Is your R&D ready for the recovery?

Is your R&D ready for the recovery?
Tags: Food & Beverage
February 25, 2010 - Christa Hoyland

Many fast casual brands started off 2010 with the launch of new products designed to appeal to health-conscious consumers. Feeling a dose of frugal fatigue, consumers are eager to try something new and have indicated they won't give up taste for value.

Smart fast casuals will use their new menu launches to further reflect the brand, many of which have lost loyal customers, and need to have a spot-on product launch to bring them back, said Dana Leo, director of product development for The NPD Group.

"Our recent environment with all these promotions has reduced loyalty overall because people just cross hop on a coupon or on a deal," Leo said. "And that's been happening throughout this past year."

Leo has noticed a number of brands losing sight of R&D best practices. She offers these tips as a refresher:

Know to whom the product is appealing. While this practice sounds like common sense, it can be all too easy to lose sight of your target audience.

Consider regional differences. It's not uncommon for national brands to have flavor profiles vary by region. It's also important to consider the varying competitive sets in the different local markets. "Competition is a big variable," she said.

Understand the function of the daypart. Breakfast, for example, is a hard daypart in which to encourage adoption of new things. Consumers like their morning routines but are more open to change as the day progresses.

Make sure the product delivers. Too often a product test can result in a false positive. Customers may be excited about trying something new, but the real test is whether they continue to come back for that same product. It's also important to know whether customers like the new product enough to try other items in the menu line.

Give the test plenty of time. For example, a product may show strong results in a quarter-long test period, but might weaken if the test were extended. "In a fairly short period of two to three months, you don't really have a good feel if people are going to repeat, whether it's really going to build your overall traffic or whether it's just temporary trial," Leo said.

More considerations

Restaurant consultant Dave McDonald specializes in R&D and offers additional considerations, especially for brands who are adding an alternate protein or an item that might cancel a veto vote.

McDonald recommends the test include a measurement of how many customers came into the stores because of the new product instead of looking simply at how much of a product was sold.

For example, he conducted a test of a shrimp product for a chicken chain. Overall traffic was up during the test, but shrimp sales were only 7 percent of the mix, he said. The company decided not to move forward with the launch because the mix wasn't high enough.

"They didn't want to roll out to the nation (because of that low sales mix)," McDonald said. "But (they didn't consider) how many of these people came on a Friday because they offered shrimp in addition to chicken."

With R&D budgets tight, it's also a good time to make sure the new product doesn't require new equipment or more than a few additional processes, he said. The most cost-effective rollouts also will utilize existing menu items.

"As a menu designer, my goal if I'm introducing one main protein is to try to use other items in the restaurant to go with it," he said.