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Research: Menu innovation should be a priority

Dec 17, 2012 | Nation's Restaurant News | Fern Glazer.

Sluggish traffic growth has been a major problem for the restaurant industry in recent years, with many concepts plagued by year-over-year declines and others experiencing only minimal increases. The brands that have managed to drive guest visits through the recession and slow recovery are those that are constantly innovating on the menu, according to officials at market research firm The NPD Group.

"The [brands] that are growing are the ones that have changed," said NPD analyst Bonnie Riggs. "They've done more targeting. [They're] more vibrant, more innovative."

According to NPD CREST data, the top growing and declining restaurant categories have remained largely the same for the last five years. In the year ended August 2012, the top growing categories were hamburger, coffee/doughnut/bagel, fast casual, retail, sandwich and Mexican. Among the most notable growth categories was fast casual, which increased incremental traffic 7 percent.

During the same period, the categories that declined most were varied menu, pizza, Asian, family style, grill/buffet, seafood, casual-dining bar & grill and Italian. The steepest declines came from grill/buffet, which declined 5 percent; seafood, which took a 4-percent dive; varied menu, which had a 3-percent decrease; and pizza, which declined 2 percent.

Similarly, select menu items have grown consistently while others have continued to decline. In the last few years, breakfast sandwiches, fruit and yogurt have topped the list of strongest-growing foods in terms of incremental change in servings. Meanwhile, hamburgers, soup and pizza continue to top the list of the weakest-growing foods.

"It's the same things that have been growing, the same things that have been declining," said Riggs. "The same foods, the same categories. It's the status quo."

Though the hamburger as a food item is down, the hamburger category is up, largely due to increased orders of breakfast foods and chicken, NPD found.

Behind the top growing restaurant categories are brands that are continually changing their menus to meet consumers' growing desire for what's new, said Riggs. For example, the strongly growing hamburger category includes chains like Burger King, which added nearly a dozen new menus items this year, and Wendy's, which has added a number of new offerings in recent years. The fast-growing coffee/doughnut/bagel category has been buoyed by brands such as Dunkin' Donuts and Starbucks, both of which heavily focus on seasonal innovations. Mexican has been elevated by Taco Bell, which has been reinventing itself with the addition of breakfast, new twists on the taco and health-focused items.

"[Operators] cannot do things the old way," said Riggs. "The new normal is continuous change."

Bill Melnick, a marketing strategist who frequently consults with commercial and retail foodservice outlets, agreed with Riggs' assessment.

"We live in a kind of ADD world where people are always looking for what's new and different. Social media, digital has sped things up," said Melnick, a director at SAI Marketing. "[Operators] need to constantly understand, constantly look for the latest trend.

"Constant innovation is really the name of the game."

Change makers

(Continued from page 1)

While the prolonged economic crisis has the majority of operators heavily focused on satisfying consumers' desire for great value, many have also been aggressively rolling out new products, even revamping entire menus. Here's how some of those operators are keeping up with consumers' growing appetite for something new.

Yum! Brands' Taco Bell has long been focused on creating innovative products. This year, in particular, the quick-service Mexican chain has added a new breakfast menu; launched Cantina Bell, a line of health-focused items; and upended the traditional notion of the taco with the introduction of Doritos Locos Tacos, a line of tacos in crispy shells made from Doritos.

"We don't want people to buy Taco Bell; we want people to buy into the brand," said Brian Niccol, Taco Bell's chief marketing and innovation officer.

While the chain hasn't necessarily introduced any more items than in previous years, how it rolls out those innovations has changed. In past years the chain's menu innovations were largely limited-time offers. This year the chain has shifted to platform-based items.

"We're really centered on platforms," Niccol said. "It's driving incremental sales as well as incremental customers."

The inspiration for all of these changes is a new generation of Taco Bell customers, he said.

"Our brand is at its best when connecting with twentysomethings," Niccol said. "They have a constant thirst for these changes, new experiences."

For Dunkin' Brands, parent company of Dunkin' Donuts and Baskin-Robbins, product innovation and success go together like coffee and doughnuts or ice cream and cake. This year alone the company introduced more than 20 new products at both brands.

"Customers really do crave new products. They see new things in all aspects of their lives - new technology, new entertainment," said Stan Frankenthaler, Dunkin' Brands executive chef and vice president of product innovation. "[It's] one critical aspect of driving traffic."

New products at Dunkin' Donuts this year have included new permanent and limited-time offerings such as bakery sandwiches; burritos; oatmeal; and seasonal coffees, lattes, doughnuts, bagels, muffins and K-Cups. New products at Baskin-Robbins have included Cake Bites, Waffle Chip Dippers, a Warm Belgian Waffle Sundae and new seasonal flavor varieties. The next big product introduction will be dome-shaped ice cream cakes that resemble snow globes, set to launch sometime in early 2013.

"Customers today expect new things all the time, and new things don't last long," said Frankenthaler, explaining why the brands are constantly rolling out new items.

Other chains are trying to use aggressive menu innovation to revive their brands.

In recent years Wendy's has introduced new items such as Dave's Hot "N Juicy Cheeseburger and branded coffee in an effort to rise to the top of the burger category. Though executives at Wendy's could not be reached for comment, the brand has previously indicated that over the next few years it plans to make some of the most significant changes to the menu in the company's history.

Olive Garden is also using innovation to uplift its brand. In the last year the struggling casual-dining chain has added new, lighter options and signature wines to its menu.

In October Jay Spenchian, Olive Garden's executive vice president of marketing, told Nation's Restaurant News that innovation is - and will continue to be for the foreseeable future - a top priority for Olive Garden.

"It's important that we continue to innovate to meet the changing needs of our guests," he said.
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Copyright Penton Media, Inc. Dec 17, 2012


last updated april 2013