Short-Order CEO

Unless you’ve never seen a menu with 15 varieties of pancakes before, a meal at an International House of Pancakes restaurant may not be exactly a jaw-dropping experience. For 47 years, IHOP--which originated in Toluca Lake--has served guests dependably, if not spectacularly, growing into a chain of more than 1,200 restaurants that did $1.8 billion in sales last year. With its pancakes made from a trade-secret batter, the signature blue A-frame roof, the jugs of syrup on every table, and the servers clad in blue aprons over white shirts, it is as much a cultural as a culinary icon.

Three years ago, though, the Glendale-based company appointed a chief executive officer who once waited tables at an IHOP in San Diego County and is now aiming to serve up something new and dynamic. “I remember saying to the board of directors, ‘If you want someone to maintain this brand, you should not hire me,’ ” 50-year-old Julia Stewart recalls. “ ‘I think this brand needs to be re-energized.’ ”

The company has downplayed its breakfast identity since the 1970s by favoring the “IHOP” acronym. Stewart is particularly focused on enticing more people to eat lunch and dinner at her restaurants. So, coming soon to an IHOP near you will be new menu items such as grilled cod hollandaise and top sirloin, presented in a setting of enhanced lighting, decor and service. Every restaurant in the chain will get a face-lift that will cost franchisees as much as $120,000. Stewart makes it sound as if guests will enjoy something just short of fine dining.

Pulling that off, especially these days, would establish Stewart as one of the more successful chief executives in the country. Traditional family-dining operations are struggling as customers have defected to restaurant chains such as Chili’s, Islands, Ruby’s Diner, and Red Robin. At Howard Johnson’s--like IHOP, a slice of Americana--only four restaurants survive of what was once a powerhouse chain of more than 850. For nearly a dozen years before Stewart’s arrival, growth in IHOP’s same-store sales--the key restaurant industry benchmark--was almost negligible.

“You can’t just sit there and do nothing, otherwise someone passes you by,” notes Hal Sieling, an industry consultant in Carlsbad.

So the job of flipping the pancake chain fell to Stewart, who says she has always been “pretty plan-ful” in her restaurant industry career. “Early on, I decided I really did want to run something one day. It was very much, how could the next opportunity provide me a greater stepping stone?” Stewart says she first absorbed some of IHOP’s “values” during her stint at the El Cajon IHOP, where she worked for a summer as a 16-year-old. “I remember [the manager] being crystal clear about providing good service, what that meant, what that looked like.”

After meeting Carl Karcher on a plane, she started her executive career in regional marketing at his Carl’s Jr. chain, moving on to Burger King, Black Angus, Taco Bell and, lastly, Applebee’s International. Along the way, she developed a reputation as a marketing whiz and a turnaround specialist. “I found myself attracted to things that needed to be fixed,” she says.

During an interview at an IHOP in Pasadena and en route to her son’s baseball practice, Stewart talked rapidly and confidently about her plans to fix IHOP, occasionally reaching across the table to emphasize a point. “My rallying cry is to become number one in family dining,” she says, referring to a ranking currently held by Denny’s.

She developed and implemented a new business model at IHOP, which--unusually for a national chain--had developed its own restaurants before selling them to franchisees for $250,000 and a 4.5% cut of revenues, often supplying the financing with high-interest loans. As part of Stewart’s initiative, franchisees now develop restaurants themselves, which, in turn, has freed up about $124 million in cash flow for IHOP to reinvest in the chain. “[IHOP] was really in the financing business, and secondarily in the restaurant business,” says Stephen Pettise, a former IHOP executive who is now a restaurant marketing consultant at Golden Spike Resources Group in Westwood. “Now they’re very much in the restaurant business.”

Stewart, a single mother, now travels so much while visiting some of the chain’s 420 U.S. franchisees that her two children, ages 8 and 6, use a globe to keep track of her. “They tag where I am so they know at all times,” she explains. “Next week they know Mom’s in D.C., then she’s in Sarasota, then New York.”

With the help of beefed-up promotions and advertising, IHOP’s same-store sales were up 5.3% last year, which at least kept pace with Denny’s. All those new lunch and dinner guests, Stewart predicts, will translate into “substantive real growth.”

Bob Leonard, president of FMS Management Systems, IHOP’s franchisee in Florida, credits Stewart with getting “everybody marching together in the same direction. She has a very personable style. People enjoy working with her.” He’s already converted a few of his 140 restaurants to the new look and says the early feedback from customers is encouraging.

But, warns Chris Milisci, president of Romulus Inc., an IHOP franchisee with 22 restaurants in Arizona, Stewart needs to make sure she doesn’t so change IHOP’s identity that it risks hurting the chain’s core breakfast business. “I think it is a distinct possibility,” he says.

There’s little room for error here. “[The new menu] has got to be almost an instant success,” Sieling says. If the server is surly or the food is mediocre, the guest likely won’t come back. And then there’s that not-so-modern guest with a visceral attachment to the old, stodgy IHOP, who just cares about his coffee refills and his eggs, bacon and “three fluffy buttermilk pancakes.”

“Our heritage is always going to be breakfast,” Stewart insists. “I want to protect and guard that. But by the same token, there’s so much more our brand can produce.”

Getting that recipe right won’t be easy.