Applebee’s franchise manager says high gas prices could help them cut wages. Now the restaurant is facing a backlash.

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For Wayne Pankratz, Applebee’s franchise manager, soaring gas prices are an opportunity for his business, rather than a downside. Indeed, as he told officials at franchise owner Apple Central in an emailed memo, the group of people who work at Applebee live “paycheck” and will be forced to “re-enter the market work” to earn more.

Pankratz also saw another silver lining: High gas prices will raise costs for competitors, who won’t be able to raise wages to the extent they had been. “We all competed to hire from the limited pool of applicants and there was a wage war,” he wrote in the March 9 memo. “They won’t have the means to do that anymore.”

The result, Pankratz predicts, is “hiring employees at lower wages to reduce our workforce [costs].”

The memo, which was shared on social media, sparked a backlash against Applebee, with some consumers vowing never to dine at the chain again. And at an Applebee location in Lawrence, Kansas, three of its six managers reportedly resigned over the memo, according to the Lawrence World-Journal.

“I was just stunned and disgusted,” Jake Holcomb, one of Lawrence’s managers who quit over the memo, told the publication.

Pankratz: “Terminated by franchisee”

Pankratz is no longer employed by Applebee franchise owner Apple Central, according to a statement from Applebee.

“The individual was terminated by the franchisee who owns and operates the restaurants in this market,” Kevin Carroll, chief operating officer at Applebee’s, said 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 Pankratz’s memo and employment status to Applebee’s corporate office.

The company distanced itself from the memo. “That’s an individual’s opinion, not Applebee’s,” Carroll said. Its employees “are the lifeblood of our restaurants, and our franchisees are always looking to reward and inspire new and current team members to remain part of the Applebee 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 franchises in the United States generated about $3 billion in total sales in 2020, according to the latest estimates from Restaurant Business magazine.

Most of these restaurants are owned by franchisees, with Applebee owning and operating only 69 of its restaurants.

“Get a second job”

Pankratz’s memo also aimed to provide guidance for managers to “make sure you have a pulse on your employees’ morale” and suggested that many workers “should work longer hours or get second jobs.”

Pankratz’s advice to managers: “Be aware of this” and provide early schedules so workers can organize their second jobs around their Applebee’s job.

Applebee workers earn an average hourly wage of $11.76 per hour, according to Payscale. That’s well below the average hourly wage of $17.22 an hour earned by people working in the leisure and hospitality sector in February, according to the most recent government data. Salaries in the sector jumped 14% compared to the previous year.

Unsurprisingly, the tone of the memo drew criticism, with some customers vowing to stop eating at Applebee’s.

“So they’re acknowledging that they’re not paying their employees a living wage and their solution is…to make the schedules earlier so their employees can schedule their second job around them? What a joke,” a writes a Twitter user.

Another added: “I think @Applebees don’t need my money anymore. Employees are not pawns that you can use to get cheap labor during tough times. I’ll spend my money elsewhere.”

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