Limited Time Offers (LTOs) are a longstanding feature of the restaurant scene, keeping regulars engaged and bringing in new traffic. Despite the COVID-19 pandemic, that hasn’t changed.

In fact, LTOs are even more important now and will be post-pandemic, with consumer hesitancy about eating out expected to linger for some time. Restaurants Canada forecasts that foodservice sales won’t surpass 2019 levels until 2023.

Use LTOs to continue testing new menu items — especially takeout

Pre-pandemic, LTOs were often used as a way to test potential menu items. For full-service restaurants that previously offered only on-premise dining, LTOs still play this role but with offerings suitable for takeout and delivery.

Chef Michael Hodgson, director of culinary operations for the Charcoal Group, located in Kitchener, Ont., says their strategy for LTOs has changed during the pandemic. “We shifted all of our thinking towards food that translates better for takeout. Even when we have been open for dining, the takeout has been a very important part of our revenue stream.”

An LTO success story during the pandemic is their Nashville-style hot chicken sandwich, which Hodgson says was “wildly popular […] and worked very well for takeout.”

Use LTOs to sharpen focus on cost control 

With restaurants doing all they can to survive the financial disruption of the pandemic, the cost control aspect of LTOs has taken on new significance.

Jason Burns, general manager of the Lacombe, Alta. location of Cilantro and Chive, says, “More than ever, due to the last year, we’re very focused on our purchasing, inventory control, and benefits of getting products at a reduced rate.”

He relates a Cilantro and Chive success story from April 2021: “One of our wine reps helped set up an LTO for mini bottles of prosecco, which we use quite frequently in-house and also for off-sales. Thanks to that one specific LTO we have saved upwards of $500 between both of our locations by buying that high volume product in bulk.”

Looking to the future, Burns says, “I think LTOs are more important now than ever before. [The pandemic] has changed our focus in business to look at inventive ways to get the very best price on quality products and also increase communication with all of our suppliers.”

“I think LTOs are more important now than ever before.”

Jason Burns, general manager of the Lacombe, Alta. location of Cilantro and Chive

Use LTOs to enhance communication with suppliers is key

Whether the purpose of your LTOs is menu testing, cost control, or a combination of the two, working with your suppliers is key to a winning LTO program.

Keep in mind that you and your suppliers have a mutually beneficial relationship — it’s in both your interests for your restaurant to succeed. Open and honest communication with your suppliers about your needs is crucial to building a relationship based on trust and respect and crafting your LTO program.

“We are in constant contact with all of our suppliers on an ongoing basis,” Burns says. “They will often tell us of items going on LTO.”

Hodgson explains how they work with suppliers to develop a successful LTO program: “Most of the time we have a concept and then reach out to suppliers to source products. […] Keeping a good relationship with our vendors is [also] important to us so we see new products when they hit the market, particularly with plant-based and gluten-free options.”

Cindy Perri, brand guardian for the Charcoal Group, says that the pandemic shift is “where partnerships really came into play. Our suppliers have had to shift and adapt with us. If we didn’t have the solid relationships that we do, it would have made the last year much more difficult to navigate.”

Think out of the savings box

If you can’t work out a special price with suppliers, ask if they can provide some merchandise for promotions. Most craft breweries, for instance, offer branded barware and apparel.

Position LTOs to your customers

LTOs are very versatile for restaurant operators wanting to develop positive guest relationships. Be inventive and build in a sense of fun whenever you can to delight your customers.

What type of restaurant LTO works for you?

• Menu features – for a limited time, whether a few weeks or over a holiday weekend.
• BOGO (buy one, get one) features – for takeout, this could be buy one hot item and get a cold item to heat up the next day.
• Discounts on your menu – Cilantro and Chive’s menu currently offers craft beer specials at 20 per cent off for off-sales.
• Merchandise promotions – offer a brewery’s mug or ball cap with the first 25 orders that include one of their products while supplies last.
• Complimentary merchandise – add a piece of your own or a supplier’s merchandise to off-site orders as a surprise gift to thank your community for their loyalty.
• Community support – Cilantro and Chive has a “burger of the month” program where they donate a portion of sales to a different cause each month. During the pandemic, these cause promotions have done a lot of good – for both recipients and the restaurant donors.

Opening a new restaurant requires good decision-making, the kind of decision-making critical to avoiding pitfalls along the way.

Here are some of the most common missteps new owners make when opening a new restaurant:

Under-capitalization

The easiest way to set yourself up for failure is to get to opening day without a penny in the bank and still owing money for construction, inventory, etc. A successful restaurant is carefully thought out, and all aspects are important to its success — consistent brand, great menu, unique atmosphere and décor. When you realize you are running out of money, you start to swerve away from the original game plan. New owners tend to cut corners on the brand and décor, cut back on staff training, drop the marketing program and withhold on the product.  

Conceptualizing on “If you build it, they will come”

Today, being new and open isn’t enough. The restaurant world is a very competitive landscape. Guests need a reason to come to your establishment. Partnering with a marketing company (even if just for the opening) to execute a communications strategy is crucial. New owners will benefit from this, as it will help to generate the buzz and continue the narrative for your brand. 

Taking possession of the space too early

Once you take possession of a space, you are on the clock with the landlord.  Whether you have fixturing period or free month’s rent is irrelevant — the clock has started and you are now into your fixturing period. You want to ensure that when you get possession, you are ready to rock. Contractors should be starting renovations on day one. This means you need your drawings done, your contractor selected (either by tendering process or other) and your building permit in place. All of this can take six to eight weeks. When you negotiate and finalize your lease for the space, ensure your possession date is two months in the future.

Not creating a detailed business plan

A business plan helps you make certain the space is right for you. The business plan defines the space requirements, location and how the profitability model is going to work. Too many people start looking for a location without a business plan completed. For example, new owners will go out looking for a 3,600 sq. ft. space, when perhaps what makes the most sense (after flushing everything out in a business plan) is a 2,800 sq. ft. space. Also, a proper business plan can help realistically plan out an opening budget and help to avoid Pitfall #1.

Not conducting dry runs

Dry runs are dress rehearsals for your opening. Friends and family are invited and play the role as real guests who have the chance to experience the restaurant before it is open to the public. This allows the new owners, chefs and servers to fix any kinks and mistakes. 

Conduct as many dry runs as needed to ensure things are running the way they should. Remember that when you first open, every guest is critiquing you, even more than with an older restaurant. From the very beginning, it is fundamental to be delivering that 11 out of 10 guest experience. 

“Conduct as many dry runs as needed to ensure things are running the way they should. From the very beginning, it is fundamental to be delivering that 11 out of 10 guest experience.”

David Hopkins, President, The 15 Group

Lack of staff before you open 

Don’t hire what you need — hire about 20% to 30% more than what you need.  Some staff will quit before even starting and in the first few weeks, some others will feel overwhelmed and not make the cut. You don’t want to be left short-staffed one month into your opening.

Not overstaffing when you first open 

The first few months of a restaurant opening are all about one thing — making guests happy! Set yourself up to make profit for the next 10 years, not a plan for only the first three months. Too many operators worry about controlling labour cost as soon as they open and end up delivering an exceptionally poor guest experience. Overstaff… by a lot! Ensure that guests are wowed by their entire experience.  

Printing expensive menus

New owners will make the decision to print very expensive menus before the opening. If you are a new concept, remember that everything is “theoretical” until you open to the public. Once you conduct the dry runs and when the doors open, you start to see how your menu plays out — pricing, kitchen bottlenecks, etc. At The Fifteen group, we always tweak and adjust menus just before opening and then a few weeks into opening as well.

“You are being judged more than ever when you first open a restaurant… judgment is all about value and you need to ensure you are providing exceptional value.”

David Hopkins, President, The 15 Group

Overpricing menu items 

You are being judged more than ever when you first open a restaurant, as you are new and untested. New owners need to remember that judgment is all about value and you need to ensure you are providing exceptional value. If anything, underprice your menu (again the first few months are not about making money). It is easier to increase your price point a bit after three to six months than to be overpriced at first and try to win guests back twho didn’t see the value in your offering.

Not hiring experts to help you

Opening a restaurant is one of the hardest things to do. However, hiring industry professionals is the best investment you can make to ensure you are a successful restaurant. This is one of the main reasons approximately 80% of new restaurants fail. It is imperative that you hire experts in the industry who will help you avoid falling into the pitfalls.