Here’s an interesting article from BurgerBusiness, talking about Burger King testing stuffed burgers in Indianapolis.  CEO John Chidsey says the idea came out of a lesson learned in the BK Ribs LTO:

Consumers are willing to pay higher price points for quality products

That might be true, but Burger King will need more data to back it up, to prove these premium product sales are truly both incremental to the business (not just cannibalizing other items) and, at least to some extent, sustainable over time (not just generating trial, then a quick fall to baseline — unless they can get the LTO pipeline strong enough).

After all, as the article points out, BK’s comps were down despite the rib LTO.  If this is to be a strategy that drives same-store growth, BK needs to test more product ideas and apply the analytical tools to sort out the true incremental gain. The same goes for CPGs and retailers who are riding a recent wave of LTOs popularity – nostalgia needs to drive bottom line gains, not just a quick, cannibalizing sales pop.

A couple weeks back, AdWeek printed an interview with Taco Bell CMO David Ovens.  In talking about Taco Bell’s value message, David made the distinction between “price value”, “abundant value” and “quality value”.  At the time, it just sounded confusing, but with the Cantina Taco launch I’m really warming to his distinction.  And to their value strategy overall.

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Great article in yesterday’s Washington Post by Steven Pearlstein, covering the history and business applications of testing and calling out Red Lobster’s use of Test & Learn to drive significant improvements in their remodel program.

UPDATE: A recent study in the grocery space concluded what many already know: more than one third of consumers polled remain leery of the exact meaning of a product labeled as ‘natural.’ It’s no wonder – as restaurant chains as well as other food retailers have skirted using phrases that imply health claims in favor of buzz words such as “premium” or “wholesome.”

Organic.  Sustainable.  Local.  Fresh.  Healthy.  In the restaurant world, these words mean different things, yet they are still lumped together under a general “green” umbrella.  Many restaurant chains seem to be chasing these ideas wholesale.  For restaurant companies to really differentiate themselves, they need to unpack these “green concepts” and figure out what their customers are truly willing to pay for. The best of intentions can lead to disastrous results, as Frito Lay recently realized. Sales of SunChips plummeted by more than 11% as customers responded negatively to new eco-friendly bags made of a material that was so loud, consumers likened it to a jet engine.

Before discussing further, we should say there are many good reasons restaurant companies may go in this direction:  beliefs, PR, employee morale, etc.  But as we think about measurement and analytics, we are primarily concerned about one dimension:  what’s the impact on consumer sales and loyalty? (more…)

Here’s a great commentary on Shopper 360 blog, regarding the In-Market Testing for Growth team over at Kraft Foods.  Kudos to Autumn and the Kraft IMTG Team!

You might look to hire someone from YUM Brands.  Or their PR firm.

Fresh on the heels of Taco Bell’s petition to the Federal Reserve for more $2 bills, KFC’s latest publicity stunt is a post-World Cup Vuvuzela Exchange Program (promoting the Doublicious, not to be confused with the Double Down).  I’m not sure this is driving YUM’s business, but it sure does make the industry more fun.

Related to the made-fresh-in-house opportunity we discussed a couple weeks ago, 3 of the first 4 articles in today’s Restaurant SmartBrief tackle various angles on sustainability and freshness (and the associated marketing!):

• Chains Cast Nets in Search of Sustainable Seafood (featuring McDonald’s, Darden – The Wall Street Journal)
• Wendy’s New Salad Line Signals a Fresh Start (QSRWeb)
• Ex-McDonalds Execs to Launch Healthy Fast Casual Concept (Advertising Age)

What is your organization’s approach to the increasing demand for freshness and sustainability?  Innovate?  Follow?  Ride the backlash (I’m thinking of you, Double Down).  It’s another rich vein for restaurant testing…

When too much investment chases a market without enough demand, what happens?  Well, at first there’s a lot of excitement in the industry and in the media.  More and more players chase the market. 

Then, the reality sets in.  Prices drop.  Losers shake out.  Ask you real estate agent or mortgage broker.  In the end, the winners get stronger (ask Google about the 2001 dot-com crash), but there’s a lot of pain along the way.

So we think it will go, on a much smaller scale, with QSR breakfast.  Yet more players are chasing the market everyday, in overlapping ways.  See the news this week.  McDonald’s successfully knocked off a chunk of Starbucks’ coffee business, so why not oatmeal.  Taco Bell plans a national breakfast push aligned to their “Why Pay More?” value menu.  The media is certainly excited.

With the down economy, the breakfast market has actually been shrinking not growing.  To be sure, some will be winners.  If we had to venture a guess, we’d start with the player who has the most consumer credibility and the corporate DNA to eek out penny profit: McDonald’s.  But the flurry of breakfast investment activity is bound to fail for many… like all bubbles, it will burst.

I read the Momofuku cookbook last night, and strangely it got me thinking about chain restaurants.  David Chang tells the story about going from buying lo mien noodles to make ramen at Noodle Bar to learning to make them in house.  Is there an opportunity for chain restaurateurs from casual to QSR to differentiate better on this “in-house” dimension?

Of course, many chains already take advantage to some extent.  Krispy Kreme has the famous, and famously cool looking, in-store donut making machine.  At In-and-Out Burger, you see the whole potatoes being cut into fries (ironically, double frying from pre-cooked frozen probably makes best tasting fries, but from-fresh sure looks great).  Panda Express has built open kitchens and a see-through wall into their refrigerator to show their fresh vegetables.  Chevy’s made a name for themselves making tortillas fresh in “El Maquino”.  Panera and many bagel places visibly bake on site.  Subway famously brought that idea to a low-price QSR.

But there are many more ideas.  To brainstorm: (more…)

Last week’s deal to take Burger King private caught few by surprise, given the intense focus of PE on the restaurant sector and the many struggles of BK.  A few months ago, Mill Road announced a deal to buy Rubio’s.  In late April, another firm (Apollo) came over the top of Thomas H Lee to buyout CKE for about $1 billion including assumed debt.  All this comes on the heels of 2010 acquisitions of On the Border (Golden Gate Capital), Papa Murphy’s (Lee Equity Partners), and Wingstop (Roark Capital Group).

Amid speculation that there are more restaurant buyouts to come, we’ve been thinking about what PE firms need to do to thrive with these new investments.  (more…)