Investing In Innovation
Introducing new menu items often invigorates an operator’s brand. At the least, even a limited-time offer (LTO) creates “news” for the brand, increases traffic and sales and develops more loyal consumers. But how do you decide if the item you created in the test kitchen is worth the time and investment in equipment new to your operation? And when do you take the additional step of investing in research and development to create an innovative new piece of equipment needed to prepare, cook or serve that menu item?
In most cases, you have one of three options for producing new menu items: use your existing equipment, replace or add to your existing equipment package with off-the-shelf products or work with a manufacturing partner to develop and design a new piece of equipment. Which option you choose depends largely on your needs or why you’re considering a new menu item in the first place.
“Wherever possible, we’ll use existing equipment for new menu items,” says the equipment purchasing director of a Midwest-based chain. “If we have to purchase new equipment, we’ll buy something off the shelf.”
But not all operators introduce new items for the same reasons. News is one of several operator “cornerstones” and a main reason why an operator would need to develop new products, according to Dave Brewer, COO, Middleby Corp., and former chief engineer at Yum! Brands. “Whether it’s Yum!, Taziki’s [Mediterranean Café] or Starbucks, an operator’s inherent need is to create new-product news on a regular basis,” he says. “It’s the same story around the globe; it drives traffic and customer loyalty.”
Other cornerstones of an operator’s needs include improving the speed, accuracy and quality of service; con trolling costs, such as food, energy, labor and health and liability insurance; and maintaining the brand’s relevance. Any or all of these can play a major part in the decision to come up with a new menu item and the extent to which you might go to add or change equipment to produce that item.
First, figure out what’s at stake. Review the cornerstones to determine which apply to your situation. Are you looking to create news, or are you trying to reinvent the brand to make it more relevant? If it’s the former, an LTO may do the trick. The latter may require a whole new cooking platform or method of storing and prepping products.
“For an LTO, the goal is incurring very low capital cost, if any,” says John Bowden, Client Services Group Leader at Wasserstrom and former director of foodservice systems at Wendy’s. “With a permanent menu item, you have more time in which to amortize the cost of any new equipment you might need.”
If you’re introducing a permanent menu item, will it replace an existing item or add to the menu? “If you’re adding to the menu, the new item obviously should drive traffic and increase sales,” says Mark Finck, Lead Engineer at the Pacific Gas & Electric Co. Food Service Technology Center, operated by Fisher-Nickel, San Ramon, Calif., and former equipment development engineer at Burger King. “The new item shouldn’t cannibalize sales of some other item.”
In an ideal situation, you can use existing equipment to make a new product. If you can, you still have to make sure that you have the capacity with existing equipment to handle an additional menu item.
At Burger King, for example, the introduction of a new fried menu item pushed the equipment development team to evaluate whether the typical store’s two 50-lb., two-basket fryers could handle production of all of the fried items. By switching to one 60-lb., three-basket fryer, stores could produce the same amount of potato products they’d been making and still accommodate the new item. Additionally, the smaller fryer gave stores the room for cold storage needed for the new item, all without changing the footprint of the kitchen.
“The challenge,” Finck says, “is to use what you have in ways it wasn’t designed for so you don’t need to invest in new equipment, change the kitchen layout or conduct lots of staff training.”
Next Best Thing
If your existing equipment is inadequate, look at available equipment or technology that will make the item work within your operational flow. When he was at Burger King, Finck was challenged by a thicker burger patty that wouldn’t cook properly on the chain’s existing broiler.
He and the team looked at how to accommodate the item in different ways. “We looked at the front end and the possibility of using a fresh or thawed patty,” he says. “We didn’t have storage room for fresh, so that meant looking at ways to stage the frozen product to thaw it. We also looked at the back end—finishing a partially cooked product in an oven of some kind.”
At the same time, the company recognized that its one-speed, one-temperature conveyor broiler limited menu development. So Finck and his team developed new technology with Duke Manufacturing that would solve both the short- and long-term problems. The onus at Burger King was that investments in new equipment were expected to result in a one-year payback. The answer was a new multispeed, multi-temperature, software-driven broiler that promised to save energy, be easier to clean and cost less in maintenance. The chain ended up replacing its standard $20,000 broilers with new ones that cost half as much and had an ROI of less than one year.
The change didn’t come without hiccups. Infrared burners and electronic controls on the new broilers initially could be easily ruined by aggressive cleaning crews who hosed down the equipment. But a few design tweaks solved the problems.
Grab Your Partner
If you’ve looked at all of the available equipment and haven’t found a solution, and you’re sure you have a homerun product idea, it’s time to look for a manufacturing partner. Some common-sense rules apply.
“Put together a cross-functional team,” Bowden says. “All departments should have input so everyone’s on the same page. The team should develop a list of functional requirements that describe what the equipment must help you accomplish. There are lots of ways to make holes, so don’t automatically go shopping for drill bits.”
Find out what kind of new-product development experience potential partners have. Are they capable? What kind of track record do their new products have? Do they have the capacity to deliver the quantities needed, and if so, in what time frame?
Your relationship with your supplier plays a big role in these types of arrangements. If you already have a good relationship, that will help. If not, you’ll likely want a more formal development agreement. In either case, “development happens most easily when communication is clear between manufacturer and operator,” Bowden says. That means detailing expectations even to points that might seem obvious, because if there are assumptions on either side, the development process can get derailed.
Work out who takes on all or most of the development costs. If you ask for proprietary equipment, you’ll likely bear the brunt of the research, development and training costs. Agreements often currently stipulate that new equipment will be proprietary for a certain period of time, after which the manufacturer can take it to market. In many of those cases, costs are shared, and sometimes the manufacturer bears them alone.
Make sure you know how many pieces of equipment you need before you give your manufacturing partner the green light. Going back later to order more could be very costly. “We just finished a big rollout,” Brewer says. “Our client miscalculated and needed 300-400 more units and wanted a discount on the additional units. We’d already shut down the production line, so the per-unit cost was even higher than on the first-run units.”
Timing, Testing And Rollout
Both the operator and the manufacturer must develop templates for lead times needed to source materials, design the equipment, get a production line up and running, seek regulatory approval in the case of major equipment and deliver a finished product.
“Corporate entities on both sides should estimate timelines from the very beginning,” Bowden says, “then troubleshoot the timeline. In some cases, you can literally buy time—having product or materials sent air freight instead of normal shipping—but in others you may not have any flexibility.”
You also may not be able to test-market a new menu item with new equipment in every case. You may have to use equipment prototypes to see if the menu item is even viable and ensure the equipment fits in operationally before going into full production and rolling out the menu item. Test-market scenarios, and any tweaks they require to the menu item and equipment, should be built into the timetable, too.
Test-marketing the menu item itself can be as simple or as complex as you want to reassure yourself of the item’s potential success. “At Yum!, if the equipment investment had a short payback—one year or less—we’d do a rolling approval,” Brewer says. It consisted of a taste panel, focus groups and rollout of the item in one or two test units, then a full rollout if the feedback at each point was positive. “For items and equipment with a one- to two-year payback, we’d roll the product out in 60 stores and get feedback, because equipment reliability and durability become the biggest issues,” he adds.
How fast you roll out the new item—and the associated equipment—depends on the complexity of the equipment involved. Two issues are at play here: installation and training.
“Some equipment is just a distribution exercise,” Bowden says. “It’s just a matter of whether UPS or an equipment distributor can handle delivery in time. How you roll out major equipment that requires installation depends on the scope of the job.” If it’s a simple counter cutout, for example, or a matter of plugging a piece of equipment into a standard outlet, handling logistics is relatively easy. If the equipment requires more extensive electrical, gas and/or plumbing hookups, you have to figure out who will handle installation and how fast stores can be modified, he explains.
There are third-party companies—kitchen equipment suppliers—for hire that can handle installation logistics, but you’ll have to find what Bowden calls the “sweet spot” between time and resources. “You can pay for 6,000 installation teams,” he says, to get all of the equipment installed at once, “or roll out a new menu item in stages [to one major market-development area at a time].” Again, develop estimated timelines early in the process.
Training—how much is needed and how long it will take—also depends on the complexity of the equipment. Even if you use your existing equipment, you’ll have to train employees how to prepare and cook a new menu item. New and different equipment obviously requires more training. The manufacturing partner you pick should be able to develop training materials for the equipment.
Putting It All Together
Any time you consider changing or adding equipment to handle a new menu item, there are several things to keep in mind. First, look for equipment that offers simple operation and advanced prep and/or cooking methods. Second, look at equipment that can do more than one thing.
“The equipment should be versatile enough to work with more than one item,” Finck says. The Burger King team knew that bacon drives store traffic, for example, but both its flavor and texture have to be right. Oven cooking, in the chain’s experience, was the best way to produce great bacon, but the resulting greasy mess meant the ovens had to be cleaned more often so they didn’t become a fire risk. The team turned to combi ovens because they are self-cleaning and can cook a variety of other items.
“David Novak, former CEO and now Chairman of Yum!, called it the miracle of ‘and,’” Brewer says. “Real innovation is taking a piece of equipment that does one thing and making it do something new and something else.”
Panda Express, for example, ranked all of the jobs in its stores from 1 to 200 in order of difficulty. Cleaning steam wells was one of the jobs ranked as more difficult. The chain switched to induction wells even though it wasn’t introducing a new item because induction wells save energy and are safer and hold food longer without quality loss. And, oh, by the way, cleaning the food wells is now ranked among the top 10 easiest jobs.