The IHOB Strategy

To promote its new line of gourmet steakburgers, International House of Pancakes decided to do a flip. Taking the “p” from its IHOP name and flipping it into a “b” the restaurant chain, franchised by Dine Brands Global Inc., in Glendale, will be known this summer as IHOB. While the chain has served burgers since its founding 60 years ago, Stephanie Peterson, a spokeswoman, said this newest iteration starts with the idea that it will take the quality and taste of the burgers as seriously as it does its pancakes. “We put a lot of emphasis on the meat patty and flavor profiles and the ingredients themselves from start to finish,” Peterson said. If nothing else, the name change grabbed the attention of a lot of consumers who might have otherwise passed over the restaurant chain. The marketing campaign started via social media on June 4 with a shot of the IHOB logo and a message that what the “b” stands for would be revealed on June 11. The company has created a television commercial promoting the burgers and even changed the exterior and interior signage of its location on Sunset Boulevard in Hollywood. “To really show off how much we believe in the burgers, we needed to rebrand a physical space as well,” said Peterson, who added that the IHOB signs will stay up for a while. Steve Stallman, president of Stallman Marketing in Santa Clarita and president of the Food Consultants Group, said that switching the “p” to a “b” was an excellent way for Dine Brands to convey its point without much risk-taking on the company’s part. “Making it temporary and not permanent mitigated their risk,” he added. The IHOB event garnered major media attention and social media traffic. It also reached investors. Rather than going bankrupt from IHOB, Dine Brands has enjoyed a double-digit increase in its equity. The share price has gone up nearly 18 percent between June 11 and June 18. Shares closed at $76.32 on June 20. Bold decision Peterson said that IHOP wanted to do something unexpected and bold to promote the burger line, which has seven varieties. The marketing campaign was the first major rollout by the new management team at Dine Brands. In September, Stephen Joyce became chief executive and last month Thomas Song was appointed chief financial officer. In February, the company changed its name from DineEquity. When he was named head of the company, Joyce said he saw opportunities in the company’s brands. “With a talented management team, a committed franchisee base and a strong group of shareholders, I look forward working to stabilize performance at Applebee’s and identify new pathways to growth for IHOP,” Joyce said in a statement. However, the fact that the IHOB name change was only temporary was lost on many people on YouTube, where the commercial was first posted. Also, some people didn’t understand that IHOP is not getting rid of pancakes. In the comments section, there were plenty of questions about what happened to the pancakes, plus remarks about how the change was a bad idea or would lead to bankruptcy. Those reactions, Peterson said, were expected, so the company had to explain that it was always going to be IHOP and will always serve breakfast foods. “There was a sense of relief of ‘OK, I can be on board with this because I know that you as a brand are not moving away from breakfast and you are simply looking at how you can give me more of what I want throughout the day,’” she explained. The breakfast shift brings in more than 50 percent of IHOP’s sales, so the chain wanted to break through with a popular food item for the lunch and dinner hours. Burgers are the most consumed foot item that is ordered outside the home and surveys with IHOP customers revealed an interest in burgers as well, Peterson said. Stallman said the situation that IHOP finds itself in is like one that he faced as vice president of marketing for East Coast Bagels Co., a regional bagel chain, in the late 1990s. Like IHOP, the bagel chain did most of its business for the breakfast crowd. He increased lunchtime sales by aggressively marketing coupons and other programs to the regular breakfast customers. “It was basically going after the morning (customers), making them an offer they couldn’t refuse and clearly not trying to get them in just one time but to establish a pattern,” he added. For an established restaurant chain like IHOP, the overhead for each location (owned by franchisees) can be costly so any incremental sales that come in make a difference to the bottom line, Stallman continued. “Even a small increase or little bit higher sales contribute disproportionately to profit,” he said. Why burgers? Going after the burger market would seem smart on IHOP’s part, considering how upscale the food has become. According to a 2017 consumer trend report on burger consumption by Technomic, a Chicago-based research and consulting firm, 58 percent of burger eaters want to customize their toppings while 46 percent said that knowing the source of the burger meat was important. In addition to mainstays McDonald’s, Burger King Corp. and In-N-Out Burgers, other entrants into the Los Angeles market include Smashburger, Five Guys Burgers and Fries, The Counter, Umami Burger, Hook Burger and Burgerim, with storefronts in Glendale, North Hollywood and Newbury Park. It is obvious that IHOP is going after a market that has seen tremendous growth. And while he supports the company’s decision to enter the burger market, Stallman believed it missed a prime period. “Frankly, they should have done it a year or two ago when people were clamoring and there was so much attention on Smashburger and all these other ones,” Stallman said. Rather than taking the same burger that was already on the menu and making changes to it, the Dine Brands team decided to start from scratch. They replaced the pre-made meat patty with hand-seasoned Black Angus ground beef that is hand pressed on the grill to lock in the juices and flavor. Different flavor combinations that include thick-cut onion rings, hickory smoked bacon, and a tangy barbeque sauce on the Cowboy BBQ burger, a jalapeño spread and serrano peppers are added in and served on a buttered and grilled brioche bun. “Burgers are a quintessential American menu item, so it makes perfect sense that IHOP would go over the top to create a delicious line-up of quality burgers that hit the spot any time of day,” Chef Nevielle Panthaky, head of culinary at IHOB, said in a statement. The burgers will remain as part of the core IHOP menu, but the name change and introductory price of a steakburger with a drink and unlimited fries for $6.99 will only last until mid-August.