Applebee's Is Again Searching for a New Creative Agency

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Applebee's certified USDA Choice steaks on its wood-fired grills.
Applebee's certified USDA Choice steaks on its wood-fired grills. Credit: Applebee's Neighborhood Grill & Bar

Applebee's, stuck in a prolonged sales slump, is once again searching for a new creative agency after working with Barkley for less than one year.

Changes in leadership and new advertising and communications agency relationships have not ignited sales at Applebee's Neighborhood Bar & Grill, the country's largest casual dining chain with nearly 1,900 U.S. restaurants. Applebee's is owned by DineEquity Inc., which also owns the IHOP chain.

"While Barkley has proved themselves to be creative and valuable partners, Applebee's felt the time was right to make a creative shift given the evolving restaurant landscape," Applebee's said in a statement.

Applebee's said Select Resources International is assisting with its search for a new creative agency. Barkley will work with Applebee's through March 31, 2017.

One reason DineEquity has said Applebee's is having trouble is that consumers are emphasizing value. On a Nov. 1 conference call, Julia Stewart, who serves as chairman and CEO of DineEquity and as Applebee's brand president, said Applebee's needed to reinforce its value proposition. Applebee's is currently running spots focused on a $12.49 buy one, get one free entree offer.

In December 2015, Applebee's selected Barkley as its creative agency and said the independent shop would be its agency of record as of March 1, 2016. Before Barkley, Applebee's worked with MDC Partners' CP&B.

"As we take the iconic Applebee's brand to new places, we're excited about the creative potential of the Applebee's-Barkley relationship," Darin Dugan, Applebee's senior VP of marketing and culinary, said in a statement in December 2015. "Barkley's track record of driving results in the restaurant category and contemporizing established brands makes the agency an ideal partner to support our new direction."

Barkley declined to comment on the creative review. Barkley said it would continue to support Applebee's in menu design and in-store experience design, which it has worked on since 2012. In-store experience design includes point-of-sale materials, display signs, and other printed materials.

"We are maintaining a relentless focus on changing the story at Applebee's," Ms. Stewart said in Dine Equity's 2015 annual report. "It starts with a commitment to return Applebee's to positive comparable system-wide same-restaurant sales growth in 2016."

Despite that commitment, Applebee's sales at longstanding U.S. locations have declined in the first three quarters of 2016 following declines in the third and fourth quarters of 2015. Such sales have now fallen in five consecutive quarters after five consecutive quarters of gains that came to a halt in mid-2015.

In November, DineEquity said it expected Applebee's 2016 U.S. same-store sales to decline near the low end of an expected 4% to 5% drop. Previously, the company anticipated a decline of just 3% to 4.5% for the year.

In May, Applebee's announced what it called "the largest and most comprehensive marketing and advertising campaign in its history," with ads from Barkley centered around its new hand-cut, wood-fired steaks. The campaign included TV, online and movie theater placement. Also in May, Applebee's said it had hired WPP agency Cohn & Wolfe as its global PR agency for consumer, corporate and franchisee communications, as well as for DineEquity's corporate communications.

Applebee's prior agency switch came months after Ms. Stewart once again became president of Applebee's in 2015, in addition to her roles as chairman and CEO of DineEquity. Ms. Stewart, a longtime restaurant industry executive, was president of Applebee's before she became CEO of IHOP, which bought Applebee's to create DineEquity in 2007.

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