By: Daniel Krauser, Investor Insights & Analytics
On its November 9th earnings call, DineEquity, parent of Applebee’s, confirmed an early rebound in sales and traffic for the brand in October, an indication of a possible turnaround for one of many casual dining restaurants suffering from declining traffic in recent quarters. Though few details were provided, management proposed that initiatives implemented as part of the Applebee’s 2018 turnaround plan were starting to yield positive results. These efforts involve a refocus on its core food and beverage programs, with Applebee’s running a limited October $1 margarita promotion, known as “Dollarita,” to help stimulate traffic.
To quantify changes in customer behavior, Sense360 analyzed the brand’s visit trends nationally in October. The study focused on efforts to bolster visitation, specifically the limited Dollarita promotion. Excluding October 31st from the comparison, the following insights were captured:
1.) Share of visits in October 2017 rose 9% versus the same month last year, utilizing a market universe of casual dining and family dining brands. Applebee’s did not run an equivalent promotion in October 2016. Prior to the offer, monthly share from July to September hovered 3-6% below the same period last year. Sense360’s data confirms the positive October shift in traffic discussed by management.
2.) Daily visit share spiked early, rising the most by Friday October 6th, then slowing over the remaining period. Still, even though momentum waned, share finished 50 bps above levels observed on September 30th, prior to the start of Dollarita.
3.) The daypart responsible for the largest share increase was Dinner, with Sense360’s ‘Social Dinner/Special Occasion’ category rising the most vs. last year. The SD/SO category captures dinner visits longer than 90 minutes. Average duration also increased in the month as customers lingered for longer, potentially boosting in-store sales. This data may help explain management’s comments that October saw a significant lift in sales of its “2 for $20” meals, which are dinner-oriented value menu items.
Ultimately, the effectiveness of the promotion should be positive news for a brand making efforts to win back customers in a hyper-competitive market. At the very least, other casual dining brands should take notice, as they may need their own Dollaritas to help bolster traffic and sales in 2018.