Off-Premise: The Secret Weapon in Applebee's Comeback Plan
Off-premise has shifted the conversation around the entire restaurant industry. Yet in casual dining, you could argue it’s played a far more disruptive role than other sectors. Delivery and take-out is a natural extension for many quick-serves. At sit-down chains? Besides trying to cram the process into a shortened offering, full-service brands have to solve the problem of overloading an already swamped back-of-the house staff, develop packaging that doesn’t ruin an elevated product, and somehow make it convenient enough where guests won’t just park in the nearest drive thru. Did we mention not diluting an experience that has separated full service from its fast-food counterparts in past history? You can’t order a date night, right? Well, now you can. Or at least that’s what some guests want.
While these challenges are significant (to state it lightly) they are also invigorating brands. This past quarter was one of the more promising in the past couple of years for casual dining, and off-premise played a leading role.
The largest chain out there—Applebee’s—is no stranger to the opportunities off-premise presents. It was one of the early adopters of Carside To Go service and has continued to leverage this segment as it progresses along its comeback path.
In fact, off-premise currently accounts for 9 percent of total sales at Applebee’s, and executives expect that number to double by 2022. Online ordering is available nationwide and Applebee’s is currently testing delivery in select markets. It also announced in March an enhanced to-go platform highlighted by a redesigned mobile app and online ordering setup.
Applebee’s has an established audience it can target with these initiatives as well. As the company explained in its investor day, it’s business breaks down like this:
- Late-night: 14 percent
- Afternoon: 15 percent
- Lunch: 23 percent
- Dinner: 48 percent
- 27 percent of guests are 55-plus
- 28 percent are 34–35
- 30 percent are 18–34
- 15 percent at under 18
- Gen Z: 15 percent
- Millennial: 29 percent
- Gen X: 28.3 percent
- Baby Boomers: 26.4 percent
So, without question, Applebee’s and its revamped leadership team have plenty of whitespace to build off domestic same-store sales increases of 1.3 percent in the fourth quarter.
Scott Gladstone, vice president, Applebee’s strategy, development, took some time to chat with FSR about how Applebee’s is bolstering its off-premise business and positioning itself to thrive amid a changing restaurant dynamic.
Currently, Applebee's is reporting about 9 percent of sales from off-premise. With that number expected to double by 2020. How does the brand see this growth opportunity as part of the company's overall strategy?
Off-premise is a critical growth driver in the casual dining industry and for the Applebee’s brand. We see the channel as highly incremental to our traditional dine-in business and are investing, particularly in technology, to gain outsized share. Our technology innovations, are intended to create a more seamless experience, to allow guests to enjoy dining with us whenever, wherever and however they choose. To meet these demands, Applebee’s continues to invest in technology and growth platforms, and looks to offer improved experiences.
What are some of the key changes in the company's recently enhanced to go experience? How did you identify the touch points that would be most important to today's customer, and then tackle those head on?
Applebee’s was one of the first restaurants in the category to offer Carside To Go, and we acknowledge that there is still room to enhance this experience. We conducted extensive guest research to understand key purchasing criteria and satisfaction with Applebee’s relative to our competition. We identified a number of opportunities across marketing, technology and operations that informed our prioritized initiatives.
Within marketing, we believe we need to continue to build awareness of this offering, despite being one of the first in To Go and the largest casual dining concept, while reinforcing value perception. Our recent $10 off $30 campaign provided this opportunity to invite guests to try us for the first time and show them what makes Applebee’s the most convenient option for high-quality To Go food.
From a technology perspective, we released our redesigned mobile app and online ordering platform in December, so that options for Applebee’s To Go are faster, more accurate and more satisfying than ever. Online ordering provides our guests added convenience to access our food, whenever and however they want. Guests can customize their order at their own pace, giving them a sense of additional control. It’s all about making it easy to access our great-tasting food and provide an exceptional dining experience.
Lastly, we rolled out our new packaging platform this past month. Our new, higher-quality and customized packaging lineup improves portability and keeps the food warmer for a longer period of time. We know our guests expect the same great tasting Applebee’s experience at home, and believe this packaging solution gets us closer to that aspiration.
Knowing that 45 percent of guests are ages 34 and below currently, how can Applebee's build this technology so it not only appeals to younger customers, but to Baby Boomers and older diners as well?
One of our strengths is that our guest profile is diverse from an age perspective with an equal percentage of millennials, Gen Xers, and Baby Boomers. At the core, we are striving to make the ordering process as straight forward to navigate as possible, to ensure that all of our guests can get familiar with the online experience. That said, there will always be a segment of guests who want to order over the phone, and we will continue to offer that ordering option for them to do so. To that end, we are also exploring ways to make the phone ordering process as easy as possible, both for our guests and for our restaurant operators.
We will continue to pursue opportunities to provide our menu to guests how they want it, and to allow them to consume our food where they want it. Our constant evaluation and testing of new technologies and services allows us to broaden our reach for both in-restaurant and off premise to support all of our guests’ needs. Our partnership with Xevo and General Motors’ connected automobile capability is an example of our commitment to power the next generation dining experience that is personalized and seamless. We’re also currently testing delivery with leading providers including GrubHub, DoorDash and Amazon in more than 200 locations across the country, making it even more accessible, perhaps for older diners who may not be as mobile-friendly.
How exciting is this future channel for the brand? Do you see it allowing Applebee's to introduce, or in some cases re-introduce, its food and improving product to new customers? And if so, how do you make sure the off-premise product measures up to the in-house one?
We’re really excited for the opportunities these To Go enhancements offer and more off-premise opportunities in general, as they allow us to capture incremental occasions from our core guests and also capture new guests who may not be familiar with our brand. Our aspiration is make the off-premise dining experience as high quality as our dine-in experience. We are focused on ongoing initiatives within technology and operations to further simplify the ordering process and to enable our teams to greet our guests and complete the order hand-off as quickly as possible.