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Limited time offers (LTOs) have long been a staple of the restaurant industry. These promotions involve launching a deal or special menu item that’s only available for a short period of time, typically a few weeks. Brands use LTOs to create a sense of urgency, drive demand, or test the potential of new menu items. When they’re well planned and executed, LTOs can bring in new guests, increase sales, and help restaurants stand out amidst fierce competition.
LTOs are currently dominating the industry as brands contend with rising inflation and fast-changing food trends. With more restaurants battling it out for fewer consumer dollars, creativity, nostalgia, and novelty aren’t just for fun—they’re critical for attracting guests, driving sales, and building brand loyalty. In fact, 52% of consumers say that an appealing limited-time offer is a major deciding factor when choosing which restaurant to visit.
Fortunately, the restaurant industry has seen a rise in the availability of guest data. Insights that were once difficult to obtain are now readily accessible, making measurement of LTO performance more comprehensive than ever. Creativity in the LTO space is also at an all-time high, with unique collaborations and flavors, novel promotional campaigns, and a growing diversity of marketing channels.
In this post, we’ll explore how analyzing LTO performance has evolved beyond PMIX reports and sales figures, and share a modern approach to measuring LTO success that shows you whether your new items are actually driving incremental sales.
LTOs are a hallmark of culinary innovation. They present brands with the opportunity to intrigue new guests or increase the frequency of repeat visits, but getting a tangible understanding of their impact can be difficult. Brands often rely on high-level sales data to measure LTO performance, tracking total sales volume, revenue generated, units sold, and the percentage of sales the LTO represented over the promotional period. While this can be a strong indicator of success, it doesn’t really answer the question, “Is this item driving incremental sales?”
Restaurants may also look for a lift in traffic, go through anecdotal feedback, or do simple comparisons to previous promotions, but deeper analysis isn’t readily available within the average POS system. This means the majority of brands are planning, executing, and measuring LTOs using very narrow insights.
Despite historically limited access to data, restaurants use LTOs to keep up with the competition and spice up their menu. This often results in a “best guess” approach, with operators relying on intuition, hunches, and high-level metrics to determine an item’s success. Few restaurants think this is the most effective way to execute LTOs, but they haven’t had the tools or data to do things differently.
Relying solely on sales data to measure LTO performance has several disadvantages, primarily, lack of context. Sales data can measure direct impact like number of units sold, or percentage of sales within a daypart, but offers no insight into why or how those things happened. Without the full picture, it’s impossible to gauge the real effects or long-term potential of an LTO. Other drawbacks of the traditional method include:
You can’t see side effects
Sales data delivers top-level information like the number of LTO items sold over a day or week, but it lacks the details needed to understand the broader impact of promotional menu items. For example, guests may respond well to a new pancake dish but cannibalize omelets in the process, or permanently favor lower-priced options over more expensive combos. Without seeing the side effects, it’s not clear if LTOs are actually driving incremental revenue or if they’re just shifting purchases.
You can’t measure long-term behavior
It’s one thing to measure a lift in sales and traffic, but do new guests who buy an LTO actually stick around? Guest retention can increase revenue, reduce marketing costs, and improve brand reputation, so it’s arguably one of the most important indicators of LTO success. Sales data misses key insights into guest lifecycle and loyalty, which leaves restaurants chasing short-term sales without understanding the longer-range impact of new menu items on their guests.
It limits creativity
Sales data can restrict thinking about the potential uses of LTOs, leading to missed opportunities for innovation and differentiation. With access to deeper insights, restaurants can see the many possible benefits of LTOs, like increased guest frequency, improved retention rates, and higher average check. Through better insights into how LTOs perform there is more opportunity for restaurants to be deliberate about future LTOs or changes to their permanent menu.
With more and more data being generated through loyalty programs, online ordering platforms, 3rd party delivery partners, and more, tools that help restaurants use this data effectively continue to gain traction. Restaurant CDPs like Bikky present brands with a comprehensive view of how their menu is performing.
With a restaurant CDP, brands are able to go beyond basic success metrics and pinpoint exactly how their LTOs impact guest behavior. This new level of performance analysis answers questions restaurants could never ask of their sales data, and opens a world of possibilities for LTO planning, implementation, and measurement.
CDPs offer restaurants a completely new way to approach and analyze LTOs. No longer limited to surface-level sales data, operators are able to ask specific and nuanced questions about how their LTOs impact the performance of other menu items, guest behavior, and more.
By examining attachment and frequency
A popular QSR chain, who did almost half their total sales at breakfast, wanted to bolster their lunch and dinner dayparts. They introduced an LTO to see if they could bring in new guests later in the day. According to traditional sales metrics, the promotion was a success, with the LTO making up a large percentage of lunchtime sales.
Through Bikky, the brand was able to dive deeper and understand how their LTO impacted attachment and frequency, not just revenue. Bikky’s data showed that along with being a top lunchtime seller, the LTO was positive for guest retention. Guests who ordered the LTO came back week after week at a similar rate to core menu items, increasing incremental sales outside of breakfast. They also frequently ordered multiple items at once, leading to a higher average check than the brand-wide average at lunch.
By looking at cannibalization
Loved by big eaters for their large combos, a nationwide brand saw the opportunity to attract new guests with a smaller, lower-priced LTO. They were also curious to see if existing customers started trading down and consistently spending less. Bikky was able to measure the number of new guests who ordered the LTO as well as the average check of existing guests during the promotional period—something that’s impossible using traditional methods.
Bikky demonstrated that the LTO was bringing in new guests, not just shifting existing ones, and that the smaller option was not a threat to the larger combos. The brand was able to validate their initial hypothesis and decisively make the LTO a permanent addition.
By measuring guest retention
Dave’s Hot Chicken partnered with Bikky to measure the success of a meatless LTO, Dave’s NOT Chicken. Despite its relatively low menu-mix, Bikky’s data indicated that the item attracted new guests who came back faster and spent more on subsequent orders, leading to thousands of dollars in incremental sales per week. The team was able to prove the positive impact of the promotion on both retention and revenue, and justify a national rollout.
Meaningful, carefully measured LTO programs can provide an important strategic advantage in today’s rapidly evolving market. The emergence of tools like Bikky give restaurants deep insights into guest retention, incrementality, and more, so they can ditch the traditional approach and start setting nuanced goals, testing hypotheses, and using performance data to its maximum potential.
The precision and agility that data-driven analysis offers can also help brands save money by seeing where real success lies, and optimizing menus or rolling out new items with confidence. This is a particularly interesting benefit as costs continue to rise and brands try to balance menu innovation and tightening budgets.
Using restaurant CDPs to measure LTO performance has led to major changes in how brands implement and measure their menu strategy. Restaurants not only gain a clear post-launch understanding of incrementality, they can use forecasting to set tailored, intelligent goals for performance from the outset. Though the industry hasn’t fully realized this potential, we’re seeing fewer reactive LTOs and more brands finding success with proactive, data-driven strategies.
As other technologies evolve alongside CDPs, we envision the planning and measurement of LTOs becoming more and more data-driven. Imagine having a revenue forecast for every test market launch, and a precise understanding of the impact on guest acquisition and retention for a chain-wide rollout. Picture the possibilities of understanding if an LTO resonates with either your core guest, or an entirely new demographic, or forecasting the sales impact across your entire chain after just a few weeks of testing in a subset of stores.
For the time being, it’s exciting to see new and innovative approaches to LTOs and to know that restaurants can finally answer “are we making more money?” very directly.
The customer data platform built exclusively for multi-unit restaurants.