Lane Cardwell

LTO: Less Than Outstanding

Do you remember reading Gulliver's Travels in high school? It doesn't matter. One of the lands that Gulliver visited on his journey was Laputa, an island in the sky. The citizens there have terribly short attention spans, and get distracted easily. In order to carry on a conversation, each Laputian would have a servant with them that carried a "flapper", a bladder like contraption. When one would speak, the servant with the flapper would softly hit the ear of the other to remind them to listen. The flapper would then gently strike their mouth to remind them that it was time to speak a response. And so it would be repeated until the conversation was complete. I believe that we have evolved our limited time offers (LTOs) in casual dining into a modern day Gulliver's Travels, complete with flappers.
 
Even though QSR has a more heavily advertised and well developed LTO program, I do not believe that they are causing themselves harm with their activities. On the other hand, I believe that many casual dining concepts are following a path that trades spikes in sales for a long term weakening of their brand. At the risk of losing my many friends in restaurant marketing, I want to voice my concern for your consideration.
 
First, some background. The are many different types of offers that are lumped under the LTO umbrella. There are partnership promotions that are tied to sports, movies, concerts and other events. There are value promotions that offer a special price for a limited time, a combo that isn't normally available, or some other way of giving you a deal on an existing product. Then there are new product promotions. These can be a new flavor or variety of an existing item, a seasonal offering, or a brand new item. It is in the new product LTOs that I believe many chains are causing harm to their well-crafted positioning in the marketplace.
 
LTOs have created an industry within our industry. They are the full employment act of the restaurant industry. When a chain chooses new product LTOs as an integral part of their strategy, a lot of people benefit. First, nothing makes a marketing department shine like the integration and impact that a LTO has with restaurant operations. Then, ads must be developed and placed. Table tents, posters, banners, menu inserts, and other collateral material must be created. A whole lot of people feast on this activity. Suppliers, sometimes new ones, must gear up products for the LTO. The purchasing department rises to the occasion. The R&D department gets to show their stuff with the creation of the products. And let's not forget our friends in the industry media who report on these activities, and keep us fearful that if we are not introducing our own LTOs, we just might be falling behind in the arms race.
 
Before I try to throw cold water on new product limited time offers, let's remind ourselves why they are used so frequently by some of the country's leading casual dining chains. They motivate customers to act now, because they are only available for a limited time. They motivate customers to buy a product that they might not normally buy, often with a more profitable outcome. They give both new and old customers a reason to visit. One of the most often mentioned reasons for doing a new product LTO is that it acts as an audition for the main menu. Think of it as a systemwide test in front of all of your customers. If it is successful, an LTO item might just become part of the regular lineup.
 
So what is so bad about offering menu items on a short term basis that stimulate business and trial, can be more profitable than what they cannibalize, and result in a positive impact on sales? I believe that that several bad things are going on under the cover of success. I believe that new product LTOs have taken on a life of their own and stress an already stressed system. I believe that there is less ability operationally to execute an LTO that will be gone in 1-3 months, than the core menu that has been around longer than most of the staff. But worst of all, I believe that by their very nature an LTO brings excessive commercialism into the four walls of the casual dining restaurant.
 
LTOs have become a supplemental menu rollout. There are the one or two new product rollouts that many chains go through each year, and then on top of that, there are the LTO rollouts. At most, a new menu item might receive a "new" next to it on the menu. Sometimes it is added without any fanfare, as a routine part of being in the restaurant business. An LTO new product gets full military honors with all of the collateral on the table, in the menu, on the air, and in the restaurant. It gets recommended by the server.
 
I have always thought that the goal of an independent restaurant is to mimic the financial success of the chain restaurant next door, while staying close to their customers, and giving them a meal like they would receive in the home of a friend. The goal of the chain should be to leverage the financial benefits of being a chain, while trying to provide the type of experience that a strong independent restaurant would deliver.
 
Most independent restaurants do not feel like commercial enterprises. They feel like restaurants. They give you a menu. They might have some chalk board additions. They do not have the resources to develop new product collateral material for a short term product. As a result there is a "purity" to the experience that separates them from the large chains. Exceptions to this are concepts like Houston's (of course), Cheesecake Factory, P.F. Chang's, Brio, and several others who keep it focused.
 
Everyone knows that steroids can make a body look strong and muscular on the outside, while causing it to weaken on the inside. Our addiction to new product LTOs could be having a similar effect on many of our large casual dining chains. They are in danger of losing their image as restaurants, only to be seen as commercial feeding facilities. Let's be more judicious in our use of LTOs. They work. Let's not overwork them, or the long term results might just be less than outstanding.
 
 

Posted by Lane Cardwell on June 30, 2008 | Comments (6)