In this FDD Talk 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 2018 FDD

• Section III – Initial franchise fee, royalty fee, marketing fee, and other fees for an Applebee’s franchise, based on Items 5 and 6 of the company’s 2018 FDD

• Section IV – Number of franchised and company-owned Applebee’s outlets at the start of the year and the end of the year for 2015, 2016, and 2017, based on Item 20 of the company’s 2018 FDD

• Section V – Presentation and analysis of Applebee’s financial performance representations, based on Item 19 of the company’s 2018 FDD, including information on the:

• 2017 average and median weekly sales for the 1,772 domestic franchised Applebee’s restaurants that were in operation for the full fiscal year 2017

Section I – Background Information

17 Things You Need to Know About the Applebee’s Franchise

Updates Applebee’s To Go Experience

1.  In mid-March 2018, Applebee’s Neighborhood Grill + Bar revealed that it had updated its To Go experience, making it easier for customers to bring their favorite menu items home. To celebrate the update, Applebee’s offered customers $10 off $30 on their next order on its website or mobile app for a limited time.

2.  Applebee’s was one of the first restaurants in its category to offer Carside To Go and now thanks to a redesigned mobile app and online ordering platform, options for Applebee’s To Go are faster and more accurate. Customers can quickly come inside and grab their meal for carry out or choose Carside To Go at participating restaurants to get their meal delivered straight to their car. No matter the method, Applebee’s new To Go packaging ensures the meal remains hot and tasty outside of the restaurant.

3.  Scott Gladstone, vice president, strategy and off-premise at Applebee’s, said, “Applebee’s To Go has undergone a makeover aimed at better serving guests, with updates to the mobile app and website, the introduction of new To Go packaging and an elevated focus on operational execution, all done to improve the guest experience. These enhancements are paving the way for new innovations in the To Go space that will enable Applebee’s to continue evolving its excellent service and be more competitive in off-premise eating occasions.”

Appoints New Chief Marketing Officer

4.  At the end of January 2018, Applebee’s Neighborhood Grill + Bar announced the addition of Joel Yashinsky to its leadership team as senior vice president and chief marketing officer. With more than 20 years of experience in the restaurant industry, Yashinsky brings a wealth of knowledge and insight from his previous marketing roles and will report directly to John Cywinski, president of Applebee’s.

5.  Cywinski said, “What I value most about Joel, other than his restaurant marketing experience, is his strategic capability and belief in franchisee collaboration. Joel is a smart, creative, mature and highly-regarded executive with a deep operational orientation. He has also successfully navigated two turnarounds within his McDonald’s tenure, which will serve him well. Bottom line, culture and team are important to Joel, and he fully understands the intensely competitive nature of this industry and our particular opportunities here at Applebee’s.”

6.  In his new role, Yashinsky will have oversight of all aspects of Applebee’s marketing, including strategic positioning, marketing plan development, media, advertising, merchandising, beverage innovation, and public relations. In addition, he will lead the Franchise Marketing Committee in partnership with franchisees.

7.  Prior to joining Applebee’s, Yashinsky held a variety of positions with McDonald’s. Most recently, he served as the marketing vice president for McDonald’s USA, overseeing the brand’s U.S. marketing calendar, promotions, advertising, sports marketing, and agency relationships. Before joining McDonald’s USA, Yashinsky led the brand’s Canadian division as chief marketing officer. He holds a bachelor of arts degree from Bowling Green State University.

Brings Back Fan-Favorite ‘Bigger, Bolder Grill Combos’ and Introduces Catering Services

8.  In early November 2018, Applebee’s Neighborhood Grill + Bar announced the return of a customer favorite limited-time offer — Bigger, Bolder Grill Combos. With Bigger, Bolder Grill Combos, customers get the choice of five delicious grill combinations each served with a number of sides starting at only $12.99. All entrees are served with steamed broccoli, garlic mashed potatoes, signature coleslaw, and crispy onions.

9.  Bigger, Bolder Grill Combos entrée pairing options include:

• Grilled Shrimp Skewer with Honey BBQ Sauce and Grilled Chicken Breast with Fireball Whisky-infused Sauce;
• Grilled Shrimp Skewer with Honey BBQ Sauce, Crispy Shrimp, and 6-ounce USDA Select Top Sirloin;
• Half Rack Baby Back Ribs with Spicy Texas BBQ or Honey BBQ Sauce and 6-ounce USDA Select Top Sirloin;
• Half Rack Baby Back Ribs with Spicy Texas BBQ or Honey BBQ Sauce and Grilled Chicken Breast with Fireball Whisky-infused Sauce; and
• Crispy Shrimp and Grilled Salmon with Honey BBQ Sauce.

10.  In the same press release, Applebee’s announced that it was also introducing Applebee’s Catering in time for the holidays. Catering portions are served in party-ready packaging and serve parties of six or more at prices starting at less than $10 per person.

11.  According to Joel Yashinsky, chief marketing officer of Applebee’s, “With the pressures of holiday spending and entertaining just around the corner, we know our guests are looking for delicious dishes both in-restaurant and at home at a great price. We brought back Bigger, Bolder Grill Combos, because it’s perfect for date night while the in-laws watch the kids, but if you’re feeling festive and need to feed the masses at home, we have you covered in a big way with our new Applebee’s Catering. I’d love to tell you more, but I’m heading to pick up my catering order for the game tonight.”

Company History

12.  Applebee’s Neighborhood Grill + Bar was founded in 1980 by Bill and T.J. Palmer in Atlanta, Georgia. The restaurant was initially called Applebee’s Rx for Edibles & Elixirs. After opening a second location, the Palmers sold the Applebee’s concept to W.R. Grace and Company.

13.  Bill Palmer remained involved with the company and was appointed president of the Applebee’s Division, an indirect subsidiary of W. R. Grace and Company. Palmer helped start the franchise system for Applebee’s and in 1985, Palmer became an Applebee’s franchisee himself and went on to own more than three dozen restaurants.

14.  In 1986, W.R. Grace and Company changed the franchise’s name to Applebee’s Neighborhood
Bar & Grill. Two years later, Abe Gustin and John Hamra, Applebee’s franchisees, acquired Applebee’s from W.R. Grace and Company. By the end of the 1980s, Applebee’s had 100 locations across the country and launched its initial public offering. Over the next decade, Applebee’s continued to grow in the U.S., as well as Canada, the Caribbean, Germany, and the Netherlands.

15.  At the beginning of the 2000s, Applebee’s updated its menu and opened its 1,250th location. Over the next few years, Applebee’s continued to open new restaurants around the world and in 2007, it was acquired by the IHOP Corporation.

16.  Beginning in 2010, Applebee’s started a brand revitalization, which included changes to the restaurants such as remodeled interiors and exteriors with warmer color tones and a contemporary design; features specific to the neighborhood the restaurant serves; service improvements; and new food and drink selections. Applebee’s set out to complete this revitalization across its entire system in 2014.

Entrepreneur’s Franchise 500

17.  Applebee’s did not rank on Entrepreneur’s 2018 Franchise 500 list.

Section II – Estimated Costs

• Please click here for detailed estimates of Applebee’s franchise costs, based on Item 7 of the company’s 2018 FDD.

Section III – Initial Franchise Fee, Royalty Fee, Marketing Fee, and Other Fees

• Please click here for detailed information on Applebee’s initial franchise fee, royalty fee, marketing fee, and other fees, based on Items 5 and 6 of the company’s 2018 FDD.

Section IV – Number of Franchised and Company-Owned Outlets

Franchised

2015

• Outlets at the Start of the Year:  1,852
• Outlets at the End of the Year:  1,884
• Net Change:  +32

2016

• Outlets at the Start of the Year:  1,884
• Outlets at the End of the Year:  1,864
• Net Change:  -20

2017

• Outlets at the Start of the Year:  1,864
• Outlets at the End of the Year:  1,788
• Net Change:  -76

Company-Owned

2015

• Outlets at the Start of the Year:  23
• Outlets at the End of the Year:  0
• Net Change:  -23

2016

• Outlets at the Start of the Year:  0
• Outlets at the End of the Year:  0
• Net Change:  0

2017

• Outlets at the Start of the Year:  0
• Outlets at the End of the Year:  0
• Net Change:  0

Section V – Financial Performance Representations (Item 19, 2018 FDD) and Analysis

• The following sales information was derived from the sales at the 1,772 franchised Restaurants that were in operation for the full fiscal year 2017.

• Of the 1,772 Restaurants included in this survey, 788 Restaurants (44.5%) attained at least the stated average sales.

• The financial results of your Restaurant may be directly affected by many factors, such as the Restaurant’s size, geographic location, weather, the effectiveness of your regional and local marketing efforts, the level of existing brand awareness and acceptance in the market, the presence of other competing Restaurants, and the quality of management and service at your Restaurant.

• Your individual results may vary substantially from the results stated in this financial performance representation. Some Restaurants have achieved this sales level. There is no assurance that you will do as well. If you rely upon these figures, you must accept the risk of not doing as well.

Weekly Domestic Franchise Unit Sales for the 52 Weeks Ended December 31, 2017