Limited-Time Menus Face Limits
Restaurant chains rely on limited-time offers for driving customer traffic, but they struggle with forecasting supply-chain needs and measuring results.
By Mary Boltz Chapman, Editor-in-Chief -- Chain Leader, 11/1/2009
Recent supply-chain research reveals that while restaurant chains rely on limited-time menu offers, they often struggle with forecasting product needs.
According to "Supply Chain Insights Survey," conducted in August by ArrowStream, a provider of supply-chain solutions, 81 percent of respondents use supply-chain software to track pricing and 74 percent, to track inventory. Only 36 percent say they use it for promotion forecasting.
Likewise, the operators showed confidence in the supply-chain data they receive, especially regarding pricing (which received an average score of 4.16, where 5 equals total confidence and 1 means no confidence), contracts (which scored 3.77) and deliveries (also 3.77). Promotions forecasting rated only a 2.8.
At the same time, restaurants are relying on limited-time promotions to build traffic. Fully 89 percent of operators say revenue and traffic growth is among their top three concerns. And 64 percent say that forecast accuracy improvements are one of the best ways to reduce operations costs.
Almost all of the respondents' companies (93 percent) have run limited-time offers in the past 12 months. And 27 percent of them have run more than 10 in the past year. The operators report a host of problems dealing with LTOs.
In the last 12 months, what supply chain problems have your LTOs caused?
| Forecasting | 77% |
| Inventory obsolescence charges | 65% |
| Supply continuity | 63% |
| Inventory transfers | 56% |
| Inventory shortages | 51% |
| Participation capture | 42% |
The research report recommends that enhanced communication among the supply-chain team and the marketing department, as well as their trading partners, before, during and after promotions would be a first step toward improving the process.
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