Applebee’s is doing something unusual with its delivery-only virtual brand, Cosmic Wings.
On Aug. 22, the 1,570-unit casual-dining chain will put the brand’s Cheetos-dusted chicken wings, cheese bites and waffle fries on its in-store menu.
The goal, President John Cywinski said, is to extend access to those items to all of Applebee’s customers, rather than just the 13% or so who order delivery.
“Our guests love these products,” he said in an interview Tuesday. “We felt the need to expand that beyond the virtual presence to include to-go and dine-in guests.”
At the same time, it should increase the “velocity” of the Cosmic Wings menu, meaning the fried foods will be prepared better and served hotter and fresher, he said.
The Cosmic Wings brand won't be mentioned on the menu, however. The items will be highlighted in the appetizer section as Cheetos Boneless Wings, Cheetos Double Crunch Bone-In Wings, and Cheetos Cheese Bites.
The update comes as more customers are returning to Applebee’s dining rooms, though not quite at pre-pandemic levels. Off-premise, meanwhile, remains a significant part of the chain’s business. About 26% of Applebee’s sales in the second quarter were for delivery or to-go, down slightly from roughly 30% a year ago.
Of that 26%, delivery makes up about half. And of that half, Cosmic Wings accounts for “a relatively small component,” Cywinski said, but one that is incremental to Applebee’s sales.
That being said, Cosmic Wings, and off-premise in general, remains a big part of Applebee’s plans going forward. The Cheetos-themed wing brand will maintain its virtual presence at more than 1,000 Applebee’s restaurants. And the chain is also in the process of testing a second virtual brand in about 100 restaurants, Cywinski said.
The moves continue parent company Dine Brands’ experimental approach to delivery-only brands, which began in 2020 with Cosmic Wings’ predecessor, Neighborhood Wings. Applebee’s sister brand, IHOP, has taken a different tack, partnering with virtual brand company Nextbite to develop two delivery-only brands: Super Mega Dilla and Thrilled Cheese.
“We’re always exploring on that front,” Cywinski said. “It’s a pretty fluid environment.”
The Applebee’s chief said he’s not surprised that off-premise has been as resilient as it has been at Applebee’s, even as consumers’ dining behavior changes.
“I expect as COVID fades and people return to normal behavior, that 26% off-premise will probably moderate and stabilize a little bit,” he said, likely in the 20% to 24% range.
But franchisees have shown a real aptitude for delivery and takeout, he said. And Applebee’s large footprint—at 1,570 restaurants, it’s the largest casual-dining chain in the U.S.—allows it to reach a lot of potential off-premise customers and improves the economics of the business.
“Our restaurants are in every neighborhood,” he said. “We’re right around the corner in most markets.”
In the second quarter, Applebee’s same-store sales rose 1.8%, lapping a record 10.5% increase from a year ago. As has become an industrywide trend this summer, demand softened in June, Cywinski said.
He attributed much of the slowdown to macroeconomic factors. During an earnings call Tuesday morning, Dine CEO John Peyton noted that both Applebee’s and IHOP have seen slowing demand among lower-income consumers but more demand from the higher-income bracket.
“Average check has remained steady throughout the two quarters, and so we’re not seeing evidence yet of major check management once they’re at the restaurant,” Peyton said.
The CEO added that he was encouraged by the 50-day trend of declining gas prices and also endorsed the opinion of some that commodity inflation seems to have peaked.
“Those are tailwinds for our guests that will be favorable for traffic in the back half of the year,” he said.
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