“Over the past few years, the brand set out to reposition or reinvent Applebee’s as a modern bar and grill in overt pursuit of a more youthful and affluent demographic with a more independent or even sophisticated dining mindset, including a clear pendulum swing towards millennials,” Cywinski said. “From my perspective, this pursuit led to decisions that created confusion among core guests as Applebee’s intentionally drifted from its, what I'll call, its Middle America roots and its abundant value positioning.”
Much of what the company is currently unwinding relates this pursuit of a younger, more affluent demographic, he said. Applebee’s aspires to extend the reach of the brand among consumers, Cywinski explained, but not by alienating baby boomers or Generation X in the process.
“Moving forward, we will primarily focus on two target segments,” he said. “The first we categorize as routine traditionalists. They like CDR chain restaurants, that’s important. They skew a bit older; they don’t mind spending more for good food, and they tend to be creatures of habit, ordering familiar favorites more often than not.
“The other equally important group is value seekers, not surprisingly,” Cywinski continued. “These folks also like CDR chain restaurants. However, they tend to be brand switchers, searching for the best deal rather than a specific menu item. Together, these segments are predisposed to like Applebee’s a lot, and they make up a meaningful percentage of our core guests in revenue.”
DineEquity plans to close 105 to 135 Applebee’s restaurants, up from a previous range of 40 to 60.
Richard J. Dahl, chairman and interim CEO of DineEquity, said, “We are focusing on operations and elevating the guest experience, whether in our restaurants or off-premise. We believe 2017 will be a transitional year for Applebee’s, and we are making the necessary investments for overall long-term brand health and expect to see improvement over the next year.”
The investments include an overhaul of Applebee’s menu. Leading that effort will be Stephen Bulgarelli, who recently was named vice president and chief culinary officer of Applebee’s. Cywinski praised Bulgarelli for “his clear guest orientation, his passion for ops-driven innovation without unnecessary complexity and his commitment to franchisee collaboration.”
“In summary, we’re back to basics in virtually every respect, as we view 2017 as a transitional year for the brand, Cywinski said. “Our optimization and turnaround is underway, but it will take time to restore Applebee’s to financial health; and I don’t expect that trajectory change in our performance until we begin to implement our initiatives in early 2018. We remain committed to our franchise partners and they, in turn, are aligned and enthusiastic around our vision for the future.”
