Applebee's Will Continue Losing Customers In 2024—Here's Why
From Cracker Barrel to McDonald's, many chains have been experiencing lower sales and fewer visits from customers who are opting to dine at home amid inflation. Applebee's is among the brands that are heavily impacted by this issue—and the chain just revealed that it expects its financial woes to worsen throughout the rest of 2024.
Applebee's parent company Dine Brands released its latest quarterly earnings results on Aug. 7, reporting a 1.8% decline in same-store sales in the United States after three consecutive quarters of similar decreases. The company lowered its annual sales projections for Applebee's in light of the disappointing quarter. Previously, Dine Brands expected the chain's domestic same-store sales to increase between 0% to 2%. Now, it expects Applebee's same-store sales to decrease between 2% and 4%.
In an Aug. 7 earnings call, company leaders attributed the "pullback" to budget-wary consumers eating out less to preserve their funds in the face of inflation.
"We recognize that our guests are in a tough spot in this economic cycle, and our data indicates that guests are reducing their restaurant visits industry-wide and choosing to eat more at home. When guests do choose to dine at our restaurants, they're managing their check by trading down from higher-priced menu items to less expensive options," Dine Brands CEO John Peyton said. "This has been a consistent trend over the past few quarters, and we, along with our franchisees, have been actively managing our offerings to adapt to evolving guests' needs and behaviors."
Dine Brands hopes to improve Applebee's fortunes in the long term by focusing on value—a strategy that many restaurant chains have been adopting this year. For example, Applebee's recently brought back its All You Can Eat Boneless Wings, Riblets, and Double Crunch Shrimp deal, which allows customers to enjoy endless food for a suggested price of $15.99.
Looking ahead, Applebee's has a "deep arsenal of profitable promotions, menu innovation, and marketing campaigns that we can deploy in the near term while remaining focused on positioning ourselves for sustainable value creation in the long term," Peyton said.
In addition to emphasizing value, Applebee's wants to make its takeout business stronger. The chain's delivery and takeout sales were down about 5% year-over-year in the second quarter, but Dine Brands hopes to reverse that trend by improving the convenience and functionality of its website and app, solving staffing issues to help its restaurants stay open later, and offering promotions for its off-premise customers. While only time will tell if these efforts will work as desired, Dine Brands seems to have confidence in its plans.
"Our brands have a long history of weathering economic cycles and despite the consumer pullback the industry witnessed this quarter, we are confident that our strategies around profitable promotions, menu innovation and development will help us manage both short-term challenges while positioning us for the long term," Peyton said in a statement.
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