FDD Talk 2016: The Applebee’s Franchise Opportunity (Financial Performance Analysis, Estimated Costs, and Other Important Stuff You Need to Know)

In this FDD Talk 2016 post, you’ll learn the following:

• Section I – Background information on the Applebee’s franchise opportunity, including relevant news updates

• Section II – Estimated initial investment for an Applebee’s franchise, based on Item 7 of the company’s 2016 FDD

• Section III – Presentation and analysis of Applebee’s financial performance representations, based on Item 19 of the company’s 2016 FDD, including information on the:

• 2015 average weekly sales for the 1,809 domestic franchised Applebee’s restaurants that were in operation for all of the fiscal year 2015

Section I – Background Information

It was back in 1980 when Bill and TJ Palmer opened T.J. Applebee’s Rx for Edibles & Elixirs in Atlanta, Georgia. In 1983, the Palmers sold the Applebee’s concept to W.R. Grace and Company, and in 1985 Bill Palmer came back to the company, this time as a franchisee.

It wasn’t until 1986 that the name was changed to Applebee’s Neighborhood Grill and Bar. That same year Abe Gustin and John Hamra of Kansas City opened their first Applebee’s franchise restaurant in Kansas City, and two years later purchased the rights to the Applebee’s concept from W.R. Grace and Company. In 1989, they took the company public.

Applebee’s now has nearly 2,000 locations in 49 states, 15 countries, and one U.S. territory. Its mission from the beginning has been to deliver both exceptional value and family fun. It considers itself the largest casual-dining chain in the world.

The Menu

The menu at Applebee’s presents lots of different beef, chicken, and pork items, as well as burgers, pasta, and seafood.

The chain’s lunch promotion, Pick ‘N Pair Lunch Combos, can create more than 60 different combinations at three different price levels depending on the combination of classic and signature items. It also has a two-for-$20 promotion where you select two entrées and one appetizer at that price.

The chain’s non-burger sandwiches are called handhelds and include three new additions – Triple Hog Dare Ya, Brew Pub Philly, and Maple Bacon Chicken Piadini (thin Italian flatbread wrap). Other recent additions to the menu include such items as Loaded Brisket Enchiladas, Shrimp Wonton Stir Fry, Hot Shot Whisky Chicken, and Crispy Brewhouse Chicken.

A recent addition to the dessert menu is Cracker Jack Banana Cheesecake.

Making the Most of Social Media

When Entrepreneur Magazine comes out with its annual Franchise 500 list, it also hands out awards for the best and worst franchise marketing campaigns – the Frannie Awards. As might be expected, these awards have become very heavily focused on use of social media channels.

Although Taco Bell won multiple awards, Applebee’s did win the Best Use of Instagram award for its School of Fantography campaign where they directed customers to a 90-second food photography tutorial video, then asked customers to send in their photos of Applebee’s food. They posted the best ones to the chain’s Instagram account.

Carside To-Go Service

In a unique move in the casual-dining segment, at many locations customers can place an order by phone, then pull up to the restaurant and park in a designated spot to which their to-go order is delivered lickety-split. Applebee’s is not a fast-food chain, so it does need some lead time to prepare an order for this to-go service.

Promotions

Applebee’s is heavily promoting the fact that the chain now uses wood-fired grills for their steak and other meat grilling, specifically using American oak wood, for what it’s worth.

It also offers half-price appetizers and bar snacks in the late-night with the great tag line, “Sometimes the best decisions happen after dark.”

Section II – Estimated Costs

• Please click here for detailed estimates of Applebee’s franchise costs, based on Item 7 of the company’s 2016 FDD (updated).

Section III – Financial Performance Representations (Item 19, 2016 FDD) and Analysis