The Real Reason A Miami Applebee's Just Went Delivery-Only

During the pandemic, the restaurant industry was one of the most hard-hit businesses due to many state regulations of limited dining capacity or no dining indoors at all (per ABC News). Many businesses found creative ways to continue operating, including using robots for specific labor, third-party delivery services, and QR-coded menus (via JWU). While the change was forced upon them, it's resulted in a shift in consumer dining habits, and companies are taking notice. Applebee's, in particular, is trying a new option in Miami that could be a fruitful direction for the company.

Instead of building a new brick-and-mortar store, Applebee's partnered with CloudKitchens to open a ghost kitchen in the Wynwood Arts District of Florida just minutes from Miami (via Restaurant Dive). The 200-square feet location pales compared to the typical 3,800-4,700 square feet of a typical Applebee's restaurant, so why the change? 

Like most business decisions, it boils down to cost, but maybe not the standard cost you hear about lately, like labor increase and cost of goods increase. Let's break down what went into their decision-making and what changes this decision has brought about.

Applebee's is testing the waters

According to Restaurant Dive, Applebee's franchisee Doherty Enterprises is testing a new delivery-only model. The reason that this was appealing is that the rent for retail spaces had gotten to the point that it didn't make sense financially to start with a brick-and-mortar store. By downsizing to a ghost kitchen, Doherty shares that there's an opportunity to gauge demand in the area and determine if a downtown Miami brick-and-mortar store would be a wise investment. Under a delivery-only model, volume and staffing are expected to be less than in a traditional model.

To ensure its success, the brand will rely heavily on targeted social media marketing, as the most significant obstacle with the ghost kitchen model is awareness. If all goes to plan, Applebee's will open an additional six ghost kitchens in the United States in 2022. According to Business Insider, Applebee's sales have struggled since 2016 due mainly to its inability to capture the millennial market. With the addition of the delivery-only model, time will tell if fate can be reversed.