Applebee's continued to struggle systemwide. Comps fell 0.9% as traffic declined by 0.7% at franchise restaurants and 1.6% at company-owned stores, even as customers spent more on average per check. The results were blamed on a promotion offered a year ago, but I'm not buying it. The company has been dealing with poor results for some time now.
I realize the casual-dining restaurants are struggling as people grapple with higher mortgage payments and the rising cost of essentials such as groceries and gas. But Applebee's also faces company-specific issues. Once a magnet for suburbanites, with individual restaurants decked out in local flair, Applebee's now faces increasing competition from the likes of Ruby Tuesday
The new management team at IHOP will therefore need to focus on how to ramp up the Applebee's menu to establish a loyal base of customers who will continuously return for more. IHOP management certainly has experience in turning around its own chain over the past few years. Perhaps it will do so again.
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Fool contributor Larry Rothman is happy to receive feedback, and he promises to read it when he's not being wrestled by his three children. Feel free to email him at firstname.lastname@example.org. He doesn't have any positions in the companies mentioned. The Fool has a disclosure policy.
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