The QSR industry is awash in innovation and discounting from the smart traffic drivers like nacho fries and donut sticks to the weird unicorn and fruit loops shakes and the endless number of bundles and ultra-cheap add-ons.
What actually drives a higher percentage of overall QSR traffic or visit share, however, is the big question. Even the savviest brands at some point are throwing the proverbial … ideas at a wall and seeing what sticks. For every wild success, there are a handful of quiet mediocre performers or outright failures across QSR.
The data and analytics firm Sense360 took a close look at visit data to see what really performed well, giving a little insight into what attributes actually drive visit share and sales in this competitive market.
The firm put out a summary of this research dubbed The Key Drivers to a Successful LTO to outline some of the 209 limited-time offers (LTOs) from 68 QSR brands in 2018.
There were three big findings:
1) It’s hard to stand out in a crowded market.
According to the research, 85 percent of all LTOs in the sample included new menu items. But the data showed a negative correlation with launching a new menu item and year-over-year visit share lift. That shows yet again, that this market is rough and if a new item doesn’t reach a new audience, it can actually lead to cannibalization of routine sales.
2) Discounts and free items work, kind of.
Discounted and free items correlated with the strongest visit share lift. Of course, incremental lift in traffic at the expense of margins is something QSR operators need to be wary of. These tactics may drive traffic, but low-margin visits can effectively cancel out the benefits of that extra traffic.
3) Momentum matters.
Hot concepts tend to stay hot with continued innovation. The research showed visit share growth was the highest correlated factor to an individual LTOs performance. Large brands especially fared well with a routine LTO cadence, benefiting from national advertising and rosy perception of recent LTOs.
Among the many LTOs of 2018, there were a few standouts.
Non-franchised Chipotle drove .3 percent visit share lift and a 25.1 percent year-over-year lift with the Late Night Taco Happy Hour in the Miami and Dallas markets. The promotion featured $2 tacos with a drink purchase after 8 p.m. It drew .3 additional visit share nationally.
Burger King had great success with a pancake discount. A November LTO that offered three pancakes for 89 cents drove .46 percent national visit share and a 10.2 percent year-over-year lift. It was one of the few new menu item discounts across QSR that really drove visit share lift.
Taco Bell saw great results from it’s annual Steal a Base, Steal a Taco promotion around the World Series. Customers could get a free Doritos Locos Taco from 2 p.m. to 6 p.m. on November 1, 2018. It drove a 1.1 percent lift in national QSR visit share and a 23.3 percent lift year-over-year.
But the strongest LTO came out of Chick-fil-A, which introduced a Key Lime Shake in Austin in October of 2018. The brand saw a 2.6 percent share lift and a 45.2 percent year-over-year lift. It was novel because it was one of the few new menu items that drove visit share without a discount—the shake was added to the menu across the system in March of 2019.
See the full report at Sense360.