IHOP is adding booze to the menu at some locations

ByDanielle Wiener-Bronner, CNN Business
Friday, August 13, 2021
IHOP is adding booze to the menu at some locations
If you visit an IHOP in the not-too-distant future, you may encounter some unexpected menu items that weren't available before: beer, wine and bubbly.

If you visit an IHOP in the not-too-distant future, chances are you may encounter some unexpected menu items that weren't available before: beer, wine and bubbly.

That's because for the first time, IHOP is offering its franchisees, which run the vast majority of IHOP restaurants, the chance to add an alcohol menu devised by the company.

A handful of IHOP franchises have already been selling alcohol. But previously it was on them to select the menu and launch the new offerings.

On the company's new menu: Bud Light, Blue Moon and Corona beers, as well as Barefoot Bubbly Brut, Barefoot Bubbly Chardonnay and Barefoot Cabernet Sauvignon. Some locations may have local offerings, as well. Hard liquor is not on the menu to avoid making IHOP, a family restaurant, feel like a bar.

Two IHOP locations in New Mexico are offering drinking-aged guests boozy options to complement their meals starting this week, the company announced Thursday. Another one in San Diego will start selling alcohol in September. About nine more restaurants will adopt the boozy menu in markets including New York, Rhode Island, Maryland and Ohio, likely by the end of the year, IHOP president Jay Johns told CNN Business.

IHOP hopes its initial slate of restaurants is just the beginning.

If things go well, "we'll hit the gas pedal and we'll go much faster" after that, Johns said.

Convincing franchisees

Johns said he's not sure all locations will end up selling alcohol. But "we want it to be as broad as possible," he said. Eventually, he thinks about 1,000 or so restaurants could offer booze. There are about 1,750 IHOP restaurants in total.

But in order for the plan to work, IHOP has to convince its franchise operators that adding the alcohol menu is worth the investment. Franchisees participating in the program have to get a liquor license, train staffers to card customers and become familiar with new menu items. Following a brutal period of declining sales and during a nationwide labor shortage, that may be a big ask. Sales at IHOP restaurants open at least a year were much higher in the second quarter compared to the same period last year, but are still below 2019 second-quarter sales.

By adding an alcohol menu, IHOP hopes to attract customers who want a drink with their meal, particularly later in the day. IHOP has long been trying to drum up interest in it's non-breakfast menu items. Back in 2018, it briefly changed its branding to "IHOb," a marketing stunt designed to call attention to its burgers.

Alcohol "is clearly something that's right in our strategy of ... coming up with more ways that people can enjoy us for dinner" or lunch, said Johns.

Cracker Barrel added alcohol to hundreds of its locations last year. The chain also said it was courting people who had been skipping Cracker Barrel in order to visit a place that served alcohol. Other chains, like Taco Bell, have also added alcohol to the menu in recent years.

Right now, the rollout is in "test mode," Johns said. The first three restaurants volunteered to be early adopters. "They feel comfortable that their staffing is fine. And [that] they can execute this," he said.

There are reasons for franchisees, who operate virtually all IHOP locations, to get excited about the program. Alcohol has higher margins than food items, so selling it could ultimately make franchise operators more profitable, he said. And if people spend more per meal because they're ordering drinks, server tips could go up as well, he added.

Johns said that "we think this will be pretty simple to execute," because of the limited menu.

Plus, IHOP's culinary team came up with meal pairings for the drinks. You might want to drink a mimosa with your french toast, pair a Chardonnay with a Southwest chicken burrito or order a Corona Extra to complement your poblano omelette, for example. The pairings can help servers upsell the product.

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