Well, a long time. Applebee's franchise warns inflation is pushing
the restaurant industry to the brink.
Zane Tankel is the chairman and CEO of Apple Metro.
One of his restaurants is the Applebee's right here in
Times Square.
So Zane is our neighbor.
Zane, great to have you with us.
Thank you. I'm used to seeing you New Year's Eve.
Yes, exactly. That's when you're usually on.
What are you finding with your consumer these days?
Are they really pushing back at this point on higher
prices?
Yeah. The, the consumer is still leftover with a bunch
of overhang from that COVID money.
We keep talking COVID, COVID,
but they were saving. There was no place to spend
it.
So now they're but they're running out.
They're running out of gas.
Here's where the collision happens,
Melissa. Costs continue, core costs continue to rise.
And we read about California,
$20.00 an hour all over the it's only a matter
of time before the mayor here says,
hey, the way to get reelected is raise,
raise salaries, wages. And then along with that comes gas
prices.
Everything in our space is delivered by truck,
everything regardless of where you are,
fast food, quick serve, casual dining trucks deliver it.
That's the trucker isn't going to absorb that,
nor will the grower nor with a slaughterhouse that's passed
on.
So the collision comes where the consumer says,
hey, I've had enough along with rising costs,
which look like core of inflation doesn't go away so
quickly.
Service inflation is reducing a little bit buying services.
However, the offset to that it's not all doomsday is
the consumer seems like he or she is very willing
to pay for convenience.
Why do we pay $10 in a movie for popcorn
that you could buy in a grocery store for $0.50?
Because you can go up and get the popcorn and
come back.
And the consumer has gotten used to not cooking.
They don't cook. When the Divergent happened strongly enough between
grocery prices and
our prices, that's when the collision will happen.
Right now, grocery prices are still pretty strong.
Exactly. You know, Well, you go to the grocery store,
we all do. And as a result,
the Divergent hasn't hit. But it will because we continue
to have $20.00 an hour at labor.
We continue to have virtually everything is rising on core
except maybe rents in certain locations,
but great sites, great Grape still very high.
So let's go through some of your costs.
In terms of the cost that will not come down
because I would imagine a lot of food costs will
eventually come down or return to some sort of normalcy.
But labor, do you think that will ever come down
or does that say hi?
Well, would you take a cut benefits?
No, of course not. And nor will our dishwasher,
nor will our server, nor will anybody.
Once you get there, there's no coming back other than
quitting and looking for something else.
And if you quit and look for something,
you have the same problem.
So wages don't come down.
Maybe proteins will slaughterhouses, the cattle,
the cattle stock, chicken, you know,
they all depends on what the
what that grower season is about.
Maybe that might, but I don't know.
Gasoline who they deliver all this stuff by tractor trailer.
We get a, a AA60 foot trailer that comes right
over here.
If you can imagine block traffic and we block traffic.
Well, we have, we have to load them at,
we're not allowed to do it after 4:00 AM in
the morning,
but we, we block traffic at 4:00 AM in the
morning.
What are you doing out on the streets at 4:00
AM? But you know, we just heard a bunch of
earnings for Q1 and some guidance from Q2 from a
lot of consumer companies.
And one thing that we heard again and again was
that the consumer is resilient,
right? And so we're talking about like we just started
this segment on the lower end.
You know, these McDonald's and Burger King are going to
$5 menu items.
That's probably like a low end item for you for
a whole meal.
So when you see some of these companies and,
you know, in the quick serve space struggling and their
consumer pushing back at the term that you just used,
does that make you a little bit worried about your
segment in cycles past?
Have you seen it move up the chain like that?
Yeah, of course we have to worry about it.
The only good thing we have going for us is
people are creatures of habit.
You are, I am. And going out to dinner isn't
some movies.
You cannot go to the movies anymore because it's all
on television,
streaming, Netflix, you name it,
you can get it. You cannot have somebody cook unless
you're going to hire a chef,
cook your meal and sit down and eat it.
So that dies very, very slowly.
The consumer. That's one habit.
The other habit is we all have,
I don't even know you guys that well,
but I know you have it.
You get it at birth.
It's called eating.