Applebee’s Neighborhood Grill & Bar has been serving up American fare in a relaxed, family-friendly setting for nearly 40 years. The largest full-service restaurant chain in the U.S., Applebee’s generated $4.4 billion in revenue last year and at press time operated nearly 1,800 locations.
But like many casual-dining chains, Applebee’s has struggled in recent years. Sales fell 6.2% in 2016 and at press time were projected to be down about 6% for 2017. Parent company DineEquity in August said it would shutter 105 to 135 locations this year, double the number it initially planned to close.
Applebee’s president John Cywinski, who joined the company in March, has acknowledged missteps in trying to modernize the brand and appeal to fi ckle Millennials. The chain had strayed too much beyond its traditional offerings, its Middle America roots and its value positioning, and in the process, it alienated core customers. The turnaround strategy will focus on promotions, customizable classics like burgers and steaks, and bringing back customer favorites, such as the Crispy Chicken Tender Salad. What does that mean for the beverage program?
“We want to be able to target the right mood, occasion and reason to come out to a restaurant and enjoy a beer, cocktail or glass of wine,” says vice president of bar and beverage Patrick Kirk, who joined Applebee’s in August 2016 after a decade with Buffalo Wild Wings. “My focus is on the variety we offer, and value.”
Classics With a Twist
Applebee’s core customers are middle-class, “come-as-you-are” folks. So the chain’s beverages don’t need to be overly complicated, Kirk says, but it’s important that the guests are served quickly and accurately.
The current beverage breakdown is roughly 47% spirits, 43% beer and 10% wine. Typical guests will gravitate to the tried-and-true cocktail categories, such as Sangrias, Margaritas, Bahama Mamas and Long Island Iced Teas, seeking something they are familiar with.
That’s why Applebee’s aims to take the drinks that guests are comfortable with and put a twist on them. For instance, the Blue Hawaiian Long Island Iced Tea livens up the original with vibrant blue curaçao. The Raspberry Cosmo incorporates Absolut Citron vodka, St. Germain elderflower liqueur, raspberry, lime and cranberry juice.
The restaurant brand also offers seasonal spins on classics such as the fall/holiday Pomegranate Perfect Margarita. The idea is to freshen the recipe without too much deviation from the original, Kirk says.
Applebee’s Perfect Margarita itself is somewhat of a twist in that it’s a highly “experiential” drink. Made with 1800 tequila, Grand Mariner, Cointreau and lime juice, the cocktail is shaken and served straight up in a salt-rimmed Martini glass.
Servers present the cocktail with the shaker tin, which holds a bit more of the Margarita. This sort of “puts the bartending in the guests’ hands,” and gives the drink a perceived higher value, Kirk says.
The Margarita also brings in a higher check, he notes. Prices range from $7.99 to $13 depending on location. Applebee’s also offers The Perfect Patron Margarita, made with Patron silver tequila and Patron Citronage liqueur.
The Perfect Margarita, which is celebrating 25 years in 2018, was created by an Applebee’s manager in Las Vegas. It’s one example of keeping eyes and ears open for new ideas and finding a way to scale them to all locations, Kirk says.
Another example is the DollarRita, the brainchild of Chris Dharod, chief operating officer of franchise partner Apple Texas. He wanted a promotion to bring guests in during the summer Texas heat so he offered Applebee’s bestselling, 10-oz. Margarita for $1 throughout July.
The campaign resulted in more Margaritas sold than in any month in the franchise partner’s history. “Based on the success they had, we felt it had potential to be a national feature,” Kirk says. All of the Applebee’s restaurants adopted the DollarRita for the entire month this past October.
Wine and Beer Selections
Applebee’s has three core wine brand mandates, two reds and one white. Locations can make other choices, but managers do provide insight on optimal recommendations so that units aren’t stuck with wine they can’t sell.
Some locations stock five or six wines, while others carry more than 14, Kirk says. The chain offers wines by the glass in 6-oz. and 9-oz. pours, depending on location, and by the bottle at some units. Wine brands include Sutter Home cabernet sauvignon, Bella Sera moscato and Kendall Jackson chardonnay.
Applebee’s takes a gentle approach to wine pairings at the point of sale, Kirk says. There generally seems to be interest in pairings from the guests, but it’s difficult to translate as a large-scale promotion. “I feel we could do a lot more with pairings,” he notes.
As for beer, domestic brands are the largest by volume, Kirk says, but craft is growing, and imports are on the rise—especially Mexican brews. Restaurants range from eight to 24 beer tap handles, though the average is 10. “But 10 tap handles is plenty to create a good variety,” he notes. For example, you could do three domestics, four imports, two crafts and one local. Restaurants are encouraged to switch out one tap handle to a seasonal or local draft, Kirk says.
There is a core list of beer brands that should be available, including Bud Light, Michelob Ultra, Blue Moon and Lagunitas IPA, “which is the only IPA we mandate,” Kirk says.
And while franchisees have the choice to offer the Lagunitas IPA—and any mandated beer—on tap or by the bottle, “we encourage them to offer it on draft,” Kirk says. The draft experience is “the cornerstone of enjoying a beer on-premise,” he notes, “plus we find that our margins are better with draft.”
Applebee’s From Seed
T.J. Applebee’s Rx for Edibles & Elixirs was opened in Decatur, GA, in 1980 by Bill Palmer and his then-wife T.J. Palmer. They sold the Applebee’s concept to W.R. Grace and Co. in 1983, though Bill Palmer is still an Applebee’s franchisee.
The name changed to Applebee’s Neighborhood Grill & Bar in 1986. Kansas City Applebee’s franchisees Abe Gustin and John Hamra bought the rights to the Applebee’s concept from W.R. Grace in 1988 and took the company public in 1989.
Applebee’s was acquired by IHOP Corp. (now DineEquity), operator of the International House of Pancakes chain, in 2007 for $2.1 billion. The chain is now 100% franchisee-owned; it sold off the last of its corporate-owned locations in 2015.
It’s been a tumultuous past few years for the brand. Applebee’s president Steven Layt resigned in late 2015 when DineEquity decided to move the chain’s corporate office from Kansas City to its headquarters in Glendale, CA.
DineEquity CEO Julia Stewart served as interim president of Applebee’s until she left the company this past February; DineEquity hired Stephen P. Joyce as CEO in September.
In addition to Kirk and Cywinski, the Applebee’s executive team includes Kevin Carroll, who was hired in June as vice president of operations and promoted to senior vice president/ chief operations officer in November. Stephen Bulgarelli joined Applebee’s in August as vice president/chief culinary officer. Both Carroll and Bulgarelli came from Chili’s.
So Applebee’s management is “a new nucleus with a lot of history in food and beverage,” Kirk says. With a chain the size of Applebee’s, it’s important to understand why the company does certain things and how it arrived at some decisions before implementing changes and improvements. “The last thing I want to do is go from one concept to another and just replicate the beverage experience,” Kirk says.
What’s unique about Applebee’s is that beverage is considered a critical function, rather than just a part of operations or purchasing, he notes. And as such, “I have a seat at the table with the rest of the leadership team.”
Kirk’s own beverage team members are subject-matter experts. They include Tracy Redmond, senior manager, bar and beverage, who has been with the company since 1997; Madeline Cronin, manager, beverage; and Nathan Grover, director, bar and beverage (both hired this year).
They cover Applebee’s product development and innovation; beverage marketing and strategy; special projects; reporting and analysis; and fostering beverage relationships and communications.
The company is clearly emphasizing the bar. Location remodels in the past few years have made the bar a focal point of the restaurants, with updated furnishings and modern lighting replacing the Tiffany lamps and nostalgic memorabilia.
And to further entice customers, Applebee’s is building upon its 2 for $20 value menu, which enables guests to order a full-size appetizer and two full-size entrees for $20. It also just added Topped Steaks & Twisted Potatoes (starting at $12.99), which let customers choose their steak, topper and a twisted potato side.
Building Better Beverages
“We’re in a constant state of evolution” in terms of fi nding and developing new products, Kirk says. Applebee’s in November rolled out a new cocktail called Pair of Jacks, made with Jack Daniel’s Tennessee Honey, Jack Daniel’s Old #7 whiskey, lemonade and a splash of cola, served in its unique “Mucho” glass goblet.
The chain is also focused on improving existing cocktails where it makes sense. For instance, the Fireball Whisky Lemonade cocktail, made with Tito’s vodka, Fireball cinnamon whisky, strawberry and lemonade, has been on the menu for two years. The strawberry fl avor initially came from a syrup made from a topping used at International House of Pancakes.
Applebee’s switched to a Monin strawberry puree this past summer. Not only does the puree offer a more vibrant texture and viscosity, Kirk says, it also provides a richer, true strawberry flavor vs. the syrup. Plus, “we feel better about using a product specifi c to beverage” vs. one designed for culinary use, he adds.
“My goal is to create craveable, consistent experiences at Applebee’s,” Kirk says. Using the example of Starbucks, customers across the country should expect to be able to go to any Applebee’s and have the same quality beverage made and served the same way, he explains. But there should also be room for local flavor to shine.
The sweet spot for Applebee’s is being able to provide the expected, signature product and service, but with personalization and localized recommendations. After all, “the brand prides itself on being a neighborhood bar and grill,” Kirk notes. “We can’t lose that aspect.”