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Study: IHOP's "value score" soars with return of Kids Eat Free

Consumers with young children see the family-dining chain more favorably, a YouGov BrandIndex survey finds

With an uncertain economy and the back-to-school shopping season underway, August arguably was the perfect month for IHOP to reprise its Kids Eat Free promotion.

New research from YouGov BrandIndex showed that perceptions of IHOP among consumers with young children grew more favorable at the end of July and into August, surpassing survey respondents’ value ratings for competing chains like Denny’s.

According to BrandIndex, IHOP’s “value score” nearly doubled from a base of 25.4 on July 25 to a peak of 50.4 on Aug. 9. Its most recently recorded value score was 39.1 on Aug. 15, still significantly higher than its base.

New York-based BrandIndex calculates a brand’s value score by surveying 5,000 consumers each weekday on hundreds of chains and asking, “Which of the following brands do you think represents a good or poor value for the money?” Negative responses are subtracted from positive ones, and a moving average between positive 100 and negative 100 is compiled.

Denny’s value score fell from a high of 35.6 at the start of the study to a low of 13.5 on Aug. 4, before recovering into the low 20s and settling at 20.4 on Aug. 15. A sector average value score for a competitive group of restaurants that also included Waffle House, Chuck E. Cheese’s, Eat ‘N Park and some fast-casual brands started at 14 and reached a high of 16.8 on July 29, before hitting a low of 6.6 on Aug. 8 and ending at 7.5.

IHOP’s gain in value perceptions among parents may have caused some of Denny’s loss with that demographic group, but the brands aren’t competing head-to-head for parent-based traffic all the time, said Ted Marzilli, BrandIndex senior vice president and managing director.

“It’s not going to be a one-to-one correlation, because consumers don’t always evaluate Denny’s in the context of them not having Kids Eat Free when IHOP does,” Marzilli said. “But those customers with kids might be considering both brands on a regular basis.”

IHOP’s promotion runs every day in August from 4 p.m. to 10 p.m., and is promoted with a tie-in to the new “Spy Kids” movie.

Marzilli said the Kids Eat Free promotion makes sense in family dining right now, as economic concerns take priority, and the offer eliminates the need for parents to spend money on their children’s food or child care.

“With a kids-eat-free program, for parents who think about the equation that way, it becomes a no-brainer because there’s no financial penalty for bringing the kids along,” Marzilli said. “It’s more than the calculation that kids eat free, it’s also that they don’t have to pay the babysitter.”

As IHOP’s value scores rose with the return of Kids Eat Free, its consumer perception scores related to quality and satisfaction also increased, Marzilli said. As the value perception metric plateaued in mid-August, satisfaction scores stayed higher than before, while quality scores trailed off slightly.

He cautioned that, while promotions like Kids Eat Free are effective in achieving their goals with parents, they should be used strategically.

“If you run a promotion like that too frequently,” Marzilli said, “the dangers are that it gets stale and people notice it less, or that people think that free is the real price [of a kids’ meal].”

Glendale, Calif.-based IHOP is a wholly owned subsidiary of DineEquity Inc. and operates or franchises 1,513 family-dining restaurants in 50 states, the District of Columbia and five international markets.

Watch a commercial of the Kids Eat Free offer

Contact Mark Brandau at [email protected].
Follow him on Twitter: @Mark_from_NRN

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