Quick service and fast casual restaurants are all about convenience. With easy-to-order menus and fast speed-of-service, many chains target the grab-and-go consumer. In recent years, an increasing number of restaurants have begun experimenting with mobile ordering to make it more convenient for guests to order food from anywhere; for example, KFC has followed in the footsteps of sister brand Pizza Hut and experimented with mobile ordering.
A recent Businesweek article talks about some interesting menu items which have made their way onto select restaurant menus, often for a limited time. Though limited time offerings (LTOs), such as glazed donut sandwiches, pizza with a cheese pocket crust, or the famous McRib, often garner media attention, understanding whether they are truly profitable can be difficult. Using in-market testing to answer the following questions will help solve this challenge: (more…)
Recently, Cosí Inc. launched a “Pop Up” location in Chicago with a new menu designed to reinvigorate a brand that has struggled in recent years. The trial menu includes only 35 items, down from 65 items in the fast casual chain’s traditional restaurants. Though it is great that Cosi is trying to test new menu options without exposing the network to substantial risk, this one-location trial will not yield sufficiently significant results to generate confident rollout recommendations because of the small sample size. Instead, restaurants such as Cosi should use advanced check-level analytics to generate hypotheses about the economic impact of each menu item, and then run scientifically robust tests to either validate or disprove these hypotheses. (more…)
APT SVP Jonathan Marek recently wrote a byline in QSR Magazine, which outlines the following five trends for restaurant executives to watch in 2013:
-QSRs taking steps to compete with Fast Casual
-Understanding how to optimize labor given recent legislation
-Determining optimal pricing given increasing commodity and labor costs coupled with continuing consumer pressures
-Using mobile more effectively
-Investing in in-restaurant technologies
Click here to read this article.
Taco Bell has recently begun testing the “$1 Cravings Menu” to replace their “Why Pay More” value menu. According to USA Today, the new menu lists nine items and three new offerings. Despite the value message, the “Cravings” menu is actually a slight price increase over the current “Why Pay More” menu, which includes items at 89 and 99 cents. To measure success of the program, simply looking at order incidence of the new menu items will paint an incomplete picture. For example, it is possible that price-sensitive guests who generally ordered the 89 and 99 cent offerings may visit less frequently. However, existing guests could be trading down from higher-margin offerings, showing order incidence as either flat or even positive.
In order to understand the total restaurant incremental impact of this new menu relative to restaurants that have the “Why Pay More” menu, Taco Bell executives will need to isolate the impact to both total number of guest visits and average check size. Because of the small extent of the price change, it is possible that this new menu will have minimal impact. However, to be most profitable, Taco Bell’s new value menu will need to either have no impact on existing value menu guests (who will then be paying more) or attract incremental guests who will then be drawn to higher-margin purchases, thus increasing check size and guest visits. Alternatively, Taco Bell will find the program to be unprofitable if messaging surrounding the “$1 Cravings Menu” causes too many trade-downs.
Applied Predictive Technologies (APT) announced that P.F. Chang’s China Bistro, Inc., operator of P.F. Chang’s China Bistro and Pei Wei Asian Diner, has signed an agreement to license APT’s Test & Learn Management System™. P.F. Chang’s will use APT to test strategic and tactical initiatives across its network of nearly 400 polished casual dining and quick-casual restaurants.
Millennials (individuals aged 18-34) are eating out less and older adults are eating out more. According to NPD Group, Millennials dined out 10 less times this year compared to last year; meanwhile, adults aged 65 and older dined out 10 more times. As the older crowd increases frequency of restaurant visits, some executives may be questioning whether they should shift their focus to this expanding segment. (more…)
Learn more about how APT is helping companies harness their Big Data to accurately measure the profit impact of pricing, marketing, operations, and capital initiatives, tailoring investments in these areas to maximize ROI.
In an effort to combat declining year over year sales, Mimi’s Café is revamping one of its locations into a new “French Revolution” prototype, which will combine the brand’s typical bakery-café feel with a bistro. The new concept blends elements of quick service, fast casual, and casual dining.
This three-pronged approach may appeal to cost- and convenience-conscious guests, who will now be able to access a broader selection of both menu items and dining experiences in one location. Additionally, Mimi’s may draw incremental traffic from diners looking to satisfy different tastes on different occasions. (more…)
A recent article in the LA Times highlights the adverse impact the Midwest drought is having on restaurant profitability. Due largely to the ripple effects caused by the spike in corn prices, food costs have risen or are forecast to rise nearly across the board. To combat this cost increase “restaurants are revamping menus, reducing portion sizes and even considering staff cuts. In the months to come [restaurateurs] say, watch for smaller steaks, fewer tortillas per entrée and maybe even menu-wide price increases.” (more…)