Tuesday, October 28, 2008

Clearing the smoke from product intros

Enough with the handicapping of the presidential election. What we really need is an analysis of what this week’s menu changes mean for the country.

Let’s start with the scheduling. Once upon a time, restaurant chains would schedule their menu overhauls to correspond with the seasons—salads and beverages added in the summer, heavier fare like soups and stews featured in the fall and winter. Now chain parents are announcing menu changes either right before or immediately after releasing poor financial results.

Earlier this week, for instance, DineEquity announced that its IHOP brand had added Coffee Cake Pancakes. Simultaneously, the franchisor disclosed that its losses had deepened to $16.4 million. It was as if the company expected investors to say, “Whoa. Who cares if the company lost money. IHOP has Coffee Cake Pancakes!!”

Similarly, Popeyes parent AFC Enterprises disclosed last Friday that its domestic same-store sales for the third quarter had slipped 2.8 percent. On Monday, Popeyes announced that it was adding a new bowl meal and a chicken sandwich—the foundations of what the chain trumpeted as a whole new menu platform.

Is the new trend to use menu additions as a distraction from bad financial numbers? Two instances would’ve been merely a coincidence that suggested no. Then came today’s one-two announcements from Denny’s. In the morning, the company crowed that it was updating its late-night Rockstar menu with items supposedly developed by stars like Katy Perry, Taking Back Sunday and Hoobastank. Hot-selling rock bands, working together in their kitchens to come up with items like the Melty Grilled Chicken and Sausage Quesadilla. Sure, I buy that.

Nevertheless, roughly eight hours later Denny’s released its third-quarter financial numbers, including a 6.1-percent drop in same-store sales for franchised restaurants and a 2.7-percent decrease for company-run units. If three instances suggest a trend, we’re there.

Yet my smokescreen theory is severely undercut by Denny’s profits. Net income more than doubled, to $10.6 million. Why blunt good news like that with yee-haws about the new Hooburrito, supposedly a brainchild of the band Hoobastank?

Denny’s may be an exemption to that trend, but it certainly fits another pattern in how chains are announcing new products these days. Not so long ago, they tended to introduce a whole new menu and stress the additions. Afterward, they might’ve showcased a limited-time offer now and again. The introductions were either grouped together into one event of note, or peppered over an extended period in a bid to stay top-of-mind.

Contrast that with the approach that was taken yesterday by Jack in the Box. The (now) multiregional burger chain announced at 9 a.m. East Coast time that it was resurrecting its Teriyaki Bowls line; at 12, that it was bringing back its Mini Churros; and at 3:30, that it was introducing two new “homestyle” chicken sandwiches (translation: sandwiches made with fried chicken) in its central and southeastern regions. What would have normally been one news item became three web postings. Which, presumably, was exactly the point. By staggering the release of three separate press announcements, it garnered at worst a story and two updates, and at best three separate articles, without a penny in ad fees. Pretty smart.

And what of the products that were added this week? Clearly they prove that “new” is a relative term. Popeyes declared its new meal in a bowl to be new, but it’s been featuring similar items for years. And its new Big Easy chicken sandwich sounds exactly like an item it’s carried for some time.

And, with all due respect to Melty quesadilla creators Taking Back Sunday, or Hooburrito midwives Hoobastank, those items aren’t exactly groundbreakers.

Need we point out that two of Jack in the Box’s three menu additions were resurrected products, and that the third sounds conspicuously like McDonald’s chicken biscuit sandwiches?

So, what does all of this mean for the country? Clearly the emphasis is on recycling retreads, which raises some alarming questions about levels of creativity. But then again, the industry is showing surprising innovation in the most mundane of areas, how product introductions are handled. Business may be down, but it’s hardly lacking in craftiness.

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3 Comments:

Anonymous Build My Bistro! said...

What do you think would happen if I opened my bistro with a concept that brought back the beans & rice, grilled cheese sandwich, and other cheap home food 'forgot-abouts'?

It will be awhile before my ideas come to fruition, so I am having a good old time blogging about it.

Any ideas?

October 29, 2008 at 2:58 AM  
Anonymous steakman said...

The only thing more gutless than rollouts to hide poor performance is a chain eliminating an ingredient to cowtow to political correctness, example, Jason's Deli removing corn syrup from all products based on bad science.

SIncerely, Steakman

October 29, 2008 at 9:27 AM  
Anonymous Peter Romeo said...

Build My Bistro,

What you're contemplating has been tried many, many times. New York alone has seen the start-up of places that specialize in macaroni and cheese, rice pudding, risotto, noodles and milk shakes--all aiming to tap that yen for comfort foods. The problem: Frequency. It's one thing to venture out once and awhile for mac and cheese. But do you want a steady diet of it?

I understand that you're talking about a variety of the old favs. New York has a number of places that have successfully taken that route, from EJ's, a chain of updated diners, to Chat & Chew, which got my lunch business at least once a week (the turkey dinner is the real thing). But part of their appeal is a relatively low price.

A low price, and the danger of low frequency? Not exactly what they drum into would-be restaurateurs at Cornell.

But I'd be curious as to what other operators think. Is it crazy to attempt a bistro with comfort foods at this point in time?

October 29, 2008 at 7:42 PM  

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