CSP Magazine

Once Upon a Limited-Time Offer

New, different products can boost business—or cause heartburn

Fresh flowers sparked new sales at Landmark Enterprises’ Timewise stores, enough so that one limited-time offer has led to another.

“We brought in flowers from a local supplier for Valentine’s Day and might do it again for Mother’s Day,” says Martha Flint, category manager for Landmark Industries, Houston.

Landmark is hardly alone. The limited-time offer (LTO) is a staple across the c-store industry, from the one- and two-store operators to chains with hundreds. But execution and success vary wildly, according to those who watch trends or offer consulting services to retailers.

Some chains have a different LTO every month, while others find that three or four a year are manageable. A special offer can be a way to test new products that then become part of the regular offerings, from food items to candy, lighters or flowers. An LTO can also give retailers the opportunity to add variety while keeping the menu tight.

Seasonal offerings around food and beverages are common, and other popular categories for LTOs include candy, snacks, energy and general merchandise.

“People are looking for ‘new’ and ‘different’ all the time, and competition is high, so we have new offers all the time,” says Jennifer Vespole, director of foodservice for Whitehouse Station, N.J.-based QuickChek. “This winter has been a bit of a struggle” to keep traffic flowing into the company’s 138 stores amid ongoing lackluster employment in the Northeast and fierce winter weather, she says.

QuickChek’s biggest success came last summer with a premium sub sandwich— the Turkey Avocado Supreme—that enabled the chain to extend a line item at a good price. Vespole anticipates something similar this summer.

“We rotate LTOs in and out all the time. Key is finding items at $1.99 or less; that seems to be the magic price point,” she says. Cheeseburger Egg Rolls are proving to be a winner this year. “They really are good,” she says. Last summer, it was popcorn chicken that drew in customers.

Vendors, of course, play a main role in successful LTOs. Marketing support is a natural, but vendors can also be proactive in understanding the c-store consumer and developing products that fit well.

Nashville, Tenn.-based Hunt Bros. Pizza added a new pie for retailers this winter, starting the year with the Italian Meats pizza in time for the Super Bowl and winter Olympics. “The pizza features three layers of meats, holds up well in the warmer and is easy for store personnel to handle,” says Keith Solsvig, director of marketing for Hunt Bros. “Stores love that it’s all premade.”

Operators Wade and Kyle Mannino, co-owners of Stop-N-Go Mart Inc., with two stores in Illinois, do a strong business in pizza with Hunt Bros. “We try everything (that Hunt offers) because people like a change,” Wade says. Success of the LTOs also depends on his staff.

“We get a lot of call-in orders for pizza, and whoever answers the phone will upsell and tell customers about the new item,” he says. The special pies, combined with staff focused on upselling, can lift sales of pizza by 20% or more during a limited-time offer, Wade says.

Time to Strategize

As foodservice becomes more prominent in the c-store, the industry is watching quick-service restaurant (QSR) operators. McDonald’s McRib is often cited as the top LTO, a product that comes back for a short time each year amid great fanfare and hype. Is it a great sandwich, or is it great marketing?

A successful LTO takes both, says Deborah Holand, consulting partner with Lake Forest, Ill.-based b2b Solutions LLC. “You shouldn’t use an LTO to pull yourself out of a hole,” she says, or even to maintain flat sales with an average menu. “Your basic menu needs to be solid and showing growth without the LTO. Then you can create some noise and boost profits with a special product or offer.”

Holand identifies three reasons for retailers to offer an LTO:

 ▶ Attract new customers.

 ▶ Give more value and selection to existing customers and bring them back more often.

 ▶ Test new products and price changes.

Holand suggests that vendors build a strategy for their limited offers, such as collaboration among the category managers for a special that includes, for example, a candy bar with a sandwich. The savvy supplier takes time to help retailers craft a successful program, she says.

Retailers, in kind, need to do their part, especially covering the basics. For one, “make sure you have it in stock,” she says. And if not, have a plan, such as a rain check or coupon, if you run out. The average run time for an LTO, she says, is four to six weeks.

Combo buys can be a solid way to drive trial and profits, whether it’s a beverage, a side or a dessert. That’s what restaurants do successfully face to face at the counter or at the table, Holand says. C-stores have to work a little harder to make customers aware of limited-time offers with signs and upselling.

The number of LTOs offered at any given time will depend on the operations team and what the store can handle, she says, but generally it’s best to keep it simple with one or two at a time. Holand says c-store retailers too often are “making a lot of noise and just selling something cheaper.” A successful LTO should always result in sales of more products to more people—and at a profit, she says.

Unleash the Power

Combo buys are key for Maverik stores, and “power” is proving to be profitable. “This year, it’s power combos,” says Joey Hobson, executive director of merchandising for the North Salt Lake, Utah-based chain of 264 stores. “We take a fresh in-store item like a breakfast sandwich and pair it with an energy drink."

He says the chain sees twice as many sales on the breakfast sandwich when it’s paired with power. “We always have a combo going, and we are really excited about ‘the power’ as a class of combo,” he says.

The power combo comes on the heels of a special offer with Monster last year that netted a 61% boost in sales, the chain’s best-ever month for the category. “Monster really got behind it, with marketing support and dollars for prizes for customers and staff,” he says.

The company is looking for another slam-dunk this spring when it debuts the proprietary f’real milkshake called the—get ready—Macachocochicoconut. Say it fast.

When considering LTOs, c-stores are challenged to fi t the offer to the audience and the capabilities of the store. In comparison to restaurants, c-stores are more likely a place for portable, hand-held food options and a beverage variety, says Darren Tristano, executive vice president of Chicago-based Technomic, who covers the restaurant industry. He suggests the c-store LTO should be based on existing items that are traditional sellers with a more contemporary spin. He points to Subway as a good model. The chain added seasonal avocado, sriracha pepper sauce and Fritos to top off its monthly LTO sandwiches.

“At the end of the day,” says Tristano, “they are still selling protein, vegetables and toppings in a sandwich. Pairing more exciting flavored beverages and beginning to bundle foods into value or combo meals will likely become a standard at many c-stores.”

Risk Factor

LTOs are not without risks. Trouble can arise if the store team isn’t prepared.

“When an item flops, it’s because we didn’t execute it well—or we tried to do too many things at once,” QuickChek’s Vespole says.

She recalls when QuickChek rolled out premium wraps along with the premium sandwiches. McDonald’s had debuted wraps, so the pressure was on. But “it was overpowering for the stores. The subs did well, but the wraps did not,” Vespole says.

It’s a mistake for retailers to discount the price of a regular product as an LTO, or to run a limited-time offer for too long. Keeping it too long devalues the offer and creates a customer expectation of everyday price, Holand says.

“If you do them right, LTOs are a bonus, a plus for the customer,” she says. “If you do them too long, then the customer feels cheated when it ends.”

LTOs can help retailers establish a brand or point of differentiation, too. Targeted offerings can build a reputation for the retailer as a leader in variety, nutrition or fun. “Customers will associate it with who you are,” Holand says.

Maverik takes that message to heart, offering LTOs and combos with frozen yogurt and packaged beverages. The chain sees QSRs as a source of inspiration, as well as competition.

“That’s our niche against QSRs,” Hobson says. “We can offer 14 cooler doors of beverages, and they can offer six or 10 flavors from the fountain. We can mix in an energy drink or a super-premium orange juice with our breakfast and they can’t.”

Measuring success means listening to your customers, Vespole says. Sometimes that means doing something you hadn’t planned.

“Our Kris Kringle coffee flavor (cocoa, coconut and vanilla flavors) was so popular, people wanted it every day,” she says. “So we brought it back in July with a ‘Christmas in July’ promotion.”

At Landmark, a good lift in candy sales at Christmas prompted the chain to add more limited-edition Easter candies this year.

No matter what the items, Holand says the most powerful LTOs are those that drive customers to new products they haven’t bought before, and hopefully create new purchasing habits.

Maverik's Fierce Beast

The Breakfast Beast sandwich, offered in March 2013, was a success for Maverik in two key metrics. The sandwich sold for a higher price ($3.99 vs. $2.49 for other breakfast sandwiches), so it encouraged customers to trade up. The chain also saw a 27% lift in the number of units sold from January 2013 to February 2013.

January 2013: 28,910 units

February 2013: 36,617 units

Increase: 26.7%

In case you’re wondering, the ingredients of the 1,600-calorie Breakfast Beast:

 ▶ 1 Long John maple doughnut, sliced

 ▶ 2 slices of ham

 ▶ 2 sausage patties

 ▶ 2 eggs

 ▶ 2 slices of cheese

 ▶ 2 slices of bacon

What to Expect from LTOs

▶ Lift in unit sales—5% to 10% minimum. A great LTO can drive 50% or higher sales boosts.

▶ Vendor support. Marketing, prizes as staff incentives, prizes for customer contests.

▶ Profit growth is a must.

▶ Positive customer feedback. Generate anticipation, demand.

▶Social media buzz. Your customers sell you to others.

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