LTOs Falling out of Favor
Restaurant chains find cost, ineffectiveness a problem
OAKBROOK TERRACE. Ill. -- The limited-time offer (or LTO) may be going the way of the dinosaur as quick-service restaurants and other foodservice establishments find the effort more work than its worth, according to a recent Restaurant Business post.
“There's no doubt that chains are reconsidering the financial value of frequent LTOs,” wrote Peter Romeo, editorial director of CSP Magazine’s sister publication. “Sure, some sort of special menu item, available for a matter of weeks, can reignite the interest of customers who are tired of the usual choices at a familiar chain. But that's also the problem.”
According to Domino's CFO Michael Lawton, LTOs are usually backed by comprehensive and costly marketing campaigns. The push often reaches customers who want to try the product but don't get to a restaurant before it's pulled. The dollars were wasted.
Or if they do try it, and like it, they can't get it again, so the patron is disappointed, and the return on the focused marketing campaign is blunted, if not capped.
"If you go back to five, six, seven years ago, we were probably launching six new products with marketing support a year," Lawton told investors attending the Morgan Stanley Global Consumer & Retail Conference. "The direction we try to go and have successfully gone over the last four years is to do fewer new products but have new products that are tested, new products that we're willing to make serious commitment to and new products that we think are likely to stay on the menu for an extended period."
He noted that Domino's hadn't launched a single new product in the past year, "not because we haven't done anything innovative," but to spend marketing dollars more wisely. To make news, as marketers like to say, the chain focused on its new digital ordering systems, not a product that would whet the public's appetite and then disappear.
Click here to read Romeo’s complete post on the subject.