Applebee's franchise exec says high gas prices could help them cut wages. Now the restaurant faces a backlash.
To Applebee's franchise executive Wayne Pankratz, surging gas prices are an opportunity for his business, rather than a downside. That's because, as he told managers at franchise owner Apple Central in an emailed memo, the pool of people who work at Applebee's live "paycheck to paycheck" and will be forced "back into the work force" to earn more.
Pankratz also saw another silver lining: High gas prices will increase costs for competitors, who won't be able to increase wages to the extent they had been. "We all competed to hire out of the limited applicant pool and there was a wage war," he wrote in the March 9 memo. "They will no longer be able to afford to do this."
The result, Pankratz predicted, is "hiring employees in at a lower wage to decrease our labor [costs]."
The memo, which was shared on social media, is sparking a backlash against Applebee's, with some consumers vowing never again to dine at the chain. And at one Applebee's location in Lawrence, Kansas, three of its six managers reportedly quit over the memo, according to the Lawrence World-Journal.
"I was just stunned and disgusted," Jake Holcomb, one of the Lawrence managers who quit over the memo, told the publication.
Pankratz: "Terminated by the franchisee"
Pankratz is no longer employed by Applebee's franchise owner Apple Central, according to a statement from Applebee's.
"The individual has been terminated by the franchisee who owns and operates the restaurants in this market," said Kevin Carroll, chief operations officer at Applebee's, in an emailed statement.
Attempts to reach Pankratz on Friday morning were unsuccessful, and Scott Fischer, director of communications for Apple Central, referred questions about the memo and Pankratz's employment status to Applebee's corporate office.
The company distanced itself from the memo. "This is the opinion of an individual, not Applebee's," Carroll said. Its employees "are the lifeblood of our restaurants, and our franchisees are always looking to reward and incentivize team members, new and current, to remain within the Applebee's family."
Applebee's corporate owner is Dine Brands Global of Glendale, California, perhaps best known as the founder of the IHOP pancake restaurant chain. Its more than 1,700 Applebee's franchises in the U.S. generated about $3 billion in total sales in 2020, according to the latest estimates from Restaurant Business magazine.
Most of those restaurants are owned by franchisees, with Applebee's owning and operating just 69 of its restaurants.
"Get a second job"
The Pankratz memo also aimed to provide some advice for managers to "make sure you have a pulse on the morale of your employees" and suggested that many workers "will need to work more hours or get a second job."
Pankratz's advice to managers: "Be conscious of that" and provide schedules early so the workers can arrange their second jobs around their Applebee's work.
Applebee's workers earn an average hourly wage of $11.76 an hour, according to Payscale. That's far below the average hourly pay of $17.22 an hour earned by people working in the leisure and hospitality sector in February, according to the most recent government data. Wages in the sector have jumped by 14% from a year earlier.
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Not surprisingly, the tone of the memo drew criticism, with some customers vowing they'd stop eating at Applebee's.
"So, they acknowledge that they are not paying their employees a livable wage and their solution is … get schedules done earlier so their employees can plan their second job around them? What a joke," one Twitter user wrote.
Another chimed in, "I think @Applebees doesn't need my money anymore. Employees aren't pawns that you can use to get cheap labor during hard times. I'll spend my money elsewhere."
