Thursday, May 01, 2008

How IHOP plans to fix Applebee's

After crowing for months that it could revive Applebee’s, IHOP started talking this week about how it’ll do it. In a presentation to financial analysts, CEO Julie Stewart spoke of such nuts and bolts changes as scaling back limited-time offers, installing new kitchen equipment, paring down the menu to a few specialties, and, perhaps most important, remembering what kind of consumer is likely to visit the restaurants. “We often overshot the brand in the pursuit of amore upscale customer while frankly failing to deliver on the expectations of our core users,” Stewart explained.

The casual chain’s new owner has already yanked Applebee’s much-ballyhooed “Talking Apple” ad campaign, which featured the sassy comedienne Wanda Sykes as the voice of the apple that’s now part of Applebee’s logo. Both the new logo and the edgy campaign, carefully slanted toward a hipper crowd, were concocted by the chain’s prior regime, which Stewart ousted in short order. The new campaign, “It’s a Whole New Neighborhood,” harkens back to the chain’s earlier positioning lie, “Eating Good in the Neighborhood,” which Steward helped to develop while she was president of Applebee’s domestic operations.

The new spots spotlight food, without any pretenses about attitude or cheeky sophistication. Or, as Stewart put it, “Our message is clearly focused on classic grill and bar food that you can only get at Applebee’s.”

That process of stripping down the concept to its core strengths, then updating those traditional draws, appears to be the basis of Stewart’s revival plan. As she told the analysts, a crowd usually more concerned with ROI than Riblets, “Signature grill and bar items, such as appetizers, burgers, salads, steaks, as well as beer, wine and other specialty drinks, are the key to differentiating Applebee’s from the competitive set while remaining true to our brand position.” Translation: The chain will stop trying to be a Cheesecake Factory or a trendy independent.

Part of the process, she continued, will be paring back the menu and updating kitchens.

In an interview with USA Today, Stewart also spoke about putting more emphasis in Applebee’s marketing on the concept’s bar. Most consumers, she suggested, don’t realize how much the brand offers to patrons who want to unwind with a cocktail.

During the conference call with investors, one of the portfolio managers asked Steward why she was veering from Applebee’s traditional reliance on limited-time offers and frequent menu changes.

“The short answer is that [the] LTO strategy did not work,” she said. “The idea of forcing people to come in for a limited period of time and order that item and somehow come more frequently did not work.” After all, she said, “if your base business and your base menu and your base service platform doesn’t provide enough for the consumer, then the LTO isn’t necessarily going to get you where you want to go, right?”

Stewart said that IHOP has plotted out a new marketing plan for Applebee’s for the remainder of 2008, starting with another flight of ads that debuts Monday. In those spots, consumers will be invited to submit videos they’ve shot inside Applebee’s units.

In addition, Stewart and her team “have developed a road map for all of 2009 that should be finalized in the next couple of months,” she said. In particular, she added, the new operating group will look at takeaway and Applebee’s rights to market Weight Watchers-brand meals.

Stewart also revealed that IHOP plans to “amend” a unit-manager bonus program that squeezed margins at company stores during the first quarter, without commenting how that effort dovetailed with the plan to improve unit-level operations.


  1. Julia's doing it again. She did a great job with turning around IHOP, but I am not sure that if maybe she is biting off more than she can chew with Applebee's. There is so much wrong in the casual dining sector right now and not to mention that Applebee's has been essentially irrelevant for so long. Their competition has been outshining them.

    On a recent road trip to DC, my family found ourselves eating lunch there simply because our other alternatives were not that much better. I ran into a friend by happenstance, and he asked me, "Orrick, what are you doing here? I thought you had better taste than this." I answered back, "Rob, what the heck are YOU doing here?"

    We both agreed that at least it was better than going to Waffle House.

  2. "There is so much wrong in the casual dining sector right now and not to mention that Applebee's has been essentially irrelevant for so long."

    That statement is way over the top. You would almost think customers quit coming in. That type of thinking leads to bad management decisions. No, I think Julia's right. The chain just needs focus, recognizing why people love Applebees. They are not a "hated" brand.


  4. “Our message is clearly focused on classic grill and bar food that you can only get at Applebee’s.”
    This comment caught my eye because I can think of 7 other resturant chains that do the same premise, if not the same exact food items in the same fashion
    those menu items include the ever famous Unlimited soup and Salad, and Parmesan Tilapia, that you can also find at The Olive Garden. And now with the Perfect Portion menu that i think they have done a wonderful job with, by the way, they stole from Fridays Bar and Grille. Oh yeah, there is one more that I would like to comment on, the popular dessert shooters, of which a guest can have their choice of six different flavors, was taken from the Chili's franchise resturants.
    So to say that i can only get this food at an applebees resturant is totally ubsurd. But I guess that it is the same way anywhere you go.