Applebee's strategic planning and competitive positioning in casual dining

Crafting and Executing Strategy

Applebee's

Strategic planning is essential for all enterprises, but particularly for organizations in the highly competitive restaurant business. Demand for food is extremely volatile, given shifting customer tastes and the degree to which the economy can affect demand for certain foods. Risk management is also required based upon the variability of supply, given that weather conditions can impact crop yields and transportation, as can political circumstances. All of these factors underline why strategic planning is vital for the future success of the comfort food dining chain Applebee's.

Mid-market 'comfort food' dining establishments were one of the hardest-hit of all the economic sectors of the hospitality industry by the recession (Gasparro 2010). Lower-income consumers were diverted to fast food establishments in search of bargains, while higher-income consumers did not patronize establishments like Applebee's with great frequency. Applebee's has to find a way to convince consumers of the value of eating out that elevates the chain above that of its slightly lower-end competitors in the standard and gourmet fast food industries.

Mission statement

A part of Dine Equity, Inc., Applebee's fundamental mission is to give consumers a strong, positive restaurant experience. "DineEquity unites great franchisees, brands and team members to create the world's leading restaurant company, one guest experience at a time" (Vision and values, 2012, Dine Equity). The emphasis on one guest experience at a time is vital. Even though Applebee's is a chain restaurant, it is essential that every customer have a sense of a personalized, homey experience to justify the time and money they invest in eating out. This is how Applebee's will distinguish itself against its fast food competition.

Vision statement

Applebee's values, according to its website are integrity, excellence, innovation, accountability, inclusion, trust, and community (About us, 2012, Applebee's). Applebee's must continue to build trust amongst its consumers that it offers food that is of high-quality yet consistent.

Strategic objectives

Objective 1: Offer a more diverse menu

Twentysomethings and younger diners are turning away from Applebee's, given the plethora of other options available for eating on the 'go.' Applebee's must find a way to keep costs low (or lower) than the competition yet offer a more personalized and gourmet feel to its offerings to attract youthful foodies with more sophisticated palates. As the menu has changed, "with 75 different combinations, you can literally eat lunch at Applebee's every workday for nearly three months and enjoy a different combination each time -- all at a great value" (Rugless 2012). New menu items such as Applebee's fried green tomato and turkey club, a roast beef sandwich with bacon and mushrooms, and a Southwest-inspired Fiesta Chicken Chopped Salad are all examples of out-of-the-box menu planning that take some of Applebee's traditional staples like burgers and chicken and re-imagine them for a new audience (Rugless 2012).

Justification: One of Applebee's fundamental values is innovation. Innovation requires changing with consumer's more diverse palates and needs.

Objective 3: Creative approaches to generating value

Applebee's competitors such as the Olive Garden have benefited from increasing portion sizes of cheaper menu items to draw customers without resorting to discounting that could cut into the company's 'bottom line.' For example, during the recession, the Olive Garden's "not-so-secret weapon" was its "never-ending pasta bowl campaign" (Gasparro 2011). Although offered at the same price, heavily promoting the value-based item was significant in enabling the company to retain market share. Similarly, fast food companies like McDonald's were able to increase revenue on dollar menu sales. Other casual-dining restaurants have found that new lunchtime menus have boosted sales, given that they offer customers the ability to eat out at a lower price point (Rugless 2012).

Justification: Applebee's must likewise fund a 'hook' or a particular market niche (financially and in terms of menu options) not filled by competitors, to distinguish itself above and beyond traditional burger chains.

Objective 4: Operational alignment of company image with menu

Applebee's commercial slogan is "There's No Place Like the Neighborhood." Offering local produce and meats as part of the advertized offerings would make consumers feel better about dining at the restaurant. Individual Applebee's could advertise where specific products on the menu were 'sourced.' Offering more local specials based upon regional palates or dining habits (such as a 'Happy Hour' special during popular sporting events when local teams are playing on television) would create a more personalized, less 'chain-like' feel for Applebee's.

Why justified: Community-spiritedness is yet another one of Applebee's core values. Working with the community would 'brand' Applebee's in a unique fashion, versus its competitors, and capitalize upon new trends such as the locovore movement. Local foods might also save Applebee's nationally in terms of transportation costs, and would generate goodwill between Applebee's and residents.

Objective 5: Improved service

Fundamentally, the reason that customers will choose to dine at Applebee's versus a fast food chain is the experience of service. Providing high-quality, highly-trained wait staff to service customer needs can create a relaxed, fun and communal experience for diners. Applebee's must improve the quality and training of its wait staff to be more responsive to consumers and to create a less generic experience at the restaurant.

Justification: Applebee's stated mission is to provide a singular experience for every patron, so that patron returns. This is its essential function as a company. Its commitment to community in its vision statement also underlines the need to give people a sense of a home- away-from-home when dining at the restaurant.