Where did Applebee’s go wrong with Millennials?

Discussion
Photos: Applebee's (Instagram)
Aug 21, 2017
Matthew Stern

Throughout most segments of retail, courting a Millennial audience has become a top priority and is seen as a path to current and future profits. But one restaurant chain’s Millennial-targeted rebranding has brought nothing but shuttered locations.

Applebee’s announced the impending closure of 130 of its restaurants in the wake of a rebranding attempt that the chain is calling a failure, as discussed on NPR’s “All Things Considered.” The rebranding effort consisted of modernizing décor in restaurants and adding foodie-aimed entrees like chicken won-ton tacos to the menu. In the final analysis, the revamp proved ineffective in pulling in Millennials while simultaneously alienated the restaurant’s core older customer.

One of the difficulties that arises when discussing what Millennials, as a generation, want is that it’s a big age range. Despite tech-savviness generally greater than older generations, the group contains people from many different backgrounds leading different lives. For example, people tend to think of Millennials as skewing urban in their living habits, but the National Association of Realtors indicated last year that Millennials make up the biggest segment buying homes in the suburbs.

This has led some researchers to break the group out into micro-generations. For example, the term Xennia, used to label people born between 1977 and 1983, recently received renewed media attention. Xennials are said to have spent their early childhoods without technology, but began emailing and the like in their formative years.

But regardless of where the Millennial lines are drawn, it’s clear what Applebee’s was going for — turning a mainly suburban bar/restaurant into a hipper, younger destination.

Brand reinvention has in fact been successful for some retailers of late. Walmart — which was in the not-so-distant past thought of as anathema to Millennial trends — has managed to boost sales and generate positive press (although not without a few stumbles) through acquiring numerous Millennial-targeted startups.

Perhaps the difference is that, while Walmart’s challenge is getting a new generation of shoppers to buy, in-store or online, a restaurant like Applebee’s would need to become an attractive hangout.

DISCUSSION QUESTIONS: Where did Applebee’s go wrong in its attempt to court Millennials? Will foodservice chains face bigger challenges than other retail segments in appealing to this generation?

Braintrust
"Millennials don’t like chains. They crave authenticity and value originality, which is antithetical to chains with hundreds or thousands of outlets."
"I’m not sure what Millennials Applebee’s was trying to appeal to with “chicken won-ton tacos,” but that's a hard miss for my demographic..."
"The brand does not have permission to speak to Millennials. Simple as that."

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17 Comments on "Where did Applebee’s go wrong with Millennials?"

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Cathy Hotka
BrainTrust

This is going to be an issue for other companies as well. Millennials don’t like chains. They crave authenticity and value originality, which is antithetical to chains with hundreds or thousands of outlets. The exceptions seem to be companies that empower customers to customize their meal, like Chipotle. I’ll be interested in what my colleagues have to say.

Max Goldberg
BrainTrust

If Applebee’s wanted to appeal to Millennials it needed to completely revamp its staid, not-necessarily-healthy image; not add a few new items to the menu. It failed to convince Millennials that it could serve healthy food in a hip atmosphere. Not every brand needs to refocus its core story for Millennials. Applebee’s management found this out the hard way.

Jasmine Glasheen
Staff

Well said, Max. Applebee’s doesn’t offer healthy or ethically-sourced food. They don’t have tie-ins with local retailers or participate in community events. I’m not sure which demographic of Millennials Applebee’s was trying to appeal to with “chicken won-ton tacos,” but that type of entree is a hard miss for my demographic.

Chris Petersen, PhD.
BrainTrust

It is difficult to target age segments in today’s marketplace. Yes age groups have different food preferences. So do different ethnic groups, regions of the country, etc. Without changing an entire menu, sit-down restaurants like Applebee’s have a large enough menu to offer a fairly large range of options to accommodate most tastes.

There are many other factors that determine the success of restaurants. One of the largest factors is the customer experience. The ability of the restaurant to personalize service to the customer (of any age) is just as important as the food.

What is the wait time? Is the food served hot and fresh? Do the waitstaff personalize service? At my local Applebee’s these factors are causing much more concern than the items on the menu.

Tony Orlando
BrainTrust
Applebee’s is caught between a rock and a hard place, as their identity is getting lost in the shuffle. Cathy is correct in what she is saying. The restaurant business has changed quite a bit and the old guard is losing ground to the newer foodie start-ups that offer local fare with unique flavorings, that can change daily, or even hourly, with local street food offerings available in many major cities. I also believe there is a huge void you can drive a truck through in terms of a restaurant concept. That would be a casual healthy eating place that actually knows how to cater to the diabetic and gluten-free palate. Some restaurants dabble in it but, in my travels all over the country, the 40 to 50 million consumers who have the health issues for the most part are not being served. Someone someday will figure this out. In my store we focus on these dishes and they do quite well. Being in the middle with average tasting food at a chain restaurant simply will not do well at attracting the foodie crowd, so to anyone out there with the ambition and marketing skills, please take advantage of this… Read more »
Tom Dougherty
BrainTrust

The brand does not have permission to speak to Millennials. Simple as that.

The purpose of branding is to create an emotional bond with a target audience. To give an audience permission to recognize that brand as important to their lives. Applebee’s is alien to Millennials. It’s for a different demographic and audience. Brands cant fix that with cosmetic changes. Menuing into an audience’s fabric is a fool’s errand — one that is instituted by people who have NO IDEA what a brand is or how it is founded.

Steve Montgomery
BrainTrust

There is a fundamental difference between the approach Applebee’s took to attract Millennials and Walmart’s. Applebee’s tried by using its existing locations which had an established position and perception in the marketplace. However you may define it, it wasn’t what Millennials were seeking. True Applebee’s applied more than just a little lipstick to their locations and menu but to the Millennials it was still an Applebee’s. To its existing/former customer base it wasn’t one any longer and they went elsewhere.

Walmart did it by acquiring business firmly established in the mind of the Millennials as somewhere they wanted to shop. They bolted them on. This allowed them to maintain their current customer base and add to it rather than trying to change it.

Joan Treistman
BrainTrust

I agree that most marketers are looking to attract Millennials. As others have stated they are often misled thinking that Millennials can be targeted by age, overlooking life stage and cultural context.

Applebee’s seems to have made the mistake of thinking (let me know if I’m wrong) that test marketing or a soft roll out was not necessary. Theoretically that could have prevented such a huge disaster.

Many of my clients want in on Millennials, even when their current consumers average 70 years of age. I believe that it takes a little bit of humility to step back and take a broader look at the particular marketplace. Yes there are some general principles about authenticity and customization, but category specification and credibility have to be addressed as well. Maybe Millennials can’t be a target audience for every business.

Gene Detroyer
BrainTrust

This is a difficult issue for any company that interacts with customers. How do you attract new and growing demographics without alienating current customers? What makes it all the harder today is that the tastes of the Millennial generation are greater than the taste gaps of previous generations.

For Applebee’s and others, the business model is not working. One might consider taking the restaurants targeted for closing and trying completely different concepts. If one is successful, roll it out. Over time use the successful concept to replace the dying business model.

Of course that means less profit in the short-term, but it means the business will continue in the long-term.

Ed Rosenbaum
BrainTrust

The first point is that Applebee’s does not offer an overly healthy menu which is important to Millennials. Second, Applebee’s menu and food was never that appetizing or appealing to many people; probably including the Millennials’ parents. That is probably why they never or seldom went there. This age group thrives more on originality. That is hard to find in typical chain restaurants. I am looking forward to seeing if there is going to be a new wave of strong local establishments, similar to what we used to have 20 to 30 years ago.

Cristian Grossmann
BrainTrust

I don’t think Applebee’s went wrong necessarily, they had an almost impossible feat to start with. Millennials aren’t fans of chain restaurants, especially ones with such an unhealthy menu. They like originality, something you can’t find just anywhere. They also seek healthy options and Applebee’s has a decades-long stigma of serving inexpensive, unhealthy food. To get the Millennial crowd they would have needed to completely change their menu and name, which would be unfortunate for the older crowd that already enjoys their offerings.

Craig Sundstrom
Guest

Applebee’s is in a difficult position: the fast/casual field is crowded, maintaining consistency with alcohol service on a nationwide basis is challenging, and as noted in the article, upgrading without alienating existing customers limits options. Plus they have the problem that many businesses have that cater to the middle class, as that group seems to dwindle: abandoned by the more successful for “the real thing” and by the less for (even) cheaper options.

My personal relationship with them is mostly on trips: you can get a beer with your meal and they’re “better than Denny’s”…if that’s enough of an edge to succeed on I don’t know.

Ricardo Belmar
BrainTrust
Applebee’s frankly went wrong in many ways. Let’s start with location — as an established casual dining brand, they were located in established suburban areas primarily. These were not going to be locations that would draw in Millennials from far away when there most likely would be other choices nearby. Add to this a brand that if known at all to Millennials it would have been known as an “old” brand that didn’t have anything to offer them. Their menu, despite any relaunching, doesn’t have a healthy food appeal nor did it have any uniqueness to it. While it’s fine to say that millennials rave healthy food, that doesn’t account for other QSR and fast casual brands that millennials do frequent — they all have a unique food character not just a decor. That helps establish what those brands are about — take for example, Chipotle, or any of a number of pizza and burger fast casual chains that let you customize your meal endlessly. Applebee’s isn’t unique. Most casual dining brands are experiencing the same problem with Millennials. Casual dining restaurants are where established families with children went to eat with static, unchanging menus. Younger Millennials prefer a fast… Read more »
Doug Garnett
BrainTrust

I’m not deeply familiar with the situation. But from the description, this sounds like poor brand choices by Applebee’s more than an issue of Millennials.

Brands take decades to build into powerhouses. That also means they change slowly — not on a dime. So a quick pivot by Applebee’s was destined to fail by fundamental brand realities.

The contrast with Walmart is interesting. So Applebee’s felt it had a problem and tried to change its brand dramatically. They probably LOST enthusiasm from their dedicated customers with their changes — and there’s no way to build new ones fast enough to undo the damage done by losing the dedicated ones.

By contrast, Walmart didn’t change it’s brand. They remain what we think of Walmart (among consumers). But the corporation bought brands that already existed and were strong and added that revenue and strategic potential.

Those are entirely different responses… And no surprise Applebee’s is struggling.

Carlos Arambula
BrainTrust

Millennials are a state-of-being, a behavior and attitude. Millennials are not parameters, or decor, or menu items. Applebee’s was wrong in deviating from their brand, it was wrong in attempting to become a different — and most likely already existing concept, to attract Millennials.

It is well known Millennials are attracted to authenticity, even kitsch. The minute you begin to re-brand to attract Millennials, the cohort can see right through the pandering and will not patronize. Millennials want to explore what’s already there, they want to discover, so if Applebee’s wants to attract the cohort, it needs to improve its brand and invite consumers to experience it.

William Hogben
BrainTrust

I suspect the difficult at Applebee’s is the conflict between appealing to Millennials and their parents at the same time. Trying to be a multigenerational social scene is a difficult task — many kids need a space apart from their parents (or parents’ age people, as may be the case) in order to feel like full adults themselves. Look at the decline among younger users that occurred on Facebook as the parents started joining — Applebees has acted this out in reverse.

gordon arnold
Guest

Millennials simply do not have the disposable income that was available in recent generations. You would have to go back to the first great depression of the 1930s and World War II era to see this level of minimum/low wage effects on a generation. High-priced designer beverages and eats at almost cost simply isn’t working well. And then there is the “DUI” traps which are more than hearsay. Without reliable transportation, finding work is difficult. And the cost over five years for a “DUI” conviction is outrageous to say the least. This is what Applebee’s is up against and is yet to reconcile which is a large portion of their business woes.

wpDiscuz
Braintrust
"Millennials don’t like chains. They crave authenticity and value originality, which is antithetical to chains with hundreds or thousands of outlets."
"I’m not sure what Millennials Applebee’s was trying to appeal to with “chicken won-ton tacos,” but that's a hard miss for my demographic..."
"The brand does not have permission to speak to Millennials. Simple as that."

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