Limited time offers (LTOs) are effective because people believe they won’t be able to have that meal after a certain period. This activates a mental state called scarcity bias. Airline websites are the best at activating scarcity bias to sell a reservation. You’ve no doubt noticed the call out reading “Only 2 seats left at this price,” which creates an urgency for you to book before the person logged on across town does so first.
McDonald’s has an annual goldmine in the McRib. By offering it each year as an LTO, they create excitement and demand that wouldn’t likely be sustained for a permanent menu item. Consumers have told us they don’t plan much for most of their dining occasions. The LTO has to earn a date on the calendar for your brand.
Most restaurant brands intend LTOs to drive traffic in a contained window. Either explicitly or in small type, they’ll identify that is is available for a limited time only. But the assumption is made that consumers register the expiration date on the offer. Without that information, it is unclear that the offer is scarce.
1. How long is limited?
As consumers continue to be buried in ad messages, it gets harder and harder to retain information. When preparing ad communications for an LTO, marketers tend to look at the pieces in a vacuum. Consider all the noise around the piece. There are several key facts that the viewer must take away to be drawn in. First and foremost, how long is limited?
Most brands hide the end date. Test making an end date visible. Consumers will have a timeline to fit the offer into their schedule.
If the offer goes ends up exceeding the end date, it can always be messaged as a positive. Extended due to popular demand.
Be aggressive about reminding your audience that they might miss their chance to try this or have it one last time.
2. Make LTOs special
There are unlimited options. Every day, people can get whatever they crave. It’s important that your LTO has something unique in the market if you want to capture new customers. How unique? Unicorn Frappuccino different. Getting attention isn’t easy. If the brand is focused on scarcity as a strategy, create something hard to find.
If the offer is intended to earn extra visits from current customers, the offer can be something a little less out there. But it has to stand out enough to draw interest and make them put a date on the calendar.
3. The end is near
If every brand were buying network television, this would be terrible advice. But with digital and social channels, updating creative with reminders is affordable and effective. Now that the end date is clear, be bold. Add a count down to digital creative. Be aggressive about reminding your audience that they might miss their chance to try this or have it one last time.
Not ready to be so bold? Test count down messaging for your next offer exclusively with paid social. It can be targeted to a specific area – from a DMA to a single store. This test can inform future approaches and expanded based on results.
[00:00:05] Adam Pierno: Welcome back to another episode of Food and Restaurant Marketing. I am Adam Pierno, and with me as always, Mr. Daniel T. Santy.
[00:00:14] Daniel Santy: Hello. Hope you’re doing well.
[00:00:15] Adam: We are coming to you today from our headquarters in Scottsdale, Arizona, where it is typically sunny but today cloudy, and we’re actually happy about that.
[00:00:25] Dan: Yes, enjoying the dreary weather.
[00:00:27] Adam: We’re not roasting for one day. Let’s all enjoy it, to token it. Today we are going to talk about something a little different. We are going to a have a little bit of a different format. We are both excited as Cinema Files and people interested in the restaurant world. This movie coming out called The Founder. The questions it’s asking of its viewers and the question that it spring boarded for us. If you’re not familiar with the movie, it is the fictionalized story of Ray Kroc who was the famous “founder” of McDonald’s, who actually discovered the McDonald brothers’ hamburger stands and built on that, and turned it from the hamburger stand into the hamburger empire that we all know and love.
[00:01:17] Dan: Yes. It’s such a great story and so near and dear to me, I mean I grew up on and which I met a lot of people, dude, but it was relatively new. I remember that when we used to go to at Des Plaines, Illinois. It was the original, and you know the big arches going through it, just a tiny little sitting area inside and real clean, or talk about a simple menu.
[00:01:40] Adam: That one was more of the hamburger stand model with like a smaller restaurant inside. Oh, that’s funny. You still see those and now they’re repopulating those a little bit. Yes, that small dining room.
[00:01:52] Dan: It was so simple and it survived so long. It’s amazing. My dad and I, we’d go get the McDonald’s for the family and we’d always get an extra order of fries, and he and I would pound them. [laughs] Having fries on the way home. Otherwise we’d end up eating everybody else’s fries, and then would be that bad.
[00:02:15] Adam: Those were the originals. Those were the beef tallow fries. Those were the real good ones. There is a place in my hometown called All American Burger, that is still a hamburger stand with the chrome exterior. Looks like a diner, and I think there’s a few tables. It’s almost no dining room and you just queue up and you go through and you order your hamburgers and you bring them to wherever you are going. Something about that hamburger stand experience, and I don’t know if McDonald’s captured it. If they are still doing that, it’s a much more different brand experience. But just something about that experience, just an All American experience.
[00:02:53] Dan: Well, the company they built around that. You see so many brands like of McDonald’s that have a meteoric rise and then they fall out of grace and they just diminish, but without storing.
[00:03:05] Adam: Keeping up for this long.
[00:03:07] Daniel: It’s just phenomenal. It’s equally phenomenal in light of other competition it has faced since its inception. Think about the restaurant industry since, what was that? 1950 something?
[00:03:20] Adam: Yes, ’55, I think.
[00:03:20] Dan: ’55? Yes.
[00:03:22] Adam: What’s interesting about the movie itself, it’s not a movie about the history of McDonald’s and it cuts to today and the new CEO stepping up and saying, “Yes, everything is great,” or, “Here is what I’m doing.” Nope, not at all. It stops around 1961 before there was ever a Ronald McDonald, before they changed their market focus or had one. Initially it was just American consumers. Before all the things they have been facing, and before our awareness as consumers about some of the downside of just eating fast food or not a balanced diet. That’s how dense and rich their brand story is.
They can make a movie that essentially is a ten year story about the founding of it. It is interesting enough to lure an Oscar winner Michael Douglas to be– or Michael Keaton to be in it. A story that is going to captivate people and I’m going to go see it. I don’t know if all Americans are as geeked out about it as I am. But I am. The question that Dan and I were debating and talking about today, and we’re doing this a little different format than we usually do, there is no outline for today’s conversation. For most brands – what would the movie be?
[00:04:47] Dan: Great.
[00:04:47] Adam: McDonald’s is lucky to have this- not lucky, they have earned this long legacy and something’s good and something’s bad. You can look at two sides of even Ray Kroc himself, there’s positives or negatives. That Founder story is such a magical, you think of Walt Disney’s and you think of Steve Jobs, and like the garage story and the whole stupid mythos that goes around all the huge companies.
[00:05:11] Dan: The Hewlett Packard guys. Those are wonderful made in America stories.
[00:05:18] Adam: So we are thinking, never mind just The Founder story. Through the lens of a consumer what would most brands, what would the movie or the story of that brand be, and using that as a tool for them to perpetuate that story that they would love people to take away.
[00:05:35] Dan: You know what brand I think would make actually probably a very good movie, we have to get a good director though, is the story about Denny’s. Denny’s is a lot more like McDonald’s. They have survived a very long time.
[00:05:52] Dan: They are on an upswing now. I drove by one of the other day and I literally almost went in. I need to get in one because I haven’t been in a while.
[00:06:01] Adam: A new one.
[00:06:01] Dan: Yes. A new one, yes. I think it’s a great story. I think the story of the Denny’s could be less about the founder and more about all the experiences that happen Denny’s over the years. Families and stoned out kid.
[00:06:18] Adam: Yes. There is millions of stories you can do it, like that would be such a fun way to tell the story over time. Maybe it’s one booth and generation after generation something different happens and the background changes.
[00:06:30] Dan: We should call them up [unintelligible 00:06:31]
[00:06:36] Adam: Yes. Exactly. Love to bring it up. That’s funny that you bring up Denny’s. There is one that just opened here north of the office and seeing that brand opening new stores. I mean, 10 years ago did you think they would be opening up new stores?
[00:06:51] Dan: Their demise has been predicted for a number of years now.
[00:06:55] Adam: Right? Like everybody in casual dining. I guess that’s the space they fit in.
[00:07:00] Dan: Absolutely that’s casual dining.
[00:07:02] Adam: If I ask, Denny’s is a great one because I can go outside into the office here and just shout, “Hey. Does anyone have a funny story about Denny’s,” or, “Does anyone have a memory about Denny’s.” I know from those 40 people, I will get 10 stories at least I can count on. McDonald’s the same thing. Can i get the same thing at Pei Wei? I don’t know, it’s a different animal.
[00:07:28] Dan: I don’t think so. I don’t think they have the– well, of course, they don’t have the heritage, Pei Wei, as the example. They don’t have a heritage yet. At the same time they were a little darling brand that’s just plateaued. You don’t really hear much about them as much.
[00:07:43] Adam: Struggling to find itself and figuring out where it’s going, and trying to reorganize. What do you think if we say that consumers have good stories about it? Consumers can already tell a story about the brand and that’s part of what the movie would be. That’s part of what the brand story would be. I think that The Founder is a powerful story because I have such a knowledge of McDonald’s that anything they add to it or plug into it, it’s like– we know that attention is a something that people are fighting over and it’s something that at least 100 million Americans know pretty well and eat at. They have plugged into that. They have co-opted that interest that I have in McDonald’s to some level, awareness of it, which is really hard to do. I don’t know of other brands, most brands don’t have that capability to have that mass shared awareness.
[00:08:45] Dan: I agree and when you look at what they are doing with their coffee offerings now and the whole McCafe, pretty powerful. They didn’t go at Starbucks. They just said, “Look, there is a coffee culture out there, and we are not going compete with Starbucks, we don’t want to. We are not going to sell our $3 cup of coffee up. Obviously that’s not who they are as a pricing strategy, but why can’t we up the quality of our coffee and our coffee offering still make a value play with it.” Now all of a sudden probably pretty powerful penny profit for the franchises in their products, in that core offering from McCafe.
[00:09:26] Adam: Yes. It gets folded into the greater understanding of the brand because they are so masterful at the marketing angle of it and passing that information through and building it up over time. I mean that platform we still think of as new but I think it’s 10 years old.
[00:09:39] Dan: Yes, you are right. I think they’ve been putting a lot of money behind with the whole breakfast thing.
[00:09:44] Adam: Now they are on a value. Now they are actually saying, “Hey. Coffee is four bucks a cup at Starbucks. We are at quarter of that. Come on in.” Which is smart. The question of what would the movie be, what would be the story be, is really about, to me, what was interesting, Dan and I read an article that was on the Ringer about the Ray Kroc movie, and we’ll put a link in the show notes. It’s really about how consumers understand the brand. They know how to use the brand. They know how to move around inside the brand. People have their own customization strategy and their own kind of approach. I was just talking to my father last night, and he was telling me, “Oh yes, I went to McDonald’s at the airport, and I did this, and I always do this. I order these two sandwiches and I mix them up in this way.” Everybody has that thing. So does your brand have that? That’s the question. I’m trying to think of another brand that’s out there that’s in the world- let’s talk about Ruby Tuesdays.
[00:10:44] Daniel: In a QSR category?
[00:10:45] Adam: No. Let’s talk about something like Ruby Tuesdays, that’s again, is in a place where it’s trying to find itself. You couldn’t make a movie about Ruby Tuesdays. I’m sure on the inside they say, “No, no. Here’s what the movie would be.” But it’s not going to be about the garden bar. Will it? I guess time will tell.
[00:11:07] Dan: Well, I think the question you’re posing is when you hear the phrase “Ruby Tuesday”, when you said it, nothing came to mind.
[00:11:17] Adam: I threw it out there to see what reaction I would get.
[00:11:21] Dan: Yes, and the only reason I know about the garden bar is because I’ve read about it.
[00:11:26] Adam: It’s an industry thing, it’s not consumer thing.
[00:11:29] Dan: There’s a brand that is in decline, and I think it’s in decline because it doesn’t know what it is, and hasn’t articulated that to consumers.
[00:11:39] Adam: That’s it, and consumers don’t know how to enter the brand.
[00:11:43] Dan: If I being go back to Denny’s, Grand Slam. That’s a great entry point for me.
[00:11:50] Adam: That’s right. We wrote an article about- I’m trying to remember which article from Food and Restaurant- well, we’ll link to everything we mention here in the show notes- about ‘do people know how to use your brand?’ Buffalo Wild Wings is another example. I don’t think you could make a movie about or tell a story about Buffalo wild wings because now it’s the opposite of Ruby Tuesdays. When I say Buffalo Wild Wings, tell me what’s the occasion that you think of? It’s their tagline.
[00:12:23] Dan: I’m going to watch sports, and eat wings with my-
[00:12:26] Adam: What are you going to drink?
[00:12:27] Dan: -Some of my buddies and I’m going to have a beer.
[00:12:29] Adam: Beer, wings, sports, right? We were laughing yet just yesterday we were doing an audit of that brand for another projects we’re consulting on, and they’ve nailed it down so much, which is normally we preach that. Nail down your occasion, nail down your visit. That they’ve hemmed themselves in in a way that they can’t tell an expanded story. If someone says to me, “Hey, let’s go to Buffalo Wild Wings.” I go, “Well, what game is on?” “If there’s not a game, I’m not going. I’m not interested.” Luckily for them, there’s a lot ESPN has serve to put on a lot of games. But I mean a game that is interesting to a casual fan like me. I’m hardly ever going out just to watch college basketball or something.
[00:13:08] Dan: By the way, what restaurant doesn’t have television on right now? I mean, obviously McDonald’s doesn’t or I could be wrong, and I don’t know if they do or not but-
[00:13:18] Adam: A lot of them do.
[00:13:20] Dan: That’s like the old- remember when Quiznos came out, and they said, “We toast our buns.” Subway just started throwing toasters, and you could meet that competition. Well, same thing, “Hey, come watch sports here.” I can watch sports just about at any restaurant where I would go, and sit down like that.
[00:13:35] Adam: Buffalo Wild Wings too is funny because wings were the late ’80s, early ’90s appetizer du jour, or I guess du decade, and- I don’t know French enough to know decade. They just said, “Okay. That’s going to be our offering. We’re just going to be the masters of that.”, and they were able to grow on that because of the popularity of that entree over that appetizer, that dish, and that flavor profile, kudos to them. It’s still a strong business even though they’ve been in a little bit of decline for the past two quarters. But now, what do you do now they introduced hamburgers, and to me that’s what Dan and I talk about is, what’s the move of desperation, and that’s it. When they say, “Well, now we’re going to expand to this.” Now people are freaking confused. Because you’ve been telling me for 15 years that you are beer, wings, sports, and now what’s this? I don’t want pulled pork from you. I don’t want it.
[00:14:34] Dan: I got another place I can go get that. A really good-
[00:14:37] Adam: A really good one. So you better-
[00:14:39] Dan: That I trust and know.
[00:14:40] Adam: Yes, and it’s not cheap. They’re not delivering out of value. That place, you can get into the triple digits on a bill without even ordering beer there.
[00:14:49] Dan: That does go under the idea, “Let’s expand them menu. Maybe that’ll expand our sales.” In that article you mentioned, that we both read, I love what they tested or piloted. It was fascinating. Wraps, fancy coffee, I heard some burgers, but did any of that make- none of it, none of it.
[00:15:16] Adam: No. The McDLT. You remember that thing? Do you have the stat up about their core menu? I’m scrolling through the article now to find it, which I’m sure people love to listen to.
[00:15:26] Dan: You mean what their sales are?
[00:15:27] Adam: Yes, that core, craveable menu that we were talking about.
[00:15:32] Dan: I think it was a Big Mac, fries and McMuffin.
[00:15:35] Adam: Yes, that’s 40-something percent of sales?
[00:15:37] Dan: That is correct, yes.
[00:15:39] Adam: Oh, good. You got it. And that’s part of the story of that brand. Does the McDLT get included in that the famous ad with Jason Alexander? I don’t think so. You can tell the story without that. You don’t need to go into the failings of the McWrap, and some of the other things that they’ve tried. Because they’ve done a few things really well.
[00:16:02] Dan: Now the McRib, I think they’ve been smart about, because they only have it once a year. For a limited time. They don’t try to make it be successful, 365.
[00:16:15] Adam: Well they play the market. That is actually a product, as I understand it, that’s a product of availability at the price that works for them, of the ingredients for that.
[00:16:25] Dan: Those little fake riblets?
[00:16:27] Adam: Yes. So when they can get that pork product, that’s when they release it. It’s not a calendar timed thing. Although I’m sure they’re disciplined in their planning and know when it’s going to happen, but it’s when the price is right, we buy it, and we issue it as an LTO, and they’re just masters of it because the McRib is part of the story, I think, for a lot of people. They know how to use that occasion and when it comes out, there’s a buzz about it, which is not a fake influence or campaign on Instagram. It is real people saying, “Oh, this thing is back. Oh, I’m going to go get one.” Every third year, I’ll go get one, and get caught up in the madness of it.
[00:17:04] Dan: What a great way, though, to actually pull in traffic, then. You’re not a regular McDonald’s guy, but what pulls you in-
[00:17:13] Adam: It’s another way to get me in.
[00:17:15] Dan: It’s what we talked about, that craveable–
[00:17:18] Adam: They also have the benefit, you said it right off the top of this which surprised me that, “Hey, I grew up with this. It reminds me of my childhood.” Every time you go in there, subconsciously, some sense memory happens for you, so that you have your own individual story. Do you think everybody has a story like that for-
[00:17:37] Dan: For McDonald’s? Or a lot of brands?
[00:17:39] Adam: For McDonald’s, yes. For Denny’s, a large population does. For Mr. Goodcents Subs, a local population probably does. But for Applebee’s? Is that a real thing or a manufactured thing? I don’t have any thoughts about Applebee’s it’s like a blank slate.
[00:17:59] Dan: Again, what is Applebee’s? There’s something coming out here in this conversation, and that is McDonald’s had Ray Kroc, the founder, and the Big Mac, and these really successful things like that. But how many brands have that? You know Denny’s has the Grand Slam-
[00:18:25] Adam: They have things they own.
[00:18:26] Dan: Things they own. Say, Applebee’s, what does Applebee’s own?
[00:18:30] Adam: They got all their operators to buy into the grills that they installed, and they put all this money behind it. I didn’t know what they were before, but I sure didn’t know what they were after. Because I’m not going there for a steak. Because in my mind a steak is going to be 25, 30 dollars, as a consumer. So I was just more confused. I think it made me go to Outback.
[00:19:00] Dan: It reminds you you want a steak.
[00:19:03] Adam: Beef is good. I’m going to the place that does beef, Lonestar. I’m going to the place that will do that there. You’re dead-on. I don’t think Applebee’s has a story to tell or I’m sure they have a story to tell. I don’t know people that can articulate that story. That people know how to use that brand and I think the sales and the traffic are reflecting that because I don’t know where it fits into my life. We did a project last summer for another brand that is kind of turning over, and rebooting itself, and we got to do some research for them. It was a lot of fun and very interesting.
We did some social media listening where we looked at the time and day that the people referred to the brand. We thought, “All right, well, let’s just see if there’s a pattern or anything.” And there was a pattern, and it was very low comments, which was not surprising because its traffic and sales were low and we knew that, but the time and day of week was basically the same pace, there were no spikes. When we compared that just for fun we compared it against Subway, we compared it against Outback and for Subway at noon every single day there’s a spike. If you look at it on a seven-day chart it’s like a heartbeat, right, it keeps the brand going. Lunch time I know how to use it and on the weekends it drops. So five days a week, lunchtime that Subway’s business, intuitively you know it but the social media backs it up.
For this brand it was essentially low and flat throughout because people didn’t know how to use the brand. They don’t know where it fits into their life. They don’t know the story it’s going to tell. So they don’t know do I go there for happy hour? Do I go there for dinner? Do I go there breakfast? Do I go there for lunch? So they just stopped going altogether. Probably if we look at Applebee’s and we haven’t done that and created that chart for them.
[00:20:57] Dan: You’d see something very similar?
[00:20:59] Adam: I think so.
[00:21:00] Dan: Yes.
[00:21:00] Adam: Don’t you think it’d be diminished?
[00:21:01] Dan: I think you’d see that flat pattern for a lot of brands out there. Ruby Tuesday we were talking about a while ago. I bet you if you do it for Cheesecake Factory you’ll see spikes.
[00:21:14] Adam: Yes, what do you think those spikes would be?
[00:21:16] Dan: I think it’s a dinner place. I definitely think– and it’s a celebration place too.
[00:21:23] Adam: Yes, it’s transcended casual-dining into that next — actually it’s not quite, it’s not white tablecloth. It’s not fine dining, but people do, it’s a special occasion place. You go there after something happens.
[00:21:34] Dan: Right. I noticed that it’s not just like a big event too like graduating from high school or anything. It’s even the smaller things that people want to celebrate, maybe a good day at work, more on a little bonus or something.
[00:21:50] Adam: That’s part of what fast-casual has stolen from casual-dining as a category. If that’s my every day in casual dining it’s like that’s, ‘Okay. It’s little bit of a bump and then the pinnacle of casual dining which is Cheesecake Factory probably and some other players, steal the special occasion space, well then if you don’t have a story when do I go there. Applebee’s and Ruby Tuesdays and Chili’s are learning lesson. We don’t know. We don’t know. Please come in. Please eat here.
[00:22:25] Dan: Look at the people in my commercial they’re having a good time.
[00:22:28] Adam: Yes, look how happy they are. They’re toasting and they’re ordering all these add-ons, please won’t you do that? Average check needs to go up.
[00:22:36] Dan: I was saying — what we’re asking you about the brand story and it seems like the thread then we keep referring back to is there’s this famous, famous is probably the wrong word, but this very memorable food item so Grand Slam, Big Mac even Cheesecake for Cheesecake Factory.
[00:22:59] Adam: Something ownable.
[00:23:00] Dan: Doesn’t Cheesecake sound good right? i wouldn’t mind that.
[00:23:03] Adam: It never doesn’t, yes.
[00:23:04] Dan: Right. So if you have a chain today, casual dining or otherwise, find the product that can be a pinnacle for you. Can be something that you can point to consistently and it represents who you are. The type of offering you have and build around that’s because that’s, now you build story around that item.
[00:23:28] Adam: Right, and you can — it’s almost that you could make a list of the– I bet if we looked by stock price or by sales for the non-public brands we could probably say, “You don’t have one, you don’t have one, you don’t have one. A signature dish or a signature. Even Chili’s has shifted cuisines from- it was modern southwestern cuisine now they’re doing more of a Mexican play.
[00:23:55] Dan: Is that right?
[00:23:56] Adam: Yes. It’s more of a Mexican influenced cuisine, more tacos and that kind of thing. How the hell can they switch that? How can that — how can you be the brand and make that change and feel good about that if you really do have the story to tell? You know what I mean?
[00:24:13] Dan: Yes, I agree. I don’t know if this is– it feels right, but you one chain that’s really struggling is PF Chang’s, but they have an item.
[00:24:23] Adam: What’s the item? The lettuce wraps.
[00:24:25] Dan: It’s the lettuce wraps, and they’re good for you, oh, yes, not good for you —
[00:24:32] Adam: They don’t have carbs.
[00:24:35] Dan: The whole idea, but lettuce wraps they is fresh–
[00:24:36] Adam: They are good. I love them, yes.
[00:24:38] Dan: They’re very good. You can get it as an appetizer. You can get it as an entree. A attorney friend of mine asked me to meet for lunch last week and said PF Chang’s, I’m like, “No, okay. I’ve been here in forever and I knew exactly what I was going to get but you could have shot a cannon through this place and they were not six tables.
[00:24:58] Adam: No, the last time I was there too, but what’s the story of that place?
[00:25:02] Dan: That’s a great question they just lost its way. Maybe, it expanded too fast.
[00:25:11] Adam: That brand I feel like has a story they just haven’t told it yet. The way they figured it out how to put a real twist on American Chinese cuisine they did some new things to it. That brand has a story. They could make an interesting story about that.
[00:25:30] Dan: I would venture to guess that the recession didn’t help them at all. As casual dining goes that’s– on that price-wise on that brand of casual dining.
[00:25:41] Adam: Right. Then you’re competing with Cheesecake Factory and there’s no veto there. They have everything you could want. That’s interesting. Yes, I think they could have a story, but I think on top of —
[00:25:53] Daniel: I think I’m going to call them today.
[00:25:56] Adam: I think on top of the recession hurting them. I think they’re spread pretty thin. They have that Hard Rock [Cafe] model where they’re not concentrated anywhere. They have a national footprint, but it’s more like dots on the map.
[00:26:06] Dan: Right, they can’t do a significant TV campaign.
[00:26:11] Adam: They don’t have critical mass anywhere. It becomes this tourist destination for lazy tourists who will you say “Oh, I don’t want to try some local, but I know that place.” That doesn’t last very long. See Planet Hollywood it fails over time people get bored of it. All right, well, this has been an interesting conversation. Thank you for humoring our experiments to see where that conversation would go.
[00:26:35] Dan: I do think we’re going to- we should float this movie idea about the booze inside the Denny’s December.
[00:26:42] Adam: I texted Scorsese already so we’ll see.
[00:26:44] Dan: Oh, perfect. Let’s see what he says.
[00:26:45] Adam: He hasn’t responded yet.
[00:26:47] Daniel: Yes? Send it to Bobby.
[00:26:48] Adam: No, I’m on it. I love it. So if you have thoughts or questions you want to debate us on our movie ideas here please do. I’m adam [at]foodandrestaurantmarketing.com. You can get to Dan at dan [at]foodandrestaurantmarketing.com or hit us on the Twitter @FandRM. Thanks for listening.
[00:27:08] Daniel: Eat well.
[00:00:05] Adam Pierno: Welcome back to another episode of Food and Restaurant Marketing. I am Adam Pierno. With me today again is Dan Santy.
[00:00:14] Dan Santy: Hello everybody.
[00:00:15] Adam: Welcome back. Are you excited?
[00:00:18] Dan: Always.
[00:00:19] Adam: Are you ready?
[00:00:20] Dan: I’m always.
[00:00:21] Adam: This is something we people get very fired up about. This topic I may end up with a black eye or a busted lip, I’m prepared.
[00:00:29] Dan: Why are they giving it away Adam?
[00:00:32] Adam: Why are they giving it away? Would you like to talk about the topic today?
[00:00:36] Dan: Offers and discounting, stop yourselves. Stop yourselves.
[00:00:40] Adam: [laughs] Well, there’s probably a time and a place, I would imagine.
[00:00:47] Dan: There is. I’m always the contrarian on discounting, I always will be. I don’t think it’ll ever go away. I marvel at the flyer in my mailbox almost every day. Clearly, it’s working on some level and achieving some level of results for many, many customers — many, many, many restaurant brands. But I just think it’s so antiquated. When I look at — every so often I look through that flyer and I’ll just see what are they doing and it’s the same thing over and over and I marvel at it. Here we are 2017, essentially right? We’ve had 20-plus years of the internet, digital marketing is just exploding, it’s about ready to blow past television and spending et cetera, et cetera. But yet, every week we get and wake up, sometimes a couple of times a week, I get this free standing insert (FSI) in my mailbox with literally dozens upon dozens of companies giving stuff away.
[00:01:56] Adam: It’s amazing.
[00:01:57] Dan: Yes.
[00:01:58] Adam. It’s amazing and I think it just takes discipline for companies to do it right, like anything.
[00:02:03] Dan: Always.
[00:02:04] Adam: Like anything we talk about. Let’s talk about what the challenges. Really, we want to split up two things; Discounting which Dan hates versus Offers and knowing when to use each and they’re different levers you can pull, there are different amounts you can discount. There’re different ways to break up things and making offers or feel like offers or look like offers that maybe aren’t really offers or they aren’t really discounted.
[00:02:29] Dan: My favorite.
[00:02:32] Adam: One thing we’ve seen this with some brands that we consult with, where they get into a discounting cycle and essentially the customers are trained to wait for that discount. They do not come in until they get the coupon from the FSIs or from the internet or whatever it is they are trained to wait for that coupon.
[00:02:52] Dan: Unequivocally, that’s the thing that drives me absolutely [unintelligible]. How many brands have we consulted with Adam where they show up and we start working with them and we see that they’re using the discount drugs, it’s like heroin right? and I always get the same story. Yes, but we’ve got to comp over last year and we did a coupon –
[00:03:17] Adam: Yes, and we do sympathize with that.
[00:03:18] Dan: – and I get that again, but that’s false. I said this before in our loyalty discussion about we’ve got people to answer to. Might all our clients have people to answer to whether it’s straight to the C-suite, PE, for whatever the case may be. We get it. We’re not ignorant to that fact. But we also know that we have successfully helped brands wean themselves off –
[00:03:44] Adam: Short-term pain for a long-term gain.
[00:03:46] Dan: Exactly, and listen, forgive me but I use this drug analogy but that’s what it’s like. You’ve got to wean yourself off. You can’t just turn it off one day. I mean, technically you could, but we don’t necessarily recommend that. What we try to get our clients to do is wean themselves off of that and demonstrate tested optimized. Demonstrate how we can help them lower their reliance on discounting.
[00:04:15] Adam: Yes, if you just turn it off. Traffic will drop off the face of the earth when the discounts are due. That’s not a correlation, that is just a hard connected fact.
[00:04:27] Dan: Exactly.
[00:04:28] Adam: If you’ve been doing hardcore discounting, you no doubt have built up an audience of people that are coupon clippers and when you stop that, the flow of coupons, the lines of people will stop pulling into your parking lot –
[00:04:41] Dan: Correct.
[00:04:42] Adam: – It’s a given.
[00:04:43] Dan: Yes, and agreed.
[00:04:44] Adam: Let’s talk about what customers see in the marketplace than when they are seeing your offer or your discount and how you can vary those things. We break them up into three different things; Discounts which we’ve already talked about. That’s your standard coupon where it’s a BOGO or I’m giving something away and I’m actually cutting my margin by doing that–
[00:05:07] Dan: Cents off.
[00:05:07] Adam: Cents off, yes, or more, sometimes. Offers. On offers, an interesting thing, we subscribe to the notion that an offer is really just a way if you could re-package the same thing that you already sell and just remind them that it’s there and by putting a price point, even if you have an entree that you sell for $16.95 on any given night and you put it with the same price point $16.95, it will appear like an offer. It will appear as a discount to the consumer.
[00:05:40] Dan: Especially if the imagery, the messaging creates crave-ability. It really can become a branding opportunity too. Here’s this beautiful 6-ounce New York or fillet, I’m just picking on that for maybe a casual dining restaurant that serves steak and you have that $16.95 price. It’s like, “Man, that looks good” and it doesn’t sound terrible.
[00:06:13] Adam: Now, let’s talk about price. It’s not here in our notes but we’re really strong believers in there’re some price point barriers that if you can get something under $10, that if you can hit $9.95, you’re going to sell more. You’re going to see more traffic, we know this. This is not anecdotal, this is not a guess. We know it. We just watched it happen and so many times we see, when we were working with brands and consulting we say, “Just give us three menu items that can get to that price point and let’s work with option, let’s work with food and let’s get to work with culinary and get the portion size right. They go, “Well, we really can’t do that or our bestseller is this version and it’s only $12.95.” Look, $12.95 is good but $9.95 is better. It’s the magic number.
[00:07:03] Dan: Yes. That’s like a $5 price point now or I think it’s even come down to four bucks maybe? But I think it’s $5 now that all the QSRs have out there. I see Wendy’s doing it and Taco Bell –
[00:07:14] Adam: Yes, the $5 number is back.
[00:07:16] Dan: Yes and that’s for the QSR and then casual-dining. Adam’s right. That $9.99- $9.95 is magical. Again, this is a hard business man, we get it. We understand your business so well. We know how hard it is slogging it out every day and you’ve got — Adam brings up a great point, is you’ve got to work with the integrated team of Finance ops and culinary, whoever that is in your organization, to create the best program that will actually attract guests and make them feel, like if it’s an offer, that they really are getting a good deal.
[00:07:57] Adam: Right and you’ve got to reset those expectations. The next kind we talk about discounts and now we just covered offers. The last kind is your LTO, so those are your Standard Limited-Time offer. Now again, this is all a matter of perspective, so a lot of times when we talk and we say, “Well okay, we think news is good.” If we can do something with your menu to create some news. Let’s talk about an LTO the pushback that will get again, is it from culinary or from OPS and they say, “Well, training the staff on this or that is really hard.” It doesn’t have to be creating an entire new subcategory of your menu. Sometimes it can just be combining things in a different way or changing out cheese or something very simple that all of a sudden takes it from the regular burger to the power burger. The spicy hot version of the same burger because you put pepper jack cheese on it which right now would be a great deal.
[00:08:53] Dan: Exactly and what I love about LTOs is that you are reminding people about why they love your brand and giving them a reason to come in. Discount by itself, sorry, is not necessarily a reason to select you. It can perhaps motivate certain customer basis, that high-discount customer, high volume discount customer. But the LTO has a broader swath of reach when you put that out there. Adam’s absolutely right. Flavor profile enhancement, a unique twist on a product, whatever. The interesting thing to remember is that I believe we saw some research and correct me if I’m wrong, where it’s like people were told, “Hey come in for this exotic hamburger” and they just ended up ordering the cheeseburger anyway.
[00:09:50] Adam: Yes, that’s from the Counter — yes.
[00:09:53] Dan: Yes. It’s interesting, but if that advertisement, that limited time offer was the driver to get me to your parking lot, well then, it’s done all the work it needs to do. I don’t need to order it.
[00:10:08] Adam: That’s right. Then I think that applies to offers as well.
[00:10:11] Dan: Right.
[00:10:12] Adam: What we love about offers is, as Dan said, is credibility. Sometimes you just take your best selling item and you re-package it as an offer. People are waiting for that reminder about your concept, what they like about it and you’ve showed them what they love about it. You’re not bringing in some new crazy menu items that doesn’t make sense. You are saying, “We sell hamburgers. Here is a great hamburger from us.” “Okay, I forgot about that. Now I want one.” Another really powerful thing about LTOs that I think is overlooked if we stay on the idea of a first casual burger, it gives you an opportunity to ride a trend. I mentioned a spicy trend. Both flavors are really popular right now and Sriracha is riding that wave. But vegetables and garden fresh is just heating up and there’s more and more concepts coming out.
We know that Smashburger’s eventually is going to have to make a really strong play there, and LTO is an awesome way not only to get a vegetable based product. I don’t know what that would be. Not something beyond a veggieburger. But to test tender for once over the course of a year and figure out a new mix that they can create a menu that it will appeal and stop that veto for that vegetarian or that non-red meat eater each time. In LTO there’s a great way to get that attention and say, “Okay. I never thought of them like that.” Now they’re on trend for this strength trend that when I think about Zoe’s and think about all these better for your options, all of a sudden you can be aligned with it just through this LTO.
[00:11:47] Dan: Absolutely. Smart. Smart.
[00:11:51] Adam: When we talk about coming up with things that will stop a veto that’s another powerful reason LTO as an offers really work. Think about if you’re crafting those things, we’ve given you some thoughts starters based on some no votes that we get as we’re pitching ideas or as we’re presenting research to brands. Another thing is really understanding the audience that you want and figuring out what is the inertia that keeps them from coming in. If you try and just get a half extra visit a month, if you try win back customers who are lapsed, you know somewhere there is research that will tell you. If you’ve conducted the research or you need to conduct the research to know why they’ve lapsed or why you’re not getting that , where do they go for the next half a visit.
[00:12:38] Dan: Exactly.
[00:12:40] Adam: Craft your LTO to beat that.
[00:12:42] Dan: Exactly. Remember, we’ve got a client that I really respect a great deal because they dig in after an LTO runs. Typically run a 6 week window, Adam is that correct?
[00:12:57] Adam: That’s correct.
[00:12:59] Dan: They look at the penetration of that LTO. They look and see what was the sale through on that particular LTO number one. They look at the average ticket for that LTO and they have that historical data across many years –
[00:13:16] Adam: And by channel.
[00:13:17] Dan: – and by channel, that’s right, and by [unintelligible 00:13:19]. Is that what mean?
[00:13:20] Adam: No. By media vehicle.
[00:13:22] Dan: By media vehicle.
[00:13:23] Adam: They track it all the way down from every vehicle through redemption as much they can.
[00:13:27] Dan: Yes. That tells them so much about what to do going forward. It gives them standards. What are the sale through levels we want to see? When something performs under that they are like, “Okay. That LTO we’re going to put that thing at the back-burner or we’re just going to set it out to pasture.”
[00:13:48] Adam: That won’t be returning.
[00:13:49] Dan: Yes. We won’t bring that back. That’s another thing that we believe is very important if you adopt an LTO strategy. It’s to look at that limited offer and how well it’s doing. Again, the bash on the discounting for you. That kind of information is so valuable in forward thinking analysis. Discounting doesn’t give you that same depth of understanding because all you’ve got is this, okay well, a thousand people redeem the bogo[sp]. What have I learnt other than a thousand people redeem the BOGO.
[00:14:30] Adam: Right. You didn’t do anything interesting enough to have a finding from it or takeaway.
[00:14:34] Dan: Exactly.
[00:14:36] Adam: Another thing that you can be thoughtful about is you’re choosing a guidance for an LTO or just choosing items for an offer more than a discount. A discount is really how much margin can we stand to lose as loss leader to drive traffic. Let’s take that off the table. We know what that is. For an offer, think about the item that you’re offering and what people will order on top of it. We’ve seen a lot of offering really good deals on sides knowing that people are going to come in and order an entree or they’re going to add beverages, they’re going to add drinks, right? You can create the offer that looks like a really good value because you know where the off-sale opportunities are and your staff is ready to pounce on those ready to capitalize and say, “Okay. Now I’ve got your $13. I know I can get you to $18.” Your guests doesn’t feel ripped off from that.
[00:15:26] Dan: No. Especially don’t feel ripped off because they’ve made the decision. That new answer is so critical. When you’ve sold, you don’t have the same experience when you choose. A whole another level of experience is perceived.
[00:15:43] Adam: At that point you feel,” Okay. I’m getting a good deal so I don’t mind spending less. I’m buying something else at regular price and I still feel okay about it.”
[00:15:51] Dan: Exactly.
[00:15:52] Adam: Because the main thing I came in for was on sale or the least I thought it was.
[00:15:55] Dan: One of the point I want to bring up, I know that we talk about [unintelligible 00:16:00] and [unintelligible 00:16:02], I believe that’s the term.
[00:16:04] Adam: [laughs]
[00:16:05] Dan: But when you start talking about discounts with that audience I always think back to the research we did where we discovered that they’re making the decision to dine out within an hour of dining out.
[00:16:18] Adam: Less than that, yes.
[00:16:19] Dan: Yes, or even less than that. How does a discount work in that environment? I have to have had to put that coupon in my pocket or have it somewhere preserved. It has to be — If I’m making that decision from my home or from my office or from my car, or where I’m going to go, I don’t see it as a driver for that audience. I think they love some of the electronics stuff that’s happening in absence of what and what not. But in mobile wallets really it’s really important. If you’re going to go down that discounting route, please, please, please make sure you create the mobile wallet environment because –
[00:16:59] Adam: Make all the tools if you can to get into my phone.
[00:17:02] Dan: Yes. Especially if you think you’re going to make any in-roads with millennials.
[00:17:06] Adam: No, you are dead on. I tend to think of offers in LTOs with regard to millennials and now iGen or GenZ. It’s news. I’d like to use them as a level of news. That’s how we consult our clients to use them. Having that announcement about that product gives you permission to say something. Because otherwise it’s very hard to be relevant and it’s hard to have a meaning for me. If I’m in Facebook and I’m just scrolling through, why do I want to hear from this? Why do I want to hear from smash burger? Why do I want to hear and I know everybody is creating consent and trying to get infront of me. I’m just here to talk my air. I don’t know, but all of a sudden you have news, you have something to say. You got a new product or here is a new combination of things or “Hey, this is on sale.” I was like, “All right. I forgot about that.”
[00:17:58] Dan: Exactly.
[00:17:59] Adam: However you can use news and I’m picking on Facebook but whether that’s done on TV or other digital channels that’s fine. But you have to find ways to be relevant and sometimes that’s kind of manufacturing something. Like an offer on LTO.
[00:18:13] Dan: Yes. Kudos to McDonald’s and how they leverage the news of breakfast all day.
[00:18:19] Adam: And now they’re doing it again with the McRib. The McRib is back and they’ve been pretty smart about rolling that out and making it feel exclusive and they’re doing a good job.
[00:18:30] Dan: I think it’s been around for, what? 30 years. I almost remember that when I was in high school or something the McRib. It’s really amazing how they have successfully let that be that LTO. In this case, it’s not even an offer. It’s just a limited time offering.
[00:18:47] Adam: It’s a true LTO. It’s once a year if that. I’m pretty sure it’s every year but the whole thing about that is it’s supply because they can’t get the supply. That’s why they make it once a year. That’s what drove it originally to be an LTO.
[00:19:02] Dan: Interesting.
[00:19:03] Adam: It was a test item and they couldn’t roll it out full time. I think it works better for them as an LTO. I think it actually creates that news, then it goes away and then next year I’m excited about it when it comes back.
[00:19:12] Dan: Talk about a reason for a lapsed visitor to make their way back. I love that McRib and nobody else has it. Every year I do that. It works on a number of different levels.
[00:19:28] Adam: It’s a great example of what we’re talking about, finding a way to make news. You’re right, all day breakfast was another thing that they did where people had been begging for it for three years. It seems like just so stupid. Why can’t I get breakfast at 10:45? When they did it I think they did a good job of doing it right and really sticking it back into Taco Bell’s face. You want to have breakfast fight? Let’s have a breakfast fight.
[00:19:54] Dan: And now they’ve, from my understanding, they’ve actually rolled it’s like almost the full menu.
[00:19:58] Adam:: It’s a lot of the menu, yes.
[00:20:01] Dan: It’s funny to see the followers coming along, so you saw Jack In The Box, saying they’re doing brunch.
[00:20:09] Adam: Brunchfast?
[00:20:09] Dan: Yes, Brunchfast.
[00:20:11] Adam: I’ll take it.
[00:20:12] Dan: They’re trying to compete now, now they’re trying to stay up with the gorilla.
[00:20:18] Adam: Well, now yes. At this point, now everybody has to do it now. It’s become table stake, so McDonald’s set the agenda. Whether they were goaded into it a little bit by a Taco Bell. How often do you think regular presentation of on an LTO or an offer makes sense before an audience gets desensitized. If we’re saying it’s newsworthy, do you have any thoughts on regularity or cadence?
[00:20:41] Dan: I think back to our client that’s been doing it for a while now, meaning a number of years, and doing it successfully. I think that’s that four to eight week window, depending on who you are as a brand, what kind of frequency you currently get from your customer. I think that that window is a good window, and again, it comes back to what you said earlier, that it’s a news bulletin. It is a news bulletin about your brand, and it keeps you in — you get a share of mind, with that new piece of news, which all of a sudden gives you a potential access to share of stomach.
[00:21:27] Adam: You know that what we found is that the cadence of the LTO’s offers, is probably directly related to the frequency of visits. However much you’re trying to amp that up, if you’re a once-a-month-place, then you can probably get away with every other month, in having an offer, and if you are that last over that time, and if you’re at once-a-week place, then you might be able to do it much more frequently, because you’re trying to keep that pace up, or you’re trying to get people excited to have that time on the experience curve, where they get some new wrinkle every time they’d come in, that makes them come back next time. Otherwise forget it, they start getting bored, and they’re done.
[00:22:01] Dan: Yes. It does another thing too, is like if you get bored with a place and I can, I said this earlier, you get bored of a place. “Oh, I keep having the same thing every time I go,” so it becomes a reason not to go back, and it reduces my frequency. But the LTO, it gives me a reason to come in, I may still get what I always get, because that’s just who I am as a human being.
[00:22:29] Adam: If you saw, you would have some new stimulus, and it created a new memory for you, and then you had something new to tell somebody about it –
[00:22:36] Dan: Exactly.
[00:22:36] Adam: – which, amen. All right, last question on this is, how far out are we planning these things, how far out are we leading LTOs and offers, before they actually hit the market? The answer is as much time as you possibly can, and the reality is, just try to do in fewer than two weeks, or longer than two weeks. Frequently it seems like they come up as a rush, we know that planning these things out a year, six or eight months out, and having everything figured out before, is really what we target. Then make sure that the operationally everybody is trained up and ready to go.
[00:23:11] Dan: You can have that discipline, it ensures, I shouldn’t say it almost ensures success, but it elevates the possibility of success the further out you work, because in the creative can be better, the channel selections can be better –
[00:23:30] Adam: The execution that –
[00:23:31] Dan: Everything about it.
[00:23:32] Adam: – and operation level can be better, and we know that so much of it comes down to training. If you have a new, if it’s a true LTO where there’s a new menu item, and that means a staff has to learn how to prep it and how to serve it and how to sell it. Well, you just can’t bang that stuff out, if you want it to be excellent, you have to do it. We had an engagement with a fast-casual Asian brand, and they were rolling out a new menu item, which was a whole new category for them essentially. Watching how that testing went, and going in and seeing it in the field, and then seeing like, ” Rr, this is wrong.” We experience what the test was like, and then we saw it tested in market, and it was way off, and they rushed it, they rushed it just to get it out there. It takes time to do that stuff right and make sure that everything is operating on all cylinders, because if it is the true LTO, and people are trying, new based on it, it has to deliver. It has to deliver on whatever you promise, or you just had to keep those things in mind when you’re crafting what the LTO should be.
[00:24:36] Dan: Couldn’t agree more.
[00:24:38] Adam: All right. Well, I think we’ve beaten this one into the ground, what do you say?
[00:24:42] Dan: I think we have, there’s a few more things I’d like to say about why you shouldn’t discount for. I will restrain myself today.
[00:24:50] Adam: We will, there will be an amendment to this episode, so look for the amendment.