Focusing on IHOP, the brand turned in same-store sales growth of 1.2 percent in Q1, marking five straight quarters of gains. That outpaced the family-dining category, based on comp sales, by more than 150 basis points, according to Black Box data.
IHOP’s off-premises comp sales jumped 54 percent in Q1 and traffic outside the four walls boomed roughly 40 percent. That’s a dramatic change from a year ago when those figures were 31 and 22 percent, respectively.
IHOP courted this customer with a new, fully integrated online ordering system through its improved website and mobile app. The goal being to create an omnichannel experience with additional touchpoints. This type of target is held by nearly all full-service chains today, but especially family- and casual-dining brands with scale. As the earlier check and revenue figures prove, classic sit-down brands simply can’t rely on guest counts anymore. There are too many concepts at similar price points serving the same occasions. But many of those smaller brands couldn’t bring anywhere close to 1,200 restaurants onto the DoorDash platform, as IHOP has.
Why is this all so important? For starters, average check for online orders is 31 percent higher than call-ins at IHOP. In 2018, online orders came in at $21.20. Call-in orders were $16.22.
Adding more guest-facing technology into the system, IHOP president Darren Rebelez said during the chain’s Q1 conference call, also enabled the brand to grow its off-premises business to 9 percent of total sales. That’s nearly double (5 percent) what it was this time in 2018.
“We believe to-go can increase to the low teens as a percentage of total sales over the next few years,” he said.
And now it becomes clearer why IHOP flipped the “P” to promote burgers last year in one of the most-talked about promotions of the calendar. The deal didn’t just quadruple burger sales in the short-term and generate 36 billion earned media impressions—it gave IHOP a dinner daypart it could build on. The majority of to-go and delivery orders, for most sit-downs, arrive post-lunch during the weekdays. People rush during lunch and grab-and-go breakfast on their way to work, giving counter-service chains and routine-drivers, like Starbucks, the advantage.
This past quarter, IHOP rebranded and relaunched its Pancake Revolution program as “MyHop.” The primary objective, Rebelez said, was to increase membership and entice guests to come back for more visits. In Q1, the company boosted its overall membership by about 9 percent.
MyHop will serve as a foundation for IHOP’s CRM efforts moving forward. Eventually, it will help the chain one-to-one market in a more direct, effective, and budget-friendly way.
Changing gears to Denny’s, 79 percent of the brand’s domestic locations were engaged with at least one delivery partner last quarter. Close to 90 percent—up from 77 percent—were eligible for the service by Q1’s end.
What that suggests is Denny’s still has room to grow its off-premises slice as more restaurants sign up (the same is true of IHOP). CEO John Miller said the transactions deliver total margin rates from the low teens to upper 20 percent range, inclusive of the fee. And sales have been incremental.
He said off-premises allows Denny’s to reach younger customers. That’s a critical element, because family dining wasn’t exactly aging well. Casual dining as a whole relied too long on generational affinity. The breakfast giants were no different. They were becoming wallpaper to an evolving generation. Hence, IHOb, Denny’s eccentric social media personality, and the infusion of offbeat and reenergized advertising campaigns.
Miller said off-premises sales represented about 12 percent of total sales at Denny’s last quarter, up from 7 percent at the launch of Denny’s On Demand in mid-2017.
Here’s how Denny’s online transactions, by age, break down:
Online transactions by age
- 18–24: 12 percent
- 25–34: 43 percent
- 35–44: 25 percent
- 45–54: 12 percent
- 55-plus: 8 percent
IHOP’s guest dynamics, overall (not just online), look as follows:
- 23 percent: 55-plus
- 26 percent: 35–54 years old
- 32 percent: 18–34 years old
- 19 percent: Under 18
So, much to the surprise perhaps of some pundits, more than half of IHOP’s current traffic is coming from guests aged 34 and below.