Restaurants innovate menus to stay relevant

In the last part of this series, we learned how restaurants advertise to showcase products on the menu, promote offers and seasonal products, and change customers’ perceptions of their brands. Restaurants also often innovate their menus to remain relevant to their customers. This also helps restaurants keep up with shifting trends in the industry. Let’s look now at some restaurants’ product innovations.

In 2013, McDonald’s (MCD) launched white chocolate mocha, the new BBQ ranch burger, the Bacon McDouble on the dollar menu, and chicken wings (Mighty Wings). Popeyes (PLKI) introduced chicken waffle tenders. Taco Bell, under the umbrella of Yum! Brands, introduced quesaritos, and Pizza Hut launched its pizza-sized cookies. Tim Hortons (THI) refreshed its hash browns and introduced new sandwiches and frozen drinks.

McDonald’s and Yum! Brands are both held by the exchange-traded fund (or ETF) Consumer Discretionary Select Sector Standard and Poors depositary receipt (or SPDR) (XLY).

Some restaurants are branching out from their traditional options to have more healthy and customizable items on the menu. Brinker International (EAT), for example, introduced Fresh Mex bowls prepared in-house with fresh ingredients and began offering a menu with lighter choices (fewer calories).

If you recall from the earlier parts of this series, restaurants try to increase the average check by increasing complementary offerings. Domino’s Pizza (DPZ), for example, introduced specialty chicken that customers can order as a side when they order their pizza.

To recap, all these product innovation initiatives keep the product mix fresh, driving and helping drive customers to the store and increasing same-store sales, which is a restaurant’s key driver.

Restaurants have also turned to technological innovations to improve same-store sales. Let’s look at that next.