With ‘Aggressive’ Approach, Applebee’s to Close 100-plus Locations
In the wake of a 6.2 percent same-store sales decline, Applebee’s forecasts the closure of up to 135 restaurants before the end of fiscal 2017.
The announcement came during parent company DineEquity’s second quarter earnings call with investors August 10, with John Cywinski, Applebee’s brand president, saying, “We will be aggressive on restaurant closures this year.” The company aims to identify older locations in areas “where once vibrant retail, residential and traffic characteristics are just no longer present,” Cywinski noted, along with restaurants that are underperforming “and perhaps even brand-damaging restaurants with unsustainable unit economics.”
“In either case, these restaurants need to close and perhaps should have closed long ago,” he added.
This most recent sales dip follows a first quarter same-store sales decline of 7.2 percent, and Cywinski, who came to Applebee’s in March after a stint with Chili’s parent Brinker International, said the brand’s “strategic missteps” in recent years are now being corrected. Those missteps include the attempted reinvention of 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.
“In my perspective,” continued Cywinski, “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 position. While we certainly hope to extend our reach, we can’t alienate boomers or Gen Xers in the process. Much of what we are currently unwinding at the moment is related to this … repositioning.”
Future marketing will focus on Applebee’s affordability and its appeal to value-seekers, along a push to reestablish off-premise dining as a growth area and to “reignite beverage innovation as a driver of incremental check and revenue.”