• The Wall Street Journal (subscription required), Friday, June 29, 2007 11:30 AM

In a business where fashions in food, decor and general restaurant ambiance shift fast, Applebee's stayed too long with a formula that's out of touch with today's consumer.

Attracting diners are newer eateries with sleek interiors--a contrast with Applebee's busy walls of photos and sports memorabilia. Menus at many newer-generation restaurants stress the freshness or naturalness of their food, a contrast with the fried-and-breaded fare at traditional bar-and-grill chains like Applebee's. And its menus have lacked distinctive "destination items."

Last year Applebee's began upgrading some of its best-selling items. At the bar, it designated Jose Cuervo as the tequila for margaritas. And it hired TV chef Tyler Florence to create food with bolder, more-diverse flavors. So far, the changes haven't stopped the slide. In the four weeks ended May 27, sales at U.S. restaurants open at least 18 months were down 2.1% from a year earlier.

Read the whole story at The Wall Street Journal (subscription required) »