On April 12th, IHOP CMO Kieran Donahue took the stage at the 2022 Restaurant Leadership Conference with PAR CEO Savneet Singh to chat about the benefits and future role that Unified Commerce will play in hospitality infrastructure.
On the precipice of a national recession, restaurants have already weathered a two-year pandemic, a labor shortage, supply chain disruptions, and a mounting demand for digital advancement that far outweighs their current tech stack. With rising pressures on brands, leadership across the restaurant industry are turning to their marketing strategies and redeveloping how they meet customer demand and guest engagement. IHOP is one of those brands at the forefront of digital innovation and has recently pivoted to developing a tech stack that is more unified around the guest experience.
And that means going to market just a little bit different than they ever have before.
“Listen, we’re a 64-year-old brand, and Dine Brands, our parent company, has publicly admitted to the fact that we are investing more in technology, and there is a reason for that. A necessity,” says Donahue. “Our tech stack is increasing and not just with our partners at Punchh, but we’re also implementing better wifi, payment options, a new POS, an app, updating the website; all advancements to help our tech stack integrate for future growth.”
Donahue admits this sort of transformation can be difficult for some brands and that she has seen the restaurant industry lagging to keep up with the digital advancements of other industries like retail, hotels, and airlines.
“[Selling the solution of loyalty] was all about creating a good business case. The one thing about the restaurant industry is that unlike my previous career in the hotel sector, we operate in real-time with the restaurant industry, and that is a challenge.” Says Donahue. “To offset this, we are working on what we call “demand generation” where we act like retailers in some ways, so that we can engage with guests, no matter what the touchpoint.”
But with the challenges of innovation and change, also comes a new dynamic for organizations. One that can strengthen interdepartmental relations and create alignment for the common good. Donahue admits over the past few years, the success of IHOP has relied on a genuine shift in the dynamics of how IT and marketing now operate, cross-functionally.
Donahue says, “The wonderful thing that came out of the necessities of this new digital horizon is that I’ve had more engagement with our CIO Justin Skelton and IT than I ever have had in my entire career as a marketer. The new reality is that [unlike in past projects], it was us together that brought the business case and got the investment approved for all the work we are doing with customer loyalty and engagement. It’s so important nowadays to be great partners with the IT team. My boss always says, marketing without execution is insanity, and that is true. In today’s [new integrated techstack], if you are not fully aligned with all departments, you’re not going to cross the finish line.”
Donahue goes on to talk about the pandemic and that the glimmer of innovation was initially seen when customer’s started shifting their sales from within the four walls, to channels that were considered off-premise. IHOP quickly discovered they needed to find a nimbleness that they never thought they had the bandwidth for.
Prior to the pandemic, off-premise sales were only 10% of IHOP’s top sales. Today they top over 25%, and that has remained steady. This signaled to the executive team that they could quickly adapt when they needed to, despite their size and geographic spread. Also, this spurned their belief that loyalty was an essential thing. It took the team at IHOP less than a year to implement the new loyalty program, app and website.
Admits Donahue, “When something is important, we can find speed. And there is an inherent value in focusing not only on getting that additional transaction from the guests that love you but also on getting new guests into the fold. The pandemic has made it, so consumers understand the value of their money and choice to interact with your brand. That has to be recognized, and we at IHOP were up to the challenge to make sure that choice was as easy as possible for them.”
And thus far, IHOP’s gamble on their guests has been a success. Their newest program, named the International Bank of Pancakes, is meeting and exceeding their overarching business goals, helping them maintain a 64-year tradition with their guests while attracting a new generation of loyal customers.
“We measure the success of our program by several factors, sales, frequency, spend, through surveys and employee engagement, of course, but the one measurement we were searching for was how to understand and increase customer lifetime value. You couldn’t do that before without a fully integrated loyalty program. Punchh makes that possible,” says Donahue.
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