IHOP CEO says in talks to license brand

By Nichola Groom

CHICAGO (Reuters) - IHOP Corp. IHP.N is in talks to put its name on packaged foods that would be sold in grocery stores as the restaurant company looks for ways to boost sales beyond its iconic pancake house chain, Chief Executive Julia Stewart on said on Wednesday.

"We just started conversations with a couple of ... national manufacturing folks who really specialize in us being able to use them to expand the brand," Stewart said at the Reuters Food Summit in Chicago. "That is something we will take a look at."

Stewart said licensing is one option IHOP is considering as part of a recently-announced move to evaluate strategic alternatives for the brand, which she said is close to running out of U.S. locations to build new restaurants.

"We're close to being maxed in terms of our build level," Stewart said.

Since Stewart joined IHOP in 2001, the Glendale, California, company has quit building new restaurants itself and shifted to a traditional franchise model to free up corporate time and resources to focus on revenue growth. The company is 99-percent franchised.

IHOP has about 1,240 restaurants in the United States and Canada and is currently opening about 60 a year, Stewart said. IHOP also has franchisee commitments to develop 419 new IHOPs as part of a goal to add 300 to 700 restaurants in the next several years.

Beyond adding new restaurants, other growth options the company is considering include acquiring another brand that IHOP's management would develop through franchisees.

"If there is an opportunity for something out there that we might be able to grow and expand, more power to us," Stewart said, adding that she was not interested in buying one of IHOP's rivals in family dining.

"We would not be looking for anything in our category," she said.

IHOP is currently expanding its pancake restaurants into Canada and Mexico and would look at whether other international markets made sense, Stewart said, but cautioned that family-style chains could be "a harder sell" than fast-food or casual dining in a market like China.

IHOP shares were down 88 cents, or 1.8 percent, at $49.05 in early afternoon trade Wednesday on the New York Stock Exchange.