Did Apple’s iPhone take bite from Applebee’s?
Apple doesn’t compete with Applebee’s. The two companies operate in com-
pletely different industries that serve two totally different sets of customers. And yet, at least in theory, one company had a significant impact on the other. That impact came from the September release of the iPhone 5, Apple’s most recent version of its popular smartphone.
That same month, same-store sales at casual dining restaurant chains, like Applebee’s, fell 1.9 percent, according to the Knapp Track Index of casual dining same-store sales. Traffic, perhaps a more realistic measure of the state of the industry, fell by 2.5 percent.
How would the iPhone hurt sales of Applebee’s Bourbon Street Steak? That falls under the “Reallocation Nation” theory of Malcolm Knapp, the New York consultant behind the Knapp Track. The theory is that consumers’ spending is limited right now, so when they spend money on one thing, like the iPhone, they spend less on something else, like a dinner out. “Every month, people look at their fixed expenses, they determine their priorities for that month, and they reallocate what’s left after their fixed expenses,” Knapp said on a conference call with Bank of America analyst Joe Buckley last month.
Income is falling, despite improving jobs numbers. Median household income last year fell 1.5 percent, according to the U.S. Census. Employment has shifted from middle-income jobs like construction to lower-wage jobs such as retail—58 percent of job growth since March 2010 has been in the bottom third of jobs by hourly wages, Knapp said. So people who have lost their jobs since late 2008 are replacing them with lower-wage positions.
Apple sold $1 billion worth of iPhones in September. According to Knapp’s theory, that money had to come from somewhere.