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Operators race to bring new, 
innovative products to market

At Bruegger’s Bagels, product innovation occurs at a breakneck pace that Philip Smith describes as “throw 50 things up against the wall.”

“Our go-to-market strategy is to constantly have new products,” said the executive chef and director of new products and services for the 296-unit, Burlington, Vt.-based chain. “We have a calendar with a series of limited-time-
offering products. If they are winners, they make it on to the full-time menu. For us, it is a strategic direction to have new products.”

Bruegger’s is not alone in its push to introduce new products. Across the industry, new product innovation has become more important among chains and gained the attention of a broader swath of executives.

According to a study of R&D practices at leading restaurant chains by Nation’s Restaurant News with Channel Marketing and Bellwether Food Group, 54 percent of the operators surveyed characterized new product introduction and innovation as “extremely important” to their businesses, with an additional 28 percent rating it nearly that important. The online study involved more than 330 respondents from chains of various sizes. Data was collected throughout 2009.

The importance of product innovation continues to grow, the survey found. Sixty-five percent of survey respondents said new product development and innovation is more important now than it was two years ago, with 32 percent pegging it at about the same level of importance.

At Bruegger’s, “we were already committed to a very high level of new products coming out all the time,” Smith said. A Trail Mix Bagel currently is making its way onto the list of LTOs.

When asked to compare the number of products recently added to menus versus the number in the prior 12 months, 47 percent of respondents said they added more items, and 42 percent said the number of additions was about the same. Only 11 percent of operators said they added fewer products.

Ten percent of respondents said they added 16 or more new products during a 12-month period, while 14 percent said they added 11 to 15 new products. Forty-four percent said they added between five and 10 new products in the course of a year. 

The recession only fueled the need to innovate, operators said.

“We didn’t stop focusing on innovation and start focusing on value as some of our competitors did,” said Tom Kempsey, vice president of culinary for Cheeseburger in Paradise, a 33-unit, Tampa, Fla.-based casual-dining chain. “Every three to four months we roll out new menu items. You have to keep the menu fresh and give them a reason to come back.”

Far from dampening the pace, the tough economy is giving Cheeseburger in Paradise incentive to innovate, Kempsey said.

“When people aren’t going out, you have to give them something they can’t make at home or don’t want to make at home,” he said.

Some operators, however, admit temporarily dialing down their innovation to focus on other goals during the downturn.

At Mr. Goodcents Subs & Pastas, the 100-unit quick-service chain based in DeSoto, Kan., product development recently picked up after several years of slower activity while the chain concentrated on customer retention, said marketing director Eric Tadda. He said the introduction of a line of Flatbread Pizzas early this year was a step toward attracting new customers. 

Menu development today is a highly collaborative activity, the survey found. Asked which corporate team members were the primary drivers of new-product needs and innovation in their companies, two-thirds of survey respondents named operations and more than half named R&D and marketing as well. Also prominent were presidents and chief executives and purchasing officials, each of which were named by about a third of respondents. 

Bruegger’s Smith said he had just participated in a product cutting with the group of Bruegger’s executives who regularly work together on product development, including the vice president of operations, vice president of purchasing and director of marketing. The chief executive is also a key participant, he said. 

Seventy-three percent of respondents said reducing the risk in new product launches is a higher priority for their organizations
now than it was 24 months ago.

“I would like to hit home runs with our core menu items,” Smith said. “If I have a soup that isn’t a winner, I can live with that. But if I have a bagel that isn’t a winner, that is not good.”

LTOs remain the safer bet for introducing new items, the survey found. Thirty-eight percent of respondents said all new products are introduced as LTOs, while 26 percent said some products are launched that way. Eight percent said they never debut new items as LTOs.

The survey also revealed an increasingly prominent role in R&D for suppliers, with 51 percent of respondents saying suppliers were “extremely important” and another 23 percent rating them as nearly that important. 

“Many vendors are very helpful,” Smith said. “I am very happy challenging them to own their piece.”

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