PR experts on how Applebee’s can recoup trust after backlash from exec’s leaked email
Editor's note: The executive who penned the e-mail has since been fired by Applebee's becuase he did not reflect the company's "values or beliefs."
A leaked email from a company exec suggests cutting wages in response to inflation / Adobe Stock
Applebee’s is in hot water after an internal email from a franchisee's higher-up urging restaurant managers to take advantage of rising inflation by hiring at lower rates was leaked earlier this week. PR and crisis management experts say it’s not too late for the company to make good.
An internal Applebee’s franchisee's email suggesting that rising gas prices should be seen as an “advantage” that would allow the company to slash employee pay was leaked Tuesday via the popular subreddit r/antiwork.
The email appears to have been sent on March 9 to company leadership by Wayne Pankratz, an executive at Apple Central Group, an Applebee's franchisee in the Midwest. In the email, the subject line of which reads “Why gas increase is good for hiring,” Pankratz wrote: “Everyone has heard that gas prices continue to rise. The advantage this has for us is that it will increase application flow and has the potential to lower our average wage.”
Pankratz went on to spell out what this might look like in practice. He indicated that inflation might force people to work more and to accept lower wages. “Most of our employee base and potential employee base live paycheck to paycheck. Any increase in gas price cuts into their disposable income,” he wrote. “As inflation continues to climb… that means more hours employees will need to work to maintain their current level of living.” He also said that an end to government stimulus payments would force Americans “relying on unemployment money” to return to the workforce.
Pankratz also pointed out that Applebee’s is at an advantage compared to “mom and pop companies” and small businesses that will have to cut employee pay and hours due to inflation. “Some businesses will not be able to hold on. This is going to drive more potential employees to the hiring pool.” He went on to encourage company leadership to hire employees at lower wages to cut labor costs.
Per data from Payscale, it’s estimated that Applebee’s employees earn an average of $11.76 an hour — a far cry from the average hourly pay of $17.22 earned by hospitality workers, according to the latest government data.
When asked for the company's perspective on the matter, Kevin Carroll, chief operations officer at Applebee’s, tells The Drum: “This is the opinion of an individual, not Applebee’s. We understand that the franchisee who owns and operates the restaurants in this market has placed the individual on leave. Our team members 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.”
Mapping the fallout
In response to the leak, it’s been reported that three of six managers at a Lawrence, Kansas Applebee’s resigned in protest. “I was just stunned and disgusted,” Jake Holcomb — among those who quit — told The Lawrence Journal-World. The same Lawrence location closed down for most of the workday on Tuesday.
The email also caused a stir across social media, with LinkedIn and Twitter users denouncing Pankratz’s sentiment and many calling for his resignation. One LinkedIn user wrote: “You are practicing [capitalism] without ethics. Loosely translated, this is an exercise of evil. [If] you want people to work for your company, pay them their worth.” Another echoed the sentiment: “He's very excited to underpay and add to people's woes. ‘We can finally exploit people again!’ Boo this man. Tomato! Tomato!”
PR experts predict that the incident will damage the company’s ability to hire and retain talent. “Applebee’s is facing a crisis that will not only have impact in the short run, but in the long run as well. People will work for brands that view them not just as a number on a spreadsheet in balancing their budget, but be understanding and empathic in knowing the current economic situation faced by all,” says Dr. Karen Freberg, a marketing expert and associate professor of strategic communication at University of Louisville. With the so-called ‘Great Resignation’ underway across sectors, Freberg says, talent is spoilt for choice and will simply choose employers who value them better.
A consultant, who asked not be identified due to ties to the brand, says that getting an inside look into the not-so-flattering business practices of an employer understandably puts off potential hires. Plus, the source says, as corporate social responsibility becomes an increasingly crucial factor in attracting business and building customer loyalty, it sours customers’ view of the brand.
What’s on the menu for Applebee's now
It’s not yet known whether Pankratz will be disciplined by the company. At the time of writing, it appears as though Pankratz’s LinkedIn page has been deleted. At the time of writing, Applebee’s has not responded to a request for comment. American Franchise Capital could not be reached for comment.
“There is no world in which Applebee's can keep [Pankratz] and expect people to think that's acceptable,” says Dini von Mueffling, who runs an independent PR firm in New York and helps brands navigate social crises like this one.
von Mueffling suggests that there are a few actions the company might take to help mitigate the fallout and recoup employee and consumer trust. “I would suggest Applebee's issue a statement that the executive has been let go, that they are not considering lowering employee pay and that they value their Applebee’s employees,” she says. von Mueffling notes that it would also be worthwhile for Applebee’s to “underscore the benefits they offer employees and the ways they try and support them.”
Freberg also endorses this approach, saying, “This has a long-term economic and reputational impact on Applebee’s if they do not take action to address this crisis. Applebee’s has to come out not just with a statement saying they are not going to do this [and] will need to follow it by actions. Employees need to feel supported in good times and tough times.”
Even so, von Mueffling predicts that the scandal won’t cause a big dent in the franchise’s sales numbers. She caveats, however, that the incident is still likely to influence attitudes internally. “[This] will have an impact on Applebee's employees' morale if the company doesn't take a stand,” she says. “In the tightest labor market in recent history, Applebee's should be bending over backward to ensure employees know they are valued.”