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FDD Talk 2016: The IHOP Franchise Opportunity (Financial Performance Analysis, Estimated Costs, and Other Important Stuff You Need to Know)

by Franchise Chatter on July 27, 2016

in Breakfast Franchise, Casual-Dining Restaurant Franchise, Diner Franchise, FDD Talk 2017: Food Franchises, Franchise Earnings



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IHOP Photo by Octavio Ruiz Cervera

In this FDD Talk 2016 post, you’ll learn the following:

  • Section I – Background information on the IHOP franchise opportunity, including relevant news updates
  • Section II – Estimated initial investment for an IHOP franchise, based on Item 7 of the company’s 2016 FDD
  • Section III – Presentation and analysis of IHOP’s financial performance representations, based on Item 19 of the company’s 2016 FDD, including information on the:
  • 2015 average sales for the 25th percentile, 50th percentile, 75th percentile, and all franchised IHOP Restaurants in the “A,” “B,” and “C” building types, which are variations of the “A” Frame, an older prototype, and is further broken down by the geographic region in which the IHOP restaurants are located (in the Midwest, Northeast, South, or West)
  • 2015 average sales for the 25th percentile, 50th percentile, 75th percentile, and all franchised IHOP Restaurants in the “D” building type, one of two former prototype buildings, and is further broken down by the geographic region in which the IHOP restaurants are located (in the Midwest, Northeast, South, or West)
  • 2015 average sales for the 25th percentile, 50th percentile, 75th percentile, and all franchised IHOP Restaurants in the “G” building type, one of two former prototype buildings, and is further broken down by the geographic region in which the IHOP restaurants are located (in the Midwest, Northeast, South, or West)
  • 2015 average sales for the 25th percentile, 50th percentile, 75th percentile, and all franchised IHOP Restaurants that are not configured in accordance with one of the former standard building types, including “Conversion” units, “End Cap” units, and “In-Line” units and would include the new “ICON” units, and is further broken down by the geographic region in which the IHOP restaurants are located (in the Midwest, Northeast, South, or West)
  • 2015 average sales for the 25th percentile, 50th percentile, 75th percentile, and all IHOP Restaurants owned and operated by IHOP, LLC or an affiliate on January 3, 2016, including those which were acquired from franchisees during 2015, and is further broken down by the geographic region in which the IHOP restaurants are located (in the Midwest and South)

Section I – Background Information

IHOP Unveils New Logo to Turn Frown Into Smile

IHOP is out to make sure its restaurants offer smiles, not frowns.



The chain introduced a new logo in June 2015 that uses the “O” and “P” as eyes and places a curve beneath the letters that creates the sense of a smile. The previous logo featured the word “Restaurant” below the name, but the word was shaped in a downward curve, which the company said was more like a frown.

Chain Was Popular From the Start

The International House of Pancakes was founded in 1958 when Al and Jerry Lapin and early investors Al and Trudy Kallis opened their first pancake restaurant in Toluca Lake, California, a suburb of Los Angeles. The restaurant proved quite popular; by 1962, the chain had 50 locations.

Over the years, many items were added to the menu, and IHOP restaurants now have breakfast (anytime), lunch and dinner menus. In addition to pancakes, French toast, eggs and waffles, customer favorites include burgers, pastas and salads.

In 1973, the chain’s name was shortened to “IHOP” in marketing campaigns. The full and shortened name were interchangeable at that point, but by 1976, the company increasingly defaulted to the acronym.

IHOP is headquartered in Glendale, California, and owned by DineEquity, which also franchises Applebee’s.

Company Seeks Franchisees With Restaurant Management and Operation Experience

The company is seeking franchisees with experience in restaurant management and operation for multi-restaurant franchise opportunities. Exclusive territories for franchise development are available throughout the U.S., as well as in non-traditional venues and in some international markets.



Domestic growth markets have been identified in Rochester, Syracuse, Buffalo and Albany, New York; Burlington, Vermont; Lacrosse and Green Bay, Wisconsin; Rochester, Duluth and Minneapolis, Minnesota; Portland and Medford, Oregon; San Francisco, California; and the states of Kansas, Minnesota and Nebraska.

New Pancakes Celebrate Paradise

Among the latest menu offerings from IHOP are three new limited-time pancakes:  Banana Macadamia Nut Pancakes; Pineapple Upside Down Pancakes; and Strawberry Passion Fruit Pancakes.

Snapchat Filter Dresses Up Pancakes

If the pancakes aren’t already decorative enough, customers can dress them up with IHOP art via Snapchat. IHOP has partnered with Snapchat to develop “chain geo-filters,” which are location-based overlays to add IHOP art to snaps of pancakes, French toast and other IHOP dishes.

The target audience for Paradise Pancakes Snapchat filters is likely tweens and teens enjoying meals with their families. Users of Snapchat, a photo-based social media platform, are predominately female and younger than 25.

58-Cent Short Stacks Honor IHOP’s 58th Birthday

In observance of the company’s 58th anniversary, IHOP restaurants offered customers a short stack of its Original Buttermilk Pancakes for just 58 cents on July 12, 2016. The price is 4 cents less than the pancakes cost in 1958.

Double Dipped French Toast Returns to Menu

Double Dipped French Toast came back in February 2016 for a limited time. The French toast variety features soft brioche bread dipped in vanilla batter and then in a coating of cornflakes and oatmeal before being griddled to a golden brown.



The two newly chosen flavors are Blackberry & Vanilla and Banana, Peanut Butter & Chocolate. The flavors were available from February 15 through April 10.

Section II – Estimated Costs

  • Please click here for detailed estimates of IHOP franchise costs, based on Item 7 of the company’s 2016 FDD.

Section III – Financial Performance Representations (Item 19, 2016 FDD) and Analysis



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