Applebee’s has made a major admission – its famous $1 margaritas and 50 cents wings are no longer enough to get customer through the door.
Sales for the three months to the end of September fell six percent on the same time a before, parent company Dine Brands said last week.
It means the chain’s sales have now fallen for six straight quarters stretching back to early 2023.
Bosses admitted its old ‘playbook’ of rotating low-cost specials is not working in today’s market, where diners want value across entire meals, not just selected items.
Instead, they say the chain plans to roll out a more consistent value offering.
First up this week, Applebee’s will introduce its Real Big Meal Deal, which will include a choice of entree and drink at an affordable price.
Applebee’s admitted its current promotions were not winning over consumers
The Real Big Meal Deal has not been given an official end date but bosses said it will last longer than a usual limited-time offer. Prices will be revealed this week.
The change comes as other chains like Chili’s, McDonald’s, and Popeyes introduce similar value-focused meals to lure inflation-weary diners.
Experts say the move could be critical for Applebee’s recovery in an increasingly tough economic environment.
‘What a lot of customers want is an everyday low price for meals,’ retail expert Neil Saunders of Global Data told Daily Mail.com.
‘Consumers are tired of constant inflation and are increasingly looking for value for money and Applebee’s is responding to this with its new value meal.’
‘The previous strategy of constantly changing deals wasn’t working as consumers never knew what the price of the meal would be and what things would be on offer,’ he explained.
‘This new strategy is much clearer.’
However, other experts cautioned that promotional deals are not necessarily always the answer for struggling chains.
‘The failure, or success, of these types of promotions can have significant financial implications for a company,’ Sarah Foss, head of legal at Debtwire told Daily Mail.com.
‘As we all remember, the failure of Red Lobster’s ‘Endless Shrimp’ promotion ultimately cost the company $11m.’
Red Lobster had several ill-advised operational decisions which were among the causes of their bankruptcy, the most notable of which was making the temporary $20 Unlimited Endless Shrimp all-you-can-eat promotion a permanent fixture.
Applebee’s announced the plan while unveiled its disappointing third quarter results on Wednesday.
‘The guest definition and expectation of value shifted over the last couple of quarters there,’ Dine CEO John Peyton told analysts on the earnings call.
‘They started to focus on the total cost of the meal. And where Applebee’s and IHOP were focused on primarily promoting an element of the menu or menu item, it became clear that guests want to know the total cost of dining in a restaurant … the cost of your sandwich, plus fries and drink,’ he explained.
Applebee’s joins Chilis and other rivals in offering value meals to win back inflation-weary customers.
Earlier this year Chili’s introduced its ‘3 for Me’ value meal which includes a side, such as fries or mashed potato and a beverage for just $10.99.
Popeyes also introduced a value meal in September, offering three pieces of bone-in chicken for $5.
Applebee’s is known for its large burgers and fries
The causal dining chain also offers ‘dollaritas’ as part of its limited offerings
The value wars were sparked earlier in the summer when McDonald’s announced its $5 meal deal, which includes either a McChicken or McDouble, four-piece chicken nuggets, fries and a drink.
Rival Burger King’s $5 Your Way Meal offers a choice of one of three sandwiches – a Whopper Jr, a Bacon Cheeseburger or Chicken Jr – plus four chicken nuggets, fries and a soft drink.
Wendy’s currently has a $3 breakfast offer and also a four-item $5 meal similar to McDonald’s and Burger King’s.
