APPLEBEE’S OFF-PREMISE SAME-STORE SALES ROSE 8% LAST QUARTER. | PHOTO: SHUTTERSTOCK
And though it still does not offer delivery, that has not stopped analysts from asking when it plans to start, given the apparent de- mand from customers to have their ribeyes and potatoes at home. (“As of right now, we have resisted going that route,” Morgan reit- erated this month.) There’s a reason some analysts are chomping at the bit: Olive Garden, the other longtime delivery holdout in casual dining, has shown just how big of an impact delivery can have for an old guard full-service brand. After adding a delivery option to its web- site last fall, delivery now accounts for more than 3% of the pasta chain’s sales, and most of that growth came with little to no market- ing behind it. In the chain’s fiscal third quar - ter, delivery contributed 40 basis points to same-store sales, which were up 6.9%. Parent company Darden Restaurants has been so happy with the service, which is provided by Uber, that it is already testing delivery at one of its other brands, Cheddar’s Scratch Kitchen. Catering and pickup continue to grow for Olive Garden as well. Overall, off-premise sales rose by 20% compared to a year ago, far outpacing total sales, which grew 8%. Applebee’s also credited off-premise as a factor in its first positive same-store sales re - sult in two years. Same-store sales rose 4.9% at the bar and grill chain in the second quar- ter, but they were up 8% in the off-premise channel. To-go accounted for 22% of total
sales, split evenly between pickup and deliv- ery. Applebee’s has worked to make takeout more appealing in recent years by extend- ing in-restaurant specials to off-premise and running some to-go-only deals. It has also dialed in its strategy on third-party delivery apps, running A/B tests to see which promo- tions and imagery work best and investing in higher placement for Applebee’s on the apps. “It’s just a very aggressive test and learn strategy, and we’re always recalibrating and updating what we’re doing,” said John Pey- ton, CEO of Applebee’s parent Dine Brands, in an interview. Learning how to succeed on delivery apps has been a key part of the off-premise equation at other full-service chains too. Af- ter breakfast and lunch brand First Watch lowered its pricing on DoorDash earlier this year, delivery sales took off. In the second quarter, delivery accounted for all of its traf- fic growth and helped drive a 3.5% same- store sales increase. The orders tend to be from customers who don’t otherwise visit First Watch, which is a positive sign, even if the brand’s CEO doesn’t fully understand the impulse. “I’m still surprised by the number of people who will go on there and order a kale tonic to have it delivered to their house,” Chris Tomasso said in an interview. “But for the most part, those orders come in at the same busy times … and other than the
surcharge impact, per person average is very similar.” Indeed, consumers’ willingness to pay a premium to have their food delivered goes against everything we think we know about our current economy. But to hear companies like DoorDash and Uber Eats tell it, they have only just scratched the surface of the opportunity. “When you look at the number of occasions that we actually capture today, we still lose the vast majority of those occasions to the pantry or a different form of consumption,” DoorDash CEO Tony Xu said on the chain’s earnings call this month. “And so it tells me that we actually have a very large runway ahead so long as we can keep improving the product.” It’s rare for a new revenue channel to come along with such a high ceiling, especially in full service, where capacity has traditionally been limited by tables and chairs. Now restaurants can accept as many orders as the kitchen can handle, even if the dining room is full. Takeout has a compound advantage for full-service restaurants because it levels out the competition. Chains like Applebee’s can now go head to head with the McDonald’s and Chipotles of the world, for whom convenience has always been a calling card. If the runaway for off-premise is really as long as DoorDash believes it is, count casual- dining chains along for the ride.
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