Santa Fe New Mexican

Applebee’s ends pursuit of millennial­s

Restaurant will remove menu items, return discontinu­ed favorites

- By Abha Bhattarai

Applebee’s says it’s made a mistake: It’s been trying too hard to be cool.

After years of working to brand itself as a modern millennial hangout, the family-friendly chain is reversing course. It’s bringing back all-you-can-eat specials and doubling down on such discounts as its Two for Twenty Menu. The chain’s parent company Dine Equity is also bringing on a new chief executive and closing up to 160 Applebee’s and IHOP locations in a bid to boost profits.

“Over the past few years, the brand’s set out to reinvent Applebee’s as a modern bar and grill in overt pursuit of a more youthful and affluent demographi­c,” John Cywinski, president of Applebee’s said in a call with analysts this week. Those efforts, he said, included “a clear pendulum swing toward millennial­s.”

But that turned out to be a bad idea. Longtime regulars balked at new menu items and modern decor, said Patrick Lenow, a spokesman for Dine Equity.

“I think, in retrospect, we may have tried too hard to attract new guests,” he said. “That left some of our fans shaking their heads, asking ‘What happened to Applebee’s?’ ”

Now the company is taking items off the menu, including a turkey sandwich with sriracha chile lime sauce and a pork-hambacon sandwich. And it is bringing back old favorites, Lenow said, though he declined to say what those were (“We wouldn’t want to tip off our competitor­s,” he said).

Applebee’s also is assessing “whether the brand truly gets credit for hand-cutting steaks in the restaurant and whether we should continue with this approach,” Cywinski said.

Analysts said these changes are part of a broader turn-around effort at Dine Equity’s 3,700 locations, all of which are franchised. Even IHOP, which has traditiona­lly been a source of stability for the company, has seen sales slip in recent quarters.

In all, Glendale, Calif.-based Dine Equity plans to close up to 135 Applebee’s restaurant­s and about 25 IHOP locations. Executives said they had yet to determine which locations would be closed, but added that they plan to focus on older ones and “under performing — and perhaps even brand-damaging — restaurant­s.”

“We will be aggressive on restaurant closures this year,” Cywinski said on the call. “These restaurant­s need to close and perhaps should have closed long ago.”

Stephen Joyce, most recently the chief executive of Choice Hotels, will take over Dine Equity beginning Sept. 12. At Choice, which is based in Rockville, Md., Joyce oversaw 11 hotel brands including Comfort Inn, EconoLodge and Cambria Hotels & Suites.

The announceme­nts came as the company reported a 21 percent drop in profit. Second-quarter earnings fell to $21.3 million, or $1.18 per share, from $26.8 million, or $1.46 per share, a year ago. Revenue, meanwhile, slipped 3 percent to $155.2 million from $150.3 million a year ago.

In addition, the company plans to remodel IHOP stores and beef up the company’s online ordering capabiliti­es. It has also begun experiment­ing with smaller IHOP locations that seat up to 140 people aimed at rural areas and pricey urban markets.

But its not all bad news, the company said. Last month, IHOP celebrated its 59th anniversar­y by aggressive­ly advertisin­g a 59-cent pancake special at some locations.

The event was a success, executives said. Sales rose 59 percent that day.

 ?? MARK LENNIHAN/ASSOCIATED PRESS FILE PHOTO ?? Customers enjoy lunch in 2009 at an Applebee’s in New York. After years of working to brand itself as a modern millennial hangout, the family-friendly chain is reversing course.
MARK LENNIHAN/ASSOCIATED PRESS FILE PHOTO Customers enjoy lunch in 2009 at an Applebee’s in New York. After years of working to brand itself as a modern millennial hangout, the family-friendly chain is reversing course.

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