Restaurant Innovation: LTO & Seasonal Menus
Dec 16, 2020 food operations management
Menu innovations can bump store sales and help maintain brand freshness, but your LTO success requires tremendous operational preparedness.
LTO menu innovation is always a hot trend in our industry - even during a pandemic. Some brands provide new takes on classic dishes while others expand their offerings to items outside their traditional menus. Taking a look at "The Art of the LTO" will make you realize that these food creations hold a special place in the restaurant biz.
Seasonal menus, which are particularly popular this time of year when your guests yearn for pumpkin spice and toasted white chocolate mocha frappucchinos, are immensely important to restaurant chains trying to boost sales during colder months when people aren't as apt to be outside.
Regardless of the innovation, for something that's supposed to be a limited time offering, there's a lot of work that goes into making an LTO happen.
Limited time menu changes and seasonal offerings can boost sales over a period of time and give you that extra oomph you need to hit your revenue goals.
Originally launched in 1982, one only needs to look at the vaunted McRib for a proof of concept. But, not everything is as COVID-proof as McDonald's once-a-year delight.
You need to do a lot of planning to launch a successful LTO
First, you must ensure your stores are prepared for these menu changes and supporting promotion. Not only will you need to properly forecast how many units of the LTO you'll sell at each location, you will also need to consider the impact it will have on your operations. Are you introducing a new beverage that pairs well with a standard food item on your menu? Will a new twist on a familiar item require an increased reliance on some traditional ingredients? How will this LTO affect the sales of your classic menu stars and plow horses? These are basic questions your inventory management system needs answers to.
Hit or miss, your LTO experiment will inform a number of decisions you'll have to make at your restaurant chain
If the menu innovation doesn't sell as well as you hoped, it might be necessary to end the experiment and not continue with the item. Not every LTO is a home run, or even a base hit. Remember "Mighty Wings?" McDonald's reportedly had 10 million tons of unsold, frozen chicken wings in storage after the initial LTO run. The remarkable "mighty flop" created serious havoc for the burger chain - but not enough to hold the Golden Arches back forever. They reintroduced the LTO in Atlanta earlier this year.
However, if your LTO becomes a big hit, you can create valuable "menu equity" and sell it again next year to boost sales when needed. It can be a long-term program that can be deployed on-demand, with careful operational planning.
Whatever decision you make, it will reverberate through your inventory management, ordering, sales forecasting, and menu engineering processes, so the stakes are high for LTOs.
Where to start? Use data to form an LTO hypothesis, then get a measurable conclusion
Experimenting with your menu isn't much different than the experiments you conducted in high school science class. You have to start with an expectation for what you think might happen - a hypothesis - and you ultimately end up with what actually happened - a conclusion.
Test your theory: We believe that if this happens (hypothesis), then that will happen (conclusion).
What you bring to your LTO planning requires a deep command of your data and your supply chain -- from determining the cost of the individual ingredients, to the forecasted consumer demand, to your ready-to-roll processes and logistics.
Usually, you will conduct an LTO experiment in a limited number of stores in geographic locations where you expect your LTO to prove your hypothesis. At the conclusion of the test, did the LTO stir the consumer demand you anticipated? Did the LTO sell the number of units you predicted in your test stores?
Other considerations like locations and day parts only add greater complexity to decision making. What if the new menu item sells really well during lunchtime in one location but is more popular as a dinner option in another? Are the ingredients more expensive at one location? Is there more wasteful spending as a result? This is all critical information that helps maximize the effectiveness of the menu innovation.
Regardless of the test results, one thing remains constant - you'll need robust, accurate, and measurable data metrics during the LTO planning stages and at the conclusion to make informed decisions for what's next.
May your limited time offer be loved as a long time success!