Applebee's is closing up to 135 locations across the US after ditching its 'Middle America roots' to win over millennials (DIN)

pulse

August 11, 2017 1:58 PM

Applebee's "drifted" from its Middle America roots. Now, the chain is trying to win back Baby Boomers and Gen X as it shuts down restaurants.

Casual dining chains like Buffalo Wild Wings and Applebee's

Applebee's locations are disappearing across the US.

On Thursday, executives announced that the chain plans to close between 105 and 135 locations this year.

"We are long overdue in rationalizing the size of our system and closing poorly performing restaurants," Dine Equity CEO Richard Dahl said in a call with investors.

In March, Applebee's said that it planned to close 40 to 60 locations in 2017. In 2016, Applebee's closed 46 locations.

Dine Equity, which also owns IHOP, reported that its net income in the second quarter was $20.9 million, down from $26.4 million in the same quarter last year. Applebee's same-store sales decreased 7% in the quarter.

Executives blamed difficulties in part on Applebee's attempt to win over millennial diners.

"Over the past few years, the brand's set out to reposition or reinvent Applebee's as a modern bar and grill in overt pursuit of a more youthful and affluent demographic with a more independent or even sophisticated dining mindset, including a clear pendulum swing towards millennials," John Cywinski, Applebee's brand president, said Thursday.

"In my perspective, this pursuit led to decisions that created confusion among core guests, as Applebee's intentionally drifted from its what I’ll call its Middle America roots and its abundant value position," he continued. "While we certainly hope to extend our reach, we can’t alienate Boomers or Gen-Xers in the process."

In 2016, Applebee's launched what it called a "comprehensive business transformation" in an attempt to modernize the chain. Changes such as installing fire grills in all 2,000-plus locations across the US — a $40 million investment by the chain’s franchisees — and redesigning locations were supposed to distinguish Applebee's from other casual dining chains.

Moving foward, Cywinski said that Applebee's will focus on "routine traditionalists" who actually enjoy casual dining chains and have favorite menu items, as well as "value seekers" who are looking for deals at sit-down restaurants.

Restaurants slated for closure are either in areas with declining traffic, such as restaurants near once bustling but now dead malls, or locations with low sales that offer customers a "substandard experience," according to executives.

Applebee's isn't the only casual dining chain struggling to win over customers. Brands such as TGI Fridays and Ruby Tuesday have faced sales slumps and dozens of restaurant closures in recent months.

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