Dine Brands Gears up for IHOP Loyalty Launch With Tech Investments

Dine Brands, the parent company of Applebee’s and IHOP, is investing in digital technologies to target consumers’ evolving habits, driving spending both through digital channels and inside its restaurants.

“The key investment areas for capex is on-premise and off-premise technology to improve guest experience and operation efficiency,” Dine Brands Chief Financial Officer Vance Chang told analysts on a call Wednesday (Mar. 2) discussing the company’s fourth-quarter and full-year 2021 earnings results. “We’re spending money on loyalty [programs, customer relationship management (CRM) and] infrastructure.”

While Applebee’s comparable sales in the quarter were up 9% from 2019, IHOP was slower to recover from the pandemic. The pancake brand’s comps were down 3% on a two-year stack. In a move to boost these sales, increase visit frequency and learn more about its customers, IHOP is launching its loyalty program by the end of the first quarter (i.e., within the next several weeks), IHOP President Jay Johns said.

“It’s a true earn-and-burn program that allows our guests to collect and redeem rewards when they dine with us,” he said on the call. “We believe this program will be a fun and appealing way for us to create even stronger connections with our guests, build brand loyalty and drive incremental visits.”

A large portion of restaurant customers — more than four in 10 — now use loyalty programs, according to data from the January edition of PYMNTS and Paytronix’s Digital Divide report, “The Digital Divide: Minding The Loyalty Gap.” The study, which highlighted the results of a survey of a census-balanced panel of more than 2,400 United States adults, found that about a quarter of consumers use loyalty programs at all or almost all the restaurants they purchase from often.

Read more: Restaurants Compete to Make Loyalty Programs Stand out as Consumers Join Multiple Programs

Johns added that the brand intends to use the program to offer value to consumers beyond the typical complimentary food rewards.

“There will probably be some chances for [members to earn] things other than just food,” he said on the call. “We have the opportunity sometimes with these special programs with vendors, etc., where they might be able to get rewards that are more experienced based.”

Consumers seek out food-based rewards above all else, but there is nonetheless a significant share of restaurant customers interested in receiving alternative offers. Research from the August edition of Delivering on Restaurant Rewards, created in collaboration with Paytronix, which drew from a census-balanced survey of more than 2,000 United States consumers, found that 77% of restaurant customers consider the availability of complimentary foods when deciding whether to sign up for loyalty programs and 66% consider the availability of customized coupons or discounts.

See more: Two-Thirds of Consumers Find Restaurant Rewards Impersonal

Less than half of consumers, but still a significant share, take other kinds of rewards into account. Thirty-eight percent, for instance, consider the opportunity to gain busy hours access, 32% consider customized menus, and 27% consider order suggestions.

As IHOP gears up for this loyalty launch, Dine Brands overall is investing in technologies geared toward improving its ability to target guests’ preferences through this loyalty program and other digital platforms.

As Dine Brands CEO John Peyton told analysts, “Importantly, we implemented a new CRM and digital platform that has vastly improved our digital marketing and marketing analytics, which serves as a foundation for our loyalty programs.”