Restaurants leverage the power of temporary promotions to make long-term menu decisions.
Ironically, one of the constants on most restaurant menus are limited-time offers (LTOs), which present loyal customers with fresh dishes and beverages and give restaurants an opportunity to test new items. However, LTOs are only as successful as the lessons learned from them.
The May 2015 SCORES report from market research firm Datassential examined 526 LTOs tested that month. Among the top-performing LTOs in terms of purchase intent and draw were menu items that did not stray too far from the comfort zone of a chain’s customers—offerings like the Bone-In Natural Cut Ribeye at Outback Steakhouse, the Bacon Ranch Cheeseburger at Shoney’s, and Lobster Shrimp Scampi at Uno Chicago Grill.
The report also highlighted that LTO activity remains strong. Some of the busiest restaurants over the last year in terms of the volume of LTOs they offered include Bonefish Grill, with 136 LTOs, as well as regional chains such as Ram Restaurant & Brewery, with 119 LTOs offered at its portfolio of 30 locations in six states; Eat’n Park, with 81 LTOs in the three states where it has restaurants; and Ninety Nine Restaurant & Pub, with 71 LTOs serving its seven-state footprint.
“In the short term, I believe we’ll continue to see the same levels of [LTO] activity,” says David Jenkins, managing director of customer solutions for Datassential. “There will be some gains by the chains that currently do very little and that begin to develop a regular LTO calendar. Those gains will likely be offset as some of the most-active chains will scale back as they find the optimal level of activity for their concept.” He adds that LTO activity has been increasing since 2011 and, in 2015, is running even with last year.
“LTOs offer a perfect opportunity to showcase new items and to offer new flavor profiles that appeal to our guests’ desire for variety,” says Paul Mangiamele, chairman and CEO of Legendary Restaurant Brands, which includes Bennigan’s. “We integrate LTOs into our menu to appeal to different taste palates, to put a twist on some of our old-time favorites, and to try new innovations. [Bennigan’s is] a chef-driven concept, so LTOs are also a great way to give our chefs creative license to try new things.”
A standard LTO runs two to three months, during which restaurants can examine seasonal trends. Chains can also test LTOs in select locations before broadening them to every unit in the portfolio.