Family Dining Leader Tackles Fast Casual

Bob Krummert

The only segment of the restaurant industry where sales growth and unit growth are both positive? It’s fast casual, which helps explain why IHOP, 1,532 full-service units strong, went to the trouble of reconfiguring its concept to fit the fast casual model. The result: IHOP Express, the first unit of which is now open in San Diego.

Just to be clear, IHOP isn’t giving up on full-service. In fact it’s expanding like crazy, opening traditional IHOP units at a one-a-week pace all through 2011. But the company still felt compelled to explore the possibilities fast casual might hold.

It began by testing versions of its IHOP Express concept in noncommercial foodservice settings like college campuses and military bases. Early versions of this concept were a little more QSR-oriented than pure fast casual. Now, after additional fine-tuning, the concept is ready for the commercial market. The first IHOP Express opened last week in San Diego’s tourist-heavy Gaslamp Quarter district.

“After extensive testing, we are introducing IHOP Express to provide an exciting new option for guests on the go who want the IHOP experience,” says company president Jean Birch. “Consumers’ dining needs vary, and IHOP Express fills an important need by allowing guests to sip, flip and enjoy our famous coffee and buttermilk pancakes, along with other options found only at IHOP Express, in less time.”

Some menu items are drawn from IHOP’s traditional menu, others are unique to IHOP Express. New items include the Cup O’ Pancakes (fruit-topped pancakes served in a cup) and Corn Cake Tacos. The concept offers burgers, too, and an under 600-calorie lineup is designed to appeal to the health and fitness crowd.

No matter what customers order at the counter, their meal is cooked to order, with the meal delivered to their table by runners. It’s hoped this service style will move customers through the unit in half the time as a traditional table-service IHOP.

Those customers will be paying a little less for their experience. Price points at IHOP Express are a bit lower than a regular IHOP. Factor in the lack of tipping and the appeal to customers is clear: An IHOP experience that is cheaper and faster than before.

So will it work? IHOP execs sure hope so. There hasn’t been much growth in the family dining sector for a number of years, so it’s to their credit that the company is giving fast casual a try. Waiting for the market to turn around won’t get the job done for a brand like IHOP, a key part, along with Applebee’s, of publicly traded Dine Equity’s portfolio.

Our personal take is that the menu seems perhaps too broad for the fast casual market, where doing one or just a couple of things very, very well seems to lead to success. On the other hand, IHOP Express will have the fresh off the griddle pancakes market all to itself, and it seems more than possible there could be a business in that. We don’t know if this concept will turn out to be the growth vehicle IHOP and DineEquity hope, but with this brand and this menu and these price points, it’s definitely going to get a ton of trial.

That alone may give IHOP Express legs.