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IHOP begins pancake promo amid slower traffic

GLENDALE Calif. On the heels of reporting negative same-store traffic trends for the September-ended quarter, IHOP introduced today the chain’s well-known all-you-can-eat-pancakes limited-time offer, a promotion typically reserved for the post-holiday months.

The campaign will end Oct. 31, the company said. It was given a new spin surrounding Halloween and is called “Trick or Treat All-You-Can-Eat Pancakes.” The deal, with a combo of eggs, hash browns and sausage, bacon or ham, is priced at $4.99, although the prices vary by location.

IHOP, the 1,375-unit family-dining chain franchised by parent company DineEquity Inc., posted a same-store sales uptick of 0.2 percent for the third quarter, amid a “sharp pullback in consumer spending,” according to the company’s chairman and chief executive Julia Stewart. The result reflected negative year-to-year traffic and a higher year-to-year average check. The company also warned that IHOP would meet the lower end of its annual same-store sales projection, which calls for growth between 2 percent and 4 percent.

Many chains, including Ruby Tuesday, Applebee’s and direct IHOP competitor Denny’s, have been or will start to focus on traffic-driving price point promotions as consumer spending continues to dwindle amid economic and financial uncertainties. Denny’s currently is promoting its Sizzlin’ Breakfast Skillets for $5.99. Ruby Tuesday will begin this month to market its lower prices, including a $5.99 hamburger, and competitor Applebee’s, which like IHOP is operated or franchised by DineEquity, is set to introduce this month new and lower combination pricing for certain menu items. It also has been marketing the chain’s $5.99 Pick and Pair lunch offerings.

The lower prices at numerous chains have been called into question by some restaurant analysts because of steep commodity prices and other escalating operating costs. Profit margins have been affected, analysts contend, for the sake of traffic.

“While we believe value-oriented concepts will fare better in the current environment, commodity and labor headwinds make us question whether the trade-off of margins for traffic is a rational, profitable decision,” Steven Kron at Goldman Sachs & Co. said in a research note this week.

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