IHOP CEO To Apply 'Brand Focus' To Applebee's

Despite a retooling of its menu and hiring a big-name chef to tout it, Applebee's couldn't seem to get off the dime in recent months. Now, an iconic pancake house has "come hungry, left happy" at the acquisition trough, having paid about $2 billion for the lackluster restaurant chain.

Julia Stewart, IHOP's chair and CEO, told analysts on Monday that IHOP is ready to lead Applebee's into a new era of accelerated franchisee ownership, cost savings through synergy and a "crystal clear" brand focus.

"The most important thing that we can do with Applebee's is be crystal clear about where the brand position is and get that firmed down from the consumer research standpoint--make sure everything flows from that clear brand positioning," she says. "Whether it's the menu, the advertising that resonates with guests, remodels, prototypes, touchpoints--everything needs to come from that crystal-clear brand focus, everything should go through that brand filter, which is what we did at IHOP so effectively."



The acquisition makes sense, especially considering that Stewart served Applebee's as president of its domestic division from 1998 to 2001, when she moved to IHOP, and introduced the bar-and-grill chain to national advertising and an upgraded, innovative menu and taught it to "think and act like a national brand."

During the call, she spelled out her immediate plans--including taking lessons from Applebee's supply chain management, which is "far more advanced that at IHOP. We have a huge opportunity to take advantage and link into that, with savings for both brands. That is a really clear example of where you get a win win.

"Applebee's recently announced it has gone with McCann Erickson, which is our agency as well, so I don't know what that synergy will look like but we'll seek to understand that better."

Over the last five years, IHOP has re-energized its nearly 50-year-old brand while transforming itself into a pure-play franchisor with more than 99% of its 1,319 restaurant system owned and operated by franchisees. IHOP plans to employ similar strategies to transform and re-energize Applebee's. It intends to franchise a substantial majority of Applebee's 508 company-operated restaurants and expects to realize significant cost savings as a result.

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