IHOP is an American multinational restaurant chain that specialises in breakfast options that are sold all day long. Its business model focusses on offering a casual dining experience at an affordable price – as well as consistent service with a smile. Let’s take a closer look at the IHOP franchise.
The brains behind the IHOP brand have built the business with several core values in mind. The restaurants should be a place where customers can relax and be themselves. It has steered clear of the ‘drive-through’ approach, and encourages customers to be good to themselves with its menu options of under 600 calories.
Does IHOP franchise?
IHOP is owned by Dine Brands Global, a company that was established after IHOP purchased Applebee’s, and the majority of the IHOP restaurants are run by independent franchisees. Today, there are around 1,800 locations spread across North America, Latin America, Southeast Asia, the Middle East, Australia and New Zealand.
IHOP is an iconic restaurant franchise, and it’s currently interested in furthering its global presence though three key strategies. It aims to energise the brand, make sure it achieves operational excellence and capitalise on franchisee development. It’s clear the IHOP franchise has big ambitions for the future, which makes it a great time to join the business as a franchisee.
History of IHOP
IHOP – or the International House of Pancakes – was launched in 1958 in Los Angeles by brothers Al and Jerry Lapin. They were inspired by “tropical tastes” like coconut syrup and wanted to develop a restaurant business that focused on pancakes. It wasn’t until 1973 that the restaurant franchise’s familiar acronym, IHOP, was introduced.
Over the years, IHOP restaurants came to be known by their A-frame roofs, but this design stopped being used in 1978. Since 2006, however, IHOP has reinstated it for several locations.
By 1999, IHOP had achieved sales of over $1 billion, demonstrating its popularity across the US. IHOP got a rebrand in 2015, when the smile in its logo was introduced and its restaurant interiors were restyled and modernised. To this day, IHOP remains a fun, family-friendly pancake restaurant where customers can enjoy a relaxed meal with family and friends.
>> Read more:
Starting an IHOP franchise unit
As eating out becomes an increasingly popular pastime across the world, restaurant owners have the potential to turn a significant profit if they can get the formula right. IHOP is a great restaurant franchise to be a part of; not only does it have a recognisable brand identity, but it’s part of an industry that is growing.
Specifically, the breakfast food market is expected to expand at a rate of 4.6 percent between 2019 and 2024. It is becoming more common to eat breakfast in a local restaurant. The share of consumers taking part in this activity has reached 21 percent in North America, 19 percent in Asia Pacific and 17 percent in the Middle East and Africa. In Europe, the trend is emerging on a slightly lower scale, at 10 percent.
This is a sector with huge growth potential, particularly given that 55 percent of diners say they would order breakfast food at any time of the day if restaurants offered it. It’s clear that meals like pancakes, granola bowls and poached eggs on toast are favourites among consumers, so there’s plenty of scope to launch a profitable restaurant franchise in this area.
When joining the IHOP restaurant franchise, you will be encouraged to build multiple restaurants – usually a minimum of five – in a defined geographical area within a specified time period. Ideal applicants also have experience as a multi-unit operator in the restaurant or food service industry.
Restaurant start-up costs
In terms of capital, you should have a minimum of a $1 million net worth and substantial cash assets in order to build and fit out each restaurant. It’s crucial franchisees have sufficient funds to cover the costs of starting up several IHOP restaurant franchises, which can be expensive.
To give you an idea of costs, a minimum net worth of $1,500,000 per restaurant is needed for the initial three. After that, each new location will require an additional net worth of $750,000. In terms of liquid assets, a minimum of $500,000 per restaurant is needed for the first three, and, after that, each new restaurant will require an additional net worth of $250,000. The franchise term usually lasts 20 years.
However, it is possible to launch and run a single restaurant. For this, you’ll need to pay a franchise fee of $50,000.
Whichever agreement you enter into, you should be prepared to pay a royalty fee of 4.5 percent of gross sales and the national advertising fee of 3.5 percent of gross sales. These are paid on a weekly basis.
Important skills and areas of expertise
Sometimes, IHOP provides territorial exclusivity, but this is based on the commitment to developing the business. That’s because IHOP’s ideal partner is someone who is dedicated to a long-term franchise relationship and loyal to the brand.
Also, it’s important that potential franchisees are knowledgeable about what works and what doesn’t in the food industry and how to build brand awareness. Therefore, partners should have expertise in quality assurance, marketing, real estate development and supply chains.
>> Read more:
Become an IHOP franchisee today
To read more about IHOP franchise opportunities and get involved with the brand, head to its website. When you’re there, you’ll be able to fill out its Request for Consideration form and contact the franchising team by email.
If IHOP isn’t quite right for you, why not take a look at our other breakfast restaurant franchise opportunities? Quick Crêpes and Crêpeaffair both serve a huge range of delicious crêpes to hungry customers and are looking for new franchisees to take their brand to new locations.
Or, read more about the pancake restaurant sector and how to set up your own eatery serving the tasty treat here.
Alice Tuffery, Point Franchise ©