On his first day on the job as Applebee’s president, Tony Moralejo was added to a group text message with the brand’s 31 franchisees.
He figured his interaction with the chat would be a weekly thing, a periodic check-in. But since then, he has been texting with operators almost every day.
“It’s refreshing,” he said in an interview.
Until recently, most of the restaurant veteran’s contacts were spread across continents and time zones. Moralejo joined Applebee’s parent Dine Brands in February 2020 as president of international and global development and was almost immediately plunged into the job of helping operators navigate the pandemic.
“That first year was tumultuous, to be honest,” he said. Many of Applebee’s international markets didn’t get the same level of government aid that U.S. restaurants did. And it took them about a year longer to recover. “We had to work very closely with franchisees to stabilize the business.”
Today, he finds himself in a less urgent but not entirely dissimilar position as Applebee’s president. He was promoted to the role earlier this year, succeeding John Cywinski, who left to become CEO of Qdoba owner Modern Restaurant Concepts. Cywinski helped turn Applebee’s around after taking over in 2017, earning the adoration of franchisees along the way. In one sense, Moralejo is taking the reins at the best possible time for the 1,579-unit chain: Same-store sales rose 5.1% last year, setting a new record for Applebee’s on a three-year basis.
“There’s a tremendous amount of momentum,” the new president said.
Tony Moralejo / Photo courtesy of Dine Brands
And yet the system is not without its challenges. After years of strategic closures under Cywinski, Applebee’s is intent on returning to net new unit growth, a goal it expected to achieve this year. But rising real estate and construction costs and slimmer restaurant margins have hurt the ROI on new stores, and the franchisor said this week it will once again finish the year with fewer restaurants.
Net new unit growth is still the long-term goal, Moralejo said, but operators will need some help getting there. The brand is developing ways to make opening new Applebee’s more appealing, including incentives Moralejo said could be potentially “industry-leading.”
“We’re gonna be extremely aggressive,” he said, noting that the particulars of the incentive program are still “wet paint.”
Applebee’s is also working to lower the cost of building restaurants. That could include smaller boxes and different prototypes, Moralejo said. “We’ll explore all options,” he said. “We need to do our part.”
Continuing to grow sales will also help, and operators have been able to do that over the past three years. Applebee’s AUVs reached a record $2.8 million in 2022, and traffic has outperformed the competition, Moralejo said.
The president believes Applebee’s reputation for value has been key in driving those sales, especially given runaway inflation over the past year.
“In the current environment, guests are looking for that value experience,” he said. “So we’re very well-positioned given our DNA.”
He cited a recent offer of 12 Double Crunch shrimp for $1 as an example of the brand’s value proposition. Meanwhile, franchisees have worked to keep prices low even as costs have risen. Applebee’s prices were up more than 7% year over year on average in the fourth quarter, which is below the national rate for full service. But Moralejo acknowledged that the restaurants still have to make money.
“[Franchisees] know that the consumer is feeling the crunch based on the environment,” he said, but they're also managing their own costs. “It’s a tightrope that they’re trying to balance.”