The largest franchisee of the largest casual-dining chain in the world is excited about business prospects in 2011.
Gregory Flynn is chairman and chief executive of Apple American Group LLC, which, with 269 restaurants, has more franchised Applebee’s Neighborhood Grill & Bar locations than anyone else in the system of 1,999 units worldwide. He said his company is budgeting 2011 sales of about $700 million.
During the past three years, San Francisco-based AAG has acquired more than 125 Applebee’s units from the chain’s parent, DineEquity Inc. of Glendale, Calif., among others. The franchisee now operates restaurants in California, Delaware, Indiana, Minnesota, Nevada, New Jersey, Ohio, Pennsylvania, Washington, West Virginia and Wisconsin.
As 2010 closed, Flynn spoke with Nation’s Restaurant News about the past year and his outlook for 2011.
Excerpts from that conversation follow:
What are your thoughts about 2011?
Sales growth has been robust in the back half of the year [2010], and I think it is less the rising tide, than the effects of a whole variety of programs that we, at Applebee’s have put in place, and that we at Apple American have put in place. I expect the sales growth to continue into next year and I expect it to be a good year.
Any regions dragging, or are all consistently performing well?
The beauty of having a diversified portfolio is that some may be up and some may be down. We’ve seen less of a consistent pattern of any given market being up or down, than in any given period, some restaurants in all markets are up and some are down, balancing each other out.
Do you have a large presence in California?
We have 51 restaurants in California.
California seems to be the ‘bad boy’ state when some public companies report because it has had prolonged higher levels of unemployment. Is that your experience?
That is really not coming through in our numbers. In California, both north and south, we have strong markets.
What are some of the programs put together by Apple American and the Applebee’s system that helped you in 2010 and that you believe will help you in the coming year?
Apple American-specific initiatives included remodeling 57 of our restaurants to the chain’s re-imaging/remodeling standards and we are seeing great results from that.
What about some of the other sales or service enhancement programs you might have shared with the system?
We’ve had a vast upgrade of our menu over the last 12 months and we’re really seeing results from that. In addition, we’ve had very good promotions centering around our 2-for-$20 offering, which has been driving traffic. And our late night initiative has been really very effective.
What is the late-night initiative about?
It is centered on driving traffic from 9 p.m. to close. All Applebee’s are staying open to midnight or later now. We’ve revamped some of our happy hour offerings and we’ve introduced a higher level of activity, with louder music and lower lights. Really refocusing on being a bar.
How long has that been in place?
We’ve really just starting seeing results from that in the back half of the year [2010]. We started rolling out it in late spring.
Anything coming up next year that has you excited?
I’m very excited that remodels are performing; we will be remodeling scores of restaurants throughout our markets next year.
Anything on the operations front or labor side now or that you expect to come along next year that has you feeling nervous?
Nothing makes me nervous. We have a purchasing co-op — I’m on the board — that has done a great job of locking in some of our major costs for next year.
On the labor side, for us, it is actually one of the first years in some time that the minimum wage is not going up everywhere and that is kind of nice.
One of the initiatives that is really driving our performance right now, I believe, is that we went through a systematic upgrading of our people during the last year and a half. I think that is really going to stand us well for next year. That was aided by 10 percent unemployment. That [upgrading] was throughout the restaurants and management ranks.
Contact Alan J. Liddle at [email protected].