Applebee’s wants to look more like McDonald’s than Olive Garden

When local governments ordered restaurants to close their dining rooms, they had to quickly make their food available for delivery or pickup. For some restaurants, like pizzerias, it wasn’t so bad. But for others, like Applebee, it meant a drastic change in their operations – and a huge drop in sales, at least initially.

It also led to a seemingly permanent change in behavior. Before the pandemic, in the last three months of 2019, Applebee pickup and delivery orders accounted for about 12.8% of sales. In the same period two years later, even after its dining rooms reopened, its door-to-door sales soared to around 27% of all sales.

That jump meant that Applebee suddenly had a different, sizable revenue stream –— but one that’s not necessarily as appealing as the restaurant, where customers can splurge on high-margin items like mixed drinks.
So Applebee got creative with its offsite options. She launched, for example, a virtual brand called Cosmic Wings during the pandemic. And last year he tried something new – his first-ever drive-thru window.
Drive-thru at Applebee is much less complex than you might find at a McDonald’s (MCD) or Burger King. An Applebee customer shouldn’t expect an outdoor menu board or the ability to place an order from an employee. Instead, they must order ahead — online or through the restaurant’s app — and use the window for pickup only.

A decade ago, someone looking for a takeout meal wouldn’t even think of Applebee’s, said brand president John Cywinski. At the time, “Applebee wasn’t really part of that set of considerations,” Cywinski said at an investor day in March. “If you didn’t have an hour and a half for dinner and you were on the go…you’re probably thinking of McDonald’s, Wendy’s and Burger King, and maybe a burger, fries and a Pepsi through a service window at the flying .”

But now, he said, “we are in direct competition with [quick-service restaurants] and fast and relaxed.”

That means exploring new concepts, including drive-thru, an idea championed by one franchise operator.

That’s early days for now: Only two restaurants have the storefronts, one in Texarkana, Texas, and the other in Monroe, Louisiana. The company expects to open two more in West Columbia, South Carolina, and Colonial Heights, Virginia in the coming weeks. By the end of this year, Cywinski expects there will be about 15 Applebee restaurants with drive-thru windows.

That’s still a small number, considering there are about 1,600 Applebee restaurants overall. But the sample size should be large enough to determine whether it makes sense to install a drive-thru window in more restaurants, Cywinski said.

While he’s not ready to say how many Applebees will eventually have drive-thru windows, he has high hopes.

“We think there’s a very strong case for this,” Cywinski told CNN Business, adding “we’re going to scale it, if the business case is clear. My gut says yes, there is a real need.”

What does it take to build a drive-in?

More restaurants may one day have drive-thru counters like this one in Texarkana.

It may seem relatively simple to set up these kinds of drive-thru windows. But that requires logistical maneuvering, Cywinski told CNN Business. “It will really depend on the site and the municipality,” he said.

Opening a drive-thru window at Applebee’s means getting rid of a few spaces in the restaurant’s parking lot to add another lane. It also takes some construction to make the window itself.

In some places, it doesn’t matter.

“There are Applebee parking lots where…it’s easy,” he said. “And you work with a village or municipality that fully supports you.”

But, he noted, “there are others where you just don’t have the space, or the throughput logistics aren’t good.” Most of Applebee’s locations are operated by franchisees, so they also need to be on board with the changes.

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Cywinski thinks drive-thru windows would also be useful for delivery drivers, who can pick up orders that way. And more take-out options could also help Applebee customers if customers get down on delivery.

Delivery is generally unattractive to restaurants. It’s expensive, because restaurants have to pay third-party providers or hire a fleet of delivery drivers themselves. And it cuts into profits because customers are less likely to order high-margin items, like liquor, when ordering delivery.

Applebee passed on delivery costs to customers, Cywinski said. Currently, delivery accounts for about 13% of Applebee’s sales.

And so far, customers have largely accepted these higher prices as the cost of convenience. But with inflation skyrocketing, they might turn on delivery and decide it’s better to take out.

“The intention is just to make the experience easy for guests,” Cywinski said.

About James Almanza

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