IHOP is so pleased with the performance of its $6 House Faves value meals that it will soon start offering them all week long.
The 1,800-unit family-dining chain later this year will make House Faves available on Saturdays and Sundays for the first time after tests showed that it drove positive sales and traffic on weekends as well as during the week.
Launched in October, House Faves features four breakfast combos such as pancakes and bacon and a ham and cheese omelet. It is IHOP’s first true value meal, and is intended to appeal to price-conscious consumers.
So far, the promotion has driven incremental, profitable traffic for IHOP, executives said this week. Though same-store sales declined 2.3% in the second quarter, the chain has seen traffic increase each month of the year, and it outpaced the industry on traffic in Q2, per Black Box Intelligence data.
“That was absolutely the goal of House Faves,” said John Peyton, CEO of IHOP parent Dine Brands, in an interview.
Now the chain is moving into phase two of its strategy, which includes extending House Faves to seven days a week while also using in-restaurant merchandising to promote more expensive items. It’s hoping customers will come in for House Faves, but opt for a pricier omelet or the monthly Pancake of the Moment once they look at the menu.
IHOP is already seeing results from this so-called barbell strategy. While traffic continues to grow, purchases of House Faves are declining.
“That means we’re driving the traffic and they’re choosing a more expensive item once they’re in the restaurant,” Peyton said.
IHOP joins a host of other full-service chains that are using value meals to drive traffic against a stressful economic backdrop. Rival Denny’s is similarly promoting a rotating selection of low-priced breakfasts, while IHOP’s sister brand, Applebee’s, has found success with a 2 for $25 meal offer.
On the development front, Dine continues to be optimistic about its new co-branded Applebee's-IHOP format. It opened the second U.S. combo location in June in Uvalde, Texas, and the restaurant is currently generating 2 to 3 times more revenue than the stand-alone Applebee's it replaced.
Dine expects to open 10 to 12 co-branded locations in the U.S. this year. It hopes the new format will help spark unit development, which has stalled in recent years.
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