IHOP Reportedly Shuttering Fast-Casual Concept as Consumers Seek Value

IHOP is reportedly shutting down its test of fast-casual concept Flip’d as restaurant customers increasingly seek out hospitality on the one end and low prices on the other, leaving fast-casuals in a tricky spot.

On Wednesday (May 31), Spring, Md. news outlet Source of the Spring reported on the closure of the area’s Flip’d location, stating that IHOP has shut down the test of the restaurant concept altogether.

“After evaluating the results of our flip’d by IHOP pilot program, IHOP will no longer be opening additional flip’d by IHOP locations,” an IHOP spokesperson told PYMNTS in an email. “The flip’d by IHOP concept was piloted to test and learn how to make the guest experience for off-premises dining more enjoyable and featured a menu inspired by IHOP classics, designed to be enjoyed on-the-go. Our learnings from this pilot will inform how we iterate going forward.”

IHOP initially shared its plans to debut the fast-casual brand back in 2019, with plans to go live in spring 2020, but given how that spring ultimately turned out, the brand delayed the launch to 2021, touting the favorable market for fast-casual concepts.

“While we know there is a pent-up demand for a return to dining in restaurants, we anticipate that our delivery and takeout business is here to stay as consumer needs continue to shift … With flip’d, we can provide that on-the-go, fast-casual experience, making now the perfect time to bring this concept into the world,” Jay Johns, president of IHOP, said in a statement at the time.

The chain’s first location opened its doors in Lawrence, Kan. in fall 2021, and a couple more locations across the United States followed.

The news of its shutdown comes amid pressures on either side for fast-casual chains, with diners on the one hand frustrated by declining service at higher-end restaurants and on the other hand turning towards the lower end to manage their food spending.

As such, with fast-casual eateries providing neither the value offerings of quick-service restaurants (QSRs) nor the hospitality offered at a full-service restaurant (FSR), it is possible that some chains are facing newfound difficulties finding their market fit.

Additionally, in the case of Flip’d, it may come down to the specific challenges of operating a fast-casual brand the breakfast space. Breakfast foods tend to be ones that consumers can easily prepare at home, such that, if they are getting breakfast out, it is likely to enjoy the dining experience rather than to have a quick, easy option. Or, if consumers are springing for a grab-and-go meal, they will likely be more inclined to pay QSR prices for a meal they could easily make at home than fast-casual prices.

Indeed, with leading restaurant brands touting their low-priced breakfast options — McDonald’s $1 $2 $3 Dollar Menu, Taco Bell’s Breakfast Box for $5.49, Wendy’s $3 Breakfast Deal and others — it may be difficult for consumers to justify spending closer to $10 on a grab-and-go meal.

Certainly, consumers are looking for less expensive food options. Research from PYMNTS’ “Connected Dining: Consumers Like the Taste of Discount Meals” found that the share of diners who had paid a reduced price on their most recent restaurant purchase skyrocketed from 14% to 26% from March 2022 to February 2023. Plus, 43% of discount recipients and 37% of consumers who did not receive a discount report that price was a key factor influencing their most recent choice of restaurant.