New York Times - August 20, 2008 <http://www.nytimes.com/2008/08/20/dining/20applebee.html>
A Craving for Riblets and Change at Applebee's By KIM SEVERSON
IN the back of a black Mercedes on a ride from the New York Stock Exchange to an IHOP in New Jersey, the woman they call the Velvet Hammer leaned in close.
"We own riblets," Julia Stewart confided. "Ninety-five percent of the world's supply, we're picking up."
For people who don't venture much past Balthazar, the riblet is the meaty piece with flat bones left over when racks of ribs are trimmed into uniform rectangles. It is a classic menu item at Applebee's Grill and Bar.
The chain is the largest of its kind in the world, with annual sales of more than $4.7 billion in beer, riblets and dishes like the Oriental chicken salad.
Last year Ms. Stewart became chief executive. She left the company as president of the domestic division in 2001 after being passed over for the top spot. She landed at IHOP (where she had worked as a waitress in high school), and began to rehabilitate what has become the nation's largest family restaurant chain. Then, in a turn soaked with satisfaction IHOP absorbed the Applebee's chain.
The resulting company, DineEquity, runs more than 3,300 Applebee's and IHOP restaurants. Nobody else owns as many "casual dining units," known to the rest of us as inexpensive restaurants where you get a menu and talk to a waiter.
The food that Ms. Stewart supervises is consumed by nearly two million people a day. Spending time with her is like having a direct view of what America wants to eat.
In her business, people use phrases like "drink equity" and "healthy indulgence rebranding." Everyone is on the hunt for the next "craveable," an item like a whole deep-fried onion, a potato skin stuffed with bacon or, in Applebee's case, the riblet.
At $18.99 for a couple of side dishes and a cut that might otherwise have ended up in the scrap heap, riblets are a sweet profit center.
But Applebee's can no longer stand on the riblet alone, nor on the dusty stained glass and vintage sports equipment motif that seemed so awesome in the 1980s, when the chain began plopping itself down in small towns and suburban parking lots.
Ms. Stewart acknowledges that Applebee's has not aged well, and that it has become indistinguishable from the other "apostrophe-s" restaurants like Chili's or T.G.I. Friday's.
Above all, she and industry analysts agree, the menu has grown stagnant. Ms. Stewart is trying to steer Applebee's into more adventurous waters.
It would be hard to imagine a more challenging time to do that. Food and fuel costs are up while the amount of money customers are willing to spend is down.
In recent months, Bennigan's and its sister restaurant, Steak & Ale, filed for bankruptcy. Almost half of the people who own chain restaurants think things are going to get worse in next six months, according to a recent survey by the National Restaurant Association.
"It's been a disaster," said Sharon Zackfia, a restaurant analyst with William Blair & Company, an investment firm. "There's been nowhere to hide."
But Ms. Stewart loves a challenge, and she believes that small but important menu changes that will be introduced in the coming months will lead her to victory.
It worked at IHOP, where she replaced the watery orange juice with juice not made from concentrate, putting it in smaller, prettier glasses and charging more for it. She improved the coffee and abandoned blue plastic carafes in favor of pots with copper jackets. The cream-cheese stuffed French toast? Hers.
These may seem like baby steps, but nothing goes onto the menu at Applebee's or IHOP without research based on thousands of customers.
This common denominator effect is one thing that makes the chains so popular. Nothing is too challenging and no matter where you go, the menu looks the same. When a franchise owner in Vermont wanted to offer maple syrup instead of flavored pancake topping, the company had to grant special permission. The problem was taste, not cost."Most people would find it way over the top," Ms. Stewart said.
At Applebee's, she has to tread as carefully. Tweaking the sweet, artificial hickory taste of the riblets is one thing, but losing the mozzarella stick? Dream on. "Don't get me started on the mozzarella stick," she said. "Can we get rid of them entirely? Probably not. All I know is we can do better in appetizers. Maybe it's a panko breaded calamari. Maybe a baked wing."
The trick is to give food that little twist. "Everybody has a quesadilla, but no one has a bruschetta quesadilla," she said. That idea is still under development, but Applebee's does have a quesadilla burger.
You don't come up with a quesadilla burger by catering to dieters. Applebee's flags some menu items that have been approved by Weight Watchers, but the company is not exactly cutting a path through the calorie jungle.
That's because what people say they want and what they eat are often different, she said as she sat in a booth at the IHOP. Nearby, a family of four was pouring different flavors of syrup over stacks of pancakes. "That's what people want," she said.
Among the dozen dishes on her table that day was the Georgia praline peach streusel pancake, a dish so sweet it made a Butterfinger bar seem like a refreshing palate cleanser. It's an item in IHOP's Discover America pancake series, designed to mark the company's 50th birthday. The program features a changing cast of pancakes including New York cheesecake and Kansas City carrot cake.
"We can't seem to make things sweet enough for people," said Patrick Lenow, the director of public relations for the company.
Earlier in the day, Ms. Stewart rang the opening bell at the New York Stock Exchange to mark the chain's anniversary. She spent the rest of her trip talking to some franchisees and doing culinary homework, as she does when she travels to other cities from her Southern California home, which she shares with her two daughters and her husband.
Whenever she eats at fancy restaurants, she looks for ideas that her chains can reinterpret. It's a longstanding tradition. Without Nobu's miso black cod, the Cheesecake Factory would never have its miso glazed salmon. During her time in New York last month, she sampled the food at Gramercy Tavern and Porter House.
On an earlier visit she enjoyed dinner at Park Avenue in Manhattan, which changes its name and décor to match the season. Mrs. Stewart thinks sous vide techniques might have some applications in her restaurants, and she is quite taken with the idea of seasonal side dishes or soups. From Porter House, she's gleaned the idea of creating individually baked side dishes. And there is the sour frozen yogurt trend to consider.
When pushed for other possible shake-ups in the Applebee's repertory, the Velvet Hammer leans in and offers this: "Think about bread baked fresh in the restaurant," she said.
Does she mean artisan breads? "Do you really think my Applebee's menu is going to say artisan bread?" she asked. "No. But the bread will be better."