John Cywinski has spent a total of 10 years with Applebee’s over two separate stints. He said Wednesday that he has never felt better about the chain than he does right now.
That might sound hard to believe given the current environment. But the president has a reason to feel that way: The 1,571-unit Applebee’s just completed its best quarter on a three-year basis under owner Dine Brands and appeared to gain momentum over the past two periods.
“Our confidence quite candidly couldn't be any higher than it's been over the past five years,” Cywinski said during an earnings call Wednesday.
Applebee’s same-store sales rose 16.9% compared to 2019 for the quarter ended Sept. 30 and 3.8% over the prior year.
The brand is well-positioned for inflationary periods. It’s known for affordability and value, and it has leaned into those attributes in recent months. Over the summer, it offered a dozen shrimp for $1 with any steak purchase; in September, it brought back an all-you-can-eat boneless wings deal.
“The combination of those two resonated and performed quite well,” Cywinski said in an interview Wednesday.
Applebee’s does not disclose traffic numbers, which are a good indicator of demand. But its same-store sales increased 3 points in Q3 compared to Q2, suggesting the chain either served more visitors or those visitors spent more. Menu prices were about the same in both quarters—up 7% year over year.
That comes as other casual-dining brands, including Chili’s and Red Robin, reported traffic declines in the quarter.
Applebee’s aggressive value push contrasts with the more conservative approach taken by other brands in recent months as they look to guard their bottom lines. The chain has not been immune to those pressures.
“Our franchise partners need to manage their margins, protect their margins to the degree that they can,” Cywinski acknowledged. “So that’s a very delicate balance between maintaining leadership on affordability and maintaining restaurant-level margins.”
Applebee's did not disclose restaurant-level operating margins in its quarterly earnings report.
Cywinski added that value does not always mean price. Abundance, emotional connection and even co-branding initiatives, like Applebee’s tie-in with “Top Gun,” are ways to offer customers more value, he said.
“Sometimes lazy or desperate brands resort to tactical discounting out of necessity,” Cywinski said. “We've always had kind of a core value proposition embedded in what we do and how we market and that will continue moving forward.”
Nor is affordability the only thing working in Applebee’s favor right now, Cywinski said. He also cited convenience, variety and brand awareness, which he said hit an all-time high in Q3.
“You add those four up, and you have sustained growth for a very relevant brand, a brand that's better positioned than it has been,” he said during the earnings call.
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