Food & Drink

Can Applebee’s Stop the Sales Skid by Making Itself Less Generic?


Applebee’s (DIN) two-for-$20 deals just aren’t drawing enough customers. Same-restaurant sales fell slightly in the first three months of the year, marking the third-consecutive quarter on the slide.

Source: DineEquity

It’s enough of a funk to prompt some soul searching—again. “We are hitting the reset button at Applebee’s,” said Julia Stewart, chief executive officer of parent company DineEquity, during an earnings call last week. It’s a phrase she used in the same context as far back as 2012; DineEquity has been trying to help the chain evolve for years. Applebee’s is now in the middle of remodeling restaurants, launching new menu items, installing tablets on 100,000 tables. Here’s an outline of the company’s innovation strategy:

Source: DineEquity

Notwithstanding the remodels and menu changes, the biggest issue facing Applebee’s may be casual dining’s broad malaise in the face of fast-casual competitors. Applebee’s has the additional problem of not being different enough from its peers. Chili’s (EAT), for instance, also offers a two-for-$20 deal, has a similar selection of burgers and bar food, and will even be adding tablets to its tables. “We need to distinguish and differentiate ourselves in a meaningful way so that we’re not just like everyone else,” Stewart said in during a conference call in February.

Stewart has also noted the need to have a healthier menu—which includes launching a redesigned kids menu—“to better target our guests and address their needs and tastes.” Sure, there’s the not-so-appetizingly named Weight Watchers and low-cal “Have It All” menu, along with salads and soups, but the rest of the menu (PDF) is chock-full of such items as the 1,120-calorie clubhouse grille sandwich and 1,400-calorie quesadilla burger. The company is also reviewing its speed of service during lunch to win back customers from quicker fast-casual chains.

Investors aren’t expecting a quick turnaround. “[DineEquity] stated the need to revitalize the brand suggesting that improvement in results may take some time in what we think will be a continued challenging environment,” wrote KDP Investment Advisors in a report predicting that the chain’s comparable sales would decline a little more over the rest of the year.

Venessa-wong-190x190
Wong is an associate editor for Bloomberg Businessweek. Follow her on Twitter @venessawwong.

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Companies Mentioned

  • DIN
    (DineEquity Inc)
    • $80.65 USD
    • -0.70
    • -0.87%
  • EAT
    (Brinker International Inc)
    • $50.65 USD
    • -1.12
    • -2.21%
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