IHOP 's new loyalty program plays off crypto craze

'Pancoins' can be exchanged for benefits at the 'International Bank of Pancakes.'

IHOP 's new loyalty program plays off crypto craze

IHOP today is rolling out a new loyalty rewards program that plays on the cryptocurrency craze.

The new program allows customers to accrue points in the form of “PanCoins” that can be exchanged for discounts and other benefits from the “International Bank of Pancakes.”

IHOP CMO Keiran Donahue said the Bank of Pancakes was designed to draw additional visits from existing customers as well as new diners, by emphasizing elements of the brand they admire. That includes discounts, the ability to customize orders, as well as perks such as the ability to pay at the table—and for founding members, free delivery. Benefits for IHOP and its franchisees include gaining valuable first-party data. The digital ordering functions will help with order accuracy and speed, Donahue said. The program does not use actual crypto, but borrows language from the digital currency trend.

The chain is kicking off the program by offering 10 free PanCoins to introductory members between March 10 and March 29. PanCoins are earned at a rate of one for every $5 spent at the restaurant. Three PanCoins can be exchanged for a stack of three buttermilk pancakes; five PanCoins can earn a full stack of five pancakes. Customers who build their PanCoin collection over time will have the opportunity to trade those in for other food, merchandise and experiences that will populate the site in coming weeks.

The loyalty program was internally designed and developed, as was the associated app. IHOP used Punchh as the technology platform, with user experience designs for its website and app handled by iCrossing. Barkley provided creative assets. Donahue said the brand would support the launch with a “full omnichannel” advertising approach built around online ads. Donahue declined to specify a total ad spend.

“I believe that marketing must also make the cash register ring and so I am putting a sharp commercial focus on everything we do at IHOP,” Donahue said. “That includes our marketing efforts being more customer-centric, omnichannel and supported by technology.”

Restaurant brands in recent years have put a big emphasis on customer loyalty, particularly as COVID interfered with normal eating habits and forced them to rely on third-party delivery aggregators for a significant chunk of their business. McDonald's for example has built a loyalty club of more than 20 million members since it launched last summer. Taco Bell recently tested its fans' loyalty through a “Taco Lover's Pass” program offering one free taco every day for 30 consecutive days in exchange for a one-time $10 fee. 

IHOP until now stayed in touch with customers digitally through a program called Myhop that sent periodic email alerts and discounts directly to consumers. All of the new capabilities of the program are now available on the restaurant’s app, allowing for customers to easily understand their rewards, and better enable customers to order ahead or customize their orders—an important consideration for IHOP, which considers its variety of ingredients and prep styles an advantage in the restaurant wars.

“Folks coming into our restaurants are used to customizing things like how they like their omelets,” Donahue said. “Although the current app allows for customizations, it’s just not as easy or intuitive, so we are updating it. It also helps us on the back end, so when the person who loves omelets wants ham, bacon and cheese, it’s clear and it makes sure the staff can deliver it to them.”

Donahue declined to share enrollment figures for Myhop or a projected base for the Bank of Pancakes program but said “we’ll be watching it closely, and in 12 months expect to have a lot of customers signed up.”

Mary Pileckai, VP and principal analyst for Forrester, said IHOP’s new program was “clever” in its ability to reflect the current fascination with cryptocurrency and play with the notion of “pancake wealth,” but said the program would ultimately rise to a competitive advantage based on how consumers respond to the experiential benefits it offers.

“One of the keys to a loyalty program is feeling special,” Pileckai said, noting proprietary data indicating 68% of U.S. consumers join a loyalty program seeking benefits that other consumers cannot get.

“So IHOP needs to make it very clear what loyalty members get. Consumers are looking for financial rewards, discounts and free samples, but they also want experiential awards—like early access to new items, access to a secret menu, and better customer service. There are a lot of opportunities there to offer things like the best table at the restaurant, or to jump the waiting list, or let people design their own pancake, or their own combinations. So overall, I don’t think this program is necessarily groundbreaking, but QSR [quick service restaurants] is a tough business for loyalty, and this represents a lot of opportunity for IHOP.”

IHOP President Jay Johns described the new program as a “true earn-and-burn program that allows our guests to collect and redeem rewards when they dine with us," during the March 2 earnings call for IHOP parent company Dine Brands. "We believe this program will be a fun and appealing way for securing an even stronger connection with our guests, build brand loyalty and drive incremental visits.”

IHOP is bringing some momentum of its own into the program. Same-store sales during its fiscal fourth quarter soared by 39.2%, but were down by 3% when compared to 2019's fourth quarter, one of the last periods unaffected by the pandemic. Sales totaled $37.5 million from 1,757 domestic restaurants including two under the newly launched Flip'd brand, a fast-casual take-out concept serving breakfast, lunch and dinner.

IHOP’s ability to serve groups of customers—like co-workers or families—is sparking the performance as COVID restrictions on consumer behavior loosen and unleash an untapped desire to socialize, said Donahue. “As we look ahead to consumer trends, there really is a desire for people to be together,” she said.

Donahue developed her marketing instincts over a 20-year career in the hotel industry where she worked for brands like Hilton and Marriott before joining IHOP a year ago, “so I understand the importance of loyalty,” she said.

Among her priorities now is overseeing a creative agency review. IHOP’s former creative agency, Droga5, is not defending the account, Ad Age reported. Donahue declined comment on the review. “We’ll have more on that in a few weeks,” she said.