Applebee's to move on from millennials

by Erica Shaffer
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The President of Applebee's says pursuing millennials might have been a strategic misstep.
KANSAS CITY, Mo. – DineEquity Inc. is changing its strategy of driving traffic to Applebee’s Neighborhood Grill & Bar restaurants by moving on from millennials. In a call with analysts earlier this month, John Cywinski, president of Applebee’s, detailed the casual dining chain’s missteps and provided an action plan for a turnaround.

“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.”

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By derek 9/1/2017 10:18:45 AM
Interesting that Mr. Cywinski describes Applebees as a "Bar and Grill". When I worked as a trainer for Applebees in the mid-90's, we were specifically instructed that the restaurant was a "Grill and Bar". In other words, we were a grill first and a bar second. Maybe they changed the training, although I notice that the building signs still have grill listed first. So maybe Mr. Cywinski simply doesn't know what he's supposed to sell. All that said, the larger problem is that Greatest Generation and Boomers wanted consistency and predictability above all else. Those who fought WWII generally wanted simpler foods than boomers, but neither wanted anything too exotic in taste, appearance or experience. Rigid conformity was valued. Later generations don't get pleasure from noticing that the salt and sugar always go on the right side of the caddy in an Applebees. They don't care if there is a half millimeter of empty salt shaker. But Applebees obsesses about it. If only the chain restaurants obsessed as much over not taking 20-30 minutes to deliver 5 burgers with fries. But perhaps more important than anything, its the price. Paying $50 for a family of two adults and three elementary age school children to get hamburgers, fries and a soft drink just doesn't make sense. Our incomes have not grown as much as prior generations. All that said, I'm not sure how ignoring the emerging generation and placing the emphasis on the aging generations is likely to work long term.

By Sara 9/1/2017 9:46:24 AM
I am on the edge of the millennial generation so would like to say that we should not dictate your restaurants. Rather your good food, good service, and decent prices should make us want to come in. It only makes sense that if you provide that the atmosphere is second and should definitely not remind anyone, young or old, of a bar. You started as a family restaurant so go back to being a family restaurant. We have sports bars, we have pizza joints, we have old timer restaurants (Perkins), and we have younger restaurants (not in my little town but in big cities yes). I grew up knowing what was good to eat and was comfortable bringing my kids but I have to be honest, haven't been in a LONG time. Look forward to some changes!