IHOP 2013 Annual Report Download - page 53

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Re-energize and Grow the IHOP Brand
To re-energize and grow the IHOP brand, we have continued our efforts to drive new and existing consumers to our
restaurants by: 1) continuously strengthening our advertising message; 2) maximizing our media effectiveness across both
traditional and new media outlets; and 3) transforming the IHOP menu to reflect evolving consumer tastes.
To ensure our advertisements resonate with consumers, we have continued to employ “Everything You Love About
Breakfast” as our tagline and theme, leveraging our substantial brand equity in breakfast. We have further refined our message
by incorporating in our advertising consumer testimonials that show a wide range of ages and demographics enjoying our
freshly made items. These testimonials have been effective in reinforcing the welcoming environment at our restaurants.
While national advertising remains core to our strategy, we recognize that media consumption is evolving and we must
reach consumers through a range of media channels to drive traffic to our restaurants. Gaining the attention of consumers in a
highly competitive and diverse media market requires that we constantly update where and how we reach consumers. We
continue to successfully build and increase consumer engagement with the IHOP brand in digital and social media, recognizing
the importance of these channels to a significant segment of the population.
We continuously evolve our menu to deliver appealing items to our wide range of consumers presented in an easy-to-use
style that is consistent with our brand message. Our new Brioche French Toast is a recent example that was met with high
consumer interest. In addition, we recently launched the latest menu revision with a new layout that is easier to read and
navigate. The new layout allows customers to more quickly identify their favorite choices, increasing guest satisfaction.
Substantially all IHOP restaurants are using pollable point-of-sale systems to capture and report a broad range of sales and
product mix data. This information is used by management to, among other things, gauge customer acceptance of menu items
and the success of promotions and limited time offers.
Improve Operations Performance
We constantly strive to improve every aspect of our restaurant operations. To enhance our guest-centric culture, and enable
our franchisees to assess and improve their service and the condition of their restaurants, we continue to evolve how we interpret
and implement changes to address feedback from our guests. We deploy a range of feedback mechanisms including national
consumer tracking studies about our brand, a guest feedback tool, our “Voice of the Guest” program, as well as operational
evaluations conducted by our own employees and operational assessments conducted by a third party service provider. Our field
based operations team is trained to work with franchisees to use this data to enhance their restaurant operations. We believe this
wide range of data enables us to clearly identify areas of opportunity. While results from our efforts have been positive, we
recognize that operations excellence is a continually evolving process.
Optimize Franchise Development and Franchise System Health
Under the Current Business Model, IHOP seeks to optimize franchise development by recruiting franchise developers
within and outside the current system and working with these franchise developers in the site selection and building process.
This strategy has proved successful as our franchisees have developed approximately 543 restaurants since the inception of the
Current Business Model and our franchisees have a pipeline of 263 additional new restaurants committed, optioned or pending.
The existing franchisee base accounts for most of these future development obligations. In 2013, an IHOP franchisee opened the
first three IHOP restaurants in the Philippines, continuing to demonstrate the interest in the IHOP brand outside of North
America. We continue to explore opportunities to grow in existing and new international markets.
In addition, we may take steps to consolidate and rehabilitate existing markets if we believe that doing so is advisable in
order to fully realize development potential. We consistently monitor individual franchisee health and compliance with franchise
agreements and we also may take steps to exercise our contractual rights within the franchise agreement in the event of
noncompliance.
To positively impact the costs of IHOP franchisees, management works closely with CSCS, an independent cooperative entity,
formed by us and franchisees of Applebee's and IHOP domestic restaurants. We recognize the importance of managing the costs
of food and non-food items and believe the successful relationship among IHOP, its franchisees and CSCS presents an important
differentiator.
However, in a challenging economic environment and a highly competitive family dining category, there can be no assurance
that the strategies described above, when implemented, will achieve the intended results within the time frame anticipated.