IHOP 2013 Annual Report Download - page 8
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Free cash flow4
(in millions)
2011 $88
2012 $305
2013 $120
4 DineEquity 2013 Annual Report
a distinct point of differentiation for aspiring franchisees
—we are uniquely positioned to take advantage of this
opportunity.
In 2013, we made meaningful progress toward this goal.
We announced the creation of our International Division,
which combined both existing brand teams and added
additional expertise. We are now geared toward driving
growth in key international markets, while creating
synergies for our franchise partners. The new division is
supported by the addition of team members who bring
international franchising experience to our organization.
International development at IHOP® exceeded our expec-
tations, with franchisees opening 12 new restaurants, for
the best year ever. For the first time, IHOP restaurants are
located in Saudi Arabia, Kuwait and the Philippines, and
Applebee’s® has expanded into Egypt and the Dominican
Republic. We are extremely pleased to add successful,
high-growth oriented franchisees to our system. Franchisees
may choose from many different franchise options, and
we believe that their decision to partner with DineEquity®
speaks to the immense value of our system.
When it comes to development, we’re also innovating by
working to expand in non-traditional locations, such as
airports. In 2013, the first IHOP Express airport location
opened at Hartsfield Jackson Atlanta International Airport.
We look forward to bringing the Applebee’s and IHOP
experience to guests in more non-traditional locations.
Creating excitement with remodels
Comprehensive restaurant remodels are another way that
we and our franchisees keep our brands fresh. Through-
out 2013, we’ve made great strides with the Applebee’s
domestic system-wide remodel, which we expect our
franchisees to have nearly completed by year-end 2014.
At the same time, we are conducting consumer research
for the next IHOP remodel. We completed the focus
groups and franchisee study of the new remodel design,
and will enter the test phases in 2014.
Realizing eciencies through synergy
At the operational level, the independent purchasing
cooperative which we formed with domestic franchisees
of Applebee’s and IHOP in
2009, Centralized Supply
Chain Services, LLC (CSCS),
has been a consistent driver
of innovation for DineEquity.
CSCS® continues to serve
as a point of competitive
differentiation for franchisees
and guests. CSCS enables our
franchisees to procure items
at a lower cost, allowing
them to pass on the savings
to guests and create value. In 2013, CSCS helped our
franchisees minimize their costs by approximately $51
million combined. During the last 5 years, CSCS has gener-
ated total net savings and cost avoidances for Applebee’s
and IHOP of roughly $171 million.
In late 2013, the first IHOP Express®
opened— at the busiest passenger
airport in the world.