Applebee’s has made a major admission: its famous $1 margaritas and 50-cent wings are no longer enough to entice customers.
Sales during the three months to the end of September fell six percent from the same period earlier, parent company Dine Brands said last week.
It means the chain’s sales have fallen for six consecutive quarters dating back to early 2023.
Bosses admitted their old “playbook” of low-cost rotating specials doesn’t work in today’s market, where diners want value on full meals, not just select items.
Instead, they say the chain plans to launch a more consistent value offering.
First this week, Applebee’s is introducing its Real Big Meal Deal, which will include an entrée and drink selection at an affordable price.
Applebee’s admitted its current promotions weren’t winning over consumers
The Real Big Meal Deal has not been given an official end date, but bosses said it will last longer than a usual limited-time offer. Prices will be revealed this week.
The change comes as other chains such as Chili’s, McDonald’s and Popeyes introduce similar value-focused meals to appeal to inflation-weary diners.
Experts say the move could be critical to Applebee’s recovery in an increasingly difficult economic environment.
“What many customers want is a low price for everyday meals,” retail expert Neil Saunders of Global Data told Daily Mail.com.
“Consumers are tired of constant inflation and are increasingly looking for a good value and Applebee’s responds with its new value menu.”
“The previous strategy of constantly changing offers was not working because consumers never knew what the price of the food would be and what things would be offered,” he explained.
“This new strategy is much clearer.”
However, other experts cautioned that promotional deals are not necessarily always the answer for struggling networks.
“The failure or success of these types of promotions can have significant financial implications for a business,” Sarah Foss, Debtwire’s chief legal officer, told Daily Mail.com.
“As we all remember, the failure of Red Lobster’s ‘Endless Shrimp’ promotion ultimately cost the company $11 million.”
Red Lobster made several reckless operational decisions that were among the causes of its bankruptcy, the most notable of which was making the temporary $20 Unlimited Endless Shrimp all-you-can-eat promotion a permanent fixture.
Applebee’s announced the plan as it revealed its disappointing third-quarter results on Wednesday.
“Guest definition and value expectations have changed over the last few quarters,” Dine CEO John Peyton told analysts on the earnings call.
‘They started focusing on the total cost of food. And while Applebee’s and IHOP focused primarily on promoting one menu item or menu item, it became clear that customers want to know the total cost of dining at a restaurant…the cost of their sandwich, plus fries and drink,” he explained.
Applebee’s joins Chilis and other rivals in offering affordable meals to win back inflation-weary customers.
Earlier this year, Chili’s introduced its ‘3 for Me’ value meal that includes a side, such as French fries or mashed potatoes, and a drink for just $10.99.
Popeyes also introduced a value meal in September, offering three pieces of bone-in chicken for $5.
Applebee’s is known for its great burgers and fries.
The casual restaurant chain also offers ‘dollaritas’ as part of its limited offering.
The value wars broke out earlier this summer when McDonald’s announced its $5 meal deal, which includes a McChicken or McDouble, four-piece chicken nuggets, fries and a drink.
Rival Burger King’s $5 Your Way Meal offers a choice of one of three sandwiches: Whopper Jr, Bacon Cheeseburger or Chicken Jr, plus four chicken nuggets, fries and a soft drink.
Wendy’s currently has a $3 breakfast deal and also a $5 four-item meal similar to McDonald’s and Burger King’s.