Inside the Saga of Applebee's $1 Margaritas | Food Newsfeed
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Applebee's is getting back to its value-based positioning in a big way.

Inside the Saga of Applebee's $1 Margaritas

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The chain's 'Dollaritas' promotion has generated a great deal of attention for the brand.
By Danny Klein October 2017 Chain Restaurants

A little known fact about Applebee’s now-fabled “Dollaritas” promotion is that the same deal broke records at Texas locations back in July. Apple Texas, a 65-unit operator and subsidiary of SSCP management, ran the promotion, which sells the chain’s 10-ounce margaritas for $1, during the summer before announcing it was returning in October. The idea was hatched by Apple Texas chief operating officer Chris Dharod. The group runs stores in Austin, East Texas, Dallas, Fort Worth, Houston, and Waco, and said it sold more margaritas in July than any other month in its history.

“We were looking for a way to see more of our neighbors over the summer and wanted to treat our valued guests to an unbelievable deal on our most popular margarita, which we call the ‘Dollarita,’” Dharod said at the time. “It was such a hit that not only are we bringing it back for another month, but the entire Applebee’s brand will be joining us as part of its Neighborhood Appreciation Month in October.”

The move for Applebee’s entire, massive system to adopt the promotion surprised Derek Farley, president of 150PR, who said in an email that Applebee’s typically operates 18 months in advance before making a call like this.

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Since, there has been a little bit of everything reaction wise, from wildly positive feedback on social media to a recent viral post that resulted in the chain reiterating to its franchisees how to properly make the drink.

The latter issue surfaced when someone who claimed to be an Applebee’s bartender posted a video of the drink being made in a 5-gallon bucket on the floor. He said the Dollarita was prepared by mixing a gallon of concentrated margarita mix, a gallon of “bottom shelf” tequila, and 3 gallons of tap water.

Applebee’s responded by saying, firstly, it had no idea if the video was valid and couldn’t confirm if the poster actually works at Applebee’s. It did say, however, that the person was making the Dollarita incorrectly and not according to the brand’s instructions.

The proper recipe is actually one-part tequila and three-parts margarita mix, served on the rocks, it said.

“Despite not knowing whether or not this video was valid, we reached out immediately to our franchisees to reiterate the correct approach to making our margarita that is being offered in restaurants nationwide for $1 as our Neighborhood Appreciation Drink," Applebee’s told Fox News.

The DineEquity chain also sent a response to PEOPLE.

“We’re thrilled at our guests’ response to our Neighborhood Appreciation Drink. Bartenders can make it to order, but because the Dollarita is in such high demand, certain locations are making the $1 margarita in larger batches,” the company said in a statement to PEOPLE. “Batching is commonplace in certain states when drinks are flying off the counter like the Dollarita. The official Dollarita is made with one-part, or 1 1/4 ounces, of tequila and three-parts margarita mix. Our margarita mix is a concentrate that requires it be cut with three-parts filtered water to one-part mix.”

The video’s user itself didn’t mince words, saying that, “If ‘the dollarita is your life,’ you’re an animal who can’t taste things,” and adding that “we go through 12 gallons of this swill a day.”

The promotion was first announced by DineEquity on September 26 as part of the October national celebration of Applebee's Neighborhood Appreciation Month.

“We focus on our food a lot, but 'bar' is in our name, and it is an integral part of what makes Applebee's a great neighborhood destination," said Patrick Kirk, vice president of beverage innovation at Applebee's,” in a statement at the time. “Our $1 margaritas in October give us a chance to show our guests a little love, giving them a totally unbeatable offer as a gesture of our sincere appreciation for their patronage."

Regardless of the kickback, the promotion has provided a jolt of attention the chain sorely needed. As PEOPLE pointed out, some customers even jokingly said they would relocate their desks into an Applebee’s. Many have brushed off the watered-down criticism as well, saying expectations should be in line with the price. Regardless, it’s a promotion that has generated noise.

Earlier in the month, Applebee’s added entrees to its 2 for $20 value menu. Guests receive a full-size appetizer and two full-size entrees, providing an inexpensive way to share a good meal, the company said.

It wouldn’t be surprising to see more value-based promotions come through the pipeline. In mid-August, the chain reported it planned to close up to 135 restaurants in fiscal 2017 as it battled sliding sales. Comparable same-store sales dropped 6.2 percent in the second quarter versus the prior year quarter. For the first six months of fiscal 2017, Applebee’s same-stores sales declined 7 percent compared to 2016.

In a conference call, Richard J. Dahl, chairman and interim chief executive officer, said, “The restaurant and hospitality industries are similar in that loyalty and revenue increases are dependent upon providing a compelling product at a strong value.”

John Cywinski, the company’s new president who joined the brand in March, said the chain created confusion among core guests as it “intentionally drifted from its, what I'll call, its Middle America roots and its abundant value positioning.”

The value positioning part of this equation will be critical to getting Applebee’s back into the minds of its once vast consumer base. A key target will be what Cywinski called “value seekers.”

“These folks also like [casual dining] restaurants. However, they tend to be brand switchers, searching for the best deal rather than a specific menu item. Together, these segments are predisposed to like Applebee's a lot, and they make up a meaningful percentage of our core guests in revenue,” he said.

“Our action steps are clear, the work is underway with an emphasis on abundant value, presentation and taste, including the possible reintroduction of a few guest favorites that were removed as part of the earlier referenced repositioning effort. Again, with proper testing and supply chain lead time, these initiatives will impact our menu also beginning next year in Q1,” he added.

Cywinski also said that Applebee’s needed to “become more relevant from a price-value perspective. Affordability has always been a cornerstone of the Applebee's brand and it's essential to our guests now more than ever. Bottom line, we've taken our eye off the ball here and we have work to do.”

The Dollarita promotion has unquestionably made Applebee’s more present in this discussion nationwide. It also stressed the chain’s bar program, which can serve as a differentiator from the fast casual and quick-service options taking market share from casual dining. Additionally, doing so at a (incredibly) low price—is also a separator from polished casual and fine dining.

How this momentum, both positive, negative, and everything in between, materializes is something to follow in coming months.