GLENDALE Calif. Franchisees of the IHOP and Applebee’s chains together will form a purchasing cooperative to improve buying leverage now that the two brands are under parent company DineEquity Inc.
“The purchasing power of that combined entity is huge,” said Julia Stewart, chairman and chief executive of DineEquity. She discussed the still-in-development purchasing co-op at Nation’s Restaurant News' headquarters in New York on Monday.
Aco-op, which pools the resources of independent franchisees to garner better pricing on food items, is more common among quick-service brands than family- or casual-dining chains. Franchisees at Yum! Brands, Burger King and Subway, for example, have formed purchasing co-ops. Stewart said the IHOP-Applebee’s co-op may be the first in their respective sectors.
DineEquity, under its former corporate name IHOP Corp., acquired Applebee’s late last year. The company now comprises about 3,250 restaurants under both chains -- most of which are franchised or are corporate locations earmarked for sale to franchised owners.
The franchisee advisory councils at both IHOP and Applebee’s have agreed in principle to a co-op, Stewart said, and are currently working to make it happen. As an incentive, DineEquity agreed to finance the payroll of co-op employees through this year and next.
The consolidation of purchasing and distribution is “worth millions,” Stewart said. About 76 percent of all the products purchased by IHOP and by Applebee’s come from the same vendors, she added. In the future, the purchasing co-op could grow to leverage other forms of purchasing power for insurance needs, non-food items, equipment and gift cards, Stewart said.
