Article
Forecasting a new product jackpot
Of Jack in the Box and Burger King's new premium sandwich menu lines, one is a hit and the other a miss.
March 2, 2010
*Stuart Morris owns and operates QSR Consulting Group Inc.
Introducing a successful premium priced sandwich during a booming economy is dicey, at best; but during a recession, it can be a high-risk recipe for derailing brand momentum and diminishing brand relevance. Kudos to both Burger King and Jack in the Box for 'rolling the dice' with their new premium-priced sandwich menu item rollouts.
The efforts involved in a new product introduction are monumental and immeasurable — financially and emotionally. Timelines are tight, and back-up marketing plans are slim to nonexistent. Once senior management commits to a new product introduction — regardless of flawed or questionable research or subsidized test-market results — the die is cast. The product will be launched.
The success or failure of any new product is largely dependent upon filling an unmet consumer need in the marketplace or within your brand. Additionally, any marketing strategy should be measured by its ability to provide great 'Menu Value' — defined as the equilibrium between giving the guest real or perceived value balanced by acceptable operator profitability.
Let's take a look at these two offerings:
Burger King's Steakhouse XT Burger
Burger King's introduction of the $3.99 Steakhouse XT burger line fits within the 'wheelhouse' or power zone of Burger King's strength. The chain's core menu competency is flame-broiled burgers. They built a worldwide brand on that premise.
Although the Steakhouse XT burger does not target an unmet need in the marketplace, it does fill a significant and profitable void on the Burger King menu board — namely, a high dollar premium burger platform. Perhaps just as important, the Steakhouse XT reduces the focus on the low margin $1 double cheeseburger.
Burger King's Steakhouse XT burger is targeting the premium high-dollar burger junkie that cDonald's Angus Burger and Carl's Six Dollar burger line has successfully attracted to the quick-service restaurant category.
The estimated 75 percent profit margin on a $3.99 Steakhouse XT burger is roughly equal to the profit margin of six or seven (or more) $1 double cheeseburgers. The math suggests this is a low-risk product introduction with monumental upside.
The creation of a premium burger platform offers Burger King additional strategic weapons to increase guest check average and incremental transactions with future premium burger line extensions.
Verdict: Burger King has a HIT with the Steakhouse XT burger line — maybe not a 'home run,' but a solid single, maybe a double. These are the types of successes that rebuild brand momentum, energize management and assuage franchise relations.
Jack in the Box Grilled Sandwiches
Jack in the Box recently reported same-store sales of negative 11.1 percent for its latest quarter. This is on top of a decline of 1.7 percent from the same quarter a year ago. These are tough numbers to swallow.
There is no 'playbook' on how to successfully reverse significant negative sales momentum. It's a scary place to be.
In an attempt to boost slumping sales, Jack in the Box introduced in January two new grilled sandwiches priced at $3.99. These are sliced meat sandwiches on artisan breads. They look good, and they taste great. But good looks and great taste mean little if consumers have no compelling reason to buy them.
Jack in the Box has an eclectic menu that has a little of something for everyone. It serves fried tacos, burgers, chicken, fish, rice bowls, fajita pitas, nachos, jalapenos, cheese sticks, salads and breakfast all day, It truly has something for everyone. Its menu is known for everything but not particularly known for any one thing.
Introducing an entirely new category of sliced-meat sandwiches is a risky proposition. The history of hamburger chains introducing sliced meat sandwiches is long and littered with failure — for good reason: It is not their core competency. And it does not fulfill a consumer need that is not being universally met by a more formidable competitor.
Subway has defined the sliced-meat sandwich category. With more than 32,000 restaurants, Subway and many smaller deli sandwich chains have empowered guests to actively participate in the building of their sandwiches. This consumer experience contributes to Subway's great Menu Value, which is enhanced further with its brilliant $5 footlong pricing strategy. The Subway experience cannot be duplicated by a burger chain whose tenets are a drive-thru business model focused on speed of service.
Case in point: Wendy's introduction of Frescata sliced meat sandwiches in April 2006 was a branding nightmare. It was introduced to great fanfare and praised by management as exceeding sales projections (often a euphemism for 'let's delete this disaster ASAP'). Frescata sales withered and the line of sandwiches disappeared. Shortly thereafter, the management team was largely dismissed, and the Wendy's brand was sold to Triarc Cos., parent of Arby's. Certainly, the Frescata sandwiches did not precipitate these events, but it certainly didn't help prevent them from happening either.
Jack in the Box itself tried the deli meat route in February 2004. The company introduced with great fanfare the Pannido, "a truly unique sandwich featuring deli meats and cheeses tucked into a sleek, foot-long, toasted ciabatta baguette." The Pannido won all sorts of restaurant industry new product awards, but Pannido sales failed to live up to the hype, and it was unceremoniously deleted from the menu.
The Pannido experience obviously became a distant memory. But history often repeats itself.
Verdict: Jack in the Box's new premium Grilled Sandwiches — MISS.
Stuart Morris owns and operates QSR Consulting Group Inc. which assists brands by creating profit driven strategies that leverage core competencies. He has more than 25 years of direct restaurant experience including 10 years in the new product development groups at three different billion dollar restaurant brands. You can reach him atsmorris@qsrconsultinggroup.com.
Related Media
Subscribe
Get the latest news and resources from QSR Web.
