Applebee’s (tied for 2nd place in casual dining market share with Chili’s & behind Olive Garden), benefits from key brand positioning elements which include: a comfortable grill with great tasting food & a prominent bar area which provides energy for diners; abundant value; decorating cues tied to individual neighborhoods; and appeal as a place to connect with family & friends. TV ads are well done, featuring compelling food photography set to famous pop songs (creating emotional connections) and punctuated with relevant taglines like “Eatin’ Good in the Neighborhood” and “Eatin’ good never felt so good”. Its simple American fare and cocktail innovation helps appeal to Millennials without compromising its core family grill positioning. Applebee’s abundant value is supported by: popular 2 for $20+ everyday value platform (2 entrees & 1 app); all-you-can-eat deals; add a protein to an entree for $1; $0.25 boneless wings; $7.99 – $8.99 Irresist-A-Bowls; and $5 cocktails (which provide a platform for new product news). The chain’s 36.7% 1Q21 off-premise mix consisted of 22% Carside To-Go and 14.7% from delivery with online & app orders generating tickets +30% higher than phone-in orders. A strong 2021 rebound reflects the retention of off-premise sales even as dine-in returns to normal. Sales prospects should further benefit from: the expansion of delivery from Uber Eats to Postmates & DoorDash; virtual brands (like Cosmic Wings) & ghost kitchens; share gains from independent restaurants that have closed across the country; the development of smaller restaurant prototypes; and off-premise enhancing technology like I-have-arrived app (Flybuy). All-the-same, Applebee’s share of $1B+ casual chain sales have steadily declined from 17.5% in 2010 to 12.2% in 2020, reflecting stiff competition and an internal challenge to find a sustainable value proposition that works sufficiently well in its smaller markets to drive traffic. This challenge is further reflected by significant AUV underperformance, even when considering a sales/sf metric to reflect small footprint stores. In conclusion, while Applebee’s has worked hard to balance the pursuit of value for its core Middle American customers and increased relevancy to attract a younger guest, more time may be needed to address the disparate needs of these demos especially as the system seeks to recover from a post-lockdown world.

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