Foodservice by Design

Team members from Profitality-Labor Guru discuss how industrial engineering can be applied to the foodservice industry.


Don't Let Menu Innovation Kill You

Blogger Juan Martinez tackles menu innovation pros and cons and offers tips for foodservice operators looking to capitalize on menu innovation.

It is my belief that foodservice operators who fail to innovate will die. I am equally solid in my belief that following the wrong path toward innovation can kill a concept, too. Of course, the industry features a handful of exceptions to this rule—such as Chipotle whose competitive advantage lies in its simplicity—but, in general, foodservice concepts need to keep their eye on the menu offerings in order to stay relevant to the customer needs and provide a value proposition that clearly differentiates their businesses from others. No one would argue that menu offering is one of the areas that make concepts different from one another, among many others, as covered in a previous article.

Menu innovation can take many forms, some more complex than others. One approach to menu innovation is simply adding some new items to an existing daypart. A more complex option is one where the concept would add a new menu category that may require the introduction of new operating parameters (e.g. processes, procedures or equipment platforms). A next generation of innovation may be to try to market the existing menu into a new daypart (such as late night). Finally and likely the most complex approach consists of going after a completely new daypart with a new menu offering, like expanding into the breakfast period.

Regardless of which option a foodservice operator takes, it is important to analyze the situation carefully to make sure that the innovation does not impact the concept's core offering and compromise the restaurant's existing brand equity. Similarly, the concept's leaders should analyze how the menu innovation can impact resources on the restaurant level, in terms of facilities and labor. This is what I mean by my comment to "not let menu innovation kill you." As previously discussed the best way to protect against the latter is to make sure that all the operating parameters are considered in the analysis.

Recently both Taco Bell and Wendy's have re-introduced breakfast. If you subscribe to the saying that "insanity is trying to do the same thing twice and expecting a different result" you may think that re-visiting this approach is crazy, but if you look deeper inside, you may say this is the right time for these QSRs to try breakfast again. The market has matured, creating a greater demand in this daypart, while the competition of other concepts, like the better burger category, has made it much more difficult to drive growth during this period.

It is important to measure the full ramifications of the new endeavor, which would go beyond the typical food cost, hourly labor cost and even somewhat smaller utility cost, to include management expenses as part of the labor mode. This is relevant since it is important to have a manager present to run the business during all hours of operations.

Mathematically speaking a seven-day-a-week operation serving lunch and dinner has 14 management shifts. QSRs typically require three managers working five shifts each. The moment you introduce breakfast, although you only add 28 hours of operations or four hours to the business day, you end up adding 7 more dayparts, theoretically requiring at minimum one additional manager. Some concepts attempt to stretch out the current manager schedules to cover for the additional shifts, creating very demanding time frames for these employees, which can result in poor execution of the brand and, worse yet, turnover.

As a result, it is important to look at management as a component of daypart expansion and understand the costs and other factors associated with it. Making sure there is an individual manager on duty, with the right training and certifications is necessary to ensure the brand is protected and can execute optimally.

Don't be afraid to innovate the menu, for without innovation a brand can get stale and die. However, you need to make sure that the expansion is done right, so you don't end up affecting your core business, risking impacting and even killing the brand.

As we head into the NRA, it is a great time to think about this topic and use this very important industry gathering to research the options available to help brands grow through menu innovation, utilizing all the tools available, including menu, design and equipment.

Enjoy the NRA.