Many fast-food restaurants often change the locations where they're testing new products in order to keep the item a secret or target customers from a specific demographic, said Darren Tristano, executive vice president of Technomic, a food industry consultancy. Restaurant chains also try to find out what consumers would be willing to pay for the new items. There are 14 tiers of pricing in the industry, says Tristano, and companies may want to test a product in all of them -- from the priciest market in New York City to the least pricey in Salt Lake City.
Tricks of the Trade
Unlike most food and beverage operators, Starbucks makes it no secret when it's testing new products. The coffee chain has two stores in Seattle that are "idea incubators" where new products, such as wine and beer, single-origin coffees and gourmet cheeses are sold to customers and evaluated. The company even has a store locator on its web site to help people find stores that are selling the new products.
Companies that want to keep their new products a secret, steer clear of large metro area markets and opt to offer the items in smaller markets where there won't be much press coverage or word-of-mouth, says Technomic's Tristano. In these markets, new items are rolled out frequently and often marketed as specials so customers don't necessarily realize it's a new item being tested. "You might not be able to tell in certain markets if it's a new item or just a limited-time offer," he says.
Test sites are also picked based on the income levels of the residents in the area, says Tristano. Little Caesars Pizza, for example, may test in low-income areas, while Panera Bread and Chipotle Mexican Grill will test in higher-end areas and Cracker Barrel will test in rural areas. McDonald's, on the other hand, tests new products in anywhere from two to 600 of its 14,000 restaurants nationwide, says Ashlee Yingling, a spokeswoman for McDonald's USA. The chain's McCafe smoothies and frappes, for example, were tested in the Michigan region for a couple of years before going nationwide in May 2009, Yingling says.
But what makes a new product a success in the company's eyes? Here are some of the criteria taken into account when testing, according to Stephen Kalil, a corporate executive research chef at the Fritolay Culinary Innovation Center.
- Operations feasibility. Can the cooks make the product without slowing down service and adding complexity?
- Will the new product sell and does the customer like it enough to buy it again or even make a special visit to get it?
- How can it be made utilizing mostly existing ingredients and minimizing the number of new ingredients needed?
- How does the new item affect restaurant profitability? Is it taking sales away from similar products with higher profit margins? Is it contributing to incremental sales?
To determine whether a restaurant near you is testing a new product, keep your eyes open for "specials" and other signs that new products are available. Here are some current market tests:
- Coca-Cola started testing the Freestyle 100-drink soda bar, a touchscreen soda fountain offering ten times as many drink offerings as your typical soda fountain, in Orange County, California in 2009. There are now machines in Georgia, Illinois, Texas and Utah. Check out the Coca-Cola's Freestyle Facebook page to see where the company will be rolling the machines out next.
- Starbucks is currently testing Refreshers (cold drinks made from green coffee) in San Diego for a limited time. Also, its Starbucks Reserve coffee, made from "single-origin" coffee beans, is being sold in test markets in metro areas across the country.
- P.F. Chang's is testing a new happy hour menu in Kansas City, Mo. If all goes well, the Yum Cha Menu, which includes sushi-style rolls and flatbreads, will also be tested in Scottsdale, Ariz. and other locations.
- If you've seen fish tacos everywhere, you haven't lost your mind. Many restaurants are adding the popular item and Taco Bell will be testing its own fish taco next year in stores nationwide.
- McDonald's and Burger King are both offering more premium-priced products, hoping to attract diners that are willing to spend a little more. McDonald's is testing a $5 Smokehouse Deluxe hamburger in Ontario, and Burger King has installed higher-end Whopper Bars at locations in Orlando and Miami, Florida, as well as Memphis and New York.
- Wendy's is testing Natural Fries with the potato skins still on in several test markets. A manager at a Florida restaurant told Consumerist they're getting rave reviews.
- California Pizza Kitchen is testing touchscreen menus that let customers pay at the table. El Pollo Loco is also testing self-serve cash registers in Orange County, Calif.
- Chipotle is testing a few things in a handful of locations around the country, including a roasted tomato salsa and a "garden blend" of vegan protein in New York, Washington, D.C., Denver, Sacramento and Los Angeles, says Chris Arnold, a spokesman for the Denver-based chain. Chipotle hasn't changed its menu much in its 17 years of business. The last major menu change, says Arnold, was the addition of a salad, and a meal in a bowl instead of wrapped in a burrito.