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A Time and a Reason For Specialty Beverage LTOs

Foodservice Brief — August 2015

Whether we want to believe it or not, fall is fast approaching. As the weather cools in much of the U.S., consumers will begin to seek out more hot beverages and different flavors for their beverage choices. While summer might inspire cravings for refreshing fruit or tropical flavors, fall means pumpkin, apple, and spice. Fall is when Starbucks brings back the extremely popular Pumpkin Spice Latte. As we move further into the holiday season, we find an explosion of mochas: peppermint from Starbucks and white from McDonald’s. 

Some of us may wince at the thought of fall and winter promotions when we’re trying to hang on to the waning days of summer. However, now is the time for restaurant operators and their suppliers to get a jump-start on marketing seasonal specialties. These limited-time offerings (LTOs) are customer favorites and provide a great way to appeal to new and existing customers. 

As with any LTO, seasonal beverage offers must create a sense of urgency with a specific start and end date. Part of the attraction of an LTO is that consumers want to purchase it right away – before it’s gone.

By and large, limited time offers are a “one and done” purchase

Offering seasonal beverage LTOs can spur additional purchases by established customers, bring in new customers, draw customers from competitors, and stimulate business during slow periods. But they’re also considered so special in consumers’ minds that they may be purchased just once in the LTO’s season.

For example, a review of the purchase cycle of Starbuck’s Pumpkin Spice Latte reveals this beverage is likely considered an “indulgent” purchase. The vast majority (72 percent) of Starbucks customers who purchased the Pumpkin Spice Latte during its 2014 run did so just once.

Trial and Repeat — Starbucks Pumpkin Spice Latte
September/October 2014

0 20 40 60 80 1 Purchase 2 Purchases 3+ Purchases
1 Purchase 72
2 Purchases 18
3+ Purchases 10

Source: The NPD Group/Checkout TrackingSM Total Channel

Other seasonal beverage favorites and impact on purchase frequency

Later in the year, as the memories of Pumpkin Spice Lattes and Peppermint Mochas melt away, Shamrock Shakes let us know spring cannot be far behind. Shamrock Shakes remain a huge favorite of McDonald’s customers, second only to the McRib in generating the most inquiries from customers regarding availability. And as spring turns into summer, Chick-fil-A’s Peach Milkshake is not far behind. The limited-time shake is the chain’s signature “icedream,” blended with peaches. It’s topped with whipped cream and a maraschino cherry.

Our Checkout TrackingSM data shows seasonal beverage LTOs like those mentioned here can have a very positive impact on visit frequency. Checkout Tracking’s ability to look at the same buyers over time lets us examine the purchase frequency rates of McDonald’s Shamrock Shake buyers compared to non-buyers, prior, during, and after the promotion. The data revealed McDonald’s Shamrock Shake purchasers are the chain’s most loyal customers; they have higher purchase frequency rates, especially during the shake’s promotional period.

Purchase Frequency — McDonald’s Buyers
Shamrock Shake Promotion February-March 2015

Shamrock Buyer Shamrock Non-Buyer Pre-LTO During LTO Post-LTO 0 2 4 6 8
  Shamrock Buyer Shamrock Non-Buyer
Pre-LTO 5.7 4.7
During LTO 6.7 4.4
Post-LTO 5.8 4.6

Sample size Shamrock Shake Buyers: Pre – 544, During – 653, Post – 622
Sample size: Pre Shamrock Non-Shamrock Buyer 4941, During Shamrock Non-Shamrock Buyer 8710, Post Shamrock Non-Shamrock Buyer, 5720

Source: The NPD Group/Checkout TrackingSM Total Channel

Seasonal beverages produce higher checks

Offering seasonal beverage items for a limited duration can be a good strategy for increasing average spend per customer. While most seasonal beverage offerings may be priced a bit higher than other traditional beverages, the price point is acceptable based on the value received. The beverages are unique, craveable, and only available once a year. Why not splurge a bit?

Additionally, for each of the chains shown, higher attach rates of food to the beverage contributed to higher check averages.

Seasonal Beverage Buyers — $ Average Spend vs. Non-Buyers

Beverage Buyer Non-Buyer Pumpkin Latte White Mocha Shamrock Shake Peach Shake 0 3 6 9 12
  Beverage Buyer Non-Buyer
Pumpkin Latte 7.81 6.67
White Mocha 8.37 6.84
Shamrock Shake 7.33 6.67
Peach Shake 10.55 9.37

Source: The NPD Group/Checkout TrackingSM Total Channel

Considerations for adding seasonal beverages to a menu

Don’t add seasonal beverage items to your menu haphazardly. If they seem thrown together or too gimmicky, like coconut eggnog or pineapple wassail, customers may not find them appealing. Don’t add too many seasonal items – it only takes a few to spruce up your menu for the next season. Remember, beverage LTOs help get the word out not only about a specific item; seasonal items are the perfect way to drum up some buzz for your restaurant when the weather changes. 

Considering the challenges the restaurant industry faces in terms of driving traffic, it is now more important than ever before to offer unique, craveable menu items that attract new customers and keep current customers coming back. One way restaurant operators can do this is by menuing seasonal menu items and beverages. Consumers not only find seasonal beverages appealing; they eagerly wait for them to appear, even if only for a limited time. For the restaurant operator, seasonal beverages have a positive impact on visit frequency and check averages, as consumers are more inclined to purchase food along with the seasonal beverage. It doesn’t get much better than that.

To learn more about Checkout Tracking, please contact your NPD client service representative, call our restaurant analyst, Bonnie Riggs, at 847-692-1767, or email bonnie.riggs@npd.com.

To learn more about Checkout Tracking, please contact your NPD client service representative, call our restaurant analyst, Bonnie Riggs, at 847-692-1767, or email bonnie.riggs@npd.com.
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