Applebee's sets back-to-the-future turnaround plan

The new leadership of Applebee’s has fired up a time machine to recapture the brand’s personality and allure, hauling back a classic ad campaign and discarded menu strategies to woo patrons identified by fresh research as readily reclaimable.

The comeback plan aired Wednesday at an investors’ conference for the casual leader’s newly renamed parent company, Dine Brands Global, calls for blowing the dust off old draws while using sophisticated analysis to suggest modern tweaks.

“This is a classic case of a brand getting back to its roots and embracing its essence,” said Applebee’s President John Cywinski.

The limping giant is resurrecting its earworm of an ad slogan, “Eatin’ Good in the Neighborhood,” while showcasing former, current and new menu items that fit the brand’s middle-market DNA. The concept’s success came from serving what Dine Brands CEO Steve Joyce termed “the 99%,” the broad mainstream, not the 1% attuned to the latest trend or fad.

“We wouldn’t pretend to be an overly hip or trendy brand,” said Cywinski, noting that half the chain’s customers have a household income of $75,000 or less. “You’re not about to see Sriracha, quinoa or pomegranate on the menu anytime soon.”

Already visible are Riblets, Applebee’s signature style of ribs, which were brought back in January after being dropped from the menu by a prior regime. The chain sold 4 million orders of the Riblets or the alternative choice offered during the promotion, chicken tenders, at $12 each.

Applebee’s is currently showcasing burgers, at a bargain price of $7.99. The chain will continue to stress value going forward, a reversal of the emphasis on premium selections a year or so ago, noted Cywinski. Customers categorized by the chain as value seekers account for half of all transactions, he added.

“If there’s one attribute that’s tied to Applebee’s performance, it’s value for the money,” said Cywinski.

A glimpse of how far Applebee’s might go in its deal-making was provided by a commercial shown during the meeting for the chain’s revamped takeout program. The spot offers customers a $10 discount on a $30 ticket if the order is placed online.

Cywinski and Joyce stressed that Applebee’s back to the future efforts will be guided by a beefed-up analytical team charged with providing data-based insights into consumers and Applebee’s customers. That insights function had been centralized, with a single group serving both Applebee’s and its sister concept, IHOP. But now each brand has its own intelligence units.

An example of that influence was aired during the conference. One of the commercials for Riblets showed a young woman longing for the hearty option. Conventional wisdom holds that men are more likely than women to order ribs, but that’s not actually the case with Applebee’s clientele, Cywinski noted.

The research will also presumably guide Applebee’s efforts to blaze new ways of getting food to consumers.

To-go orders currently account for 9% of restaurant sales, Cywinski said. “We intend to double that,” in part through the rollout of an updated curbside delivery service later this year. The chain also plans to push online ordering until 90% of takeout requests are placed through that route. The tickets for self-placed digital orders tend to be considerably higher, executives noted.

Cywinski also revealed that Applebee’s is testing both third-party and staff deliveries of meals.

The emphasis on off-premise business is part of an effort to boost Applebee’s average unit volumes by $300,000 per store, from the current mean of $2.3 million, “with most of that coming from traffic,” Cywinski said.

The chain is also considering new formats that would shoot for high volumes from a smaller footprint. A prime development target for the business will be nontraditional sites, said Joyce.

He also revealed that Applebee’s will be testing a variety of fast-casual formats in the Middle East. Other executives suggested that ideas refined abroad could be brought back to the United States, where the overwhelming majority of Applebee’s restaurants are located.

Dine Brands has retained PricewaterhouseCoopers, the consulting and accounting firm, to identify ways of bringing down the developmental and operational costs of conventional Applebee’s restaurants.

The investors’ meeting was convened the day after Dine Brands, formerly known as Dine Equity, posted a fourth-quarter same-store sales gain for Applebee’s of 1.3%, the brand’s first positive comps since 2015. The boost came from a rise in traffic, the chain’s first since 2014.

Comps have remained positive in 2018, according to Cywinski.

Investors have been worried about the financial shape of Applebee’s 35 franchisees, some of which were unable to pay their royalties in 2017 and sought assistance from the home office. To allay those concerns, management asked the leader of the system’s largest franchisee, Greg Flynn of Flynn Restaurant Group, to address the audience.

“The very fact I’m here speaks volumes about the sea change,” said Flynn, Restaurant Business’Restaurant Leader of the Year for 2016. “No franchisee has been here before.”

He lauded the changes that have been undertaken by the new leadership in place at Applebee’s—“the strongest team I’ve ever seen in a brand.”

“We needed change at Applebee’s, and we got it,” Flynn continued. “It’s the biggest upgrade I’ve ever seen in my career.”

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