Applebee’s, renowned for its affordable and diverse menu offerings along with its signature cocktails, finds itself at a critical juncture as it grapples with a recent decline in sales. To counter this setback and regain its competitive edge, the restaurant chain has devised a strategic plan centered around introducing a new value-oriented burger, aimed at enticing customers away from fast-food giants like McDonald’s.
At the helm of this initiative is John Peyton, the CEO of Dine Brands, which oversees both Applebee’s and IHOP. Peyton underscores the direct rivalry between sit-down restaurants such as Applebee’s and the fast-food establishments dotting the landscape. His vision is to position Applebee’s as a viable alternative to the quick-service options offered by fast-food chains.
In response to the growing dissatisfaction among consumers with the escalating prices at fast-food outlets, Applebee’s has unveiled its latest offering: the “Whole Lotta Burger,” priced at an attractive $9.99 and accompanied by a serving of fries. This burger, adorned with bacon, cheese, lettuce, tomatoes, and pickles, is designed to deliver a flavorful and satisfying dining experience at an affordable price point.
This strategic move mirrors a similar endeavor by Chili’s, another prominent player in the casual dining segment, which recently introduced its own value-centric option, the “Big Smasher” burger. This burger, akin to a larger rendition of the iconic Big Mac, is priced under $10 and includes fries and a drink. Peyton emphasizes the inherent value proposition of Applebee’s offerings, highlighting the appeal of dining in a cozy restaurant setting versus the hurried experience of consuming fast food on the go.
Applebee’s decision to pivot towards value-driven menu items is a proactive response to shifting consumer preferences and economic realities. Notably, lower-income consumers, constituting a substantial portion of Applebee’s customer base, are scaling back their visits and opting for more budget-friendly menu selections. To address this trend, Dine Brands plans to double down on value across its portfolio of restaurants, including IHOP, which has also experienced a dip in sales.
George Felix, Chili’s Chief Marketing Officer, echoes Peyton’s sentiments, stressing the superior value proposition of their menu offerings compared to traditional drive-thru fare. The introduction of the “3 for Me” value meal, featuring the Big Smasher burger, is part of Chili’s broader strategy to offer customers better quality and pricing while enhancing their overall dining experience.
As the cost of fast food continues to escalate, restaurant chains like Applebee’s and Chili’s are embracing promotional offers and value-driven menu items to attract and retain customers. Initiatives such as Applebee’s “2 for $25” deal and Red Lobster’s “Shrimp Your Way” meal promotion exemplify the industry’s concerted efforts to provide consumers with affordable dining options amid prevailing inflationary pressures.
In summary, Applebee’s and Chili’s are proactively adapting to evolving consumer preferences and economic dynamics by introducing value-focused menu items aimed at challenging the dominance of fast-food giants. These strategic initiatives underscore the industry’s resilience and innovation in catering to the changing needs and preferences of customers while navigating challenging market conditions.