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LTO Meaning: What Is LTO & What Is LTO Food?

By
Joshua Weatherwax
Table of Contents

Are you looking for bar promotion ideas to increase restaurant sales?

LTO may be the answer!

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It is a valuable tool that can be used to sell off excess inventory, maximize the impact of restaurant marketing, and increase the restaurant profit margin.

This is achieved by playing with the ideas of scarcity and urgency.

Read on to learn more about what LTO means, how it's used in restaurants, and some best practices for getting you started.

LTO Food: What Does LTO Stand For?

LTO, or limited time offer, is a menu item or set of items that are only available for a limited period of time.

For example, the many happy hour ideas used in the restaurant and bar industry are common examples of LTO. They create a limited-time promotion that incentivizes customers to order particular drinks.

Even better, you can supplement your LTOs with a bit of menu engineering and psychological pricing. This will ensure the drinks or dishes offer the most profit for the business and are popular enough to sell.

LTO Meaning Food: What Is LTO Food?

LTO food is food that a restaurant offers for a limited period of time. Usually, LTO food comes in the form of daily specials like the soup of the day or a du jour menu.

Here are a few reasons to run a food LTO:

  • Increase profit margin. The most common reason to run an LTO is to increase daily profits. This can be further improved by selling dishes that use cheaper ingredients, so the markup is higher. Markups for drinks can be even more helpful, so LTOs can really increase bar profits. BinWise Pro’s Smartview Report breaks down the cost of goods sold for every item in your inventory, allowing you to easily calculate the profit margin and better plan and adjust your menu for maximum profit. It's a great way to hit that pre-determined restaurant KPI.
  • Sell inventory nearing expiration. Another common reason to run an LTO is to sell off inventory before it goes bad. Often this is due to improper purchasing that leads to excess stock. Restaurants that use a perpetual inventory system like BinWise Pro don't have to worry about inventory nearing expiration. BinWise Pro’s Last Day sales report tracks how long items have been in inventory and if they’re nearing their end of use. They also have real-time access to their inventory data from anywhere in the world. It even has reports on profit margins, liquor cost, food cost, and more. This lets them shift plans more quickly and use LTOs to increase sales, not sell off bad stock.
  • Recipe testing. Sometimes your chef or bartender may want to try something new. Rather than shift your entire offering, you can run an LTO featuring the new item. If it does well, it's worth adding to your menu. This can be done whether you use a prix fixe menu, table d hote menu, or an a la carte menu. Make sure to include recipe testing in your line cook job description so they know what the chef will need help with.
  • Rewarding customers. Though less common, using LTOs as a way to reward your customers can help build lasting relationships. Things like a customer loyalty program where your customers can get a discount after a certain number of orders can pay dividends. They'll feel like they're rewarded for their business and tell their friends. It's also a valuable tool to market your restaurant and increase customer satisfaction.

Creating a Successful LTO at Your Restaurant

There are many ways to use LTOs to help increase your profit margin and grow your bottom line. 

Here are a few tips:

  • Emphasize urgency. It's called a limited time offer for a reason. Emphasize to your customers that the deal will not last long and set a defined ending time or date. This will cause customers to act more quickly for fear of missing out. You should also make sure to include in your marketing efforts that the deal will only last for a short period of time. This will ensure you attract the largest audience possible.
  • Be unique. Every restaurant and bar will have LTOs, so you need to stand out. Come up with your own interesting dishes and drinks that your competitors can't copy. Then teach your staff how to upsell these new offerings and watch the money roll in. It also makes your restaurant more memorable to customers since that unique offering is tied to your business.
  • Keep it small. In addition to limiting the time something is available, you should also limit the total supply. This makes the item even more exclusive and desirable. It also means you can price it more aggressively and increase your profit margins. Even better, it saves money on ingredients and marketing, so it can help reduce cost in a restaurant.
  • Go seasonal. If you're looking to make the most out of your LTOs, seasonal trends are very helpful. Particularly when it comes to drinks, customers like to eat and drink certain foods at certain times of the year. Create a rotating menu that changes each season and keep your diners excited about your offerings. You can offer earthy spring cocktails, refreshing summer cocktails, rich fall cocktails, or even some fun Christmas cocktail recipes.
  • Understand your market. Are you customers mostly Gen Z or millennials? Do men come in more often or women? Knowing your customer demographics provides insight into what types of dishes and drinks will sell best. Don't try to force an LTO that your customers aren't interested in, it will only push them away and possibly lead to restaurant failure. Using a QR code menu is also a good way to sell to younger markets. QR code menus are also easy to update and hygienic and  can help run a successful LTO program without adding a ton of operational overhead expenses.
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Long-term Knowledge for Limited-time Use

Once you know the best practices for running LTOs, you can draw in the crowds and increase your revenue. Whether you choose to run daily specials, seasonal dishes, or limited happy hours, you can see profits. Focus on providing unique, timely dishes that your customers will enjoy and will have a good impact on your restaurant balance sheet.

In addition to running LTOs, you should make sure your normal prices are optimized. Using a bar inventory app like BinWise Pro can help you understand where you're losing money and where profit margins are thin. This will let you know how to price liquor for your bar, how to price beer, and even the best prices to sell wine by the glass. It can help you set par level, too.