After putting up a "For Sale" sign back in February, Applebee's
The company has certainly seen trouble lately. And it hasn't helped that consumers continue to worry about the soft housing market and rising gas prices. While Applebee's draws diners in for its large portions and local flavor, such as neighborhood sports paraphernalia, management has admitted it lacks destination items -- in other words, the restaurant doesn't boast any special items on the menu that keep people coming back. And that was evident in the past comps report, where same-store sales were down 0.9% during the second quarter and down 0.3% in June.
As a family restaurant, boy, is Applebee's out of touch. Rather than toys from the latest Disney
Additionally, Applebee's implemented its Call and Go promotion, where you phone in your order and the food is delivered right to your car. It is nice and convenient, but it isn't enough to continuously draw in large crowds. To attract loyal customers, casual dining restaurants need to offer unique items people crave at an attractive price. Yet Applebee's raised its prices 1.3% again last month.
Facing its own internal struggles, it is also facing more competition. The company once blanketed the suburbs, leaving residents with little choice of where to dine, but there is now a plethora of options: Ruby Tuesday
IHOP's offer may not seem attractive at first glance, but given Applebee's troubles, I think a new management team with turnaround experience might be just what the company needs to survive in this lackluster industry. Not only does Stewart possess the skills necessary to revitalize the company, but she has personal history as an Applebee's employee. With this all-cash deal for Applebee's investors, I advise shareholders to abide by that old saying: Take the money and run.
An appetizer sampler of further Foolishness:
- Eatin' Bad in the Neighborhood
- International House of Plunder
- Shareholders Have Spoken at Applebee's
Fool contributor Larry Rothman is happy to receive feedback, and promises to read it when not being wrestled by his three children. He doesn't have any positions in the companies mentioned. The Fool has a disclosure policy.