The term ‘innovation’ is prevalent across industry sectors, but it has varying definitions, as does the term ‘innovation process.’ Regardless of the meaning, if executed effectively, both can increase customer traffic and average eater checks, establish a key point of difference and steal customers from competitors.
Within the foodservice industry, innovation can be implemented in many formats, but the most actionable example is menu innovation. The top five quick-service restaurant chains in Canada — Tim Hortons, McDonald’s, Subway, A&W and Wendy’s as well as the top full-service restaurant, Boston Pizza — are the most obvious examples of operators who executed a well-structured menu innovation strategy in 2013. As a result, these six chains are growing sales faster than the industry average.
The key to innovation is understanding why customers want to try something new. According to findings from the NPD’s new “Menu Item Trial” report, consumers play it safe and buy food they think will taste good. As a result, appearance and description play a significant role in convincing them to buy a new product. So, full-service restaurant servers should provide pleasing descriptions of trial menu items, while quick-service restaurant operators should provide visuals of the menu items across media platforms. A well-designed menu innovation strategy should increase sales, since the main factor driving sales growth is consumers choosing to spend more when ordering new menu items. According to the “Menu Item Trial” report, 57 per cent of consumers order multiple new menu offerings, resulting in higher average eater checks. Last year, the top six restaurant chains in Canada increased their average eater checks by more than three per cent.
Meanwhile, innovation attracts millennials who play a key role in driving dollar sales. Millennials are adventurous eaters, and 45 per cent of them are likely to order a new menu item. As a result, the cohort has the highest average eater check compared to all other age groups. They are also the most frequent restaurant users, which may explain their desire to try new items.
Either way, restaurant operators can expect that Canadians will eat out of home the same number of times this year as they did last year. In a flat market, restaurant operators will need to implement an effective menu innovation strategy as a fundamental approach to increase sales and steal customers from their competitors.