IHOP is launching its first fast-casual restaurant in Atlanta next year.
The Dine Brands' chain will launch Flip'd by IHOP in April. IHOP is also exploring additional sites in New York, Washington, D.C., Denver, Chicago and San Francisco. IHOP's President Jay Johns said he thinks the chain will be open several more locations in 2020.
Flip'd is IHOP's answer to consumer demand in dense cities. A Flip'd restaurant is about half of the size of a typical IHOP, with less seating and no wait staff to take orders, according to Johns. Customers can order their food via a digital kiosk or move through assembly line at the counter. Online ordering for pick-up or delivery will also be available as part of an effort to keep growing IHOP's off-premise business.
The menu tweaks IHOP's to make offerings more convenient for customers. For example, IHOP's buttermilk pancakes are available in Pancake Bowls that allow customers to add sweet or savory toppings like fresh berries or eggs. Popular lunch and dinner items from IHOP's menu, like the Ultimate Steakburger and Buttermilk Crispy Chicken, will also be available.
"One of the things that we really believe is that a lot of people have a habit of going to get their breakfast wherever they get their coffee, and they settle for potentially substandard food that happens to be there," Johns said. "We're going to flip that, flip that expectation."
Franchisees will operate the restaurants, including the Atlanta location. Johns said that is "too soon to tell" if Flip'd restaurants will be open for 24 hours, like many IHOP locations.
IHOP's decision to expand into fast casual comes as the broader full-service restaurant industry has seen foot traffic decline as more consumers choose independent eateries or buy ready-made options at the grocery store. Fast-casual restaurants like Chipotle Mexican Grill and Sweetgreen have also been luring away customers.
IHOP is not the first fast-casual chain to try out a fast-casual spinoff. The Cheesecake Factory launched Social Monk Asian Kitchen in February. Bloomin' Brands has branched out into sandwiches this year when it opened Aussie Grill by Outback locations internationally and in the U.S. Some have not fared well. Cracker Barrel announced in October that it planned to scrap Holler & Dash, the fast-casual spinoff it launched in 2016, after it acquired Maple Street Biscuit.
Dine Brands' CEO Stephen Joyce has told investors that the company, which also owns Applebee's, is looking to acquire a fast-casual or fast-food chain as well. Johns said Tuesday that the search is still ongoing.
IHOP's same-store sales grew by 1.2% during its third quarter, helped by customers spending more even though fewer customers visited its restaurants. Shares of Dine Brands, valued at $1.4 billion, are up 21% so far this year.