate on the details.

Robert Bouza, senior vice president of Key Federal Savings Bank in Maryland, another affinity- and secured-card marketer, expressed concern about security: "Are they prepared to pay for fraudulent charges?"

Mr. Chasen said bad debt and fraud account for less than 0.5% of his gross volume. But Transmedia takes full responsibility for any fraudulent charges. He also noted, "The only thing you can do with our card is eat at restaurants."

Diners are doing just that. Gross usage in May was $8.4 million, double the total in May 1993. The company, which is based in Miami, also operates in the New York tri-state area, Boston, and Philadelphia.

Overseas Operations

Six franchises cover most of New Jersey, Chicago, Washington, Maryland, North and South Carolina, Atlanta, California, parts of Nevada, and Washington State.

International licensed operations include Transmedia Europe, based in London, and under a new agreement, Transmedia Asia Pacific, covering Australia and the Pacific Rim.

Mr. Chasen said he will not rest until Transmedia has conquered all the major metropolises of the United States and Europe. He also alluded to future plans for other enterprises that could be marketed to his growing customer base.

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