Two widely used customer attractions may be falling out of favor in the restaurant business. If the early indications are valid, we may very shortly see fewer limited-time offers, and virtually an end to fine dining's use of common tables.
There's no doubt that chains are reconsidering the financial value of frequent LTOs. Sure, some sort of special menu item, available for a matter of weeks, can reignite the interest of customers who are tired of the usual choices at a familiar chain. But that's also the problem.
As Domino's CFO Michael Lawton explained recently, LTOs are usually backed by comprehensive and costly marketing campaigns. The push often reaches customers who want to try the product, but don't get to a restaurant before it's pulled. The dollars were wasted.
Or if they do try it, and like it, they can't get it again, so the patron is disappointed, and the return on the focused marketing campaign is blunted, if not capped.
"If you go back to five, six, seven years ago, we were probably launching six new products with marketing support a year," Lawton told investors attending the Morgan Stanley Global Consumer & Retail Conference. "The direction we try to go and have successfully gone over the last four years is to do fewer new products but have new products that are tested, new products that we're willing to make serious commitment to and new products that we think are likely to stay on the menu for an extended period."
He noted that Domino's hadn't launched a single new product in the past year, "not because we haven't done anything innovative," but to spend marketing dollars more wisely. To make news, as marketers like to say, the chain focused on its new digital ordering systems, not a product that would whet the public's appetite and then disappear.
With no prompting or recount of what Lawton had said, Papa Murphy's CEO Ken Calwell told me that the take-and-bake leader is taking the same approach. Papa's revamped menu-development operation has a full roster of products under development, but each will be tested extremely thoroughly, and with the approach of identifying true signatures, not something that generates a few weeks of interest before disappearing.
On the day before I interviewed Calwell, McDonald's confirmed that it wasn't going to roll out the poster-product of LTO-dom, the McRib sandwich. Instead, franchisee groups will have the option of adding it and promoting it in their regions, at a cost that would seem like pocket change compared with what McDonald's might have spent nationally.
At the other end of the pricing spectrum, word channeled up through Restaurant Business Associated Editor Sara Rush that some fine-dining operators are rethinking the viability of common tables. Our speculation holds that consumers want comfort and relaxation when they dine out, and not the adventure of meeting a tableful of strangers. Stayed tuned for more on that.
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