Why Applebee’s Is Selling $1 Cocktails

It’s a Wednesday night at Applebee’s in metro Detroit and the restaurant is turning a brisk business. Waitresses rush by carrying plates of boneless chicken wings, fried mozzarella sticks, and a fair share of plastic cups filled with clear brown liquid. “There’s no limit to drink as many as you want,” one waitress says as those plastic cups pass by. “So [people] just keep ordering them.”

Since Applebee’s launched its $1 Long Island iced tea promotion (aka $1 L.I.T.s) last week, the alcoholic drink — poured into a mug or sometimes a disposable cup, depending on volume of orders — has drawn in a growing adult clientele. The demand has been high enough that the beverage director at the metro Detroit location now mixes four keg-sized batches of the sweet alcoholic drink daily, according to a server. The uptick in business is big enough to warrant a modest wait at the door.

The casual dining chain as a concept may be limping along, but Applebee’s, it seems, has discovered a temporary cure. In October, the neighborhood-centric chain managed to win over thrifty imbibers with a whole month of $1 margaritas — or rather, Dollaritas, as the marketing dubbed them. Anecdotally, the cheap margs seemed to drive more diners into Applebee’s locations, apparently driving some employees and regulars crazy with bad tips and long wait times.

The Long Islands have mustered similar excitement. As one Twitter user noted, “I’m not an @Applebees fan but if you want to throw $1 Long Island Iceteas [sic] at me....I can help you out #MerryDrunkness.” An Applebee’s in the New York area reportedly experienced unusually long lines, “a backed-up kitchen, and half-hour waits for drinks” during the first weekend of the promotion, according to Refinery 29. The mania surrounding the cocktails has even inspired its own service industry memes.

But how can a chain that’s contracting and shuttering locations across the country afford to offer cocktails, albeit watered-down cocktails, at such a steep discount?

“The general idea is, once you bring [customers] in, then you start to use suggestive selling, and building that check average through getting them to order other things,” says David Henkes, a senior principal at the food and beverage industry consulting group Technomic.

As in the case of a happy hour or a bottomless mimosa brunch, consumers are made to feel like they’re getting a good deal — especially considering that alcohol is often expensive. Applebee’s doesn’t list prices for its regular, so-called “top-shelf” Long Islands, but at the metro Detroit Applebee’s, these standard cocktails rang in at around $6 a glass. At the same time, restaurants are betting that customers will only order a few drinks, while consuming high-ticket items like three-for-$13 appetizer samplers and $15 top sirloins.

Alcohol has also become a particular focus for chains, as food and beverage industry analysts identify beverage sales as a place of untapped potential: At independent restaurants, beverages can account for as much as 34 percent of sales. In fact, in a press release for Dollaritas, Applebee’s vice president of beverage innovation Patrick Kirk attempted to reemphasize the chain serves more than food: “‘Bar’ is in our name, and it is an integral part of what makes Applebee’s a great neighborhood destination,” he says.

With steeply discounted cocktails, the company is banking on attracting in more customers. “There’s no secret that casual dining — especially the big chains like Applebee’s — have been challenged,” Henkes says. “Growth has been at a premium, and they’re looking for ways to bring traffic back into the restaurant.”

But do the $1 promotions really translate into more traffic and sales? Applebee’s quarterly sales haven’t yet been released (and its parent company DineEquity declined to provide data on consumer traffic during the Dollaritas promotion). The server in metro Detroit noted that the restaurant had experienced more traffic since the Long Island deal was introduced, though it’s still “calmer” than during the Dollaritas promo. Data from Google Trends seems to back that up: Searches for Applebee’s in the past year showing a steep spike in October during the month of Dollaritas; that tapered off in November, only to show a slight jump in December after the launch of the $1 L.I.T.s offer.

Whether the brief uptick in cocktail promotion-related traffic will translate into a lasting appreciation for Applebee’s bar is still up for discussion. On social media, consumers continue to express excitement for the deal. But customers have offered up mixed reviews for the beverage itself — an amalgam of sweet and sour mix, cola, rum, vodka, gin, tequila, and triple sec (the exact spirit brands may differ between locations, but all are “prepared with the same amount of 75-proof alcohol,” according to Applebee’s). The Long Islands have been varyingly characterized as “watered down,” “nasty,” and the flavor of a dollar. Though perhaps the answer was more in the middle: One Twitter user offered up a tepid review saying, “$1 LITs at Applebee’s could be worse.”

That last experience, the feeling that consumers are getting exactly what they paid for — even if what they paid for is a cocktail overwhelmed by mixers — may be exactly what Applebee’s is going for, according the Henkes.

Data shows “a pretty convincing link” between customer satisfaction and having a drink with dinner, Henkes says. That’s even more true when it comes to the oft-hyped millennial dollars — a group the chain had reportedly given up on wooing back in August. In the context of Applebee’s $1 cocktails, “they’re probably not getting full margin on it when they’re selling it for a dollar, but they’re looking to build their beverage business and create that little bit of a buzz, so to speak, that will continue to get guests back into the restaurant.”

If Applebee’s current strategy proves successful at increasing traffic in its restaurants, the true measure of success will be if the ailing chain can begin to grow its enduring base of return customers.

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