Applebee's Will Shutter More Locations Than Anticipated In 2023
Applebee's is no stranger to creative advertising. Who could forget the $1 margarita (aka Dollarita) promotion of 2017? The fast-casual chain even brought back its fan-favorite "2 for $20" menu for a short time in 2020. But, it's been a few years now since Applebees' heyday, and chances are it's been a while since you've popped in to see what's up. Unless you've arrived hideously early for a movie and there happens to be an Applebee's in the same parking lot as the theater, you probably aren't making a special trip for that spinach and artichoke dip (which rocks, for the record).
Looking to slash and burn operating costs by pruning off underperforming stores, Applebee's will be closing an estimated 25 to 35 restaurants by the end of 2023, reports Restaurant Business. For reference, the last time Applebee's had to close more than 30 stores was in 2020 when the pandemic rocked the industry.
Applebee's is hoping to open more new stores than it closes, but growth has been slow-moving. It opened a whopping 431 new stores from 1996 to 2000, but now, inflation and the labor revolution have made operating costs higher. Building a new store is roughly 30% more expensive compared to just a few years ago pre-recession. In a symbolic blow, Applebee's got evicted from its iconic Times Square location last fall for failing to pay rent.
Cautiously navigating the new market
The chain didn't have particularly high expectations for the year, to begin with, previously anticipating that it would close between 10 and 20 stores. But, these new figures demonstrate deeper trouble. Still, Applebee's has been working on a game plan to return to its former glory.
Catering to recent shifts in consumer behavior could be the lucrative break that Applebee's has been seeking. Folks continue to choose takeout over dine-in, and last March, Applebee's announced plans to implement more drive-thrus. President John Cywinski told Forbes, "What we know is the [drive-thru] model facilitates a much more efficient model where it's easier for the guest, better for the team members, and more profitable for the franchisees. Not everyone has an hour and a half to dine in, and this model will make us that much more attractive."
In total, Applebee's has closed around 300 stores since 2017. But, the shuttered stores might not stay closed permanently. The chain plans to try to relocate franchisees to areas where their stores could see more sales. John Peyton, CEO and owner of Dine Brands, explained "Think about how certain malls no longer have the traffic they did before COVID," via Restaurant Business. "The market can shift over time. And COVID accelerated the shift."
Applebee's saw its peak sales year in 2015 with $4.7 billion. The figure fell to $2.99 billion in 2020 but has been gradually climbing back up with $4.02 billion in 2021 and $4.24 billion in 2022.