Limited-time offers (LTOs) appeal to a broad demographic and are particularly popular with younger consumers, according to a 2014 survey by Chicago-based research firm Technomic Inc. Nearly half (48 percent) of consumers said they tried a limited-time-offer menu item in the past month, and more than three in 10 of those ages 18 to 44 ordered one in the past week.
Here’s how operators can best capitalize on LTOs.
“Lack of planning is the biggest mistake operators make when it comes to LTO programs,” says Jeffery Goodwin, a Segment Specialist based in Fort Wayne, Indiana. “Before committing to a program, operators should ask themselves: Does this item fit my brand? What is my food cost and profitability on this item? Is the price point consistent with the rest of my menu? Does the item target the customer base I’m trying attract?”
Once you answer those questions, write a plan. “It is essential to develop a yearly marketing calendar,” says Tennessee-based Business Solutions Specialist Jim Milliman.
“LTOs are tailor-made for a seasonal focus,” says Scott Thompson, a Commercial Segment Specialist based in Florida. “Use items that are plentiful and desirable in each season.”
“Operators should plug in major holidays within seasonal LTOs,” Goodwin adds. “Highlighting Christmas with a winter LTO and Mother’s Day with a spring LTO are smart ideas.”
“I recommend using LTOs three to four weeks out before major holidays,” says Jan Watts, a Tennessee-based Product Specialist for Fruits, Vegetables, and Dairy. “You’ll pull in more repeat customers.”
LTOs don’t just boost short-term profits; they’re also an ideal R&D tool.
“Use LTOs to test new items and determine if they’ll work on a permanent basis or can succeed on a recurring limited basis,” Goodwin advises. “Offer items that fit your brand, but don’t be afraid to stretch yourself a bit. Take advantage of trendy items that might help you expand your customer base.”
Doug Clayton, a Brighton, Michigan-based Commercial Segment Specialist supports experimenting. “Mixed dayparts are gaining success, so think breakfast for dinner. Craft beverages—alcoholic and non-alcoholic, especially housemade—are hot. You can’t go wrong with creative desserts and clever local offerings. And anything else you might want to add to your core menu.”
“Price the LTO higher than your core menu. If you’re a burger place and you run a special burger, you should be charging, at minimum, $1 more for the special,” Clayton says.
“Operators should price aggressively on LTOs,” Goodwin agrees. “Price them profitably and test what the market will bear.”
“I spoke to a customer who was very proud to have gotten ‘free’ LTOs from a beer company,” Milliman says. “They promoted $3 beers for $1.99 and table tents were placed throughout the restaurant. ‘Wait a minute,’ I said. ‘Isn’t this your biggest selling beer?’ ‘Yes.’ ‘So your customers come in expecting to save money and this company has convinced them to spend less?’ ‘Well. . .’ ‘How much of a discount is the company giving you on the beer?’ ‘None.’ ‘So who’s really winning in this ‘free’ scenario?’ I asked. The customer immediately removed all the LTOs from his tables.”
Two lessons here: 1) Free is rarely ever free, and 2) Table space is valuable; use it to promote your own menu items and maximize your own profit.
Controlling your real estate also means producing your own LTO materials. Table tents, chalkboards, and menu inserts are all worthy promotional vehicles, but they have to look professional.
“Make sure you use good-quality photos that look like the dishes you’re setting in front of customers,” Watts advises. “Keep them clean and fingerprint-free. Buy extras to replace ones that get tired and dog-eared,” Millman adds.
You can’t stop there, Thompson says. “Social media is perfect for drumming up interest in LTOs; use your website, Facebook, Twitter, and Instagram accounts.”
Staff involvement is also a must. “Train staff to recommend the LTO to each table,” Goodwin advises. That means helping them with language that makes the special sound irresistible.
“Measure your sales,” Milliman urges. “Keep notes for each LTO, recording sales lifts and any insights that will help you continually tweak your program.” If an LTO is a hit, consider adding it to your menu in place of a slow-selling item.
It’s also critical that you give the program time to work, Thompson says. “Don’t be too quick on the trigger. Yes, it’s a limited-time offer, but you need to give it enough time so you can gather empirical sales data.”
“What makes an LTO special is the fact that your customer base has not seen the item sold within your four walls,” Goodwin concludes. “There is no prior knowledge or perception of price, flavor, or value.” That gives you tremendous flexibility to experiment without making a full menu commitment.
Ask your Customer Development Specialist for information about MenuStudioPlus. It’s an exclusive tool for Gordon Food Service customers that gives you the power to create your own LTO:
Sign up at menustudioplus.com.