DineEquity Inc., formerly known as the IHOP Corporation, is a company that manages over 3600 restaurants under the brand names IHOP (International House of Pancakes) and Applebee’s Bar & Grill. Based out of Glendale, California, the restaurant chain operates both brands on a franchisee model and is one of the largest food retail chains in the Full Service Restaurant (FSR) business (DineEquity, 2014). Unlike its competitors serving pizza, burgers, burritos and coffee among other eat-on-your-feet snacks in the Quick Service Restaurant (QSR) format, DineEquity’s restaurants promote the full dining experience of a restaurant where the customers can relax and enjoy their food at a leisurely pace.
Earlier, the company managed only the IHOP chain, but changed its name to DineEquity. This was done as the successful takeover of Applebee’s bar and grill chain in November 2007 gave it two brand names to manage under a single corporate identity. While IHOP is primarily a restaurant known for its lavish breakfast menu, bar-and-grill chain Applebee’s International is known for its full course meals. IHOP took over Applebee’s when the latter was running into losses and within five years converted the chain from being promoter owned to a 99 per cent franchisee operation. In the process, the company has managed to make the business more profitable and the company has seen its sales and profits growing year on year, in spite of competition from the quick service restaurants like Starbucks, Chipotle’s, etc. which provide fast eating services that cater to people in a hurry. The QSR segment has seen tremendous growth and DineEquity’s growth in spite of the challenge from these competitors is admirable.
IHOP (International House Of Pancakes)
IHOP started in 1958 in a suburb of Los Angeles, catering to customers looking for a full healthy breakfast. The restaurant brand offers its breakfast menu throughout the day and people can enjoy their favourite breakfast dishes anytime they feel like. The company began expanding through the franchisee route as far back as 1960, and today has over 1500 restaurants across the US and Canada, Guatemala, Mexico, Puerto Rico and the U. S. Virgin Islands (IHOP, 2014). The restaurant also sells under license a range of its breakfast products under the name IHOP at Home, through various retail chains across the country.
HOP is primarily a breakfast food chain that caters to early morning and lunchtime consumers with its breakfast and brunch-oriented meals. While the items on the menu are largely meant for breakfast eaters, they can also be consumed as light lunch or meals during the day. The menu consists of breakfast foods like pancakes, waffles, omelettes, crepes, as well as light lunch items like soups, burritos, sandwiches and salads, besides appetizers, beverages and juices. The menu is as extensive as any full service restaurant and can offer a variety of choices to any kind of customer.
IHOP’s caters to a large segment of the population, ranging from families to office-goers, singles and couples. While it does not specifically address the teenage crowd as a target segment, it has a strong pull among the young working professionals as well as middle-aged consumers who come for the relaxed ambience and a good meal. The restaurant works on a sit-down model rather than the faster movement of a QSR, and offers wholesome meals for breakfast and lunch diners who prefer something more substantial and healthier than fast food.
Applebee’s Bar and Grill
Applebee’s was started by Bill and TJ Palmer in 1980 in Atlanta, Georgia. In 1983, the Palmers sold the concept to W. R. Grace and Company, and Bill Palmer became a franchisee. Abe Gustin and John Hamra of Kansas City became franchisees in 1986, and in 1988, bought out the rights of the concept from the parent company. Today it has over 1, 900 restaurants across the US and in places like Brazil, Chile, Ecuador, and Jordan (Applebee’s, 2014). Earlier, it operated on a mix of own and franchised restaurants, but after the 2007 takeover by IHOP (now DineEquity) it converted 99 per cent of its restaurants to the franchisee format. It also underwent a significant change in décor and menu to return to profitability, and has seen significant changes in the period up to the present, with improvement in service, store layouts and menu changes to better cater to consumer demand.
The Applebee’s menu caters mainly to lunch and dinner customers, with a range of items from light salads and entrees with sandwiches going up to full course meals and deserts. The restaurant also promotes healthy eating habits by offering items that have calorie servings below 550. The restaurant seeks to create the ambience and feel of the neighbourhood restaurant where families and friends can go for a comfortable relaxed meal consumed in pleasant surroundings. Without the hustle and bustle of a quick service restaurant, people are more likely to enjoy their meals and consume fresh, healthy food, better than that offered by the fast food chains. This is the core of Applebee’s positioning. It targets itself largely at families and older people, without having the flashy appeal that younger (teenage) consumers prefer. It even has a separate menu for kids.
DineEquity’s sustainability efforts are focused along several key areas – animal concerns, environment, packaging, energy consumption, and waste recycling.
DineEquity supports the welfare and proper treatment of farm animals and ensures that it works towards sensitizing its vendors towards this aspect. To reduce the impact of their restaurants on the environment, the company ensures that all their restaurants for both IHOP and Applebee’s are located in buildings certified for environmental safety norms. They have also implemented several measures to reduce the impact of their business on the environment through the active execution of programs designed to support the environment, such as reducing waste and increasing recycling percentages.
The company uses polystyrene in their packaging for take-away and delivery goods, but have reduced the percentage to 5%, replacing 95% of the polystyrene with recyclable paper products. They are now working to make this 100 per cent recyclable. For reducing energy consumption, the company has installed motion-activated light switches and compact fluorescent lighting in most of its restaurants to ensure minimal impact on the environment and efficient utilization of electricity.
The Use of Technology
While IHOP does not use the online ordering option, Applebee’s has options for online ordering as well as drive-through takeaway. Using either restaurant’s site, it is possible to browse the menu, find the special options available, to locate the nearest restaurant and to place an order for the food. This translates to more convenience and better service for customers.
Uniqueness of DineEquity’s restaurants
While the increasing demand for quick service restaurants has led to the growth of brands like Chipotle’s and Starbucks, DuineEquity has chosen to go against the trend and promote healthy sit-down eating through both its chains. While QSR makes more money due to the faster turnaround of customers in the same space, DineEquity focuses on the customer experience and tries to enhance and build a loyal following by making their restaurants a place where people come to relax. This is based on the logic that a happy customer is likely to spend more if he stays longer. Based on the results shown by the company, this approach seems to be working, with the company showing significantly improved results over the last few years (Sozzi, 2014).
Applebee’s Company Profile (2014) About Us, retrieved from http://www. applebees. com/about-us
DineEquity Company Profile (2014) About Us, retrieved from http://www. dineequity. com/about. html
IHOP’s Company Profile (2014) About Us – History, retrieved from http://www. ihop. com/about-ihop/history
Sozzi, B (2014) How DineEquity’s CEO Is Transforming IHOP and Applebee’s, retrieved from http://www. thestreet. com/story/12853621/1/how-dineequitys-ceo-is-transforming-ihop-and-applebees. html