The Test & Learn Summit continued Tuesday, including the Food for Thought session focused on restaurant issues.  One major discussion topic was around the “local option”, periods of time in the marketing calendar when QSRs’ market-level franchisee groups can choose localized promotions and media support.

Local option periods can provide a wealth of insight into which programs work and which don’t, if managed correctly.  In broad strokes, local marketing programs should be treated as “natural experiments”, with restaurants in markets running a particular initiative serving as a “test group”.  Other restaurants not offering that initiative then serve a “control”, enabling the company to understand whether a given pricing, product, or promotion move works overall, and if it should be targeted to certain types of markets.  By sharing results with other markets, franchisees across the country can help each other achieve tens-to-hundreds of millions of sales and profit dollars.

At APT, we’ve seen three key issues that must be addressed for this analysis to yield accurate, actionable results:

1. Test Markets can be biased.  If you don’t pick the right control, you may well get the wrong answer (and make the wrong business decision). 
2. Test Markets may not be representative of the whole network.  If the Houston market decides to test a new cold beverage in August, that won’t be predictive of performance in Minneapolis in January!  Understanding how an initiative works in each specific type of locations in critical.
3. You must track what’s happening in control markets.  While this requires rigorous tracking, it also yields more “natural experiments” that may have occurred in the control.

With the right process and toolset, the issues can be tackled head on.  You can read more about the tools and techniques to use here.