Skip to main content

Applebee’s is a Market

In the 21st century, classic American eateries such as Applebee’s and Ihop are struggling heavy. Analysts blame the fact that these casual dining chains no longer get traffic from millennials and other young peoples. For this market I will use ‘Applebee’s’ to represent this whole group of struggling food giants. Recently, Applebee’s has had to close down hundreds of locations as it continues to shake its “dated” appearance while still appealing to its older clientele who still love Applebee’s. This is a fine example of a two side matching market with currency. On one side is your Applebee’s and the restaurants that are popular these days (i.e. McDonalds, Panera, Chipotle, other places that are appealing for young people). The other side of the market is a sample of the millennial generation and older people like baby boomers. We match each of these people to their favorite go-to restaurants for a casual dinner. The ‘currency’ is not money in this scenario, although each customer still pays for their food, but increased reputation and power of Applebee’s if they are able to garner support from more millennials. Money is not the currency because while they eventually do need a higher steady revenue, right now they must take a hit and change their demographics. In exchange, millennials want a pleasant dining experience where they can get trendy foods, served quickly, at a price that they like. Old people want a warm, familiar establishment and do not care as much about price. The reputation ‘currency’ that Applebee’s receives from a match with millennials is far more valuable than that of a match with an old person.

The ‘market’ itself can be defined for a time interval (such as a financial year) in which millennials go out to eat. A feature of the market is that preferences update dynamically as we see trends occur. Customers have a binary preference list of restaurants they habitually eat at. Preferences are determined at the start of the quarter by preference of food, brand recognition, and their habits of where they had eaten in previous markets. However, if one restaurant becomes more popular with young people, a millennial’s preference may change during the year if he is swayed by new culture and he could be rematched. Old people provide a negative ‘currency’ when they match with Applebee’s as it effects the preference list of millennials and other young people. It becomes less of a vibrant atmosphere and is less cool because eating in a place with many old people is sometimes weird. Young people may choose to not preference Applebee’s and go match with Panera or Chipotle or McDonalds if too many of these matches occur. Furthermore individual Applebee’s franchises might be less concerned about attracting youth if they are still making immediate money with old people even though they will struggle in the future. As Applebee’s reputation changes, they hope that more millennials will preference it and they can prosper. An interesting dilemma is how to change their culture so that it could appeal to both older generations AND millennials in the future such that all reputation or ‘currency’ received is positive in the market. We will wait and see as they continue to change their menu.



Leave a Reply

You must be logged in to post a comment.