Jul 10, 2020 | Report Announcements

Applebee’s (the 2nd largest player by sales in the casual segment) benefits from its “Eatin’ Good in the Neighborhood” grill & bar positioning (approachable, accessible & affordable) which provides a place to connect with family & friends. Culinary innovation (leveraging mainstream American recipes/flavors) and buzzworthy Neighborhood drink of the month deals keep the restaurants interesting and LTOs almost always feature attractive price points and popular promotions including its All-You-Can-Eat Riblets. Its value positioning further benefits from abundant plate coverage, its popular 2 for $20+ everyday value platform and its $7.99 Irresist-A-Bowls. However, it is not easy for the brand to balance value (required by its core middle America customer to maintain traffic) with a need to attract guests willing to pay-up for higher checks. Also, the brand’s traffic challenges may reflect the economic condition of its core blue collar customers as much as it does with finding the appropriate value offers. Help may come from its success in driving high ticket, incremental off-premise sales. In any case, TV ads are well done (featuring compelling food photography set to famous pop songs to create emotional connections) and operations benefit from a reduction in store performance variability and back of the house simplifications. Also, operators report that the senior management team is considered very collaborative in its work with franchisees. Taken together, improving internal guest satisfaction scores speak volumes. In conclusion, while Applebee’s has worked hard to balance the pursuit of value for its core Middle American customers and increased relevancy to attract a younger guest, more time may be needed to address the disparate needs of these demos especially as the system seeks to recover from a post-lockdown world.

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