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Applebees Bucking the Discount of Chain Restaurants

DineEquity, owner of Applebees and IHOP brands, is trying smartly trying to avoid discounting their menu like the rest of industry. Their strategy to get customers in the door focus on appealing healthy “skillets” price at $9+ which currently make up about 10% of sales.

The “2 for $20” deal of an appetizer and two entrees now makes up 18% of Applebee’s sales mix, down from around 20% in previous quarters, Stewart said. Applebee’s promoted that offer through most of last year but has since made it a mainstay on the menu that’s not supported prominently by ads.Applebee’s margins rose slightly last quarter, to 14.1% to 14%, helped by lower food costs, although that was offset partly by more marketing to try to bring in guests.

Same-store sales were down 1.6% at Applebee’s systemwide, an improvement from prior quarters, while guest counts continued to decline on year.

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2 comments
David
David

I think it is smart to start marketing a healthier alternative to your patrons. I also would imagine that a lower calorie meal probably means less food on the plate, which in turn would mean higher margins on your 'healthier' meal options.

Brendon
Brendon

For the chains, I don't think you want to be known as the cheapest option. It'll hurt reputation and people will try harder to find cheapness in your restaurant. They gotta compete on experience. The sit downs are expected to be priced in the $7-12 range for a meal.