“We win on variety,” Cywinski says. “So there's no veto vote with the Applebee's brand, and we steamroll the competition when it comes to brand awareness, meaning we are far and away the category leader on brand awareness. It positions us very well moving forward. With that said, a recessionary environment is a tough environment for a guest with $77,000 average household income, and so we have to be very thoughtful and creative and always mindful of the fact that this guest has very modest discretionary income. And so we've got to earn that, and I believe it will be a challenging environment moving forward. It will not be easy, and we'll have to compete hard, and we do have many formidable competitors who I respect as well.”
The beauty of having only 31 franchise partners, Cywinski says, is that everyone is able to meet frequently and change course on short notice in reaction to the marketplace. The group of operators gives him more confidence and optimism than he’s ever had at Applebee’s, and that’s in the midst of a potential recession. The company recently held its annual conference in Beaver Creek, Colorado, where the brand not only framed its 2023 business plan, but also spent much time recognizing performance. Team Schostak Family Restaurants, an operator of 62 stores in Michigan, was named Franchisee of the Year.
Applebee’s is completely franchised after selling 69 company-owned restaurants in North Carolina and South Carolina to Thrive Restaurant Group. The operator is the second-largest Applebee’s franchise with 148 restaurants, behind only Flynn Restaurant Group, which oversees 439 units.
“I now know what this team and these partners are capable of, and they genuinely love one another,” Cywinski says. “… We've got a lot to celebrate. With that said, it's a tough environment. Commodities are still at an all-time high and ‘23 will remain challenging. So brands have to be really great at what they do to thrive in this type of an environment. So we're very fortunate and thankful for those partnerships with our franchisees and for the team members that we have here. I wouldn't trade those two groups of folks out for anyone in this industry.”
On previous earnings calls, Cywinski said Applebee’s will return to U.S. new unit growth in 2023, but that prediction was flexed to either 2023 or 2024 during October’s call, likely because of the impending economic downturn. The brand president said the business environment in general, with its skyrocketing costs and supply chain delays, is worth rebuilding the new restaurant development pipeline, and that will take time. He’s confident, however, that net expansion will happen no later than 2024, through a combination of traditional outlets and ghost kitchens. Going forward, the closure rate will be roughly 1 percent, which is the historical norm.
Cywinski says Applebee’s classic “Eatin' Good in the Neighborhood” tagline has played particularly well during the pandemic. According to the brand president, customers find the positioning familiar, comfortable, welcoming, and inviting.
“We’re not a pretentious brand,” the executive says. “We’re kind of like a good friend. That's how we like to talk about Applebee's, and that's how guests view us. And we may not be the prettiest new building on the block. May not be the sexiest brand out there, but gosh, we're about as reliable as they come, and we think earning the trust of our guests throughout everything that we've been through together over the past two years is really important. Some brands have done that well, like Applebee's, and some haven't and that will be important to future success as well.”