Flip’d is part of a four-pronged strategy of development for IHOP. In addition to the fast casual, IHOP plans to test a smaller prototype this year. Johns said the brand expects the prototype to provide a higher return on investment and allow operators to enter “areas we might not have been able to penetrate previously.”
Another avenue of growth will be traditional development, which will come from a “stable pipeline” as a result of franchisee obligations that were deferred during the pandemic. The final channel is non-traditional locations, spearheaded by IHOP’s 94-unit partnership with TravelCenters of America—the largest deal in company history.
“For 2021 we expect to continue to reinvigorate our growth that was hindered by the pandemic,” Johns said during Dine Brands’ Q4 earnings call.
The objectives are notable, considering the chain previously announced in October the net closure of 100 stores over the course of six months. However, the program concluded with 41 closures—well below the initial call. Johns emphasized IHOP evaluated “greatly underperforming restaurants that we determined had a greater chance of not being viable coming out of the pandemic.”
Generally, the stores were some of the lowest-performing units in the system, based on sales and franchisee profitability. As Johns noted before, the brand is confident it can replace these locations with better-performing restaurants that can match pre-COVID AUV of roughly $1.9 million.
IHOP ended Q4 with 1,772 stores systemwide—1,670 domestic and 102 international. In 2021, the chain closed a net of 69 restaurants. Johns estimated about 33 IHOPs are temporarily closed and roughly 200 are mainly using off-premises and outdoor patios.
Johns said IHOP isn’t giving guidance yet on when the brand will return to net unit growth.
“We clearly have franchisees that are interested in developing, but they’re still in the middle of COVID right now,” Johns said. “The rate at which that comes back, we’re just going to have to wait and see how that plays out.”