Six weeks after Julia Stewart took the helm at the International House of Pancakes (IHOP) in December 2001, she asked the company’s advisory board of franchise owners to gather in Orlando.
There, she outlined her vision to revitalize IHOP and lobbied for the board’s commitment to a national media campaign. It was a sharp departure from IHOP’s previous marketing efforts. Stewart (’77, communication) pulled no punches. Without a smart, fresh image, she said, IHOP would be at risk in the increasingly competitive family dining market.
Joe Scripture, a longtime IHOP franchise owner, recalled Stewart’s impact at that first meeting. “Hers was a new style of leadership and not everyone was happy,” he said. “But most of us recognized we needed to support the lady while her strategy played out. In the end, she was every bit as good as her promise.”
Trademark Stewart—she delivers.
Not only did she take IHOP to the top of the family dining sector, she also engineered its acquisition of Applebee’s in 2007 to form the world’s largest full-service restaurant company, DineEquity Inc., which feeds 2 million people every day.
Stewart’s appetite for challenge and reputation for regularly polishing off the workload equivalent of a five-course meal are legendary in the restaurant industry.
Friends describe her as “driven to achieve” and “beyond focused,” but also genuinely charming with a hostess’s innate desire to please. IHOP’s “Come hungry. Leave happy” catchphrase could be a metaphor for Stewart’s success in the competitive dining industry.
Inventor and TV star
The 54-year-old Stewart had her first taste of the restaurant trade waiting tables at the local IHOP while still a teenager. After high school, she left San Diego to attend UC Santa Barbara on a full scholarship, but disliked the large classes and impersonal feel of the place; she transferred to San Diego State.
“For me, learning was about the engagement, the interchange, the dialogue, and I found that
at State,” Stewart said.
(Her daughter, Alexa, is currently enrolled at SDSU taking classes in the Department of Hospitality and Tourism Management.)
Stewart made her mark among the small group of communication majors at SDSU. When an advertising professor challenged students to create a new product for McDonalds, Stewart built a “McDonalds Masher” that molded hamburger meat into the familiar shape of the golden arches. A local TV station picked up the story, and Stewart got a call from Mac Clark.
“You’re exactly the kind of person I want to run my in-house ad agency,” he said. It was her first full-time job.
But Stewart wasn’t cut out for advertising or for the retail trade, in which she also dabbled. Instead, she returned to the restaurant business.
With increasingly responsible positions at Carl’s Jr., Burger King, Stuart Anderson’s Black Angus/Cattle Company Restaurants and Taco Bell, she carved out a reputation for bold ideas and marketing savvy.
As manager of all franchise and license units for Taco Bell, she urged CEO John Martin to let her breach the breakfast market, a revolutionary idea at the time. Then, in a rare moment of self-doubt, she asked, “What if I fail?” His response: “Julia, you’re not going to destroy this company by testing breakfast in the restaurants.”
“And I remember thinking,” Stewart said, “so it’s alright to experiment. Today, I give my managers a very big sandbox and tell them where the edges are. The real difference you can make as a leader—the difference I hope I’ve made—is to present the vision and the direction. Then get out of the way.”
Not that Stewart ever gets completely out of the way. Those hostess instincts will zero in on the smallest details, from the selection of pancake syrups to the number of mozzarella sticks in a serving. Given her successful turnaround of IHOP, the franchisees aren’t complaining.
Restoring the blue roofs
Stewart was a toddler when brothers Al and Jerry Lapin opened the International House of Pancakes in Toluca Lake, 12 miles north of downtown Los Angeles. Once farmland, the area had become home to the wealthy, including actor William Holden and comedian Bob Hope.
The Lapins’ first restaurant grew into a chain, expanded nationally and survived changes in ownership and experiments with several business models. By the time Stewart came on board as president and chief operating officer in 2001, the ubiquitous blue-roofed franchises numbered more than 1,000 in 44 states.
But the IHOP brand—though profitable—was tired, said Destin Tompkins, restaurant analyst for Morgan Keegan in Nashville, Tenn. Stewart not only roused the company, she energized the entire family-dining sector.
“Textbook marketing,” is how franchisee Scripture described Stewart’s approach. “Have a vision, live the vision. We thought we knew what our guests wanted, but we never did the research. Julia brought data to the game, which is so important in making good decisions. It was a strategic departure from what IHOP had done forever.”
Not everyone at IHOP welcomed the shakeup, and stories of top-level defections appeared in print. When a colleague called Stewart “The Velvet Hammer,” the descriptor stuck.
“Change is not always popular,” Stewart acknowledged, reflecting on her early days at IHOP. “At the time, it was absolutely critical to change this organization that neither welcomed change nor was accustomed to it. I was trying to build the company so I was giving some tough input; yet I think my style of being a very caring individual was still coming through.”
To excite and inspire
Stewart’s self-image of the personable and caring CEO is no hype, according to those who know her.
She entertains frequently and makes note of the dishes her visitors enjoy. Guests invited to Stewart’s home for a second or third time may be surprised with a dish they complimented during a previous visit. Husband Tim Ortman, a TV cameraman-turned-wine-broker, is the official raconteur.
“He has been everywhere twice and he has a million amazing stories,” she said.
If it were physically possible, Stewart would lavish the same attention on each IHOP and Applebee’s customer as she does on friends.
Several years ago, SDSU classmate Jennifer Neale visited her college buddy at a Taco Bell restaurant, where Stewart was behind the counter as part of a two-week management training program.
“She made the customers feel happy to be there,” Neale said, “and her enthusiasm made an impression on the employees. Julia takes care of people. You can’t work for her without believing the work you do is important.”
The ability to excite and inspire will be imperative as Stewart takes “the neighborhood” to the next level. IHOP acquired the larger Applebee’s with its 2,000 restaurants for $2 billion just before the economy collapsed. Now the combined enterprise, DineEquity—in line with its strategy to be a franchisor rather than a restaurant operator—is trying to woo franchisees in an inhospitable market.
“Economically, she’s outrunning a tidal wave,” said one industry insider. “Restaurant stocks are doing okay, but DineEquity is carrying a ton of debt, so this economic crisis is doubly tough for her.”
New York metro area franchisee Zane Tankel has no doubt Stewart will enhance Applebee’s image as well as its profit margin.
“I knew her quite well in her first term as president of Applebee’s and was glad to see her triumphant return during a very, very difficult time for the industry and for Applebee’s in particular,” Tankel said. "I sit on five corporate boards, and so I can say with some authority, Julia's definitely the best person I know to be running the largest restaurant company of its kind in the world."
Larger than life
An added plus for Applebee’s is Julia Stewart’s larger-than-life persona. Among America’s CEOs, she draws attention. The New York Times and Forbes recently profiled her and Nation’s Restaurant News flagged her as one of 10 restaurant executives to watch in 2010.
“Her star is still rising,” said one industry analyst.
Stewart’s talent and drive have some analysts predicting she’ll lead DineEquity in a second acquisition. Others see her taking the top job at one of the food industry giants.
Given the political aspirations of former Hewlett-Packard CEO Carly Fiorina and former eBay CEO Meg Whitman, would Stewart consider running for office? She acknowledged the possibility, but only after her younger children, Alec, 13, and Aubrey, 10, are grown.
What about hosting a television show? The ever-charming Stewart contemplated, admitting she'd been approached for "Undercover Boss." No reality TV for her, but “a cooking show…now that would be fun.”
Try one of Julia Stewart's favorite recipes and read a transcript of 360 Magazine's interview.