Cashing in on LTOs

What makes for a winning limited-time offer, and what’s the ROI?
Illustration: Hawk Krall

The ingredients for successful limited-time offers can be as varied as the ingredients that actually go into them. Compare Arby’s sous vide duck sandwich with Taco Bell’s Nacho Fries and Applebee’s $1 Margaritas, for example. All might have had success in terms of sales, traffic, buzz, brand building or other less tangible goals, but some focused on innovation and uniqueness, while others tipped toward value, craveability or filling a void in the menu mix. 

Launching a limited-time offer can be expensive, time-consuming, operationally stressful and risky. Yet more LTOs are coming into the pipeline, and at a faster clip, according to Technomic. Over the past five years, the number of limited-time menu items has increased 64% at Top 500 chain restaurants and retail operations. 

Some LTOs have succeeded, while others have tanked. Although there’s no one winning formula, these chains tapped into all their teams—culinary, marketing, supply chain, operations, finance and, often, franchisees—to develop multipronged strategies that worked for their brands. 

Betting on innovation

“We’re big on bringing surprising ideas to the fast-food drive-thru space, always trying to bring the type of $12-$15 sandwiches sold at indies to the $5 range,” says Neville Craw, VP of culinary innovation for Arby’s. The chain’s volume and relationship with suppliers helps meet what Craw calls that “gold standard” at a lower price point. Sandwiches are the primary platform for LTOs, but Arby’s focuses on filling them with interesting proteins and high-quality meats, he says. 

Arby’s elk and duck sandwiches heightened awareness about this focus, reinforcing Arby’s as a destination for innovative sandwiches. But these buzzworthy game meats were targeted for hunting season and intended to have short runs. Long term, innovation is still a priority, but “we’re not on a trend hunt,” says Craw. “We want an idea to work today and tomorrow, giving customers a reason to come to our restaurants by offering items they can’t make at home.” 

A case in point is the chain’s Cajun Deep Fried Turkey Sandwich, which “brings white meat turkey to an indulgent place,” says Craw. The sandwich layers deep-fried turkey breast with a Cajun spread, crispy onions, lettuce and tomato. “We make sure every ingredient has a reason to be there,” says Craw. 

A supplier seasons and preps the turkey for consistency and operational ease chainwide. “We have a lot of leeway in seeking out niche suppliers to bring a product to life,” says Craw. “We’re big enough (3,300 units) to get suppliers’ attention but small enough to get custom treatment.” The Cajun turkey LTO debuted in 2017 and returned in 2018 as a result of its sales success.  

But they aren’t all winners. One that went a bit too far was the porchetta sandwich. “It was a ‘chef’s dream’ but not broadly appealing to our customer base,” says Craw. “Success depends on guests having some familiarity with the product.” 

Are you set up for a successful LTO?

Menu development is now underway, with scores of LTOs already in the pipeline. "We comb through thousands of ideas every year to set the LTO calendar," says Neville Craw, VP of culinary for Arby's. And from idea to launch, an LTO can involve up to 150 steps, says Brian Hipsher, VP of marketing for City Barbeque. For the sake of time and space, here's a flow chart of the process and the teams involved.

Value equation 

Taco Bell is also known as an innovator in the QSR space, with LTOs such as the Naked Chicken Chalupa and Nacho Fries revving up fans and boosting traffic. But the chain doesn’t do innovation without offering value.

“At Taco Bell, we’re constantly imagining and perfecting what hasn’t been tried before and redefining value by providing menu items with bold, craveable flavors at a price our fans will go crazy for,” says Marisa Thalberg, global chief brand officer for Taco Bell Corp. While other value menus are limited to items such as small fries, she says, Taco Bell’s Cravings Value Menu, introduced mid-December,  includes a range of items. “Our $1 menu items and $5 combo boxes are major sales drivers for us, so we decided to offer both deals under one unified Cravings Value Menu to provide fans with a more simplified, convenient experience.”

Affordability is certainly part of the value equation at Taco Bell, but convenience, craveability and excitement also define value for the chain. Those attributes forge connections with core customers, creating buzz and a dedicated following.   

“It’s no secret that limited-time offers drive news, excitement and traffic into restaurants,” says Thalberg when discussing the ROI for Taco Bell. 

New with a side of moderation

Applebee’s Grill + Bar prioritizes value, too, as evidenced by its recent spate of $1 and $2 cocktails and its January LTO:All You Can Eat Riblets, Chicken Tenders and Double Crunch Shrimp for $14.99. But trying out new flavors is also an LTO goal—especially on the drinks side of the menu. 

“We are always working on finding the right balance between our traditional favorites and new ideas that provide a new taste for our guests,” says Joel Yashinsky, CMO of Applebee’s. “Every limited-time offer is determined, developed and executed in partnership between our culinary and marketing teams and our franchise partners.”

Arby's Gyro options


That said, the chain sees itself as “America’s kitchen table,” meaning that guest feedback plays a part in determining what’s on the menu. “We learn from testing with our guests in our restaurants which offers should come forward on a national level,” says Yashinsky. For the most part, LTOs trend toward familiar foods with a twist. “While we work hard to ensure any LTO tastes great and is what our guests want, we absolutely keep in mind the price and experience,” he says, in describing what value means to Applebee’s.

Technomic’s MenuSurf program tracks LTO purchase intent among consumers. The responses reveal that very unique items can spur a one-time purchase but may not lead to increased traffic or sales long term. A safer LTO bet is to spin a familiar food, such as burgers or nachos, with an on-trend or craveable flavor or ingredient, says Lauren Hallow, manager of consumer insights for Technomic. 

Arby’s seeks the sweet spot by balancing its out-of-the-box LTOs with more mainstream, value-conscious sandwiches. The chain’s gyros fit the latter category, offering on-trend global flavors with familiar meats at a price that encourages trial.  

In addition to its Traditional Greek Gyro, which features a spit-roasted beef and lamb combo, there is a roast beef and turkey gyro, both of which reinforce Arby’s “meaty” brand messaging. During the run of the LTO, the gyros were priced at two for $6, and Arby’s marketed their value as well as uniqueness, says Craw. Now that the sandwiches are permanently on the menu, “we sell more gyros than anyone in the U.S.,” he says.

Price it right

While it’s common to offer deals on limited-time offers to drive traffic, profitability is also a goal—especially in franchised operations. The right price even attracts trial, says Noah Chillingworth, VP of marketing for Del Taco. The QSR focuses on LTOs with premium proteins, such as shrimp and pork carnitas, pricing them as premium items ($4 to $6); regular menu items average $2 to $3. “These prices are still a great value when compared to our competitors. Many QSRs have evolved to $5, $6 and $7 items and combos, while fast casuals are closer to $8, $9 or $10” Chillingworth says. 

“We then run protein LTOs for 12 to 16 weeks so consumers can purchase them several times,” he says. “Our LTO strategy is not just ‘one and done.’ We have to factor in [and get back] the investment in training and sourcing.”  

Similarly for City Barbeque, a meat-centric fast casual, LTOs are often priced higher than regular menu items. That strategy incentivizes management to upsell the items, says Brian Hipsher, VP of marketing for the chain. “Our LTOs are designed to be incremental in terms of margins and sales, with the goal of 10% to 15% margins,” he says. 

Zoup's triple bread bowl


Lining up vendor partners 

Del Taco does not obtain any special discounts on its premium proteins. “We communicate with our vendor partners regularly to look for opportunistic buys and be sure they are aligned with what we are interested in,” says Chillingworth. That communication between Del Taco’s supply chain and marketing teams and vendors continues to be important during the run of an LTO, he adds. “If we have a winner on our hands, our vendor partners sometimes have to react quickly and produce more product on the fly. On our end, we have to know where the flex points are so we can keep running the LTO.”

Arby’s similarly doesn’t receive volume discounts from its suppliers. Craw and his team work with suppliers to develop some of the new menu items, and then ARCOP, the brand’s independent nonprofit supply chain cooperative, handles cost negotiations. For some LTOs, like the venison and duck sandwiches, sourcing the entire system isn’t possible, so instead the chain opts for a short run within a few select markets. 

Driven by demand

Del Taco conducts online surveys throughout an LTO’s run to gauge its performance,taste and guests’ intention to make return visits, says Chillingworth. Loyalty customers are then targeted via email and app, and their feedback guides future R&D, sometimes revealing the need to expand or create a menu category. A demand for late-night options spurred the development of the Churro Dipper Shake, an LTO that earned lots of trial and buzz on Instagram, he says.

Consumer demand is also an important LTO driver for Zoup Eatery, which launches new items in step with the seasons. Soup flights came out of guest feedback, says Jason Valentine, president and COO of the fast-casual chain. “Guests were struggling with what soup to order, so we introduced the flights, which allows them to sample three varieties,” he says. 

To take the idea to the next level, Zoup partnered with its  baker supplier to create a boule divided into three compartments. An LTO featuring the soup flights in the triple bread bowl debuted last fall. It not only capitalized on the popular larger boules, but the new iteration was also photogenic, helping Zoup take a more aggressive approach to social media and encourage its staff to share. 

In sync with the chain’s name change from Zoup Fresh Soup Company to the more wide-reaching Zoup Eatery, grain bowls will debut as LTOs this spring. The bowls will cross-utilize ingredients already on hand, so food costs are kept in line and they don’t overtax the supply chain team. 

City Barbeque was hearing from guests both in its restaurants and online that they were interested in lighter options. So the culinary team rolled out a series of healthy slaws. “But any time you add an item, it brings operational complexity,” says Hipsher. “Our Super Slaws have a number of unique ingredients that need to be sourced and managed for freshness. Storage space is limited, so having a place for everything is also a consideration.” Training is also key. “We have learned that LTO success is all about execution and the food itself—it has to taste great.” 

Del Taco carnitas


Generating buzz

While an important LTO goal is to get new guests in the door, targeting current customers is key,these operators agree. City Barbeque’s marketing efforts combine old- and new-school tactics—giving out free samples of LTOs in restaurants and reaching customers online through its loyalty program, incentivizing them to try a new item. One of the chain’s tech partners uses POS data to identify new customers as well as gauge frequency of old customers. 

Social media extends the message beyond the loyalty base. “When our fans engage with the content, it gets wider reach, helping us reach prospective guests from a trusted source, a friend,” says Hipsher. City Barbeque boosts high engagement posts to spread the word. On its Instagram feed, “sometimes guests submit photos that are better than ours and we share them,” says Hipsher.

While multiple platforms—TV, radio, billboards, point-of-purchase materials and/or social media—are critical to pushing out an LTO for larger chains, digital can target specific audiences and “activate your brand fans,” says Chillingworth of Del Taco. “It breaks through the clutter.” To introduce its carnitas, for example, the chain partnered with social media influencers to create a pop-up event. 

Measuring ROI 

In the end, are LTOs worth it?“Having LTOs allows us to constantly innovate and keep our menu relevant with customers’ evolving tastes, while also seeing if a new fan favorite can become a permanent menu item,” says Thalberg of Taco Bell. 

“They’re absolutely worth the investment,” says Chillingworth. “It’s so important to stay relevant in consumers’ eyes and ignite their passion.” But, he cautions, an LTO must tie back to the brand strategy and build brand awareness. 

Sales is the No. 1 factor used to gauge success, says Chillingworth, but Del Taco also measures impact through weekly guest feedback surveys and social media impressions.  

Hipsher of City Barbeque also cites sales as the best indicator of an LTO’s effectiveness. But he tracks spikes in traffic from new guests and additional frequency from regular customers as signs of success, too. “We really started focusing on LTOs three years ago, and the process is now more methodical and disciplined,” says Hipsher. 

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