Applebee’s new traffic-driving strategy was on the menu all along

Same-store sales turned positive in March and April. | Photo: Shutterstock

Applebee’s has tried a number of different tactics in recent years to get customers to visit and turn around flagging sales and traffic. 

First there were low-priced, item-specific offers, like $1 margaritas and 50-cent boneless wings. And when those didn’t work as expected, the chain switched to a combo meal approach with the $9.99 Really Big Meal Deal last year.

But after spending much of the past year talking to its customers, the chain realized that its best value offer had been on the menu all along.

“Guests talked more and more about 2 for $25,” said John Peyton, Applebee’s president and CEO of its parent company Dine Brands, in an interview.

Applebee’s has offered 2 for $25 for more than 20 years. The two-person deal comes with the choice of two entrees, plus an appetizer or two side salads, for $25. 

Applebee’s has leaned in and out of the deal over the years. But as it spoke to customers, including those who hadn’t been to the chain for a while, 2 for $25 kept coming up.

That was one obvious sign that Applebee’s was onto something. And at a time when restaurant chains are flooding the market with discounts and value meals, it gave Applebee’s a way to stand out. 

“The fact that only Applebee’s does it is something that’s so important,” Peyton said. “No one’s gonna confuse that with anybody else.” 

So Applebee’s is embracing 2 for $25 again. It plans to put more marketing behind the deal, and it wants to use it as a platform for new menu items, such as the Hot Honey Glazed Chicken & Bacon Skillet it introduced in March.

As for the Really Big Meal Deal, Applebee’s will wind that down as it shifts its attention to 2 for $25. The combo drove traffic at lunch and in Applebee’s digital channels, but ultimately it’s not what the brand does best, Peyton said.

“Rather than invest in the new concept of the Really Big Meal Deal, we see more legs and more impact from 2 for $25,” he said.

In a similar vein, Applebee’s tapped into another fan favorite in the first quarter with the Bourbon Street portion of its menu. It added two new $11.99 Cajun pastas to the lineup that “drove traffic and sales in a way that we haven’t in several quarters,” Peyton told analysts during an earnings call Wednesday.

Customers clearly responded to the pricing of those items. The share of Applebee’s customers who opted for value items shot up to 34% in the quarter, from 28% a year ago.  

That’s at the high end of what Applebee’s has historically seen, but Peyton said the chain is comfortable with it. And he noted that 2 for $25 has good margins.

“I would suspect that if and when we return to an environment where guests feel less pressure on their wallet, that number would come down a bit,” he said. 

Overall, the new-old strategy has shown some promising results. Applebee’s same-store sales, while still down, improved to negative 2.2% overall in the first quarter. And, encouragingly, they turned positive in March and April. 

It was an early sign of progress at Applebee’s after a tough couple of years. Same-store sales have now declined for eight consecutive quarters, and it has lost share to resurgent rival Chili’s Grill and Bar.

But a plan to turn things around is beginning to take shape. In March, Applebee’s acquired 47 restaurants from a pair of franchisees and has been using them to show off a new remodel package and test different operating strategies.

For instance, it hired more front-of-house staff, repriced the menu and invested more in local marketing at those restaurants, all of which has produced good results. It will now share those ideas with the rest of the system. 

Dine Brands also has high hopes for a new dual-branded restaurant format between Applebee’s and sister brand IHOP. It plans to open 14 of them in the U.S. this year, with additional openings slated for 2026. The first location, opened in February in Seguin, Texas, is doing three times the revenue of a stand-alone Applebee’s or IHOP. 

Remodeled Applebee’s are also performing well, Peyton said. They feature a total refresh inside and out for a cleaner and more modern look. The package costs $200,000 or $300,000, but is generating enough of a sales lift to more than justify the investment, Peyton said. 

Applebee’s is also offering incentives for franchisees who sign up for a remodel. It expects to complete about 100 of them by the end of the year.

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