IHOP Sees 600 New Units

"At the time of our business-model change in early 2003, we stated that it was our projection that there were about 400 to 800 new IHOP restaurants possible in the US. Our remaining potential stands at 250 to 600," IHOP president and CEO Julia Stewart said during the conference call. The company's current development pipeline already places it in the middle of the 250-600 range, Steward added. "We will continue our franchisee recruiting efforts full force to capture every possible unit growth opportunity within the US as well as internationally," she said.

The 1,242-restaurant IHOP chain's immediate plans call for adding 64 to 69 new locations this year, most of them to be developed by franchisees. The new restaurants, most of which will open in the second half of the year, will include 55 to 60 franchise locations, five to be developed by IHOP's area licensee in Florida and four that IHOP Corp. will open in its dedicated company market of Cincinnati. In addition, franchisees will complete about 150 restaurant remodelings this year.

IHOP also expects that franchisees will open the first of several planned international locations in Mexico and some new restaurants in Ontario, Canada. The two agreements could result in up to 13 new IHOPs in Mexico and Canada, where the company "will continue to pursue additional development" besides the deals already signed, Steward said. The IHOP president said that the franchise-oriented expansion of the chain is one of a number of elements in a "successful financial formula that served us well in 2005," which the company intends to continue this year.

In offering its guidance to financial analysts on expectations for this year, IHOP said Tuesday that it expects earnings per diluted share for 2006 to range between $2.25 and $2.35, including the impact of $2.5 million to $3.5 million of stock option expenses. The company's earnings performance outlook is based on IHOP's expectation of positive same-store sales growth at 2% to 4% in 2006, the addition of the new restaurants, careful management of expenses and the benefit of ongoing stock share repurchase by the company.