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<PAGE>
 
                                 UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C. 20549

                                   FORM 10-Q



(Mark One)
[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
     OF THE SECURITIES EXCHANGE ACT OF 1934

  For the quarterly period ended March 31, 1997

                                       OR

[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
     OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from           to
                               ---------    ---------

Commission File Number 0-8360

                                  IHOP CORP.
            (Exact name of registrant as specified in its charter)


         Delaware                                        95-3038279
(State or other jurisdiction of                        (I.R.S. Employer
incorporation or organization)                        Identification No.)


          525 North Brand Boulevard, Glendale, California 91203-1903
             (Address of principal executive offices)  (Zip code)

                                (818) 240-6055
             (Registrant's telephone number, including area code)

     Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.   Yes   X     No 
                                               --------    ------

     Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.

       Class                                 Outstanding as of March 31,1997
- ----------------------------                 -------------------------------
Common Stock, $.01 par value                            9,517,299
      

<PAGE>
 

PART I.  FINANCIAL INFORMATION


ITEM 1.  Financial Statements

CONSOLIDATED BALANCE SHEETS                   IHOP CORP. AND SUBSIDIARIES
(In thousands, except share amounts)
- -------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                        March 31,   December 31,
                                                          1997          1996
                                                        ---------   ------------
<S>                                                      <C>         <C>
Assets
 
Current assets
  Cash and cash equivalents                                $  8,347    $  8,658
  Receivables                                                25,553      29,324
  Reacquired franchises and equipment held for sale, net      1,834       1,474
  Inventories                                                 1,284       1,180
  Prepaid expenses                                              356         676
                                                           --------    --------
    Total current assets                                     37,374      41,312
                                                           --------    --------
Long-term receivables                                       139,583     143,338
Property and equipment, net                                 128,019     120,854
Reacquired franchises and equipment held for sale, net       10,393       8,352
Excess of costs over net assets acquired, net                12,801      12,908
Other assets                                                  2,079       2,125
                                                           --------    --------
    Total assets                                           $330,249    $328,889
                                                           ========    ========
 
Liabilities and Shareholders' Equity
 
Current liabilities
  Current maturities of long-term debt                     $  4,731    $  4,731
  Accounts payable                                           14,799      17,474
  Accrued employee compensation and benefits                  2,970       2,674
  Other accrued expenses                                      5,093       5,024
  Deferred income taxes                                       3,827       4,311
  Capital lease obligations                                     910         870
                                                           --------    --------
    Total current liabilities                                32,330      35,084
                                                           --------    --------
Long-term debt                                               58,554      58,564
Deferred income taxes                                        24,504      25,061
Capital lease obligations and other                          81,630      80,823
Shareholders' equity
  Preferred stock, $1 par value, 10,000,000 shares 
    authorized; shares issued and outstanding:  
    no shares                                                     -           -
  Common stock, $.01 par value, 40,000,000 shares 
    authorized; shares issued and outstanding:  
    March 31, 1997, 9,517,299 shares; 
    December 31, 1996, 9,467,294 shares                          95          95
  Additional paid-in capital                                 50,122      48,768
  Retained earnings                                          82,794      79,244
  Contribution to ESOP                                          220       1,250
                                                           --------     -------
    Total shareholders' equity                              133,231     129,357
                                                           --------    --------
    Total liabilities and shareholders' equity             $330,249    $328,889
                                                           ========    ========
</TABLE>


See the accompanying notes to the consolidated financial statements.

<PAGE>
 
CONSOLIDATED STATEMENTS OF OPERATIONS    IHOP CORP. AND SUBSIDIARIES
(In thousands, except per share amounts)
- -------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                            Three Months Ended
                                                                March 31,
                                                            ------------------
                                                              1997      1996
                                                            --------   -------
<S>                                                         <C>        <C>
Revenues
  Franchise operations
  Rent                                                      $ 8,096    $ 7,183
    Service fees and other                                   18,833     17,368
                                                            -------    -------
                                                             26,929     24,551
  Company operations                                         14,048     11,453
  Other                                                       5,464      4,288
                                                            -------    -------
    Total revenues                                           46,441     40,292
                                                            -------    -------
Costs and Expenses
  Franchise operations
  Rent                                                        4,194      3,996
    Other direct costs                                        7,721      7,432
                                                            -------    -------
                                                             11,915     11,428
  Company operations                                         13,425     10,682
  Field, corporate and administrative                         7,053      6,721
  Depreciation and amortization                               2,449      1,898
  Interest                                                    3,506      2,632
  Other                                                       2,273      1,870
                                                            -------    -------
    Total costs and expenses                                 40,621     35,231
                                                            -------    -------
Income before income taxes                                    5,820      5,061
Provision for income taxes                                    2,270      1,999
                                                            -------    -------
    Net income                                              $ 3,550    $ 3,062
                                                            =======    =======
 
Net Income Per Share
Net income per common and common
  equivalent share                                          $   .37    $   .32
                                                            =======    =======
Weighted average common and common
  equivalent shares outstanding                               9,568      9,547
                                                            =======    =======
</TABLE>


See the accompanying notes to the consolidated financial statements.

<PAGE>
 
CONSOLIDATED STATEMENTS OF CASH FLOWS    IHOP CORP. AND SUBSIDIARIES
(In thousands)
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
 
 
                                                             Three Months Ended
                                                                 March 31,
                                                            --------------------
                                                              1997       1996
                                                            ---------  ---------
<S>                                                         <C>        <C>
Cash flows from operating activities
  Net income                                                $ 3,550    $  3,062
  Adjustments to reconcile net income to cash provided
   by operating activities
    Depreciation and amortization                             2,449       1,898
    Deferred taxes                                           (1,041)       (459)
    Contribution to ESOP                                        220         188
    Change in current assets and liabilities
      Accounts receivable                                     3,949        (837)
      Inventories                                              (104)       (122)
      Prepaid expenses                                          320        (437)
      Accounts payable                                       (2,675)     (1,637)
      Accrued employee compensation and benefits                296       1,232
      Other accrued expenses                                     69         913
    Other, net                                                1,452         228
                                                            -------    --------
        Cash provided by operating activities                 8,485       4,029
                                                            -------    --------
 
Cash flows from investing activities
  Additions to property and equipment                        (9,490)    (11,383)
  Proceeds from sale and leaseback arrangements                   -       1,196
  Additions to notes, equipment contracts and direct
      financing leases receivable                            (1,215)       (817)
  Principal receipts from notes, equipment contracts
      and direct financing leases receivable                  1,979       1,386
  Additions to reacquired franchises held for sale               (8)       (214)
                                                            -------    --------
        Cash used by investing activities                    (8,734)     (9,832)
                                                            -------    --------
 
Cash flows from financing activities
  Proceeds from issuance of long-term debt                       20       5,800
  Repayment of long-term debt                                   (30)     (1,600)
  Principal payments on capital lease obligations              (156)       (125)
  Reacquisition of treasury shares                              (39)          -
  Exercise of stock options                                     143          95
                                                            -------    --------
        Cash (used) provided by financing activities            (62)      4,170
                                                            -------    --------
 
Net change in cash and cash equivalents                        (311)     (1,633)
Cash and cash equivalents at beginning of period              8,658       3,860
                                                            -------    --------
        Cash and cash equivalents at end of period          $ 8,347    $  2,227
                                                            =======    ========
 
Supplemental disclosures
  Interest paid, net of capitalized amounts                 $ 2,410    $  1,964
  Income taxes paid                                             569         276
  Capital lease obligations incurred                            503       3,041
</TABLE>


See the accompanying notes to the consolidated financial statements.

<PAGE>
 
IHOP CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------


1.   The accompanying consolidated financial statements for the three months
     ended March 31, 1997 and 1996 have been prepared in accordance with
     generally accepted accounting principles ("GAAP"). These financial
     statements have not been audited by independent public accountants but
     include all adjustments, consisting of normal, recurring accruals, which in
     the opinion of management of IHOP Corp. and Subsidiaries ("IHOP" or the
     "Company") are necessary for a fair presentation of the financial position
     and the results of operations for the periods presented. The accompanying
     consolidated balance sheet as of December 31, 1996 has been derived from
     audited financial statements, but does not include all disclosures required
     by GAAP. The results of operations for the three months ended March 31,
     1997 are not necessarily indicative of the results to be expected for the
     full year ending December 31, 1997. 

2.   In February 1997, the Financial Accounting Standards Board issued Statement
     of Financial Accounting Standards (SFAS) No. 128, "Earnings Per Share."
     SFAS No. 128 supersedes and simplifies the existing computational
     guidelines under Accounting Principles Board Opinion No. 15, "Earnings Per
     Share." It is effective for financial statements issued for periods ending
     after December 15, 1997. Among other changes, SFAS No. 128 eliminates the
     presentation of primary EPS and replaces it with basic EPS for which common
     stock equivalents are not considered in the computation. It also revises
     the computation of diluted EPS. It is not expected that the adoption of
     SFAS No. 128 will have a material impact on the earnings per share results
     reported by the Company under the Company's current capital structure.

<PAGE>
 

I
tem 2.   Management's Discussion and Analysis of Financial Condition and
          Results of Operations

Results of Operations
- ---------------------

The following table sets forth certain operating data for IHOP restaurants:

<TABLE>
<CAPTION>
                                                             Three Months Ended
                                                                  March 31,
                                                             --------------------
                                                               1997       1996
                                                             --------   ---------
                                                            (Dollars in thousands)
<S>                                                          <C>        <C>
     Restaurant Data
       Effective restaurants (a)
         Franchise                                               533         495
         Company                                                  60          52
         Area license                                            137         132
                                                                 ---         ---
            Total                                                730         679
                                                                 ===         ===

     System-wide
       Sales (b)                                            $216,459    $189,486
         Percent increase                                       14.2%       11.8%
       Average sales per effective
         restaurant                                         $    297    $    279
          Percent increase                                       6.5%        2.2%
       Comparable average sales
        per restaurant (c)                                  $    302    $    283
         Percent increase                                        3.9%        0.3%
     Franchise
       Sales                                                $168,547    $146,766
          Percent increase                                      14.8%       12.9%
       Average sales per effective
        restaurant                                          $    316    $    296
          Percent increase                                       6.8%        2.8%
       Comparable average sales
        per restaurant (c)                                  $    311    $    290
          Percent increase                                       4.2%        0.2%
     Company
       Sales                                                $ 14,048    $ 11,453
          Percent increase                                      22.7%       24.3%
       Average sales per effective
        restaurant                                          $    234    $    220
          Percent increase                                       6.4%        7.3%
     Area License
       Sales                                                $ 33,864    $ 31,267
          Percent increase                                       8.3%        3.3%
       Average sales per effective
        restaurant                                          $    247    $    237
          Percent change                                         4.2%      (2.9%)
- ----------------
</TABLE>


(a)  "Effective restaurants" are the number of restaurants in a given fiscal
     period adjusted to account for restaurants open only a portion of the
     period.
(b)  "System-wide sales" are retail sales of franchisees, area licensees and
     Company-operated restaurants as reported to the Company.
(c)  "Comparable average sales" reflects sales for restaurants that are operated
     for the entire fiscal period in which they are being compared. Comparable
     average sales do not include data on restaurants located in Florida and
     Japan.

<PAGE>
 
The following table summarizes IHOP's restaurant development and franchising
activity:

<TABLE>
<CAPTION>
                                                                Three Months
                                                               Ended March 31,
                                                              -----------------
                                                                1997      1996
                                                              --------   ------
      <S>                                                        <C>      <C>
      RESTAURANT DEVELOPMENT ACTIVITY (a)
      -----------------------------------
      IHOP - beginning of period                                 729      678
        New openings
          IHOP-developed                                           4        6
          Investor program                                         -        2
          Area license                                             2        1
                                                                 ---      ---
        Total new openings                                         6        9
        Closings
           Company and franchise                                  (1)      (2)
           Area license                                            -        -
                                                                 ---      ---
      IHOP - end of period                                       734      685
                                                                 ===      ===
      Summary - end of period                                 
        Franchise                                                534      498 
        Company                                                   62       55
        Area license                                             138      132
                                                                 ---      ---
          Total IHOP                                             734      685
                                                                 ===      ===
      RESTAURANT FRANCHISING ACTIVITY(a)
      ----------------------------------
      IHOP-developed                                               5        4
      Investor program                                             -        2
      Rehabilitated and refranchised                               1        -
                                                                 ---      ---
        Total restaurants franchised                               6        6
      Reacquired by Company                                       (6)      (4)
      Closed                                                      (1)       -
                                                                 ---      ---
        Net addition (decrease)                                   (1)       2
                                                                 ===      ===
</TABLE>
 

- ---------------
(a)  The Company reports restaurants in Canada as franchise restaurants although
     the ten restaurants are operated under an area license agreement.

The following discussion and analysis provides information management believes
is relevant to an assessment and understanding of the Company's consolidated
results of operations and financial condition.  The discussion should be read in
conjunction with the consolidated financial statements and notes thereto
contained in the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1996.  The forward-looking statements included in Management's
Discussion and Analysis of Financial Condition and Results of Operations
("MD&A") relate to certain matters involving risks and uncertainties, including
anticipated financial performance, business prospects, anticipated capital
expenditures and other similar matters, which reflect management's best judgment
based on factors currently known.  Actual results and experience could differ
materially from the anticipated results or other expectations expressed in the
Company's forward-looking statements as a result of a number of factors,
including but not limited to those discussed in MD&A.  Forward-looking
information provided by the Company pursuant to the safe harbor established
under the Private Securities Litigation Reform Act of 1995 should be evaluated
in the context of these factors. In addition, the Company disclaims any intent
or obligation to update these forward-looking statements.

<PAGE>
 
IHOP's quarterly results are subject to seasonal fluctuation.  IHOP's results of
operations are impacted by the timing of additions of new restaurants, by the
timing of the franchising of those restaurants, and by the number of restaurants
in the Company's inventory of restaurants that are available for refranchising.
Revenues from sales of franchises and equipment and their associated costs of
sales are affected by the mix and number of restaurants franchised, as follows:
(i) restaurants newly developed by IHOP normally sell for a franchise fee of
$200,000 to $350,000, have little if any franchise cost of sales and have
equipment in excess of $300,000 that is usually sold at about break-even; (ii)
restaurants developed by franchisees normally sell for a franchise fee of
$50,000, have minor associated franchise cost of sales and do not include an
equipment sale; and (iii) previously reacquired franchises normally sell for a
franchise fee of $100,000 to $300,000, include an equipment sale, and may have
substantial costs of sales associated with both the franchise and the equipment.
As a consequence of the forgoing factors, the results of operations for the
three months ended March 31, 1997, are not necessarily indicative of the results
to be expected for the full year ending December 31, 1997.

System-wide retail sales for the first quarter of 1997 grew 14.2% over system-
wide retail sales for the first quarter of 1996.  This was due to increases of
7.5% in the number of effective restaurants and 6.5% in average per unit
revenues.  System-wide comparable average sales per restaurant (exclusive of
area license restaurants) for the first quarter of 1997 grew by 3.9% over those
in the first quarter of 1996.  Management believes that unusually severe winter
weather experienced in the United States during the first quarter of 1996 had a
negative impact on sales in that quarter. Management continues to pursue growth
in sales through the Company's restaurant development program, improved
marketing efforts, improvements in customer service and operations, and the
Company's remodeling program.

Franchise operations revenues for the first quarter of 1997 grew 9.7% over
franchise operations revenues for the first quarter of 1996. This was primarily
due to increases in the number of effective franchised restaurants of 7.7% and
in revenues per effective franchised restaurant of 6.8%. Franchise operations
costs and expenses for the first quarter of 1997 increased 4.3% over costs and
expenses for the first quarter of 1996.  As a result of franchise revenues
increasing in excess of franchise expenses, franchise margin increased to 55.8%
in the first quarter of 1997 versus 53.5% in the comparable 1996 period.  The
margin improved primarily because of increases in rental income and in interest
income associated with IHOP's financing of sales of franchises and equipment to
its franchisees.

Company-operated restaurant revenues in the first quarter of 1997 grew 22.7%
over revenues for the first quarter of 1996.  This was primarily due to
increases in the number of effective Company-operated restaurants of 15.4% and
in revenues per effective Company-operated restaurant of 6.3%. Company-operated
restaurant costs and expenses for the first quarter of 1997 increased 25.7% from
costs and expenses for the first quarter of 1996.  Margin at Company-operated
restaurants in the first quarter of 1997 was 4.4% compared to 6.7% in the
comparable 1996 period.  The change in margin was primarily due to operating
increases in employee costs and controllable expenses, excluding food costs, as
a percentage of revenues.

Other revenues in the first quarter of 1997 grew 27.4% over other revenues for
the first quarter of 1996 primarily due to an increase in revenues from the sale
of franchises and equipment to $2,924,000 from $2,247,000 and an increase of
30.4% in interest income from direct financing leases. Other costs and expenses
in the first quarter of 1997 increased 21.6% over those in the first quarter of
1996 primarily from the increase in franchise and equipment cost of sales to
$1,655,000 from $1,230,000. IHOP franchised six restaurants in both the first
quarter of 1997 and the first quarter of 1996.

<PAGE>
 
Field, corporate and administrative costs and expenses in the first quarter of
1997 increased 4.9% over costs and expenses in the first quarter of 1996
principally due to increases in employee related expenses including salaries and
wages.  Field, corporate and administrative expenses were 3.3% of system-wide
sales in the first quarter of 1997 compared to 3.5% in the first quarter of
1996.  

Depreciation and amortization expense in the first quarter of 1997 increased
29.0% over that of the comparable 1996 period primarily reflecting the addition
of new, larger restaurants and an increase in the number of Company-operated
restaurants.

Interest expense increased 33.2% in the first quarter of 1997 over that of the
comparable 1996 period due to interest associated with increased capital lease
obligations and the private placement of $35 million in senior notes in November
1996.

Provision for income taxes was 39.0% of income before income taxes in the first
quarter of 1997 and 39.5% in the first quarter of 1996.

Liquidity and Capital Resources
- -------------------------------

The Company invests available funds into its business through the development of
additional restaurants and the remodeling of older Company-operated restaurants.

In 1997, IHOP and its franchisees and area licensees plan to develop and open
approximately 75 restaurants. Included in that number are the development of 54
new restaurants by the Company and the development of 21 restaurants by IHOP
franchisees and area licensees.  Capital expenditures budgeted in 1997, which
include IHOP's portion of the above development program, are approximately $60
million.  In November 1997, the second annual installment of $4.6 million in
principal becomes due on the Company's senior notes due 2002.  The Company
expects that funds from operations, sale and leaseback arrangements (estimated
to be about $18 million) and its revolving line of credit will be sufficient to
cover its operating requirements, its budgeted capital expenditures and its
principal repayment on its senior notes in 1997.  At March 31, 1997, $20 million
was available to be borrowed under the Company's unsecured bank revolving credit
agreement.

<PAGE>
 

P
art II.  OTHER INFORMATION
- ---------------------------


Item 6.   Exhibits and Reports on Form 8-K.

     (a)  Exhibits.

Exhibits not incorporated by reference are filed herewith.  The remainder of the
exhibits have heretofore been filed with the Commission and are incorporated
herein by reference.  Management contracts or compensatory plans or arrangements
are marked with an asterisk.

3.1  Certificate of Incorporation of IHOP Corp.  Exhibit 3.1 to Form 10-K for
the fiscal year ended December 31, 1991, Commission file number 0-8360, (the
"1991 Form 10-K") is hereby incorporated by reference.

3.2  Bylaws of IHOP Corp.  Exhibit 3.2 to Registration Statement on Form S-1 No.
33-40431 is hereby incorporated by reference.

*10  Employment Agreement between the Company and Richard C. Celio.

 11  Statement Regarding Computation of Per Share Earnings.

 27  Financial Data Schedule.

     (b) No reports on Form 8-K were filed during the quarter ended March 31,
         1997.

<PAGE>
 

                                   SIGNATURES


Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.


                                                            IHOP Corp.
                                              ---------------------------------
                                                           (Registrant)


     April 29, 1997                      BY:  /s/  Richard K. Herzer
     --------------                           ---------------------------------
       (Date)                                 Richard K. Herzer
                                              Chairman of the Board,
                                              President and Chief Executive
                                              Officer (Principal Executive
                                              Officer)


     April 29, 1997                      BY:  /s/  Frederick G. Silny
     --------------                           ---------------------------------
       (Date)                                 Frederick G. Silny
                                              Vice President-Finance and
                                              Treasurer (Principal
                                              Financial Officer)





<PAGE>
 
                                                                      EXHIBIT 10
 
                                EMPLOYMENT AGREEMENT
                                --------------------


     This Employment Agreement (the "Agreement") is entered into as of the 17th
day of March, 1997 (the "Effective Date"), between IHOP CORP., a Delaware
corporation (the "Company"), and Richard C. Celio (the "Employee").

     Whereas, the Board of Directors of the Company (the "Board") has approved
and authorized the entry into this Agreement with the Employee; and

     Whereas, the parties desire to enter into this Agreement setting forth the
terms and conditions for the employment relationship of the Employee with the
Company.

     Now, therefore, in consideration of the promises and mutual covenants and
agreements herein contained and intending to be legally bound hereby, the
Company and the Employee hereby agree as follows:

     1. Employment. The Employee is employed as Vice President - Development of
        ----------
the Company from the Effective Date through the Term of this Agreement (as
defined in Section 2 hereof). In this capacity, the Employee shall have such
duties and responsibilities as may be designated to him by the Board from time
to time and as are not inconsistent with the Employee's position with the
Company, including the performance of duties with respect to any subsidiaries of
the Company, as may be designated
 by the Board. During the Employee's period of
employment hereunder, the Employee shall be based in the principal offices of
the Company in Southern California, and shall not be required to relocate
outside of Southern California to perform services hereunder, except for travel
as reasonably required in the performance of his duties hereunder.

     2. Term. The "initial term" of this Agreement shall be for the period
commencing on the Effective Date and ending on the second anniversary of the
Effective Date; provided, however, that on the second anniversary of the
Effective Date, and on each subsequent anniversary date thereafter, the term of
this Agreement shall automatically be extended for one additional year unless,
not later than 90 days prior to such applicable anniversary date, the Company or
the Employee shall give notice not to extend this Agreement; and provided
further, however, that, if a Change in Control (as defined in Section 11(g))
occurs prior to the expiration of the Term of this Agreement, this Agreement
shall remain in full force and effect and shall not expire prior to the last day
of the 24th month following the date of such Change in Control. The "Term of
this Agreement" or "Term" shall mean, for purposes of this Agreement, both the
"initial term" (as hereinbefore described) and any additional term (created by

<PAGE>
 
extension, as described above), and the Term of this Agreement shall not be
affected by the Employee's termination of employment.

     3. Salary. Subject to the further provisions of this Agreement, the Company
shall pay the Employee during the Term of this Agreement a salary at an annual
rate equal to $190,000, with such salary to be increased at such times, if any,
and in such amounts as determined by the Board, which increases shall be
consistent with the historical business practices of the Company and the salary
adjustments for other senior executives of the Company. Such salary shall be
payable by the Company to the Employee not less frequently than monthly and
shall not be decreased at any time during the Term of this Agreement.
Participation in deferred compensation, discretionary bonus, retirement, and
other employee benefit plans and in fringe benefits shall not reduce the salary
payable to the Employee under this Section.

     4. Participation in Bonus, Retirement and Employee Benefit Plans. The
Employee shall be entitled to participate equitably with other senior executives
in any plan of the Company relating to bonuses, stock options, stock purchases,
pension, thrift, profit sharing, life insurance, medical coverage, education, or
other retirement or employee benefits that the Company has adopted or may adopt
for the benefit of its senior executives. For purposes of the Company's
Executive Incentive Plan, Employee's target bonus will be 50% of his base pay.

     5. Hiring Incentives.

        (a). Upon the Effective Date, or as soon as practicable thereafter,
     Employee shall receive a restricted stock award in the amount of 9456
     shares of IHOP Corp. common stock. Such restricted stock award shall be
     subject to the terms of the IHOP Corp. 1991 Stock Incentive Plan, as
     amended, and a Restricted Stock Award Agreement setting forth, among other
     things, the conditions for release of the restrictions on the shares.

         (b). Upon the Effective Date, or as soon as practicable thereafter,
     Employee shall receive an option to purchase a total of 20,000 shares of
     IHOP Corp. common stock. Such stock option shall be subject to the terms of
     the IHOP Corp. 1991 Stock Incentive Plan, as amended, and a Stock Option
     Agreement setting forth, among other things, the option exercise vesting
     schedule and option exercise price.

                                      -2-

<PAGE>
 
     6. Fringe Benefits; Automobile. The Employee shall be entitled to receive
all other fringe benefits which are now or may be provided to the Company's
senior executives. In addition, the Company shall provide the Employee during
the Term of this Agreement with a car allowance of $700 per month, plus
reimbursement of all automobile expenses such as gasoline, maintenance,
insurance and vehicle registration, in accordance with the Company's general
policy on providing cars to senior executives. Notwithstanding the foregoing,
the benefits provided under this Section 6 shall cease upon the Employee's Date
of Termination (as defined in Section 11(d)).

     7. Vacations. The Employee shall be entitled to an annual paid vacation as
determined in accordance with the Company's general policy for senior
executives.

     8. Business Expenses. During such time as the Employee is rendering
services hereunder, the Employee shall be entitled to incur and be reimbursed
for all reasonable business expenses and be provided allowances as are furnished
to the Company's most senior executives under the Company's then current
policies. The Company agrees that it will reimburse the Employee for all such
expenses upon the presentation by the Employee, from time to time, of an
itemized account of such expenditures, setting forth the date, the purposes for
which incurred, and the amounts thereof, together with such receipts showing
payments in conformity with the Company's established policies. Reimbursement
shall be made within a reasonable period after the Employee's submission of an
itemized account.

     9. Insurance and Indemnity. The Employee shall be added as an additional
named insured under all appropriate insurance policies now in force or hereafter
obtained covering any officers or directors of the Company. The Company shall
indemnify and hold the Employee harmless from any cost, expense or liability
arising out of or relating to any acts or decisions made by the Employee on
behalf of or in the course of performing services for the Company to the same
extent the Company indemnifies and holds harmless other senior executive
officers and directors of the Company and in accordance with the Company's
established policies.

     10. Legal and Accounting Advice. The Employee shall be entitled to
reimbursement by the Company for expenses incurred by him for personal legal,
accounting, investment or estate planning services in an amount to be determined
by the Board, but in no event greater than $5,000 annually (or a pro rata
portion of such amount for any period of employment less than a full year);

                                      -3-

<PAGE>
 
provided, however, that no reimbursement shall be made for any such expenses
incurred by the Employee after such Employee's Date of Termination.

     11. Termination.

         (a) Disability. If, as a result of the Employee's incapacity due to
     physical or mental illness, he shall have been absent from the full-time
     performance of his duties with the Company for 90 consecutive days or 180
     days within any 12-month period, his employment may be terminated by the
     Company for "Disability."

         (b) Cause. Subject to the notice provisions set forth below, the
     Company may terminate the Employee's employment for "Cause" at any time.
     "Cause" shall mean termination upon: (1) the willful failure by the
     Employee to substantially perform his duties with the Company (other than
     any such failure resulting from his incapacity due to physical or mental
     illness), after a written demand for substantial performance is delivered
     to him by the Board, which demand specifically identifies the manner in
     which the Board believes that he has not substantially performed his
     duties; (2) the Employee's willful misconduct that is demonstrably and
     materially injurious to the Company, monetarily or otherwise; or (3) the
     Employee's commission of such acts of dishonesty, fraud, misrepresentation
     or other acts of moral turpitude as would prevent the effective performance
     of his duties. For purposes of this subsection (b), no act, or failure to
     act, on the Employee's part shall be deemed "willful" unless done, or
     omitted to be done, by him not in good faith and without the reasonable
     belief that his action or omission was in the best interest of the Company.
     Notwithstanding the foregoing, the Employee shall not be deemed to have
     been terminated for Cause unless and until there shall have been delivered
     to him a copy of a resolution duly adopted by the affirmative vote of a
     majority of the non-employee members of the Board at a meeting of such
     members (after reasonable notice to him and an opportunity for him,
     together with his counsel, to be heard before such members of the Board),
     finding that he has engaged in the conduct set forth above in this
     subsection (b) and specifying the particulars thereof in detail.

                                      -4-

<PAGE>
 
         (c) Notice of Termination. Any termination of the Employee's employment
     by the Company or by the Employee shall be communicated by written Notice
     of Termination to the other party hereto in accordance with Section 15. 
     "Notice of Termination" shall mean a notice that indicates the specific
     termination provision in this Agreement relied upon and sets forth in
     reasonable detail the facts and circumstances claimed to provide a basis
     for the termination of the Employee's employment under the provision so
     indicated.

         (d) Date of Termination. "Date of Termination" shall mean: (1) if the
     Employee's employment is terminated by his death, the date of his death;
     (2) if the Employee's employment is terminated for Disability, 30 days
     after Notice of Termination is given; and (3) if the Employee's employment
     is terminated for any other reason, the date specified in the Notice of
     Termination.

         (e) Dispute Concerning Termination. If within the later of (i) fifteen
     (15) days after Notice of Termination is given, or (ii) fifteen (15) days
     prior to the Date of Termination (as determined without regard to this
     Section 11(e), the party receiving such Notice of Termination notifies the
     other party that a dispute exists concerning a termination by the Employee
     for Good Reason (as defined in Section 11(h)) following a Change in Control
     (as defined in Section 11(g)), the Date of Termination shall be the earlier
     of the expiration date of the Agreement, or the date on which the dispute
     is finally resolved, either by mutual written agreement of the parties or
     by a final judgment, order or decree of a court of competent jurisdiction
     (which is not appealable or with respect to which the time for appeal
     therefrom has expired and no appeal has been perfected); provided, however,
     that the Date of Termination shall be extended by a notice of dispute only
     if such notice is given in good faith and the party giving such notice
     pursues the resolution of such dispute with reasonable diligence.

         (f) Compensation During Dispute. If a purported termination by the
     Employee for Good Reason occurs following a Change in Control and during
     the Term of this Agreement, and such termination is disputed in accordance
     with Section 11(e) hereof, the Company shall continue to pay the Employee
     the full compensation in effect when the notice giving rise to the dispute
     was given (including, but not limited to, salary) and continue the Employee
     as a participant in all compensation, benefit and insurance plans in which
     the Employee was participating when the notice giving rise

                                      -5-

<PAGE>
 
     to the dispute was given, until the dispute is finally resolved in
     accordance with Section 11(e) hereof or, if earlier, the expiration date of
     the Agreement. Amounts paid under this Section 11(f) are in addition to all
     other amounts due under this Agreement (other than those due under Section
     12(b) hereof) and shall not be offset against or reduce any other amounts
     payable under this Agreement.

         (g) Change in Control. A "Change in Control" shall be deemed to have
     occurred if the conditions set forth in any one of the following paragraphs
     shall have been satisfied:

         (i) any "person" (as such term is used in Sections 14(d) and 15(d) of
         the Securities Exchange Act of 1934, as amended (the "Exchange Act"))
         (other than the Company; any trustee or other fiduciary holding
         securities under an employee benefit plan of the Company; or any
         Company owned, directly or indirectly, by the stockholders of the
         Company in substantially the same proportions as their ownership of the
         stock of the Company) is or becomes after the Effective Date the
         "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act),
         directly or indirectly, of securities of the Company (not including in
         the securities beneficially owned by such person any securities
         acquired directly from the Company or its affiliates) representing 25%
         or more of the combined voting power of the Company's then outstanding
         securities; or

         (ii) during any period of two consecutive years (not including any
         period prior to the Effective Date), individuals who at the beginning
         of such period constitute the Board and any new director (other than a
         director designated by a person who has entered into an agreement with
         the Company to effect a transaction described in subparagraph (i),
         (iii) or (iv) of this Section 11(g)) whose election by the Board or
         nomination for election by the Company's stockholders was approved by
         a vote of at least 2/3 of the directors then still in office who either
         were directors at the beginning of the period or whose election or
         nomination for election was previously so approved, cease for any
         reason to constitute a majority thereof; or

         (iii) the stockholders of the Company approve a merger or consolidation
         of the Company with any other corporation, other than (A) a merger or
         consolidation which would result in the voting securities of the
         Company outstanding immediately prior thereto continuing to represent
         (either by remaining outstanding or by

                                      -6-

<PAGE>
 
         being converted into voting securities of the surviving entity), in
         combination with the ownership of any trustee or other fiduciary
         holding securities under an employee benefit plan of the Company, at
         least 75% of the combined voting power of the voting securities of the
         Company or such surviving entity outstanding immediately after such
         merger or consolidation, or (B) a merger or consolidation effected to
         implement a recapitalization of the Company (or similar transaction) in
         which no person acquires more than 50% of the combined voting power of
         the Company's then outstanding securities; or

         (iv) the stockholders of the Company approve a plan of complete
         liquidation of the Company or an agreement for the sale or disposition
         by the Company of all or substantially all the Company's assets.

         (h) Good Reason. At any time following a Change in Control, the
     Employee may terminate his employment hereunder for "Good Reason." "Good
     Reason" shall mean the occurrence (without the Employee's express written
     consent) of any material breach of this Agreement, including, without
     limitation, any one of the following acts by the Company, or failures by
     the Company to act, unless, in the case of any act or failure to act
     described in subsections (i), (iv), (v), (vi) or (vii) below, such act or
     failure to act is corrected prior to the Date of Termination specified in
     the Notice of Termination given in respect thereof:

         (i) the assignment to the Employee of any duties inconsistent with the
         Employee's status as a senior executive of the Company or a
         substantially adverse alteration in the nature or status of the
         Employee's responsibilities from those in effect immediately prior to
         the Change in Control;

         (ii) a reduction by the Company in the Employee's annual base salary as
         in effect on the date hereof or as the same may be increased from time
         to time ;

         (iii) the relocation of the Company's principal offices to a location
         outside Southern California (or, if different, the metropolitan area in
         which such offices are located immediately prior to the Change in
         Control) or the Company's requiring the Employee to be based anywhere
         other than the Company's principal executive offices, except for
         required travel on the Company's business to an extent

                                      -7-

<PAGE>
 
     substantially consistent with the Employee's present business travel
     obligations;

     (iv) the failure by the Company to pay to the Employee any portion of the
     Employee's current compensation, or to pay to the Employee any portion of
     an installment of deferred compensation under any deferred compensation
     program of the Company, within seven days of the date such compensation is
     due;

     (v) the failure by the Company to continue in effect any compensation plan
     in which the Employee participates immediately prior to the Change in
     Control which is material to the Employee's total compensation, unless an
     equitable arrangement (embodied in an ongoing substitute or alternative
     plan) has been made with respect to such plan, or the failure by the
     Company to continue the Employee's participation therein (or in such
     substitute or alternative plan) on a basis not materially less favorable,
     both in terms of the amount of benefits provided and the level of the
     Employee's participation relative to other participants, as existed
     immediately prior to the Change in Control;

     (vi) the failure by the Company to continue to provide the Employee with
     benefits substantially similar to those enjoyed by the Employee under any
     of the Company's pension, life insurance, medical, health and accident, or
     disability plans in which the Employee was participating immediately prior
     to the Change in Control; or the taking of any action by the Company which
     would directly or indirectly materially reduce any of such benefits or
     deprive the Employee of any material fringe benefit enjoyed by the Employee
     immediately prior to the Change in Control;

     (vii) any purported termination of the Employee's employment which is not
     effected pursuant to a Notice of Termination satisfying the requirements of
     this Agreement; for purposes of this Agreement, no such purported
     termination shall be effective; or

     (viii) any failure by the Company to comply with and satisfy Section 13(b)
     of this Agreement.

     The Employee's right to terminate the Employee's employment for Good Reason
shall not be affected by the Employee's incapacity due to physical or mental
illness. The Employee's continued employment shall

                                      -8-

<PAGE>
 
     not constitute consent to, or a waiver of rights with respect to, any act
     or failure to act constituting Good Reason hereunder.

         (i) Voluntary Termination. The Employee may terminate his employment
     hereunder ("Voluntary Termination") upon a material breach of this
     Agreement by the Company, unless the Company shall fully correct such
     breach within 30 days of the Employee's Notice of Termination given in
     respect thereof.

     12. Compensation Upon Termination or During Disability. The Employee shall
be entitled to the following benefits during a period of disability, or upon
termination of his employment, as the case may be, provided that such period or
termination occurs during the Term of this Agreement:

         (a) During any period that the Employee fails to perform his full-time
     duties with the Company as a result of incapacity due to physical or mental
     illness, he shall continue to receive his base salary at the rate in effect
     at the commencement of any such period, together with all compensation
     payable to him under the Company's disability plan or program or other
     similar plan during such period, until his employment is terminated
     pursuant to Section 11 hereof. Thereafter, or in the event the Employee's
     employment shall be terminated by reason of his death, his benefits shall
     be determined under the Company's retirement, insurance and other
     compensation programs then in effect in accordance with the terms of such
     programs.

         (b) If at any time the Employee's employment shall be terminated: (i)
     by the Company for Cause or Disability or (ii) by him for any reason (other
     than in a Voluntary Termination or for Good Reason following the occurrence
     of a Change in Control), the Company shall pay him his full base salary
     through the Date of Termination at the rate in effect at the time Notice of
     Termination is given, plus all other amounts to which he is entitled
     through the Date of Termination under any compensation plan of the Company
     at the time such payments are due, and the Company shall have no further
     obligations to him under this Agreement.

         (c) If the Employee's employment should be terminated: (1) by reason of
     his death, (2) by the Company other than for Cause or Disability or (3) by
     the Employee in a Voluntary Termination, he shall be entitled to the
     benefits provided below:

                                      -9-

<PAGE>
 
         (i) the Company shall pay to the Employee or the appropriate payee (as
         determined in accordance with Section 13(c)) (A) his full base salary
         through the Date of Termination at the rate in effect at the time
         Notice of Termination is given; plus (B)(x) in the case of death or a
         Voluntary Termination all salary and bonus payments that would have
         been payable to the Employee pursuant to this Agreement for the
         remaining Term of this Agreement, or (y) in all other cases, all salary
         and bonus payments that would have been payable to the Employee had the
         Employee continued to be employed for a period of 12 months, assuming
         for the purpose of such payments that his salary for such remaining
         period is equal to his salary at the Date of Termination and that his
         annual bonus for such remaining Term is equal to the average of the
         annual bonuses paid to him by the Company with respect to the three
         fiscal years ended immediately prior to the fiscal year in which the
         Date of termination occurs; plus (C) all other amounts to which he is
         entitled under any compensation plan of the Company, in cash in a lump
         sum no later than the 15th day following the Date of Termination;

         (ii) for a 12-month period after the Date of Termination, the Company
         shall arrange to provide the Employee with life, disability, accident
         and health insurance benefits substantially similar to those which the
         Employee and his covered family members are receiving immediately prior
         to the Notice of Termination (without giving effect to any reduction in
         such benefits subsequent to a Change in Control); provided, however,
         that such continued benefits shall be reduced to the extent comparable
         benefits are actually received by or made available to the Employee
         without cost during the 12-month period following the Employee's
         termination of employment (and the Employee agrees that he shall
         promptly report any such benefits actually received to the Company);
         and

         (iii) the Company shall continue in effect for the benefit of the
         Employee all insurance or other provisions for indemnification and
         defense of officers or directors of the Company which are in effect on
         the date the Notice of Termination is sent to the Employee with respect
         to all of his acts and omissions while an officer or director as fully
         and completely as if such termination had not occurred, and until the
         final expiration or running of all periods of limitation against
         actions which may be applicable to such acts or omissions.

                                      -10-

<PAGE>
 
         (d) If the Employee's employment should be terminated by the Employee
     for Good Reason following a Change in Control, he shall be entitled to the
     benefits provided below:

         (i) the Company shall pay to the Employee or the appropriate payee (as
         determined in accordance with Section 13(c)) (A) his full base salary
         through the Date of Termination at the rate in effect at the time
         Notice of Termination is given; plus (B)(x) in the case of death or a
         Voluntary Termination all salary and bonus payments that would have
         been payable to the Employee pursuant to this Agreement for the
         remaining Term of this Agreement, or (y) in all other cases, all salary
         and bonus payments that would have been payable to the Employee had the
         Employee continued to be employed for a period of 24 months, assuming
         for the purpose of such payments that his salary for such remaining
         period is equal to his salary at the Date of Termination and that his
         annual bonus for such remaining Term is equal to the average of the
         annual bonuses paid to him by the Company with respect to the three
         fiscal years ended immediately prior to the fiscal year in which the
         Date of termination occurs; plus (C) all other amounts to which he is
         entitled under any compensation plan of the Company, in cash in a lump
         sum no later than the 15th day following the Date of Termination;

         (ii) for a 24-month period after the Date of Termination, the Company
         shall arrange to provide the Employee with life, disability, accident
         and health insurance benefits substantially similar to those which the
         Employee and his covered family members are receiving immediately prior
         to the Notice of Termination (without giving effect to any reduction in
         such benefits subsequent to a Change in Control); provided, however,
         that such continued benefits shall be reduced to the extent comparable
         benefits are actually received by or made available to the Employee
         without cost during the 24-month period following the Employee's
         termination of employment (and the Employee agrees that he shall
         promptly report any such benefits actually received to the Company);
         and

         (iii) the Company shall continue in effect for the benefit of the
         Employee all insurance or other provisions for indemnification and
         defense of officers or directors of the Company which are in effect on
         the date the Notice of Termination is sent to the Employee with respect
         to all of his acts and omissions while an officer or director as

                                      -11-

<PAGE>
 
         fully and completely as if such termination had not occurred, and until
         the final expiration or running of all periods of limitation against
         actions which may be applicable to such acts or omissions.

         (e) Notwithstanding any other provisions of this Agreement, in the
     event that any payment or benefit received or to be received by the
     Employee in connection with the termination of the Employee's employment
     (whether such benefit is pursuant to the terms of this Agreement or any
     other plan, arrangement or agreement with the Company, and all such
     payments and benefits being hereinafter called "Total Payments") would not
     be deductible (in whole or part), by the Company as a result of the
     application of Section 280G of the Internal Revenue Code of 1986, as
     amended ("Code"), then, to the extent necessary to make the nondeductible
     portion of the Total Payments deductible, (i) the cash payments under this
     Agreement shall first be reduced (if necessary, to zero), and (ii) all
     other non-cash payments under this Agreement shall next be reduced (if
     necessary, to zero).

         (f) If it is established as described in the preceding subsection (d)
     that the aggregate benefits paid to or for the Employee's benefit are in an
     amount that would result in any portion of such "parachute payments" not
     being deductible by reason of Section 280G of the Code, then the Employee
     shall have an obligation to pay the Company upon demand an amount equal to
     the sum of: (i) the excess of the aggregate "parachute payments" paid to or
     for the Employee's benefit over the aggregate "parachute payments" that
     could have been paid to or for the Employee's benefit without any portion
     of such "parachute payments" not being deductible by reason of Section 280G
     of the Code; and (ii) interest on the amount set forth in clause (i) of
     this sentence at the rate provided in Section 1274(b)(2)(B) of the Code
     from the date of the Employee's receipt of such excess until the date of
     such payment.

         (g) The Employee shall not be required to mitigate the amount of any
     payment provided for in this Agreement by seeking other employment or
     otherwise.

         (h) If the employment of the Employee is terminated by the Company
     without Cause or the Employee's employment is terminated by the Employee
     under conditions entitling him to payment hereunder and the Company fails
     to make timely payment of the amounts then owed to the Employee under this
     Agreement, the Employee shall be entitled to interest on such amounts at
     the rate of 1% above the prime rate (defined

                                      -12-

<PAGE>
 
     as the base rate on corporate loans at large U.S. money center commercial
     banks as published by the Wall Street Journal), compounded monthly, for the
     period from the date such amounts were otherwise due until payment is made
     to the Employee (which interest shall be in addition to all rights which
     the Employee is otherwise entitled to under this Agreement).

         13. Assignment.

         (a) This Agreement is personal to each of the parties hereto. No party
     may assign or delegate any rights or obligations hereunder without first
     obtaining the written consent of the other party hereto, except that this
     Agreement shall be binding upon and inure to the benefit of any successor
     corporation to the Company.

         (b) The Company shall require any successor (whether direct or
     indirect, by purchase, merger, consolidation or otherwise) to all or
     substantially all of the business and/or assets of the Company to expressly
     assume and agree to perform this Agreement in the same manner and to the
     same extent that the Company would be required to perform it if no such
     succession had taken place. As used in this Agreement, "Company" shall mean
     the Company as hereinbefore defined and any successor to its business
     and/or assets as aforesaid which assumes this Agreement by operation of
     law, or otherwise.

         (c) This Agreement shall inure to the benefit of and be enforceable by
     the Employee and his personal or legal representatives, executors,
     administrators, successors, heirs, distributees, devisees and legatees. If
     the Employee should die while any amount would still be payable to him
     hereunder had he continued to live, all such amounts, unless otherwise
     provided herein, shall be paid in accordance with the terms of this
     Agreement to his devisee, legatee or other designee or, if there is no such
     designee, to his estate.

         14. (a) Confidential Information. During the Term of this Agreement and
     thereafter, the Employee shall not, except as may be required to perform
     his duties hereunder or as required by applicable law, disclose to others
     for use, whether directly or indirectly, any Confidential Information
     regarding the Company. "Confidential Information" shall mean information
     about the Company, its subsidiaries and affiliates, and their respective
     clients and customers that is not available to the general public and that
     was learned by the Employee in the course of his employment by the Company,
     including (without limitation) any data,

                                      -13-

<PAGE>
 
     formulae, information, proprietary knowledge, trade secrets and client and
     customer lists and all papers, resumes, records and the documents
     containing such Confidential Information. The Employee acknowledges that
     such Confidential Information is specialized, unique in nature and of great
     value to the Company, and that such information gives the Company a
     competitive advantage. Upon the termination of his employment, the Employee
     will promptly deliver to the Company all documents (and all copies thereof)
     containing any Confidential Information.

         (b) Noncompetition. The Employee agrees that during the Term of this
     Agreement, and for a period of one year thereafter, he will not, directly
     or indirectly, without the prior written consent of the Company, provide
     consultative service with or without pay, own, manage, operate, join,
     control, participate in, or be connected as a stockholder, partner, or
     otherwise with any business, individual, partner, firm, corporation, or
     other entity which is then in competition with the Company or any present
     affiliate of the Company; provided, however, that the "beneficial
     ownership" by the Employee, either individually or as a member of a
     "group," as such terms are used in Rule 13d of the General Rules and
     Regulations under the Exchange Act, of not more than 1% of the voting stock
     of any publicly held corporation shall not be a violation of this
     Agreement. It is further expressly agreed that the Company will or would
     suffer irreparable injury if the Employee were to compete with the Company
     or any subsidiary or affiliate of the Company in violation of this
     Agreement and that the Company would by reason of such competition be
     entitled to injunctive relief in a court of appropriate jurisdiction, and
     the Employee further consents and stipulates to the entry of such
     injunctive relief in such a court prohibiting the Employee from competing
     with the Company or any subsidiary or affiliate of the Company in violation
     of this Agreement.

         (c) Right to Company Materials. The Employee agrees that all styles,
     designs, recipes, lists, materials, books, files, reports, correspondence,
     records, and other documents ("Company Material") used, prepared, or made
     available to the Employee, shall be and shall remain the property of the
     Company. Upon the termination of his employment or the expiration of this
     Agreement, all Company Materials shall be returned immediately to the
     Company, and Employee shall not make or retain any copies thereof.

         (d) Antisolicitation. The Employee promises and agrees that during the
     Term of this Agreement, and for a period of one year thereafter,

                                      -14-

<PAGE>
 
     he will not influence or attempt to influence customers, franchisees,
     landlords, or suppliers of the Company or any of its present or future
     subsidiaries or affiliates, either directly or indirectly, to divert their
     business to any individual, partnership, firm, corporation or other entity
     then in competition with the business of the Company, or any subsidiary or
     affiliate of the Company.

     15. Notice. For the purpose of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
certified or registered mail, return receipt requested, postage prepaid,
addressed to the respective addresses set forth below, or to such other
addresses as either party may have furnished to the other in writing in
accordance herewith, except that notice of a change of address shall be
effective only upon actual receipt:

     Company:            IHOP Corp.
                         525 North Brand Blvd.
                         Glendale, California  91203-1903
                         to the attention of the Board;
     with a copy to:     the Secretary of the Company

     Employee:           Richard C. Celio
                         525 North Brand Boulevard
                         Glendale, California  91203.

     16. Amendments or Additions. No amendments or additions to this Agreement
shall be binding unless in writing and signed by both parties hereto.

     17. Section Headings. The section headings used in this Agreement are
included solely for convenience and shall not affect, or be used in connection
with, the interpretation of this Agreement.

     18. Severability. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof.

     19. Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed to be an original, but both of which together will
constitute one and the same instrument.

     20. Arbitration. Any dispute or controversy arising under or in connection
with this Agreement shall be settled exclusively by arbitration,

                                      -15-

<PAGE>
 
conducted before a panel of three arbitrators in Los Angeles, California, in
accordance with the rules of the American Arbitration Association then in
effect. Judgment may be entered on the arbitrator's award in any court having
jurisdiction; provided, however, that the Employee shall be entitled to seek
specific performance of his right to be paid until the Date of Termination
during the pendency of any dispute or controversy arising under or in connection
with this Agreement.

     21. Attorneys' Fees. The Company shall pay to the Employee all out-of-
pocket expenses, including attorneys' fees, incurred by the Employee in
connection with any claim, legal action or proceeding involving this Agreement
in which the Employee prevails in whole or in part, whether brought by the
Employee or by or on behalf of the Company or by another party. The Company
shall pay prejudgment interest on any money judgment obtained by the Employee
calculated at 3% above the prime rate (defined as the base rate on corporate
loans at large U.S. money center commercial banks as published by the Wall
Street Journal), from the date that payment(s) to the Employee should have been
made under this Agreement.

     22. Miscellaneous. No provision of this Agreement may be modified, waived
or discharged unless such waiver, modification or discharge is agreed to in
writing and signed by the Employee and such officer as may be specifically
designated by the Board. No waiver by either party hereto at any time of any
breach by the other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of similar or dissimilar provisions or conditions at the same or at any
prior or subsequent time. No agreements or representations, oral or otherwise,
express or implied, with respect to the subject matter hereof have been made by
either party which are not expressly set forth in this Agreement and this
agreement shall supersede any prior understanding or agreement either written or
oral, will respect to the subject matter hereto. The validity, interpretation,
construction and performance of this Agreement shall be governed by the laws of
the State of California without regard to its conflicts of law principles. All
references to sections of the Exchange Act or the Code shall be deemed also to
refer to any successor provisions to such sections.

     Any payments provided for hereunder shall be paid net of any applicable
withholding required under federal, state or local law. The obligations of the

                                      -16-

<PAGE>
 
Company under Section 12 and Section 20 and the obligations of the Employee
under Section 14 and Section 20 shall survive the expiration of the Term of this
Agreement.

     IN WITNESS WHEREOF, each of the parties hereto has executed this Agreement
on the date first indicated above.

ATTEST:                       IHOP CORP.


/s/ Mark D. Weisberger             /s/ Richard K. Herzer
______________________        By:_______________________
Mark D. Weisberger            Richard K. Herzer
Secretary                     President



                              EMPLOYEE:

                              /s/ Richard C. Celio
                              ___________________________________
                              Richard C. Celio

                                      -17-



<PAGE>
 
                                                                      EXHIBIT 11
                         IHOP CORP. AND SUBSIDIARIES 
            STATEMENT REGARDING COMPUTATION OF PER SHARE EARNINGS 
                     (In thousands, except per share data)




<TABLE>
<CAPTION>
 
 
                                           Three Months Ended
                                               March 31,
                                           ------------------
                                             1997      1996
                                           --------   -------
 
 
<S>                                        <C>        <C>
NET INCOME PER COMMON SHARE - PRIMARY

Weighted average shares outstanding           9,485     9,392
Net effect of dilutive stock options
  based on the treasury stock method
  using average market price                     83       155
                                             ------    ------
  Total                                       9,568     9,547
                                             ======    ======
 
Net income available to common               $3,550    $3,062
  shareholders                               ======    ======
 
Net income per share - primary               $  .37    $  .32
                                             ======    ======
 
NET INCOME PER COMMON SHARE - FULLY DILUTED
 
Weighted average shares outstanding           9,485     9,392
Net effect of dilutive stock options
  based on the treasury stock method
  using the average market price or the
  year-end market price, if higher 
  than the average market price                  83       159
                                             ------    ------
  Total                                       9,568     9,551
                                             ======    ======
 
Net income available to common               $3,550    $3,062
  shareholders                               ======    ======
 
Net income per share - fully diluted         $  .37    $  .32
                                             ======    ======
 
</TABLE>






<TABLE> <S> <C>


<PAGE>
 
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED FINANCIAL STATEMENTS OF IHOP CORP. AND SUBSIDIARIES AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
       
<S>                             <C>
<PERIOD-TYPE>                   3-MOS
<FISCAL-YEAR-END>                          DEC-31-1997
<PERIOD-START>                             JAN-01-1997
<PERIOD-END>                               MAR-31-1997
<CASH>                                           8,347
<SECURITIES>                                         0
<RECEIVABLES>                                   25,553
<ALLOWANCES>                                         0
<INVENTORY>                                      1,284
<CURRENT-ASSETS>                                37,374
<PP&E>                                         128,019
<DEPRECIATION>                                       0
<TOTAL-ASSETS>                                 330,249
<CURRENT-LIABILITIES>                           32,330
<BONDS>                                        140,184
<PREFERRED-MANDATORY>                                0
<PREFERRED>                                          0
<COMMON>                                            95
<OTHER-SE>                                     133,136
<TOTAL-LIABILITY-AND-EQUITY>                   330,249
<SALES>                                              0
<TOTAL-REVENUES>                                46,441
<CGS>                                                0
<TOTAL-COSTS>                                   27,613
<OTHER-EXPENSES>                                 2,449
<LOSS-PROVISION>                                     0
<INTEREST-EXPENSE>                               3,506
<INCOME-PRETAX>                                  5,820
<INCOME-TAX>                                     2,270
<INCOME-CONTINUING>                              3,550
<DISCONTINUED>                                       0
<EXTRAORDINARY>                                      0
<CHANGES>                                            0
<NET-INCOME>                                     3,550
<EPS-PRIMARY>                                      .37
<EPS-DILUTED>                                      .37
        

</TABLE>