IHOP Explores Virtual Brands, New Loyalty Program

MarketingDive.com says that while IHOP is currently in the "preliminary stage" of determining its virtual brands strategy, Johns noted during the earnings call the breakfast chain's infrastructure strongly supported the model, with 70% of its domestic restaurants including two full kitchens.

"We're currently reviewing our daypart strategy and assessing how to best utilize our existing capacity," Johns said during the call, adding that off-premise sales have remained strong even as dining room restrictions lifted. IHOP's off-premise sales accounted for 26.1% of the sales mix in Q2, down from 33.3% in the first quarter — an expected dip as diners returned to restaurants, he said.

MarketingDive.com says IHOP has an advantage of sharing a parent company with Applebee's and could pull a page from that chain's playbook to get a virtual brand or more off the ground. Applebee's launched the virtual Neighborhood Wings by Applebee's in May 2020, which the company moved away from when it launched Cosmic Wings in February 2021. At the time of the launch, Cosmic Wings was available exclusively on Uber Eats.

Applebee's, however, has hit a bit of a supply chain roadblock. The company planned to expand its Cosmic Wings concept to DoorDash, but those plans have been postponed due to chicken wing supply challenges, Applebee's President John Cywinksi said during the call. Such issues will likely be something IHOP can be mindful of if or when it jumps into the virtual restaurant space.

Virtual brands could also eventually fold into IHOP's new unit growth, which includes a plan of 40 to 50 new restaurants this year and also includes its fast casual Flip'd model and a smaller footprint prototype it plans to test.

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