Crafting and Executing Strategy

Crafting and Executing Strategy

Applebee's

Strategic planning is essential for all enterprises, but particularly for organizations in the highly competitive restaurant business. Demand for food is extremely volatile, given shifting customer tastes and the degree to which the economy can affect demand for certain foods. Risk management is also required based upon the variability of supply, given that weather conditions can impact crop yields and transportation, as can political circumstances. All of these factors underline why strategic planning is vital for the future success of the comfort food dining chain Applebee's.

Mid-market 'comfort food' dining establishments were one of the hardest-hit of all the economic sectors of the hospitality industry by the recession (Gasparro 2010). Lower-income consumers were diverted to fast food establishments in search of bargains, while higher-income consumers did not patronize establishments like Applebee's with great frequency. Applebee's has to find a way to convince consumers of the value of eating out that elevates the chain above that of its slightly lower-end competitors in the standard and gourmet fast food industries.

Mission statement

A part of Dine Equity, Inc., Applebee's fundamental mission is to give consumers a strong, positive restaurant experience. "DineEquity unites great franchisees, brands and team members to create the world's leading restaurant company, one guest experience at a time" (Vision and values, 2012, Dine Equity). The emphasis on one guest experience at a time is vital. Even though Applebee's is a chain restaurant, it is essential that every customer have a sense of a personalized, homey experience to justify the time and money they invest in eating out. This is how Applebee's will distinguish itself against its fast food competition.

Vision statement

Applebee's values, according to its website are integrity, excellence, innovation, accountability, inclusion, trust, and community (About us, 2012, Applebee's). Applebee's must continue to build trust amongst its consumers that it offers food that is of high-quality yet consistent.

Strategic objectives

Objective 1: Offer a more diverse menu

Twentysomethings and younger diners are turning away from Applebee's, given the plethora of other options available for eating on the 'go.' Applebee's must find a way to keep costs low (or lower) than the competition yet offer a more personalized and gourmet feel to its offerings to attract youthful foodies with more sophisticated palates. As the menu has changed, "with 75 different combinations, you can literally eat lunch at Applebee's every workday for nearly three months and enjoy a different combination each time -- all at a great value" (Rugless 2012). New menu items such as Applebee's fried green tomato and turkey club, a roast beef sandwich with bacon and mushrooms, and a Southwest-inspired Fiesta Chicken Chopped Salad are all examples of out-of-the-box menu planning that take some of Applebee's traditional staples like burgers and chicken and re-imagine them for a new audience (Rugless 2012).

Justification: One of Applebee's fundamental values is innovation. Innovation requires changing with consumer's more diverse palates and needs.

Objective 2: More organics

Applebee's positions itself mid-market in terms of its price point -- between fast food and higher end dining. It must make a case for itself as offering additional value beyond fast food in terms of taste, quality, and even health, while still responding to consumer needs for a low price point. Applebee's must keep prices low, given the downward pressure on prices from cheaper establishments like McDonald's and Wendy's and from higher-end fast food restaurants like Five Guys and In-And-Out. But it must also keep quality high given the improved quality of many fast food offerings like gourmet burgers. There is also a demand for higher-quality food overall, including organic food and a concern about the impact of fast food on consumer health.

Justification: Even Wal-Mart has responded to consumers' desires for organic foods. Rising food prices, rising fuel costs, and a greater appetitive for quality requires careful balancing of Applebee's menus. Excellence is another of Applebee's core values, as is integrity, trust, and accountability. Customers need to feel, particularly after a number of recent 'scares' about food safety, that Applebee's holds their safety high in its priorities and Applebee's cares enough to offer food that meets high standards, including organic standards, without compromising its democratic food image.

Objective 3: Creative approaches to generating value

Applebee's competitors such as the Olive Garden have benefited from increasing portion sizes of cheaper menu items to draw customers without resorting to discounting that could cut into the company's 'bottom line.' For example, during the recession, the Olive Garden's "not-so-secret weapon" was its "never-ending pasta bowl campaign" (Gasparro 2011). Although offered at the same price, heavily promoting the value-based item was significant in enabling the company to retain market share. Similarly, fast food companies like McDonald's were able to increase revenue on dollar menu sales. Other casual-dining restaurants have found that new lunchtime menus have boosted sales, given that they offer customers the ability to eat out at a lower price point (Rugless 2012).

Justification: Applebee's must likewise fund a 'hook' or a particular market niche (financially and in terms of menu options) not filled by competitors, to distinguish itself above and beyond traditional burger chains.

Objective 4: Operational alignment of company image with menu

Applebee's commercial slogan is "There's No Place Like the Neighborhood." Offering local produce and meats as part of the advertized offerings would make consumers feel better about dining at the restaurant. Individual Applebee's could advertise where specific products on the menu were 'sourced.' Offering more local specials based upon regional palates or dining habits (such as a 'Happy Hour' special during popular sporting events when local teams are playing on television) would create a more personalized, less 'chain-like' feel for Applebee's.