IHOP, the chain known for pancakes and other breakfast foods, wants to sell even more breakfast.
The chain already sells quite a bit of breakfast. More than 70% of its food sales are breakfast items, including 60% at dinner, indicating that its customers want breakfast at all hours.
When former Yum Brands leader Lawrence Kim was named president of IHOP last year, he took a look at those numbers and decided that IHOP should double down.
“Lawrence’s insight is that we should lean into even more what we are actually selling and why people come to us,” said John Peyton, CEO of IHOP owner Dine Brands, during an interview Wednesday.
The 1,800-unit chain is hoping a renewed focus on its biggest daypart will help reverse a year-long traffic slump. IHOP’s same-store sales fell 2% last year as inflation-weary consumers pulled back on their restaurant visits.
IHOP’s menu already has a good mix of breakfast items. Aside from its signature pancakes, it has done work around its crepes, Benedicts, biscuits and omelets in recent years. And last year, it added a value section to its menu featuring four breakfast combos for $6 each.
So the new strategy is more about telling the breakfast story, highlighting the fact that IHOP’s food is made from scratch, customizable and affordable, Peyton said.
That is where Kim’s expertise will really kick into gear. Before joining IHOP, Kim spent nearly four years as Yum’s chief innovation officer. Prior to that, he worked in marketing and brand strategy for Taco Bell, Yum’s largest brand.
He knows how to tell a story, Peyton said, especially one that will work on social media and resonate with younger customers.
One of Kim’s first moves as president was to build out a social media team at IHOP headquarters. That team made its first major splash last weekend, when IHOP set a Guinness World Record for cooking and serving the most pancakes in eight hours. (25,629, to be exact.)
The campaign generated 3 billion impressions for IHOP on social media, most of which came through the accounts of social media influencers. “When we hit 1 billion [impressions] that’s a home run for us, so 3 billion is just extraordinary,” Peyton said.
Social media will be key to IHOP’s marketing efforts going forward as it looks to court diners in the 18- to 30-year-old range.
“They’re looking to TikTok for their news, they’re looking to TikTok for their restaurant recommendations,” Peyton said. “We need to be seen where they’re spending their time, and that’s increasingly on social channels and particularly TikTok.”
IHOP is also working to streamline its marketing message. Historically, the chain has run 10 to 11 limited-time promotions a year, changing up its creative every month or so. This year, it will run just six or seven campaigns “so that we can lean more into investing into a single message,” Peyton said.
That message will largely focus on value and core breakfast items, specifically IHOP’s House Faves value menu of $6 combos.
IHOP launched House Faves in October. | Photo courtesy of IHOP
House Faves is IHOP’s first permanent value offer, besides the section of its menu reserved for customers who are 55 or older. And it has proven to be a traffic driver. The chain is currently testing extending the availability of House Faves all week long, rather than just Monday through Friday.
IHOP believes that honing in on value will help it stand out in the increasingly crowded field of restaurant advertising, much of which features meal deals and other value offers as brands go after price-conscious consumers.
It will also save IHOP some money, because it won’t have to shoot new commercials or photograph new food every four to six weeks as it has in the past. The change has yielded an almost 20% increase in the chain’s marketing dollars, Peyton said during an earnings call Wednesday.
IHOP believes this strategy will help get more customers into its restaurants. From there, it needs to make sure they have a good experience so that they’ll come back again. To that end, IHOP is also working on improving its operations.
The chain plans to simplify its recipes and food preparation processes and even reorganize the layout of its kitchens to make things easier for employees. It’s also investing in technology such as handheld server tablets that are designed to speed up service.
The tablets are in more than half of its locations today and have produced good results, Peyton said, including faster table turns and better tips. They have also helped boost drink sales because employees no longer have to walk over to the POS to ring them in—a step that can be easily forgotten when things are busy.
Dine Brands is betting these efforts will translate to a better year for IHOP. It’s expecting same-store sales at the pancake chain to range from negative 1% to positive 2% for the year.
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