Lessons from Product Introductions in Foodservice

Food companies seeking to launch new products into foodservice venues can learn some important lessons from the ongoing wave of plant-based product introductions in the industry.

The entrepreneurial spirit that helped drive many plant-based companies can be a valuable asset for any food or beverage manufacturer pursuing market share in the restaurant space, for example.

In addition, plant-based product makers learned that identifying the veto vote can be as important as targeting the ideal consumer. That can be a key asset for any company that's looking for its products to gain a place on restaurant menus.

Manufacturers also need to ensure that their own organizations and supply chains are structured to support the needs of their restaurant customers. This can require an approach that differs significantly from rolling products out in retail or even launching line extensions of existing foodservice products.

Unlike retail products, which consumers may discover while shopping or through word of mouth, in the restaurant industry new products are key sales drivers and play an important role in generating consumer excitement. A typical restaurant may have only 10 or 20 core menu items, compared to 20,000 or more SKUs in a grocery store. This makes each new product that much more important to the restaurant's success.

Also, most restaurant products will be a direct reflection of the restaurant's brand, as opposed to the supplier's brand. Manufacturers need to consider how their products help define a restaurant's own concept and positioning.

Here are three lessons suppliers can take away from the burgeoning plant-based category in foodservice:

Understand the needs of the restaurants you are trying to reach

Food and beverage manufacturers will need to take steps to optimize their products for foodservice applications, such as packaging in bulk.

In addition, each foodservice segment will have its own specific needs when it comes to product — hotel restaurants may need their suppliers to prepare or package products one way, quick-service restaurants another way and college cafeterias yet another. Some segments require annual contracts or multi-year bids while others prefer the ability to rotate menu items seasonally based on what is new.  Manufacturers need to understand the differences among these foodservice formats and how their products may fit into each.

Other factors to consider include how the product will be prepared in the restaurant's kitchens. What equipment is needed? Will the product be geared for on-premises consumption, off-premises consumption or both? What kind of packaging is needed to provide customers with an optimal experience?

Restaurant operators need to know that a new product will drive incremental revenues by attracting new diners, driving higher check averages or increasing frequency.  The plant-based industry was able to identify the veto vote, a member of the group with specific dietary needs, as a key target to drive patrons in as part of a party of diners.  The restaurants catering to that veto vote, in this example, those consumers desiring animal-free options, won the business.

"Restaurants rely on suppliers to help them recognize those gaps in their current menu development," says Catherine Porter, chief marketing officer at Elohi Strategic Advisors, which provides strategy and execution services for manufacturers selling into the foodservice channel. "Manufacturers need to make sure they're prepared, come in knowing the answers to those questions and show that they're ready to do business with them."

When it comes to plant-based products, for example, vegans aren't necessarily seeking a product that mimics the taste and texture of meat, says Tamearra Dyson, chef and owner at Souley Vegan, a vegan restaurant chain based in Oakland, Calif.  Dyson was recently featured on "Beat Bobby Flay" and was the first vegan to win against the acclaimed chef. Meat-eaters, on the other hand, may be tempted to try a plant-based alternative that provides a more meat-like eating experience. Reviewing the restaurant's menu in advance of a sales call is imperative.

Ensure you have the right organizational structure

Stephanie Lind, founder of Elohi Strategic Advisors, likes to say that manufacturers "need to slow down to go fast."

"That means you need to get your house in order before you launch," says Lind. "You may think your product is ready, but is your organization ready?"

For instance, manufacturers should be able to ensure that they can provide their restaurant partners with a consistent supply before they pitch their product. That includes having the manufacturing capacity and the distribution strategies in place, as well as the structure to provide ongoing support once a product has been introduced.

Bringing an entrepreneur's enthusiasm can be an asset when it comes to working with restaurants, says Dyson, but that only goes so far.

"You need to have some strong strategic relationships," she says. "You need to establish a strong, healthy team behind you. As a small operator, I cannot afford to add an item to the menu and then suffer product shortages or quality issues. It detracts from our service levels and customer satisfaction. That can kill a restaurant."

Another lesson from the plant-based world: Manufacturers of mainstream products that are seeking to sell highly specialized items into foodservice may want to consider using a dedicated sales team for those new items. These sales agents would have in-depth knowledge about the specialty products and their target customers.  Says Lind, "If you're a meat company that decides to launch a plant-based product, does your sales team really know how to sell it?  Will they be able to, in essence, sell against themselves?  If not, you should consider a different approach during launch to create demand and then integrate the product into the organization's sales portfolio."

Consider what's needed for long-term success

Plan strategies up front to ensure that products can stay on menus for the long term.

That requires maintaining communications with restaurant partners about how the products are meeting all their needs. This includes how the products are fitting into the restaurant's operations, as well as how they are impacting key variables like sales volumes, average check sizes and traffic counts.

Manufacturers should be prepared to adjust their product to ensure that it is meeting all their restaurant partners' goals, as well as their own.

"We believe it's really important to build a strong relationship with operators and distributors from the start, be a good supplier partner and be easy to do business with," says Porter. "That really comes from knowing what they need and how you can help support their success with your products. That means showing up with insights, menu inspiration and operational and communications support that the customers are going to need and expect from their business partners. Remember, it's their brand on the door, not yours."