The International House of Pancakes is cooking. Following a new brand strategy put into place six years ago, IHOP has experienced 21 consecutive quarters of same-store sales growth. Parent company DineEquity is looking for ways for the newly acquired Applebee's to imitate IHOP's success. DineEquity, Glendale, Calif., CEO Julia Stewart met with Brandweek New Editor Kenneth Hein to talk about how Stewart turned around the once "tired" IHOP and how she plans to do the same for Applebee's. Here's what she said:

Brandweek: What is IHOP's strategy?
Julia Stewart: We put a thorough brand strategy in place in 2002 that was designed to do three things: re-energize the brand, maximize development and substantially improve operations. The overarching goal was to become No. 1 in family dining. We plan on declaring victory at our franchisee convention next month in Hawaii with 1,600 of our closest friends. We're quite proud of that.

BW: What were the tenants of these three strategies?
JS: In energizing the brand, we have changed the advertising so it resonates with the guests with the 'Come Hungry, Leave Happy' strategy. From a media buying standpoint, everyone's pooling media dollars so as opposed to [franchisees] doing their own thing. [This allowed IHOP] to get into a big way cable and some network and syndication [IHOP was 100% spot six years ago]. It has made a huge difference. You're having tremendous reach and frequency you never had before and the efficiency of that of that buy is substantial. The targeting capability is unbelievable. We have a huge customer base of families form all walks of life. We're able to target whether it is families, Hispanic…lifestyle [psychographics] with limited time-offers that give people a reason to visit. They experience better service, better food they say, 'wow what's different, what's changed? I'm coming back more often.'

[The success is a result of] better ads that resonate with the guest, media buying that has really made a difference, a marketing strategy using limited time offers, and then literally having better food in the restaurant so enhancing the flavor profile of some of the food and last but certainly not least is the whole remodel package. Each of the franchisees is required to remodel their restaurant every five years, but historically management hadn't given them anything specific to do differently. This new package does a wonderful job of being timeless…because we didn't just want to talk about breakfast, we wanted to talk about lunch and dinner. This remodel package has got sort of a better way to think about the brand from a lighting perspective, from murals, from colors. We went back to the copper coffee pots and some of the warm colors we didn't have before. A lot of the feedback we had gotten was that [our restaurants] felt sterile and didn't have a personality. All of those things combined have helped us reenergize the brand and become No. 1 in family dining.

BW: Is the 'Come Hungry' value even more effective in this economic environment?
JS: Our value message has been core to the brand, that we're an incredible value for the price. I think that's been clear for the last several years. Everything we've done reinforces that we play in the $8.50 to $8.75 check arena and that's a real plus especially in this environment. We just continue to do well with 21 consecutive quarters of same-store sales growth since we put this new strategy in place. Clearly people like us, it's a 50-year-old American icon. We took a brand that had maybe gotten a little tired and a little stale and energized it. Our value message, the category we play in…I don't think there is such a thing as being totally resilient, but certainly we are performing extremely well in this environment. It shows that we are offering a great experience for a great price. People love us. There is a tremendous history with us and we continue to deliver. It's fair to say that had we not put that entire strategy into play in 2002 and literally been working on all cylinders, we might have had some difficulty.



BW: How do you evolve it?
JS: The largest way is take other opportunities for consumers to access the brand whether that's licensing, international [expansion] or brand extension. Finding other ways for consumers to access the brand is our mission for the next five years that we will be focused on. Our franchisees have committed to building 500 more IHOPs in the domestic U.S. over the next several years. That's great, but there are other avenues in non-traditional [venues], whether it's airports and in military bases, truck stops and colleges and universities. We're looking at that path. We're clearly looking at the licensing path whether it's you go to the frozen food section and there is an IHOP waffle. We're looking at [syrup].

BW: What are your plans for Applebee's?
JS: We are just starting a very similar strategy of re-energizing the brand. The advertising, the media buying, the target customers, the food, the back of the house, eventually getting to the remodeling…different tactics for Applebee's but a very similar strategy. It's going to take some time, but I have a very high comfort level. We don't have a limited-time-only product strategy, it's more about featuring items that are already on the menu. But we have a tremendous opportunity to instill news and interest and get people to come in more often.

BW: Applebee's campaign seems to have changed a lot.
JS: It has. I have a lot of faith in "It's a whole new neighborhood" [the $200 million campaign launched in the March from McCann Erickson, New York]. Historically, they were struggling to find their target, which made it difficult to stick with an advertising campaign. We've had "Come Hungry, Leave Happy" at IHOP since 2003. There has been an evolution but we still kept some of the baseline pieces because it resonates [Vitrorobertson, San Diego, took over the $60 million account in January]. I think with this whole idea of "It's a whole new neighborhood" we can do so much with. It has some real upside. Real people submitting their videos gives [Applebee's] a chance to differentiate itself.