Applebee's
Sales at Applebee's are headed in the wrong direction.

Applebee's Could Shutter 3 Percent of Stores in 2017

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The brand closed 19 restaurants during the first quarter.
By Alex Dixon May 2017 Chain Restaurants

With a same-store sales decline of 7.9 percent for the first quarter of this year, Applebee’s is betting on new leadership and initiatives to turn the brand around.

The chain recently named former Brinker executive John Cywinski as president, who said in a conference call Tuesday that Applebee’s needs to get back to its roots through meaningful structural changes and a focus on guest satisfaction.

“It’s very apparent to me, and I think to all of us, that the brand has had a few missteps over the past 18 months; one of those is drifting from our core Applebee’s guest, which is very much middle America, middle income,” Cywinski says. “There was an attempt to reposition the brand in a somewhat aspirational manner around the modern bar and grill and in the process, it’s very clear that we may have alienated some core guests.”

Cywinski says Applebee’s also needs to improve its core value proposition and tighten up variability around operations and guest satisfaction. While he didn’t share specific details on the brand’s plan to improve traffic and sales, he said he doesn’t expect to see the benefits of this new focus until later this year at the earliest.

Applebee’s turnaround plan will result in the closure of between 40 and 60 underperforming restaurants throughout the year. The brand, which operates around 1,800 units, closed 19 restaurants during the first quarter.

“I’m confident we have the strategy and resources in place to turn around Applebee’s,” Cywinski says. “This is clearly a brand turnaround from my perspective. My job is to challenge the status quo and provide leadership required to unlock growth embedded in this great Applebee’s brand.”

The numbers at IHOP were more positive. Domestic system-wide comparable same-store sales declined 1.7 percent in the first quarter. "I am very confident in the several strategies underway at IHOP to drive sales and traffic as well as improve the guest experience through restaurant remodels and expansion of our off-premise business.  Importantly, we have taken action to further empower Applebee's, IHOP and the International division by redirecting team members and resources formerly provided by DineEquity to these operating units," said Richard J. Dahl, chairman and interim chief executive officer, in a statement.

DineEquity reported first-quarter net income of $14.1 million, or 79 cents per share, which was down from $25.2 million ($1.37 per share), year-over-year. Adjusted EPS was $1.22. Revenue dropped from $163.5 million to $156.2 million. Shares of DineEquity are down 35 percent in the past year.