DineEquity Inc. Shaking Things Up Across the Board

DineEquity Inc., the parent company of IHOP and Applebee’s, reported a 5.5% increase in profits during the first quarter of 2012.  They also announced a purchase agreement for the sale of 39 Applebee’s locations that are currently company operated.  The units are being sold to the Potomac Family Dining Group LLC of Virginia.

 

Set to close in the third quarter, this deal is expected to net DineEquity about $25 million, reducing the firm’s sale-leaseback obligations to the tune of $40 million.  This is the second time that Potomac Family Dining has purchased restaurants.  Earlier purchases were made in the Washington, DC area.

 

DineEquity is moving towards refranchising and this sale will place about 96% of Applebee’s restaurants in franchise agreements.  This last transaction is part of an overall strategy and has helped boost numbers, but is only a portion of the total picture.

 

Julia Stewart, Chief Executive of DineEquity, states that the company is focused on innovative efforts that will help to differentiate each brand.  Applebee’s has replaced and upgraded almost everything on the menu in the last few years.  Particularly successful have been New Orleans-style dishes and the 2-for-$20 menu.  Additionally, 36% of the units have been renovated and more are due to be completed by the end of the year.

 

IHOP restaurants have not received as much attention, but DineEquity plans to continue work on the menu, focusing upon promoting the value message that’s so attractive to customers.  One such innovation was the recently revealed “7 for $7” menu selections.  These offer 7 meal options for only $7 each day.

 

IHOP will be launching a new marketing campaign in the second quarter.  The brand is moving towards healthier selections as well as low-calorie items so as to draw in a different demographic.  While DineEquity is still searching for the perfect value message for IHOP, franchise support remains strong.

IHOP vs. IHOP

It’s the case of IHOP vs IHOP. No, this is not a situation where a franchise is suing the corporation. Instead, this is a situation more akin to the brouhaha a few years ago between the World Wrestling Federation and the World Wildlife Foundation.

By using the same initials, however unintentionally, the World Wrestling Federation (now renamed World Wrestling Federation and going by WWE) had created an association in some people’s minds between the two disparate organizations.

International House of Pancakes vs. International House of..?

The thing is, this time there is even more for the International House of Pancakes to be concerned with. Save for a single word, the International House of Prayer has the same name as well and IHOP (the pancake place) is suing to have IHOP (the church) rename itself.

The International House of Prayer is a church based in Kansas City, MO. The church is open to congregants twenty-four hours a day, seven days a week–just like the more well-known IHOP.

The Pancake People aren’t Happy

However, the International House of Pancakes doesn’t see it that way, claiming the church was deliberately infringing on the initials they had made famous and sowing confusion amongst their customer base.

After repeated requests from the pancake chain to the church that they stop using the famous name in their advertising were rebuffed, the company felt it had no choice but to sue to protect their name.

The IHOP name was made famous when the International House of Pancakes decided to begin using it as a marketing gimmick way back in 1973. The chain today boasts 1,400 restaurants worldwide, most of them franchisees.

It’s About Endorsement as Much as Infringement

The pancake company is also concerned about the fact that some people of other faiths may get the idea that they have chosen to endorse one particular faith over another, thus potentially alienating Jewish, Muslim and Buddhist customers (not to mention anyone who doesn’t adhere to the IHOP church’s particular brand of Christianity).

The lawsuit is careful however to make demands only for the church to stop using the name of the pancake restaurants and to demand recovery of legal fees. No punitive damages are being sought by the IHOP restaurant chain in an effort to make clear that they are not trying to harm the church. They just want them to stop using the name.