Are your LTOs cannibalizing your menu?
May 18, 2023 | By Cody Henson, Account Support Manager with PayBev™
In the hospitality industry, we love a good acronym. We have our P&L, COGS, SOP, R&D, APL, BTG. I believe, with enough time and energy, I could fit the entire alphabet into that sentence. Also, part of our vernacular is the Limited Time Offer, the LTO. For some operators, an LTO is a negative word, while for many chain operators, it is an integral part of the beverage program. As creatures of habit, we can easily get caught in a cycle of putting together LTOs simply because summer is coming and we “need” a summer feature. However, each LTO should complement your program and have its own goal, otherwise you run the risk of diluting your beverage menu.
While we are laying out the promotional calendar, we should be asking ourselves: WHY we are choosing that period, and WHAT do we want to accomplish with that promotion? The underutilized opportunity in LTOs is the follow up. At the end of the promotion, we should be determining if the amount of time and energy that went into planning, R&D, training, design, printing, and execution had the desired impact on the business and on guest satisfaction. Did the promotion have a positive impact on check averages and quantity of drinks sold? Or did the promotion simply take sales away from your core menu? This recap can help with the direction of future LTOs, presenting opportunities to your supplier partners, and overall Building Better Beverage Business™.
In the spirit (pun intended) of talking about how LTOs can have varied goals, I wanted to highlight several types and what each might set out to accomplish.
The (Truly) Limited Time Offer
This type of LTO often comes with the tagline of “while supplies last.” The McRib is undoubtedly one of the most famous LTOs of our time. To the point that it has its own social media fan sites. In the beverage world, this type of promotion might come in the form of allocated or small production brands. It is a fantastic way to draw in new guests, but it certainly has its challenges. One might think that success would be to develop a cult following, but more likely it would be to sell through the product…just not so quickly that you make your guests angry.
The Seasonal Offering
With seasonal features you are able to complement your menu with seasonally appropriate flavors. A spiced apple sour may do well in the fall and winter months, but on a year-round menu, it will be sacrificing menu real estate. You can use seasonal LTOs to round out a concise menu or as a line extension of popular menu items. IMI client On Deck Concepts features variations on their Jack’s Rita like prickly pear in the spring, and mango with a Mezcal float as we ease into summer. With either approach, the feature should support your core menu rather than overshadowing.
The Staff Promoter
Bartending is a creative field, and in chain restaurants, some of your most passionate bartenders may feel they do not have the opportunity for creativity. Nobu Restaurants does a fantastic job at giving their staff a creative voice through their Grand Cordon cocktail competition. The winner gets their cocktail featured on all Nobu cocktail menus in the US, with credit. Success here can be measured through staff retention and engagement.
The Innovation Station
An independent restaurant changes menu items more frequently than even a small chain, as the difference in expense and guest impact can be monumental. Your LTOs can be a major source of insight into what your guests are looking for. Talking to Emily Beesley and Dan Timm of On Deck Concepts, “If we have any strong performers that fill a gap in our menu, or could replace a current low seller, it makes sense to have an LTO item move to the menu as we already have data on how the guest will receive it.” If your LTO is outperforming some of your menu, it might be an indication to update the menu.
Trends and palates change. Longstanding menu items can start fading in popularity as your regular guests start exploring more of your menu. No salesperson wants to see it, but at times it is necessary for the business to make changes. However, just because it is gone does not mean it is forgotten. Paige Stroud and Lesa Sorrentino will revitalize past menu items at Perry’s Steakhouse & Grille as an LTO. Like a little dose of nostalgia, this promotion should have quick engagement in the restaurant and on social media.
Too often, our LTO calendars become so full that by the time one is ending, we are too deep in the training and rollout of the next one. We do not take the time for a postmortem evaluation to record and communicate the effectiveness. Sales and COGS are important, but did your LTO deliver what you set out to accomplish?
Cody is a 14-year hospitality industry veteran that has been Building Better Beverage Business™ with Emerging Accounts at PayBev™ since 2020. Prior to joining the PayBev™ team, Cody was managing beverage programs in nationally awarded restaurants and boutique hotels. As Account Support Manager, Cody leads a team that supports PayBev’s emerging chain clients in strategically structuring their beverage program to scale with their growth, drive topline sales and build strong partnerships. He found his passion for hospitality while studying marine science, which set him up to love a good spreadsheet, develop his methodical approaches to problems and get nerdy about cocktail technique. As an Atlanta native, Cody lives in the heart of the city with his partner Allison and two pets, Wednesday and Josephine. When not working on beverage-related projects, you’ll likely find him at a concert or local comedy show, playing croquet in the park or nestled up with a book.