Dive Brief:

• IHOP is soft launching beer and wine at three restaurants in San Diego and New Mexico, with plans to expand its "Bubbles, Wine & Brews" menu to New York, Rhode Island, Maryland and Ohio in the coming months. The alcohol menu is available for dine-in only, with prices varying by location, according to a Thursday announcement.
• The pancake chain's alcohol offering includes mimosas, Barefoot wine by the glass and beer, including Bud Light, Blue Moon and Corona. Participating IHOP stores can also feature local beer and wine during the menu test. 
• This isn't the first time IHOP has dipped its toe into the adult beverage space. Most recently, the chain collaborated with a Phoenix franchisee to develop a menu including beer, wine and cocktails in 2018.

Dive Insight:

IHOP customers are already primed for alcohol pairings with their pancakes, omelet and burgers, according to the chain. 

The Dine Brands restaurant found in a July survey that 66% of its recent customers and 58% of its younger customers (aged 21-34) would be interested in adult beverages served by the diner, IHOP President Jay Johns said in the press release. 

"As we continue to focus and expand on our daytime and evening menu options, adult beverages offer a terrific innovation and evolution to enjoy IHOP for every occasion," Johns said. 

IHOP will use the soft launch to collect diner feedback to tweak the menu based on customer preferences ahead of a broader rollout. If the chain chooses to go national with the alcohol menu, this could be a valuable asset to franchisees looking to grow their sales and speed up recovery from last year's restaurant lockdowns, dining room capacity caps and reduced traffic at casual dining establishments out of concern for COVID-19 spread. 

The addition of beer and wine could also strengthen IHOP's dinner daypart and increase ticket values. Rival diner Denny's has been doubling down on its evening offerings as well, but through virtual brands instead of alcoholic beverages. Denny's brand The Burger Den launched at roughly half of the chain's domestic locations, followed by The Melt Down, which features handcrafted sandwiches, earlier this year. 

IHOP isn't alone in its alcohol exploration, either. Last fall, Panera's second-largest franchisee rolled out a program called "Panera Tonight: Beer, Wine & Dine" alongside the brand's new flatbread pizzas at five Kansas City locations. The menu, including wine, beer and hard seltzer, is available after 4 p.m.