Applebee’s Gains Edge On Rivals By Emphasizing Hometown Feel

Planet Hollywood names drinks after Demi Moore and Arnold Schwarzenegger movies. Hard Rock Cafe displays glitzy memorabilia like Billy Joel’s old piano.

At the Applebee’s Neighborhood Bar and Grill in this suburb of Kansas City, the closest things to celebrity memorabilia are the autographed sneakers of Bill Elliott, a former basketball star at nearby Olathe South High School.

And while there are no celebrity pianos, a used fire hose from the local fire department hangs on the wall.

At Applebee’s restaurants nationwide, the menu, too, has a hometown feel, featuring “neighborhood specialties” with local touches like chicken-fried steak in Texas and seafood gumbo in Boston. And if all that neighborhood feeling is not enough, there is the price: The average bill is $8.50 a person, at least a dollar lower than at many competing chains in the “casual dining” market - including Chili’s Grill and Bar, TGI Friday’s and Olive Garden.

The idea is to make the restaurants seem local, cozy and affordable. And so far it has worked. Planet Hollywood and Hard Rock Cafe may get a lot more attention, but Applebee’s - taking a far different, less citified approach - has become the nation’s largest and fastest-growing casual-dining chain in terms of number of stores and is among the largest and fastest-growing in revenue and earnings. Today, Applebee’s International Inc. has sales of $1.5 billion and operates more than 840 restaurants in 45 states, primarily in towns and sprawling suburbs in the Midwest and South.

Undaunted by all the competitors in this corner of the restaurant market, Applebee’s plans to double in size within five years, opening at least 135 restaurants this year alone. That means moving into new, sometimes more urban terrain, including the New York metropolitan area.

Applebee’s is also rolling out a new chain of Tex-Mex restaurants, called Rio Bravo Cantina. In addition to the 38 restaurants it now operates, the company plans to add 27 this year.

But continued growth will not come as easily. Even as Applebee’s expands, sales at its restaurants open more than a year have declined or been flat in recent years.

Then there is the question of the company’s relationship with its largest franchise owner, Apple South Inc. of Madison, Ga., whose chief executive tried to take over Applebee’s in 1994 and who is opening a chain of Mexican restaurants that competes with Rio Bravo in some markets.

Applebee’s - the name was chosen because it sounded apple-pie American - was created in Atlanta in 1980 by Bill and T.J. Palmer, a husband and wife who sold it to W.R. Grace three years later. Abe J. Gustin Jr., now chairman and co-chief executive, and a partner who has since retired became franchise owners in 1986 and bought what had become a 41-restaurant chain in 1988.

Now, at 62, he is handing off Applebee’s leadership to Lloyd L. Hill, a former president of Kimberly Quality Care, a health care company in Boston. Hill has no previous restaurant experience but was brought in to transform Applebee’s entrepreneurial culture into a more corporate one.

Applebee’s is known for both its bite-size “riblets” and ever-changing menu. A popular new dish called “N’Awlins Skillet” - a mix of grilled chicken, smoked sausage and sauteed shrimp, onions and bell peppers on a bed of rice - is one of several new entrees served on skillets and priced as low as $6.99.

The mozzarella sticks and tequila-lime chicken notwithstanding, customers say they also like the mix of the raised bar in the middle of the restaurants and the family-style booths, where children are given crayons and balloons.

Applebee’s, based in Overland Park, Kan., a suburb of Kansas City, has capitalized on health-conscious consumers seeking alternatives to fast food at a time when some older chains’ concepts have gone stale for many diners.