IHOP expanding to Wal-Mart

IHOP is looking to Wal-Mart to expand its customer base beyond booths and coffee refills.

The Glendale-based restaurant chain on Monday announced plans to start selling frozen breakfast entrees at 3,000 Wal-Mart stores this week, with plans to enter supermarkets later in the year.

The move comes as IHOP restaurant revenues stall and brand-name chains seek customers who may not walk in the door.

“The bottom line is, we are pretty good at breakfast, and we feel we ought to be offering more folks quality IHOP breakfasts more of the time,” IHOP President Jean Birch said Monday.

The new products include stuffed French toast pastries, a buttermilk pancake and sausage wrap, and crisp tarts made of scrambled eggs, cheese and bacon or sausage.

Harry Balzer, chief food industry analyst with the NDP Group, said the U.S. market for frozen meals is growing, while restaurants fight for a slice of the economic pie that has not expanded since the recession.

“There are 115 million households in this country, and all of them are going to visit a grocery store or a supermarket this week,” Balzer said.

The same can’t be said for restaurants, he added.

“The driving force here is increased distribution,” Balzer said. “If I can get it to you on the shelves, I don’t have to get you to drive to my restaurant to try me.”

IHOP goods will likely appear in other stores later this year, Birch said, but not before the supply chain works smoothly between the third-party manufacturer of the IHOP frozen goods, whom she declined to name, and the 3,000 Wal-Mart stores.

“Three-thousand Wal-Marts is a big launch,” she said.

Julia Stewart, the chief executive of IHOP parent DineEquity Inc., said in a call with investors last week that the chain may introduce more frozen items later this year.

Last week, the company announced that in the first quarter of 2011 IHOP had seen a 2.7% decline in same-store sales compared with the same period last year. And the company has forecast that 2011 revenue from the 1,500-restaurant chain will come in relatively flat compared with 2010.

Balzer said people may not be going out as much as they do in better times, “but the desire to have easy meals is ever-present. We don’t want to cook, and that is not changing.”

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