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Are LTOs still worth it?

The appeal of limited-time offers—an opportunity to get new customers in the door and increase visits from regulars, as well as the accompanying bump in checks and sales—is clear. But the cost in dollars and development time, additional SKUs, staff training and marketing can make their value a little cloudy. Those factors were a  key reason Darden CEO Gene Lee gave for Olive Garden cutting back on LTOs during Q4 2017—a move that contributed to the brand’s stronger performance, he said in an earnings call. 

Olive Garden ran one fewer promotion in the fourth quarter, eliminating the need to bring in extra product. Instead, it lengthened the run time of the others, with the hopes of re-energizing the LTO mid-promotion, Lee said. That strategy, along with the chain’s never-ending pasta promotions (which require no training and no new products), is proving effective. But some chains see value in running more varied, frequent LTOs to appeal to different customers. 

Value vs. innovation

Black Angus Steakhouse takes a multi-pronged approach to limited-time offers to deliver a positive ROI, says CMO Liz Geavaras. The 44-unit chain recently expanded on its two existing types of LTOs, which run about nine times a year. To target value-conscious consumers, Black Angus runs four discount-based promos a year, says Geavaras. Seasonal LTOs, scheduled about five times a year, play up timely ingredients and flavors. David Bolosan, director of product innovation for Black Angus, develops these specials to showcase menu creativity. 

“We were reaching only two guest databases with these efforts,” says Geavaras. So Black Angus started mixing up these longer-term LTOs with one-shot deals, targeting its Prime Club members and social media to build awareness. 

Long or short?

No doubt short-term LTOs can create a lot of buzz and demand—Arby’s Venison Sandwich is a prime example. But at Habit Burger Grill, LTOs serve a different purpose, says CMO Matt Hood. The fast casual’s LTO strategy is to menu “something other than burgers; to introduce items that expand the reach of the brand,” says Hood. Habit has found success with traditional long-term specials that can take months of R&D and test marketing to work. “We run a handful of LTOs a year, with most in the six- to eight-week range,” he says. “This length of time allows our regulars to try them a few times in the cycle.”  

Bumping up traffic and sales with minimal operational complexity is the ultimate test of a successful LTO, says Hood. For the Golden Chicken Sandwich, which later moved to the permanent menu, Habit had to gauge the impact on each store’s fryers and nail down exact cook times. Even something that seems as simple as a salad requires training on the build and packaging for takeout. 

Pacing and spacing

That training needed for LTOs cuts into profitability. Minimizing training is the main reason Logan’s Roadhouse has cut back from four limited-time offers a year to three, says Luis Haro, director of culinary operations. “For Lent, we ran a seafood special with the highest-priced entree at $16.99. People are spending less in February.” But from October through the holidays, spending surges, Logan’s has found, so more expensive steaks are featured. 

“If something doesn’t work out, we muscle through anyway,” says Haro. “We still have printing costs [for marketing materials], photography costs and sometimes extra SKUs we’ve paid for.” But there are more winners than losers, and Logan’s LTOs do what they’re supposed to do: boost traffic and drive sales. 

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