Applebee’s Slump Prompts Agency Change (Again)

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By Max

Applebee’s Neighborhood Grill and Bar has been in a prolonged sales slump for five consecutive quarters, which must have hit the casual dining giant hard, considering its previous five consecutive quarters of gains that ended abruptly in mid-2015. After less than a year of working with Barkley, the brand is searching for a new creative agency – an ironic move considering that Barkley’s tagline is “We Future-Proof Brands.” And future-proofing is exactly what Applebee’s needs.We suspect the problem wasn’t with the agency – it’s with the era. Casual dining as a category has fallen on hard times as food quality improves in fast-food and fast-casual restaurants. Lines are blurring everywhere it seems as McDonald’s serves gourmet burgers, Starbucks serves wine and small plates, and legit chefs like Top Chef judge Tom Colicchio open fast-casual joints like ‘wichcraft.

It’s bizarro world out there, and the most normal thing in it is the casual dining restaurant, like Applebee’s, IHOP, The Olive Garden, and The Cheesecake Factory.

Casual dining is losing its niche.

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What is Casual Dining Anyway?


In the world of lower-end dining, there’s fast food, fast-casual, and casual dining. Fast food is like McDonald’s or Taco Bell, places with drive-through windows. Fast-casual restaurants don’t offer full table service, but typically offer higher quality food, like Panera Bread. But then there’s the odd middle category of casual dining.

Casual dining restaurants are typically chains, have full table service, are family-friendly and try to cater to the Everyman. They used to offer better food than you could find at McDonald’s, and offer cheaper prices than higher-end establishments. But as the quality of fast food increases and the experience of fast-casual improves the casual dining segment is getting left in the dust.

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Casual Dining’s Rise & Fall


Applebee’s saw unprecedented growth between 1993 and 2005, opening more than 100 locations each year. In 2007, IHOP bought the chain and, together, became DineEquity, Applebee’s current parent company.

Ten years later, it’s a whole other story.

Fast-food and fast-casual rivals have been winning market share from casual-dining chains, which typically have slower service and are more expensive. McDonald’s Corp. has recently been successful attracting diners with its all-day breakfast and steep discounts, such as a two-for-$5 menu. More contemporary fast-casual chains also are hurting sales at sit-down restaurants.”
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Bloomberg

Currently, fast-casual is the fastest growing foodservice segment globally, growing at 10.4% between 2014 and 2015.

Sales at restaurants and bars are growing more quickly than grocery store sales (restaurant and bar spending overtook grocery purchases for the first time ever in March of 2015). And pizza is enjoying high demand: Domino’s Pizza sales went up by 45% in 2016; Papa Johns by 60%.

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Can Applebee’s Come Back?

There is still a market for casual dining – where else can you bring your newborn baby, toddler, husband, and Great Aunt Mary-Lou for a family meal you don’t have to clean up after? There is a real need for the truly family-friendly, budget-conscious restaurant. But, to recapture that market, you have to understand that you’re dealing with a new demographic: The Millennial Parent (and their parents).

In our research, we found that the demographic for Casual Dining Restaurants Consumers are nearly 50/50 men and women, 50% married, 43% with children, and mostly between the ages of 25-44.

And, in keeping with Millennial trends, they’re overwhelmingly “Foodies” (enjoying gourmet and specialty foods), are active and fit, care about how they look, and drink socially.

Right now, Applebee’s isn’t attracting this demographic. The demographic they are attracting are car lovers.

Cars, and racing, are a big deal for Applebee’s consumers, it turns out.

So it seems like the brand is at a turning point. It could double down on its cars-and-racing fan demographic with marketing ‘geared’ towards that audience (pun intended); or, it could pivot and go the route of offering gourmet options, local wines, and craft beers, while maintaining its family-friendly atmosphere.

Either way, the days of the Everyman restaurant may be over.

Find out more about Applebee’s, the state of the casual dining industry, and its consumers in our latest Pitch Brief.

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Topics: Knowledge; Infographic; New Business Pitch