Tony Moralejo, president of Applebee’s Neighborhood Grill & Bar, has had an “absolutely exhilarating” 60 days in his new role, he said this week.
Moralejo in January was promoted to succeed John Cywinski. He had served as the president of Glendale, Calif.-based parent Dine Brands Global Inc.’s international and global development since 2020, guiding that team through the pandemic.
Prior to Dine Brands, which also owns IHOP and Fuzzy’s Taco Shop, Moralejo served as executive vice president for international business and global development at Church’s Chicken and its international brand, Texas Chicken, and worked for more than 18 years for Burger King in various leadership roles.
Moralejo, in an interview after Dine Brands’ earnings on Wednesday, said Applebee’s development will depend on factors the corporate team can control to make the casual-dining concept appealing to its existing 31 franchise groups.
At the end of the fourth quarter, Applebee’s had 1,673 units, down from 1,683 in the same period last year. Average weekly domestic unit sales increased to $52,500, up from $51,900 in the prior-year period.
While the Applebee’s team can’t control macroeconomic factors, inflation, the rising cost of real estate and access to capital, he said. “I've told my team … let's control what we can control." Among those things, he added, are average unit volumes and operating margins.
“What we can control is continuing to grow our top-line AUV, working you know hand in hand with our franchisees to improve their four-wall EBITDA margin and looking at the cost to build one of our restaurants,” he said. “We can value-engineer the box.”
Moralejo added that “our franchisees, they're very well capitalized. They want to develop. They're a little risk-averse right now, and honestly you can't blame them given the background the environment that we're dealing with. But i'm confident that we're going to return back to net unit growth in the near future.”
While the virtual Cosmic Wings brand remains an optional program for franchise owners, Moralejo said, “We've decided to focus more on building our top-line sales, which we've done an incredible job with the last three years. We've decided to focus more on the dine-in guest experience and our off-premises business, which is thriving as well.”
In the fourth quarter ended Dec. 31, Applebee’s same-store sales increased 1.7%. Off-premises sales accounted for 23.8% of the sales mix, representing per-restaurant average weekly sales of about $11,500.
Moralejo said the off-premises sales were mixing 50-50 between the to-go and delivery channels.
“The keys to a successful off-premises business is you have got to have the right mix of portable items that you can take home and share,” he said. “You’ve got to have really best-in-class packaging, and you have got to have a robust technology agenda.”
Applebee’s this year is rolling out a new point-of-sale system, has implemented server handhelds and has a new website and smartphone app to aid the off-premises business, he said.
“We're also experimenting a little bit with artificial intelligence” as a recommendation engine on the Applebee’s app and website, he said. “It'll self-learn, and it'll know what people like, know what people are going to order. And as you visit our website time and time again, it's going to be better positioned to offer you the products that you're looking for,” Moralejo said.
Other innovation tests include lockers for order pickup and new shelving for to-go orders as well as the existing test of exterior order-pickup windows at some units.
Applebee’s marketing has been effective, Moralejo added. “Our goal is to provide value for our guests while minimizing the margin erosion,” he said. “If we do that, that's a winning recipe for our franchisees and for our guests.”
In his nearly 28 years in franchising organizations, Moralejo said he’s learned, “I'm a consensus builder. I'm a collaborator. Those are some of my strengths, and I'm going to lean into that and continue to build on the strong relationships that we have today.”
Moralejo said little keeps him awake at night but for a loud air-conditioner in Miami and “the fear of the unknown — not knowing what's coming next.
“But I think I think since COVID, you've learned to live with uncertainty,” he said. “I think our franchisees coming out of COVID have learned to live with uncertainty. They are no strangers to difficulties, so the inflationary environment that many brands find themselves in I think Applebee's is uniquely positioned — with our talented, experienced [and] knowledgeable set of franchisees — to navigate these uncertain waters.”
Moralejo said, “Applebee's is thriving because guests continue to respond to value experiences. I think we're winning because you know our menu is innovative, our value is best in class and we're a welcoming experience for all who visit.”
Dine Brands Global Inc. has more than 3,500 restaurants under its three brands.
Contact Ron Ruggless at [email protected]
Follow him on Twitter: @RonRuggless