As consumers tighten their spending, limited-time offers give chains pricing flexibility and relevance.
This article first appeared in the 15 July 2008 issue of Restaurants & Institutions (R&I).
R&I is the USA's leading source of food and business-trend information and exclusive research on operators and restaurant patrons. Editorial coverage spans the entire foodservice industry, including chains, independent restaurants, hotels and institutions. Visit the R&I website to find out more about the magazine or to search its recipe database.
By Kate Leahy, Senior Associate Editor
The limited-time offer (LTO) long has been a staple of restaurant marketing. The "hurry or you'll miss it" pitch provides marketplace news and, ideally, pulls in the occasional customer and the curious.
But with consumers less willing to part with their dollars, LTOs have become a more-important means of addressing what consumers are willing to spend as well as what they are interested in eating. Unlike coupons, which tell customers that a menu item isn't worth what they paid for it a week ago, LTOs respond to consumers' value consciousness by saying "special" rather than "marked down."
"In this environment, ‘new and news' is as important as it's ever been, if not more," says Paula Vissing, vice president of purchasing for Nashville, Tenn.-based quick-service seafood chain Captain D's. "You have to worry about the fatigue factor."
Customization for Both Sides
Limited-time offers don't always have to include new flavors. Bennigan's Grill & Tavern's "Lucky 3" promotion, which ended in mid-June, invited guests to choose an appetizer, an entrée and a dessert from the core menu for $10.99. Captain D's Shrimp Lover's Trio Platter -combining breaded-and-fried shrimp, seasoned-shrimp skewers and shrimp pasta along with a choice of two side dishes for $7.99-gathers three sometimes-overlooked core-menu items at a value price. At the same time, Captain D's is offering a new flavor at the other end of the price spectrum, a Coconut Shrimp Basket (coconut-battered fried shrimp and marmalade sauce) for $3.99.
LTOs themselves can be customized to individual market conditions. Underwood, of Abuelo's, says that some markets in which the concept operates are booming, while others are less robust. Requiring all units to offer the same value items would create the risk of missing market-specific opportunities.
Instead, Abuelo's rolled out the Chef's Creations menu, through which unit operators pick and choose the dishes that they want to feature at lunch and dinner. These vary from indulgent-such as a 6-ounce sirloin with six shrimp sautéed in garlic butter and sides for $12.99-to economical, as with a $5.99 chile relleno.
The opportunity to promote higher-margin products also makes LTOs attractive to operators. Bugaboo Creek Steak House runs lobster specials during the summer. Bugaboo reconsidered a surf-and-turf offer when the outlook for lobster-tail prices indicated that the chain might need to push menu prices above $25-beyond many guests' comfort zone.
The chain created a new item: a surf-and-turf trio combining sirloin steak topped with crabmeat, four fried shrimp and three maple-glazed, bacon-wrapped scallops. The entrée, finished with lobster Newburg sauce, is priced at $21.49.
LTOs often are composed of similar flavors in a new package or an existing dish with a flavor extension. El Pollo Loco's current LTO, a chicken sandwich spiced with guacamole and pico de gallo, places the chain's signature flavors in a different package. Such an offering gives chicken-sandwich fans, some of whom may be infrequent customers, a reason to visit the Costa Mesa, Calif.-based chain's units. "We know a lot of people eat chicken sandwiches," says Karen Eadon, chief marketing officer.
Atlanta-based Church's Chicken is careful not to stray too far from its core menu items. Its most successful LTOs have featured bone-in spicy chicken and boneless wings.
"We have a risk-averse customer-they want to know what they're getting," explains Marc Butler, vice president of marketing. "In some cases, we've taken the existing protein item and changed the sauce or the cheese."
Chipotle's first-ever limited-time special, Le Burrito, isn't really new. The burrito's ingredients-cilantro-lime rice, black beans, naturally raised chicken, guacamole and mild tomato salsa-are staples for the Denver-based chain.
But the Le Burrito is the first item the chain has singled out and branded for a limited-time promotion. Le Burrito will be on offer for the duration of the 2008 Tour de France cycling race. It has been formulated to provide a precise balance of carbohydrates, protein and fat recommended by the members of the professional cycling team that Chipotle has co-sponsored for three years. This is the team's first time in the Tour de France.
"The reason we did it is to draw the connection between Chipotle and the cycling team and to our customers and cycling enthusiasts," says Chris Arnold, director of public relations. "One thing we have learned from sponsoring a team is just how engaged the cycling community is."
Arnold stresses that this limited-time offer may be a limited-time strategy. "It's the first time that we have done it," Arnold says. "There's no guarantee that we'll do it again."