Grey Named AOR for Tumultuous Applebee's Business

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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, which saw the resignation of its president this month as sales continue to drop, has selected Grey as its advertising agency of record for North America, an appointment that comes as the restaurant sets out to fix every aspect of its business.

The latest agency switch at Applebee's Neighborhood Grill & Bar comes after a major food overhaul and campaign focused on hand-cut, wood-fired steaks flopped. It also follows major executive changes at the top of the country's largest casual dining chain, which along with IHOP is owned by DineEquity Inc.

On March 1, DineEquity Chairman and CEO Julia Stewart, who was also serving as Applebee's president, left the company after 16 years. At that time, DineEquity Chief Financial Officer Thomas Emrey announced his resignation, effective March 15. On March 9, John Cywinski, who had been Applebee's chief marketing officer from 2001 to 2006, rejoined the chain as president of Applebee's.

In a statement, Applebee's said it hired WPP's Grey "as the brand embarks on a journey to reaffirm its commitment to providing its guests with great food and service at a reasonable price."

The shop was hired following an RFP that kicked off at the end of last year and was supported by Select Resources International. Barkley, which was hired in December 2015 as Applebee's creative agency effective March 1, 2016, will work with the chain through the end of the month. Before Barkley, Applebee's had worked with MDC Partners' CP&B since 2012.

Grey is expected to launch an integrated communications plan for Applebee's in July. The agency's Los Angeles and New York offices will work on the account.

DineEquity is not expecting much of a rebound at Applebee's this year after a 5% drop in domestic same-store sales in 2016, including a 7.2% decline in the fourth quarter. At the beginning of March, DineEquity announced that it will close between 40 and 60 Applebee's locations this year, after shutting the doors on 46 locations in 2016. The company expects Applebee's domestic same-store sales to fall 4% to 8% in 2017.

DineEquity is working with an unnamed "world-class management consulting firm" on how to fix Applebee's, Richard Dahl, DineEquity's chairman and interim CEO, said during a March 1 conference call.

Mr. Dahl said Applebee's weakness, underperforming in a weak industry, involved "every aspect of our business" including value perception, marketing, food differentiation, and operations. He said the hand-cut, wood-fired grill effort was "off target" with the value focus in the industry.

Plus, general shifts are at play. People are doing more of their shopping online, bypassing malls and the company's nearby restaurants and even weighing on sales of its gift cards at other shops. And, he added that people dining at home, including on prepared foods from grocery stores, may be having an impact on its business.

Despite the difficult business environment, Jeannine D'Addario, interim senior VP-marketing and culinary at Applebee's, said in a statement Monday that the brand "couldn't be more excited to begin working with Grey."

"In addition to their deep experience, capability and creativity, the team at Grey has a solid understanding of Applebee's evolving consumer, the brand's legacy and our goals to ignite change and deliver original and compelling work," she added in the statement.

Last spring, Applebee's hired sibling WPP agency Cohn & Wolfe as its global PR agency for consumer, corporate and franchisee communications, which includes corporate social responsibility, executive visibility and issues management as needed. The PR shop was also hired to support what the brand called "the largest and most comprehensive marketing and advertising campaign in its history," with ads from Barkley centered around the new hand-cut, wood-fired steaks. The campaign included TV, online and movie theater placement.

Recently, Applebee's has been advertising a $9.99 lunch deal on a burger, fries and a Pepsi.

In 2015, Applebee's U.S. measured-media spending fell 1.4% to $159 million, according to an Ad Age Datacenter analysis of Kantar Media data.

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