Menu Innovations | July 2010 | By Nick DiUlio

Ahead of the Game

Operators often lose sight of the importance of innovation in a down economy, but recession or no recession, consumers demand new options.

At the end of 2008, Kelly Roddy was in the same boat as every other quick-serve executive. The economy was spiraling out of control around him, the average U.S. consumer’s wallet was shrinking, and his task was to figure out how to successfully weather the storm with his Texas-based quick-service sandwich chain, Schlotzsky’s.

But while many executives decided that maintaining business as usual was the best way to get through the recession unscathed, Roddy had other ideas. As president of Schlotzsky’s, Roddy decided his company was going to zig while everyone else zagged, embarking on a rebranding strategy at the very moment when it seemed most risky to do so.

“I’m sure a lot of quick-service chains have looked at this time of economic turmoil and said, ‘OK, we’re not going to make any changes and just get through this,’” Roddy says. “But we saw it as an opportunity. While everyone else was hunkered down, we were going to reinvent ourselves.”

That reinvention, which rolled out in October 2009, involved a cobranding deal with Cinnabon, a complete décor redesign of the chain’s 365 locations, a new service model implementing partial table service, and a new marketing strategy. There are 58 cobranded Schlotzsky’s locations open in the U.S., with 31 more being converted—and the effort, Roddy says, is starting to pay off.

“Sure, there were some folks in the industry who said, ‘Are you sure you’re not moving too fast?’ But the advent of the economic downturn only accelerated our new initiative of reimagining the restaurant,” Roddy says.

The Schlotzsky’s anecdote illustrates an important point: During tough economic times, creativity and ingenuity often suffer as owners and operators head for the safe, high roads of business as usual. But innovation—on both the large and small scales—still plays a critical role in a restaurant’s success.

“Companies need to keep consumers engaged now more than ever,” says Quiznos vice president of culinary development Zach Calkins. “No matter what the economic climate, consumers demand new choices and flavors. Focused innovation is key.”

For Quiznos, that focused innovation is what led to a new breakfast menu that rolled out to participating convenience store locations in March.

The operative word, Calkins says, is focus. While it is important to remain innovative, he says there is also a temptation for quick-service concepts to swing too far in the opposite direction of caution, feeling as though they must change in drastic, sweeping ways.

“I’ve seen too many brands promoting items that are a complete disconnect from their core concept,” Calkins says. “You need to maintain energy around innovation. Innovation is a thought-filled process in which we have to be sensitive to customer acceptance, as well as franchise-owner and shareholder profitability.”

Echoing the focus sentiment, Amy Alarcón, head of culinary innovation for Popeyes Louisiana Kitchen, says it’s critical that owners and operators don’t begin reaching toward innovation for innovation’s sake. An “eye toward authenticity” should be the mantra, she says, because at the end of the day the needs of the consumer will dictate the changes one needs to make. This means making sure those needs remain at the top of the priority chain.

“Correctly identifying consumer needs is a considerable challenge—but essential—when it comes to innovation and product development,” Alarcón says. “For example, comfort foods remain consistently popular, especially in tough economic times. It’s a kind of retreat to something that is known. However, that doesn’t negate the need for it to taste fantastic or even come with a new twist to attract a little attention.”

Not only can innovation excite one’s consumer base, it also has the potential to reinvigorate employee morale, says Mark Swiecichowski, a financial adviser and author of the blog “The Profit Power of Creativity.”

“No matter what the economic climate, consumers demand new choices and flavors. Focused innovation is key.”

“Innovation isn’t just for developing products and serving customers,” Swiecichowski says. “Allowing employees the opportunity to contribute to the restaurant by developing ideas can make work more interesting for them, which reduces turnover.”

Diane Spiegel, a corporate trainer with experience in the quick-service industry, echoes this sentiment, adding that some of the most effective innovations often come from opening the lines of communication between managers and employees.

“That relationship is key, and managers should regularly be asking employees, ‘What would you do differently if this restaurant was yours?’ I think that’s a very innovative question,” Spiegel says.

Implementing some of the newest technologies is a good way to stay ahead of the game, says Joseph Lema, who teaches courses on the equipment, design, and layout of foodservice facilities for the hospitality management program at Drexel University’s Goodwin College of Professional Studies.

“Innovation is more important than ever, especially when it comes to integrating more technology into your operation,” Lema says. “One of the myths is that it’s all about human contact, but [owners and operators] can maximize technology to deliver service in more innovative ways.”

Consider the case of Scotty P’s, a small Texas-based hamburger chain that began  using text messaging in its marketing efforts.

The new campaign, which rolled out in January, uses text messages to specifically target customers from any of its eight locations. If business is slow in one of the locations but not the others, Scotty P’s can send text coupons exclusively to those customers who dine at that particular location.

“I’ve been in the business for more than 30 years, and all I see are the same ideas over and over again, and I wanted to change that, especially in this economy,” says Scott Pontikes, owner of the chain. “I realized that it doesn’t have to be in big, grand ways. For those of us that are out there in the regional markets, we’re trying that much harder to be more innovative and creative. It’s almost a no-brainer.”

Calkins of Quiznos agrees that the same ideas won’t cut it in this new quick-service environment.

“Consumers are more careful than ever these days when choosing where to eat out,” he says. “So now is the time to push the envelope.”