The coronavirus pandemic changed the way a lot of people eat. Many customers avoided in-person dining at restaurants, opting for delivery or to-go meals instead due to safety concerns.
Now that coronavirus vaccines are widely available and the CDC has given those who have gotten a jab the green light to ditch their masks even in indoor settings, diners may grow increasingly comfortable with the idea of eating indoors. But for some, the convenience of takeout may be enough to keep them from dining in.
IHOP, which is part of Dine Brands Global (NYSE: DIN), is looking to capitalize on that trend. And it's introducing a new restaurant concept that could prove quite successful.
Pick up your pancakes and go
Traditionally, IHOP has been the sort of restaurant that entices people to sit down and stay a while. But during the pandemic, it noticed a rapid shift to delivery and takeout orders.
With that in mind, it's gearing up to introduce a new restaurant concept called Flip'd, with the first location set to open in New York City this July.
Flip'd will have its own dedicated menu, which will be designed to allow for portability. Instead of pancake platters, for example, Flip'd customers will be able to order pancake bowls. And rather than offer up omelets, the menu will feature egg sandwiches, which are easier to eat on the way to work.
Furthermore, Flip'd will not be offering table service at all. Rather, customers will be limited to takeout or delivery.
A clear trend
IHOP actually thought up the Flip'd concept before the pandemic began but put its opening plans on hold when things got really bad on the coronavirus front. In 2020, IHOP restaurant sales declined nearly 33%, and the chain, like many fast-casual restaurants, had to quickly shift its focus to takeout and delivery to avoid an even more massive revenue hit.
Now, takeout and delivery account for roughly 30% of IHOP's orders, so it makes sense for the chain to find ways to capitalize on that trend. By dumping dining tables and focusing on smaller restaurants, IHOP can cater to customers and save money on lease space at the same time.
Furthermore, while IHOP initially planned to introduce its Flip'd locations in larger cities -- where customers tend to be in a hurry -- it now intends to open these smaller restaurants in suburban areas as well. It's even looking to test out its new concept in convenience stores.
The impact on real estate investors
IHOP isn't the only fast-casual chain to get rid of its dining rooms in some locations. Chipotle, for example, is also introducing new restaurants where sit-down dining won't be an option.
From a real estate investing perspective, downsizing square footage sounds like a bad thing at first. But if IHOP's new model really takes off, the chain will no doubt seek to expand its footprint, which could translate into tons of revenue for landlords with space to rent out. Furthermore, this smaller IHOP concept could make it a good fit for malls, which have been desperate for tenants since before the pandemic began.
While eating pancakes to go sounds wonky at first, for many customers, it clearly works. And IHOP's latest model could prove quite successful due to the convenience factor alone.