Foodservice NPD’s

Best Practices

Reference Paper #49 Michelle Jones and Devon Gerchar

Compliments of:

Stage-Gate International and Product Development Institute Inc.

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This article appeared in Prepared Foods August 2013, pp. 41-57

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Product Innovation Best Practices Series

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www.PreparedFoods.com ● August 2013 41

Foodservice NPD’s Best Practices

Foodservice professionals know innovations grow business. However, the new product development (NPD) process is one of the riskiest activities a busi-

ness can undertake. These risks are further amplified in foodservice, due to the complexity of the industry and the

fact that there have been no standard languages, metrics or processes used amongst the multiple trading partners.

Our work through the Center of Innovation Excellence (CIE) showed that successful NPD in foodservice depends on many things; however, there were specific practices that our most recent research highlighted as critical.

Evaluating, Selecting ProjectsCustomers are increasingly sophisticated regarding NPD and what works best for their brand/menus. Most operators

are already in Stage Two (Feasibility) or Stage Three (Development) of their NPD process before they invite a manufacturer to join. Often, that means the operator wants a sample. As simple as that seems, it most certainly isn’t from the manufacturer’s viewpoint. Manufacturers have to quickly move through their own internal NPD pro-cess, possible progressing into Stages Three or Four (Validation) before a realistic prototype is produced.

Obviously, speed be comes critical. Thus, one of the most important ways food-service leaders can support a successful product innova-tion is to make timely deci-sions. Failure to do this can Source: International Foodservice Manufacturers Association

Delivering the Consumer Value Proposition in Foodservice

Consumers

ChainsRetailers

Self-distribution/Wholesalers

GPOs

LLOs

FSMs

Manufacturers

Independents

Distributors

Brokers

Operators

Manufacturers

The inherent risks of the NPD process can be a deterrent to some companies. However, with these guidelines in mind and careful planning, true innovation—and business growth—can be the happy end-result.

Want to look inside Darden’s Restaurant Support Center?

Foodservice food and beverage manufacturers should aspire to

become “strategic new product partners.”

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Michelle Jones, Executive Vice President, global growth, Stage-Gate International, and Devon Gerchar, IFMA Director of Member Value

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and will impact your customer, your business strategy and your speed-to-market.

One way to quicken the process is to define criteria that will help determine whether to continue or stop a project. Our research concludes that criteria should be broader than just financial gain and should include factors such as strategic fit; product and competitive advantage; market or channel attrac-tiveness; competency; and technical feasibility.

Successful organizations create evaluation scorecards to manage criteria, quantify the merits of each project and capture the guidance of each decision-maker. “New Product

Development: Best Practices in Foodservice” provides a tool to score projects using a scale of 1-10. Each decision-maker rates the project, and the scores are combined and averaged to give the project an “attractiveness” score. Low scores and scores with high deviations deserve discussion, because they indicate problem areas. An example of this may be an innovation that provides a significant financial reward but is technically risky. The score enables organizations to force-rank projects into a prioritized list—so it’s easier to focus resources on the highest priority projects. Even more important than the score itself is the rich business discussion that occurs among the decision-makers, a process of facili-tating alignment. (For more information about the “New Product Development Project Evaluation Scorecard,” go to ifmaworld.com.)

To align the various functional players on a project team and speed decisions, an executive summary featuring the

Source: IFMA

New Product Development Pyramid

StrategicNew Product

Partner

EnablingSupplier

PreferredSupplier

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SupplierSupplier is typically competing on price if product is not differentiated:

• Customer-defined expectations• Defined reward• Transactional in nature• No co-development

Relationship CharacteristicsSupplier’s new product capability is at the core of the contributions to an innovative customer solution:

• Jointly establish mutually beneficial performance goals• Shared reward and risks (some degree of uncertainty)• Shared knowledge that provides mutual value (IP, technology, market insights, etc.)• Alignment on approach to co-develop (roles, value-add, learn, co-location, process, milestones)

Enabling SupplierSupplier’s product is at the core of the customer’s defined solution (product is uniquely different from competition):

• Customer establishes benefits and performance goals• Supplier has skills, capacity and capability to bring customer’s offering to market and provides some development work to finalize solution• Defined reward and risk (some certainty)• Shared knowledge that provides mutual value and some knowledge remains proprietary• Adjustment on approach to co-develop

Preferred SupplierSupplier’s product is ideal choice of customer (combination of product, price and delivery is superior to competition):

• Customer-defined expectations for product availability, reliability, consistency, price, service• Defined reward and risk• Supplier informed of customer’s needs which may require NPD effort (but no co-development)

the nPD Partner Pyramid highlights the various types of new

product collaboration relationships a foodservice manufacturer

considers with its customers and/or suppliers, for the varying types

of nPD projects it pursues.

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August 2013 ● www.PreparedFoods.com

most relevant information about the project is made available to decision-makers. As decision-makers evaluate the project across the criteria, it becomes evident that certain projects are not worth the time or the outlay of resource to continue.

Deciding to kill a project is a discipline many lack—and for a variety of reasons. However, one of the most common reasons many small- or low-risk projects (like customer requests) are not killed is because they are inexpensive and, therefore, escape the rigor that other business investments might otherwise endure. However, this is a dangerous falsehood and may be costing you more than you think. When these small- and low-risk projects are added up and viewed as a portfolio, they can represent a very high percentage of your total NPD spending, yet offer little financial or strategic advantage. To cultivate “kill discipline” earlier in the process, adopt the following:

- Use tools like scorecards to enable objective decisions.- Clarify hurdles and expectations upfront.- Nominate the right person to deliver “kill decisions” in person.- Be transparent and share specific information that led to the

decision.- Confirm the importance of a “correct kill” decision to the

organization.- Offer your customer alternative options that are mutually

more rewarding.

New Product CollaborationIn foodservice, collaboration means working cooperatively with customers, internal functions and/or supply-chain partners. There are three key benefits derived by collaborating to develop new products:

1. Revenue: Realize revenue that is not possible without col-laborating.

2. Capability: Access to IP or technology not present withinone company.

3. Speed: Accelerate completion by leveraging partners’resources and/or capacity.

The overall goal always is to improve product performance and results. Collaboration is challenging, however. Foodservice is a business-to-business environment, and one supplier’s prod-uct may be a component of the customer’s output. It’s not just innovating together—it’s aligning and managing business and cultural needs, as well. Because of this, it’s critical for manufac-turers to not only choose the right projects in which to invest, but also choose the right partners with whom to collaborate.

For manufacturers, collaboration fails when the following occurs:

- Inability to kill a deteriorating project- Lack of alignment among partners- Inappropriate or insufficient resource allocation to key roles,

like project leaders, customer liaison, etc.

NPD collaborations can be successful when business lead-ers provide clarity around the types of relationships a com-pany pursues. “New Product Development: Best Practices in

August 2013 ● www.PreparedFoods.com46

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Foodservice” provides an “NPD Partner Pyramid” outlining partner types and the amount of resources each type requires. (See chart: “New Product Partner Pyramid.”) A multi-tude of dimensions are offered, such as degree or risk vs. reward, prod-

uct customization, partner values, relationship’s complexity, commit-ment levels and others. After these dimensions are outlined, the partner is defined as a supplier; a preferred supplier; an enabling supplier; or a strategic new product partner.

Supplier: Relationship is largely trans-actional, and R & D/NPD resources are not involved.

Preferred Supplier: Relationship is built on supplier’s product, either as-is or with minor modifications. The customer does not typically invest their NPD resources.

Enabling Supplier: Relationship exists because of the supplier’s product, IP or technology is at the core of the customer’s defined solution. NPD resources of both parties are allocated, and coordination is needed (example: unique ingredient must “fit” into a new menu offering).

Strategic New Product Partner: Relationship is highly collaborative, guided by jointly developed product vision and perfor-mance goals. This is the most highly engaged type of collaboration and requires sophisti-cated collaboration skills and NPD resources.

The purpose of the Pyramid is to guide business leaders to more easily recognize the degree of risk of product development and partner collaboration to enable timely project selection and resource allocation.

SummaryWhat we have learned though this work is that effective project selection requires timely decisions and discipline. It also showcases that new product collaboration can unlock signifi-cant value, but partners must be chosen wisely.

For more information on “New Product Development: Best Practices in Foodservice” and other research from The Center of Innovation Excellence, or to dis-cover the benefits of being an IFMA mem-ber, go to ifmaworld.com.

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Starbucks expands to fresh juices. Suppliers must

evolve too.

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3-D movie glasses. 5G smartphones. It’s clear that con-sumers like options, and they value anything that adds functional dimensions for a heightened experience.

Then, there’s The Coca-Cola Company’s Freestyle, a touch-screen foodservice beverage dispenser that seemingly puts an endless array of beverage flavor combinations at the user’s fingertips. Coca-Cola Freestyle offers users (consumers or foodservice crew members) an unprecedented selection of more than 145 different drinks, including waters, sports drinks, lemonades and sparkling beverages—from a single unit.

For the record, Coca-Cola’s US Foodservice Division sells and distributes a broad line of branded beverages to every type of commercial and non-commercial foodservice operator. That line includes soft drinks, juices and juice drinks, coffee, tea, smoothies, sports drinks, water and enhanced water, energy drinks, mixers and frozen bever-ages. Coca-Cola’s portfolio features many billion-dollar brands, such as Diet Coke, Fanta, Sprite, Coca-Cola Zero, vitaminwater, Powerade, Minute Maid, Simply, Georgia and Del Valle.

Jennifer Mann is vice president and general manager for Coca-Cola Freestyle.

“Our ‘ah-ha’ moment came from a desire to address the gap between the number of beverage choices we offered in retail outlets—such as grocery and convenience stores—and the limited choices we offered in outlets with fountain dispensers, like restaurants,” she says. “While we have hundreds of beverages, in outlets with fountain dispensers, we were limited to offering just six to eight choices. Coca-Cola Freestyle was developed to provide a similar landscape of options in all the places where people want to choose a refreshing beverage from The Coca-Cola Company.”

Mann continues, “Our technical team also developed several new ideas and solutions, based on numerous technologies. We recognized that the technology land-scape had changed dramatically since we launched our legacy six- to eight-valve fountain dispenser more than 20 years ago.”

“People were becoming inherently tech-savvy, connected and wired—with smartphones, tablets, Twitter and Facebook becoming second nature,” she concludes. “We knew we needed to go beyond the concept of simply offering greater beverage choices through a new type of fountain dispenser. We needed to tap into the love people have for technology and customization.”

Officials say the dispenser features many varieties of waters, sports drinks, lemonades and sparkling beverages that were not previously available. People can select brands such as Caffeine-Free Diet Coke with Lime, Fanta Peach, Minute Maid Light Orange Lemonade and more, via an interactive touch-screen on the front of the fountain. There are more than 70 low- or no-calorie options; more than 90 caffeine-free choices; more than 50 non-carbonated bever-ages; and more than 80 unique brands.

What will it be? Coca-Cola Freestyle offers more than 70 low- or

no-calorie options; more than 90 caffeine-free choices; more than 50

non-carbonated beverages; and more than 80 unique brands.

Freestyle: Drink in Innovation

Bob Garrison, Chief Editor

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A revolutionary dispenser offers win-win opportunities and options for foodservice customers and consumers.

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Mann says Coca-Cola began developing Freestyle in 2004 with Gene Farrell, the former vice presi-dent and general manager, US Foodservice Division, leading a cross-functional support team.

Speaking of technology, Coca-Cola Freestyle uses a proprietary PurePour system that employs “micro-dosing” (common in medi-cal applications) to precisely meter

and dispense fluids. Instead of syrup, the technology relies on concentrated ingredients stored in cartridges inside the Coca-Cola Freestyle cabinet. Interestingly, each Freestyle machine also is literally wired to Coca-Cola. That allows customer representatives to remotely monitor everything —from ingredient levels to top-selling combinations.

Since its 2009 debut, Coca-Cola Freestyle has quickly grown, with installations in more than 7,000 outlets across 135 markets in 47 states in the U.S. and Puerto Rico. To date, there are more than 12,000 Coke Freestyle dispensers in market, including machines for consumers and more modest units for foodservice crew members.

In 2011, Burger King rolled out Coca-Cola Freestyle to its more than 800 company-owned locations nation-wide. Subsequent operator customers include Five Guys, Firehouse Subs, Willy’s, Taco Mac restaurants, Pei Wei, Noodles and Wendy’s.

Today, Coca-Cola Freestyle is available in more than 1,500 U.S Burger King restaurants, and officials say the chain plans to have 2,000 by the end of the year, representing about 30% of its system. Burger King also introduced Coca-Cola Freestyle in 16 of its restaurants in London, as part of a limited-scale trial just before the Olympics.

“Their guests love the new brand varieties, many of which they cannot buy at the store, like Coke Zero with Orange or Fanta Zero Peach,” says Jim Andrist,

vice president of North America sales for Coca-Cola’s Burger King account team. “Guests also love the fresh taste; the intense aromas of the flavored beverages; and the perfect carbonation of each drink. Those things, along with the fun touch-screen interface are the magic of Coca-Cola Freestyle.”

Andrist says Burger King restaurants have seen a posi-tive impact on their business from Coca-Cola Freestyle. Restaurants that offer the technology report increases in guest counts, drink incidence and profits.

Taco Mac, an Atlanta-based casual-dining chain, was the nation’s first operator to test and install the Coca-Cola Freestyle crew-serve machine in all locations. By expand-ing beverage choices to more than 100 brands, Taco Mac officials say they’ve seen an increase of revenue-generating beverages, along with a significant drop in tap water orders.

“Coca-Cola Freestyle has become a point of differentia-tion for us,” says Bruce Skala, vice president of marketing for Tappan Street Restaurant Group, which operates Taco Mac. With dozens of menu items and 140 beers on tap, “the ability to offer more than 100 beverage choices complements our concept.”

Last but not least, Coca-Cola Freestyle has represented a “win” for Coca-Cola itself, as officials noted in the compa-ny’s 2012 annual report.

“We’re always pushing ourselves to create even greater value for all our customers—from individ-ual vendors to traditional retailers to large stores,” said officials. “One way we did so in 2012 was by helping our customers increase immediate con-sumption sales by 5%, the fastest rate in over a decade. We also continued to roll out our revolution-ary Coca-Cola Freestyle fountain dispenser, which is now delighting consum-ers in 47 U.S. states and test markets in London, Tokyo and Toronto, with more than 100 beverage options.”

Coca-Cola’s us Foodservice

Division distributes a broad

line of branded beverages to

every type of commercial and

non-commercial foodservice

operator. That line includes soft

drinks, juices and juice drinks,

coffee, tea, smoothies, sports

drinks, water and enhanced

water, energy drinks, mixers and

frozen beverages.

sleek design attracts

patrons; technology aids

operators.

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To see or not to see. That is the question. Some newfood and beverage products make a strong visual statement. Others add value in more subtle ways. No

matter what, Rich Products Corp. strives for new products that address foodservice operator needs.

This private Buffalo, N.Y.-based company processes and sells nearly 1,300 items into every foodservice channel, as well as in-store deli-bakeries and convenience stores. Rich’s line includes whipped toppings, pizza doughs, flatbreads, cheesecakes, cakes, ice-cream cakes, breads, rolls, cinna-mon rolls, biscuits, meatballs, BBQ, value-added seafood, shrimp and even cheese-based appetizers.

Acquisitions and R&D investments are helping Rich’s expand its product portfolio and customer innovation capa-bilities. Meanwhile, with such a large and diverse product line, how does Rich’s focus in on the best new product opportunities? Jamie McKeon, vice president of market-ing-Foodservice Division, notes how the IFMA Center of Innovation Excellence (CIE) project has helped.

“We are leveraging learnings from CIE into our new prod-uct process,” she says. “We are revamping our speed-to-mar-ket efforts and taking a segment-focused, problem-specific approach to all new product development. Our products are developed for a variety of segments, such as K-12, conve-nience store and quick-service restaurant (QSR), and address a unique problem for those particular segments.”

Rich’s officials shared two examples involving the com-pany’s whipped topping and pizza lines: one case that’s quite evident to operators and consumers, while the other is more subtle—yet equally important.

In the first case, Rich’s saw convenience store operators compete for gourmet coffee and value-added hot/cold bever-age sales—but lose revenues to coffee retailers and QSRs. How could c-store operators quickly and easily enhance their offerings in a limited space?

“We developed the mytop dispenser, featuring Rich’s On Top,” says Sarah Jane Burke, foodservice division associate marketing manager-Toppings and Icings. “mytop is a self-service whipped topping dispenser that lets patrons custom-ize their hot and cold beverages …This is helping store owners keep their current customers and attract new ones.”

Burke notes that c-store customers—old and new—like the program, because it’s “affordable—with no complicated cost-recovery programs.” She says mytop also provides a functional solution, because the topping dispenser requires no electricity or batteries. Meanwhile, its slim, sleek profile lets operators position it anywhere within a store.

How about a product improvement consumers wouldn’t normally notice? Loraine Grimm, foodservice marketing manager-Pizza, says K-12 school nutrition directors must balance meal participation to comply with new federal nutritional guidelines—requiring meals that satisfy a 51% whole-grain standard.

Rich’s recently introduced a proof-and-bake, sheeted whole-grain pizza dough. Grimm says it features white whole-wheat flour—the nutritional equivalent to conventional whole wheat—yet it produces pizza with a texture, taste and appearance similar to products made using all-purpose flour.

“Pizza is one of the highest performing menu items in schools, but, with the new nutritional guidelines, it is diffi-cult to menu,” says Grimm. “Rich’s whole-grain pizza crust

Whipped topping dispenser and product allows c-store consumers to

add their own upscale flair.

Counter(top) CultureRich’s Foodservice improves its R&D process, bolsters product line and invests in its research future.

Bob Garrison, Chief Editor

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meets the nutritional requirements at the right cost target and tastes great for students.”

Interestingly enough, pizza was a key factor in of one of two 2012 acquisitions by Rich’s. It purchased Goglanian Bakeries, a Santa Ana, Calif., maker of par-baked pizza crusts, flat-breads and pita. In tandem, Rich’s also bought f’real foods, an Orinda, Calif., company specializing in authentic milk shakes, smoothies and frozen coffee beverages, along with patented blending equipment.

Last, but not least, Rich’s also is investing—in itself.“We are spending approximately $18 million to build a new

global Customer Innovation Center, renovate our R&D facilities and renovate our world headquarters in Buffalo,” McKeon notes. “The new Customer Innovation Center and enhanced R&D facili-ties will serve as the focal point of a ‘must-visit destination’ for customers and business partners from around the world.”

McKeon concludes, “We will leverage this new center to pro-vide product training and on-the-spot new product development, utilizing equipment that will replicate the kitchen environment of our targeted operator segments.”

It’s what you don’t see that helps you. New, whole-grain flour is equally

pleasing to school kids and nutrition directors.

“We are revamping our speed-to-market efforts and taking a segment-

focused, problem-specific approach to all new product development.”

—Jamie McKeon, Rich’s vice president of marketing-Foodservice Division

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How do you spell new product “success?” How about combining these letters: R&D, M&A and CIE.

Here to explain is Ken Miller, vice president and general manager for The J.M. Smucker Company’s foodser-vice business.

“Our innovation strategy took on new dimension in 2012 with the acquisition of Sara Lee’s North American foodservice coffee and hot beverage business,” says Miller. “That deal nearly doubled our business and added significant size and scale to our organization. It also afforded us a unique opportunity to refocus innova-tion efforts through a long-term partnership agreement between Smucker and D.E. Master Blenders 1753,

an independent company spun-off from the Sara Lee Corporation. This extends our R&D capabilities as we collaborate on liquid coffee technology.”

Smucker Foodservice also has emphasized its new product development process. For the past two years, Miller has been involved in the Center of Innovation Excellence (CIE), an industry initiative involv-ing the International Foodservice Manufacturers

New Way to Spell SuccessAn acquisition and an industry CIE project help Smucker Foodservice elevate its innovation process.

Bob Garrison, Chief Editor

Here is a look at additional new items from Smucker Foodservice.

Smucker’s PlateScapers Dessert Toppings. Three new Select Recipe flavors (each made with real sugar) are Deep Dark Chocolate, Countryside Raspberry and Caramel Delight. Smucker says the toppings are “the perfect way to transform desserts and beverages into custom, memorable creations with minimal effort.” Staff can easily and quickly create a Chocolate & Banana Caramel Turtle Dessert Pizza and Raspberry Cream Lemonade, or use it as an ingredient to add indulgent flavor to blended dessert or coffee beverages. The three new varieties join a line of six other Select Recipe flavors (Chocolate, Vanilla, Strawberry, Caramel, Raspberry and Lime).

Smucker’s Snack’n Waffles Brand Waffles. Smucker says with the newly reformulated line—among the most popular items on school breakfast and lunch menus — schools can menu these products to satisfy kids with great taste and still meet USDA Child Nutrition Guidelines. Each Snack’n Waffles Brand Waffle is made with whole grains equivalent to two bread servings. With popular flavors such as Apple Cinnamon, Maple, Blueberry, Cinnamon and Chocolate Chip, Smucker says portable Snack’n Waffles Brand Waffles also have great appeal beyond breakfast. They come individually wrapped, ready to thaw and serve or warm in an oven and make it easy to increase a la carte sales, the company says.

Crisco Professional Pan Release Spray and Crisco Professional 100% Extra Virgin Olive Oil Pan Release Spray. Smucker says it developed Crisco Professional Pan Release Spray to produce less foam and offer more complete and consistent surface coverage. Likewise, officials say Crisco Professional 100% Extra Virgin Olive Oil Pan Release Spray offers complete coverage to prevent food from sticking to grills and utensils. Available in 14oz. and 21oz. sizes to fit any operational need, Crisco Professional Pan Release Spray was awarded the American Culinary Federation (ACF) Seal of Approval. Smucker says Crisco Professional 100% Extra Virgin Olive Oil Pan Release Spray enhances the crispiness of baked goods, such as pizza crust, garlic bread or pita chips, with the addition of a popular Mediterranean flavor.

More on the Menu

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Associat ion (IFMA), Stage-Gate International and IFMA members. That project has examined R&D process improvements, so manufacturers can increase their new product success.

“Our participation with IFMA and the CIE helped us build on our learnings from the Sara Lee acquisition,” says Miller. “CIE has helped raise our overall con-sciousness about the innovation process and has helped us to develop a more strategic point of view when it comes to new product development.”

“With the increased size of our foodser-vice business, we had the ability to take a long-term view of our organization—and to restructure and invest in added resources that will help us better support innovation—particularly in the product-discovery phase,” Miller concludes.

Smucker Foodservice manages a broad portfolio across all commercial and non-commercial segments. The company produces and distributes as many as 500 different products, including fruit spreads, hot and cold beverages, peanut butter, sweet-ened condensed milk, and shortening and oils, under well-known brands such as Smucker’s, Folgers, Douwe Egberts, Dickinson’s, Jif, Smucker’s Uncrustables, Crisco and Eagle Brand.

“We have recently launched Folgers concentrated liquid coffee in foodser-vice,” notes Miller. “The liquid coffee concentrate form is becoming increas-ingly important to foodservice operators, because it allows them to offer small, medium and large volumes of consistent, quality coffee on demand,” he says. “That is why liquid coffee technology and its systems are ideal for foodservice envi-ronments, including convenience stores, restaurants, cafeterias, hospitals, banquet halls and convention centers.”

Miller concludes, “Now we are cou-pling this innovative liquid coffee tech-nology with the Folgers brand. As the number one at-home coffee brand, Folgers coffee has great equity and loy-alty among consumers.”

Foodservice patrons also will find expanded product choices for Jif peanut better with on-the-go, away-from-home locations. Smucker Foodservice recently launched two varieties of Jif To Go in the

foodservice segment: Creamy Peanut Butter and Chocolate Silk. Each comes in a 1.5oz (43g) peel-and-serve cup that’s ideal for dipping (celery, carrots, strawberries, etc.).

“Snacking and grab-and-go conve-nience foods continue to gain popular-

ity among consumers, and Jif To Go helps meet this need,” says Miller. “… We continue in our commitment to provide quality products to our cus-tomers and consumers and to optimize and promote leading brands away from home.”

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