Clearing the smoke from product intros

Enough with the handicapping of the presidential election. What we really need is an analysis of what this week’s menu changes mean for the country.

Let’s start with the scheduling. Once upon a time, restaurant chains would schedule their menu overhauls to correspond with the seasons—salads and beverages added in the summer, heavier fare like soups and stews featured in the fall and winter. Now chain parents are announcing menu changes either right before or immediately after releasing poor financial results.

Earlier this week, for instance, DineEquity announced that its IHOP brand had added Coffee Cake Pancakes. Simultaneously, the franchisor disclosed that its losses had deepened to $16.4 million. It was as if the company expected investors to say, “Whoa. Who cares if the company lost money. IHOP has Coffee Cake Pancakes!!”

Similarly, Popeyes parent AFC Enterprises disclosed last Friday that its domestic same-store sales for the third quarter had slipped 2.8 percent. On Monday, Popeyes announced that it was adding a new bowl meal and a chicken sandwich—the foundations of what the chain trumpeted as a whole new menu platform.

Is the new trend to use menu additions as a distraction from bad financial numbers? Two instances would’ve been merely a coincidence that suggested no. Then came today’s one-two announcements from Denny’s. In the morning, the company crowed that it was updating its late-night Rockstar menu with items supposedly developed by stars like Katy Perry, Taking Back Sunday and Hoobastank. Hot-selling rock bands, working together in their kitchens to come up with items like the Melty Grilled Chicken and Sausage Quesadilla. Sure, I buy that.

Nevertheless, roughly eight hours later Denny’s released its third-quarter financial numbers, including a 6.1-percent drop in same-store sales for franchised restaurants and a 2.7-percent decrease for company-run units. If three instances suggest a trend, we’re there.

Yet my smokescreen theory is severely undercut by Denny’s profits. Net income more than doubled, to $10.6 million. Why blunt good news like that with yee-haws about the new Hooburrito, supposedly a brainchild of the band Hoobastank?

Denny’s may be an exemption to that trend, but it certainly fits another pattern in how chains are announcing new products these days. Not so long ago, they tended to introduce a whole new menu and stress the additions. Afterward, they might’ve showcased a limited-time offer now and again. The introductions were either grouped together into one event of note, or peppered over an extended period in a bid to stay top-of-mind.

Contrast that with the approach that was taken yesterday by Jack in the Box. The (now) multiregional burger chain announced at 9 a.m. East Coast time that it was resurrecting its Teriyaki Bowls line; at 12, that it was bringing back its Mini Churros; and at 3:30, that it was introducing two new “homestyle” chicken sandwiches (translation: sandwiches made with fried chicken) in its central and southeastern regions. What would have normally been one news item became three web postings. Which, presumably, was exactly the point. By staggering the release of three separate press announcements, it garnered at worst a story and two updates, and at best three separate articles, without a penny in ad fees. Pretty smart.

And what of the products that were added this week? Clearly they prove that “new” is a relative term. Popeyes declared its new meal in a bowl to be new, but it’s been featuring similar items for years. And its new Big Easy chicken sandwich sounds exactly like an item it’s carried for some time.

And, with all due respect to Melty quesadilla creators Taking Back Sunday, or Hooburrito midwives Hoobastank, those items aren’t exactly groundbreakers.

Need we point out that two of Jack in the Box’s three menu additions were resurrected products, and that the third sounds conspicuously like McDonald’s chicken biscuit sandwiches?

So, what does all of this mean for the country? Clearly the emphasis is on recycling retreads, which raises some alarming questions about levels of creativity. But then again, the industry is showing surprising innovation in the most mundane of areas, how product introductions are handled. Business may be down, but it’s hardly lacking in craftiness.

New heat-beaters--and a Happy New Year

I’ve put my finger precisely on The Cheesecake Factory’s recent traffic problems: Calendar confusion. Yesterday, Sept. 2, the mega-volume chain announced that it was rolling out its new summer menu. “Take a break from the summer heat and visit The Cheesecake Factory,” gushed the announcement.

Labor Day is popularly recognized as the end of summer, but maybe Cheesecake prefers the official closing date. That would give the chain easily three more weeks to promote its new hot-weather selections. By then, maybe it’ll be ready with a new Halloween lemonade, or maybe a Christmas fresh-fruit salad.

How IHOP plans to fix Applebee's

After crowing for months that it could revive Applebee’s, IHOP started talking this week about how it’ll do it. In a presentation to financial analysts, CEO Julie Stewart spoke of such nuts and bolts changes as scaling back limited-time offers, installing new kitchen equipment, paring down the menu to a few specialties, and, perhaps most important, remembering what kind of consumer is likely to visit the restaurants. “We often overshot the brand in the pursuit of amore upscale customer while frankly failing to deliver on the expectations of our core users,” Stewart explained.

The casual chain’s new owner has already yanked Applebee’s much-ballyhooed “Talking Apple” ad campaign, which featured the sassy comedienne Wanda Sykes as the voice of the apple that’s now part of Applebee’s logo. Both the new logo and the edgy campaign, carefully slanted toward a hipper crowd, were concocted by the chain’s prior regime, which Stewart ousted in short order. The new campaign, “It’s a Whole New Neighborhood,” harkens back to the chain’s earlier positioning lie, “Eating Good in the Neighborhood,” which Steward helped to develop while she was president of Applebee’s domestic operations.

The new spots spotlight food, without any pretenses about attitude or cheeky sophistication. Or, as Stewart put it, “Our message is clearly focused on classic grill and bar food that you can only get at Applebee’s.”

That process of stripping down the concept to its core strengths, then updating those traditional draws, appears to be the basis of Stewart’s revival plan. As she told the analysts, a crowd usually more concerned with ROI than Riblets, “Signature grill and bar items, such as appetizers, burgers, salads, steaks, as well as beer, wine and other specialty drinks, are the key to differentiating Applebee’s from the competitive set while remaining true to our brand position.” Translation: The chain will stop trying to be a Cheesecake Factory or a trendy independent.

Part of the process, she continued, will be paring back the menu and updating kitchens.

In an interview with USA Today, Stewart also spoke about putting more emphasis in Applebee’s marketing on the concept’s bar. Most consumers, she suggested, don’t realize how much the brand offers to patrons who want to unwind with a cocktail.

During the conference call with investors, one of the portfolio managers asked Steward why she was veering from Applebee’s traditional reliance on limited-time offers and frequent menu changes.

“The short answer is that [the] LTO strategy did not work,” she said. “The idea of forcing people to come in for a limited period of time and order that item and somehow come more frequently did not work.” After all, she said, “if your base business and your base menu and your base service platform doesn’t provide enough for the consumer, then the LTO isn’t necessarily going to get you where you want to go, right?”

Stewart said that IHOP has plotted out a new marketing plan for Applebee’s for the remainder of 2008, starting with another flight of ads that debuts Monday. In those spots, consumers will be invited to submit videos they’ve shot inside Applebee’s units.

In addition, Stewart and her team “have developed a road map for all of 2009 that should be finalized in the next couple of months,” she said. In particular, she added, the new operating group will look at takeaway and Applebee’s rights to market Weight Watchers-brand meals.

Stewart also revealed that IHOP plans to “amend” a unit-manager bonus program that squeezed margins at company stores during the first quarter, without commenting how that effort dovetailed with the plan to improve unit-level operations.