IHOP to the Grocery Store
IHOP is the latest foodservice operator to try its luck
in grocery stores. The restaurant chain announced a new line of premium frozen
breakfast items under the “IHOP at Home” brand.
The new line, which
includes Omelet Crispers, French Toast Stuffed Pastries and a Griddle ‘n
Sausage wrap, will initially be sold in over 3,000 Walmart locations in the
U.S. with plans to expand to other retailers.
According to an IHOP press release,
nearly 84 percent of breakfasts in the U.S. originate in the home. The company
is looking to extend its reach to consumers who are not visiting their restaurants
in the morning. There are currently over 1,500 IHOPs operating in the U.S.,
Canada, Guatemala, Mexico, Puerto Rico and the U.S. Virgin Islands.
“The driving force here is increased distribution. If I can get it to
you on the shelves, I don’t have to get you to drive to my restaurant
to try me,” Harry Balzer, chief food industry analyst with the NPD Group,
told the Los Angeles Times.
“There are 115 million households in this country, and all of them are
going to visit a grocery store or a supermarket this week,” Mr. Balzer
said.
Video courtesy of IHOP
“The bottom line is, we are pretty good at breakfast, and we feel we
ought to be offering more folks quality IHOP breakfasts more of the time,” Jean
Birch, president of IHOP, told the Times.
Golden County Foods, a manufacturer
of private label foods for retail and foodservice, will distribute the IHOP
at Home line, according to the South Florida Business Journal.
The new brand
is offering a $1 coupon download on the IHOP at Home website (www.ihopathome.com)
and Facebook (www.Facebook.com/ihopathome).
Discussion Questions
Discussion Questions: How valuable is the “built-in advantage” restaurant brands ostensibly have when distributed in food stores? How should brands deal with consumer expectations of quality compared to menu items sold in the restaurant?
I think expectations of a restaurant brand are pretty high–the food needs to be nearly, but not exactly, as good as it is in the restaurant. The risk is that the food falls well below restaurant quality, hurting that product and the potential for going to the restaurant itself. The reward, as the article states, is increased usage of the restaurant’s brand.
We’ve shown a tolerance for mediocre breakfast food in this country. No offense, Kellogg, but when was the last time someone said, “Boy, that Eggo was really good!”? So there is less of a quality concern with a breakfast item than perhaps a dinner item. Which may be why we see such turnover of products in the frozen dinners section.
The frozen food case is saturated with waffles and pancakes, with Aunt Jemima firmly established as #1, and Eggos as the #1 waffle. I don’t think it will do great guns, as their restaurant food is just OK. If they had done this 10 years ago…maybe, but there are other channels like convenience stores that it might do well in. However, if the price point is super attractive, than we’ll have a good price war going, which benefits consumers.
The restaurant brand must have a significant product that is popular enough to entice the grocery shopping public to at least give it a try. My concern is no matter how good the product is when delivered to your table in a restaurant, it is rarely the same at home.
IHOP feels it is pretty good at breakfasts and they are. But when a person or family or friends go to an IHOP it is usually because they want to have some extra eating enjoyment. To have the same or similar breakfasts duplicated in a frozen form for home reconstitution and consumption doesn’t seem to offer the same built-in advantage or intrinsic value or fun. That’s my pop on IHOP.
The frozen breakfast cases are, in fact, overflowing and the best part of any restaurant experience is…well…eating in the restaurant.
I agree with Tony that IHOP is a brand whose time may have come and gone, at least in its ability to compete at retail. And, everyone is right about the range of quality in the frozen waffle/pancake market. These are, after all, products that taste best when made fresh whether at home or in a restaurant.
There’s a saying that no advertising grows a business like new distribution. That’s why this is so tempting for IHOP. Restaurant brands succeed in retail with the right brand, product, and category. But partner is critical too.
Starbucks applied the strongest coffee brand and a good product to growing drink-at-home categories. PF Chang’s brought a premium brand and unique cuisine to an expanding frozen dinner category. Wolfgang Puck struggled with a decent brand but wrong positioning. In this case, Tony and Ryan have pointed out the breakfast category is saturated.
Partner missteps can upset positive momentum. Starbucks decelerated due to friction with Kraft. Logistics will be essential for IHOP to replenish 3000 Walmart stores.
IHOP is taking a risk if it didn’t first test product and supply chain. At a minimum, shelf distribution will advertise the brand (perhaps expensively) for at least a little while.
When I would take my kids to IHOP, it was more for the “fun” of the different flavored syrups than anything else. Being able to mix different colors on their plates was the highlight. The food served was incidental. Sure, they loved the whipped cream, mega-amounts of butter, and chocolate chips that covered their breakfast (dessert for breakfast!), but it was the syrup that was the reason to go.
It may work, but I sure don’t see IHOP as a high quality brand, even in the restaurant space. By the time you take a facsimile of an IHOP product and put it in the freezer case, I imagine this is going to be a real low-end offering.
The name (and coupons) will prompt many consumers to try the item. The quality, taste, and price will determine whether there is repeat business.
The key to such a strategy is to replicate the IHOP experience at the store and in the home. The first step is to match the IHOP brand profile with the selected grocers. At first glance, the Walmart distribution appears to be good fit. Next, IHOP needs to separate itself from the crowd in the freezer case at retail. It needs to provide unique offerings that replicate the food’s taste, portion size, and value of the dining-in version. Easily said; not easily accomplished.
There are some relatively successful restaurant items in the freezer section these days. IHOP definitely has the brand recognition and equity in the breakfast space. If it is proceed competitively and the product specs make the quality as close to the “real thing” as possible, there might just be some potential. Frozen foods has a ton of new item churn each year, so the odds for a long-term success are against them. Good luck to them though! I love their stuff!
There’s a built-in advantage at the start, and lots of restaurant offerings have done really well in supermarkets. Once on the shelf, and when the coupon drops are over, it’s always up to taste, price and merchandising execution.