Top 5 reasons restaurant chains won't innovate in 2014

Feb. 19, 2014 | by Darrel Suderman

I am sure that if I asked the CEOs of the top 100 restaurant chains if they would like to realize innovation within their restaurant chains, most of them would respond with a hearty YES! If I asked them what area within their organization they would prefer to see innovation, they would probably state new product innovation. If I asked them what the top 5 impediments to innovation within their organization, they would stutter. And if I asked the CEOs if they were the biggest impediment to innovation, they would probably refuse to answer.

I have been fascinated by CEOs that begin each year stating their expectations for innovation within their organization, but providing little vision for what the innovation process looks like nor projected outcomes. This response abdicates the responsibility of CEOs to take charge and show exceptional leadership. I have long championed the concept of linking CEO pay to measureable innovation outcomes, but I am not holding my breath. Later in this blog I will refer to a couple international chains that are embracing innovation in different ways. At this point, I would like to review five obstacles (in no particular order) to innovation in the QSR industry.

First, companies don't innovate based on little NEEDS — and one simple need is everyday ANNOYANCES. One everyday annoyance is setting your home thermostat. So a company called NEST developed a device a couple years ago that uses sensors and algorithms to "learn" your preferences and program itself. This innovation story was explained by Farhad Manjoo in his Oct. 13, 2013, Wall Street Journal article titled "Big Innovation in Small Annoyances."Manjoo describes innovation based on annoyances as the Andy Rooney business plan: first, find the most annoying, obvious problem that millions of people deal with every day. Then ask if things really have to be that way. I am sure the line cooks and drive-thru window servers could identify five opportunities in 3 minutes. So why do chains send corporate people to observe store behavior rather than ask actual hourly workers? I guess that's the same reason CEOs go "undercover" to work in their stores — and embarrass themselves in the process.

Second, companies don't innovate based on Big NEEDS even. I had a CEO of a large international chain ask me to help his company implement innovation processes that would help him keep that competitive edge in an international company — and it wasn't all new product innovation. His need was to stay ahead of the competition, and get to market first with innovation across the board. He was serious, because in 4 weeks we met at an international location for 10 days to begin the innovation process.

Third, companies tend to think product innovation first, as opposed to process innovation, Quality Assurance innovation, marketing innovation, or Food Safety innovation. In some situations, all of these alternate innovation areas could impact the business profitability more than new product innovation. I recently had a QSR VP ask me for a picture (in the Product Specification) showing people how to properly cut a piece of meat before it was cooked. I responded, why don't we use current technology and insert a video clip? He agreed; because old school printed specifications remind me of rock formations I see outside my Denver office windows each day.

Fourth, most CEOs don't understand the innovation processes from other industries like Apple and HTC in the electronics field. But once CEOs are able to understand all detailed steps within the innovation process, they can then communicate it to willing listeners within their company — and fire the noninnovators.

And fifth, food companies don't learn from other segments within the food industry. For example, the most innovation in the food industry over the past five years has been in packaging, beverages and dairy products. But do you think the CEO of a fried chicken QSR chain is asking his R&D team to write up a competitive analysis of innovation in these areas? I doubt it! But the first CEO that does challenge his team to do this will reap the benefits.

For more information on the 2014 Food Innovation Workshops on how to contribute new product innovation value to your company, contact me at or 303-471-1443.

Topics: Food & Beverage, Operations Management, Research & Development / Innovation

Darrel Suderman
Darrel Suderman, Ph.D., is president of Food Technical Consulting and founder of Food Innovation Institute. He has held senior R&D/QA leadership positions at KFC, Boston Market, Church's Chicken and Quiznos and led KFC’s development team of “Popcorn Chicken”, now a $1B international product –invented by Gene Gagliardi. wwwView Darrel Suderman's profile on LinkedIn

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