Welcome to In-N-Out
In-N-Out is the envy of the entire industry. What’s
their secret? By Chris George
“As you may have heard we are a very private,
family-owned company,” writes In-N-Out Burger spokeswoman
Michelle Guzman in response to an interview request. “We rarely
participate in interviews. We have chosen not to publicly discuss
aspects of our business like operating strategies, sales figures,
etc. Also, we never want to seem as though we are seeking publicity.”
And there you have it, the reason why one
little California quick-serve has managed to capture the attention
and admiration of not only legions of faithful fans, but also its
Fortune 500 competition and the national press. Aside from its superior
service and addictive fare, anything that happens with In-N-Out—good
or bad—is big news precisely because the family-owned burger
chain doesn’t want it to be.
But why? Why would a multimillion dollar
company shy away from publicity? Why would it turn down opportunities
to be featured in the press and earn even more recognition?
The answer is simple: Because In-N-Out can still be ranked as one
of the top quick-service brands in America. What’s more intriguing
than an enigma?
Welcome to In-N-Out, the envy of an industry.
To walk into an In-N-Out store is to enter
another time. Everything is painted either red, white, or yellow.
The tables are clean. The staff wears paper hats and smiles as if
you’re an old friend. The menu is simple—burgers, fries,
and shakes. And no matter what time of the day you visit, there
is a line. But waiting doesn’t seem so bad when you know that
eventually you’ll be sinking your teeth into a 100-percent
beef burger made exactly as you requested.
“Everyone in the fast-food industry
envies In-N-Out,” Carl’s Jr. founder, Carl Karcher,
told The Los Angeles Times in 2000. “We’re working
on new products every year and In-N-Out keeps the same menu and
knocks them dead.”
Founded in 1948 by Harry and Esther Snyder,
very little has changed at In-N-Out Burger over the years. The menu
has never changed—hamburgers, cheeseburgers, French fries,
and shakes—even in a market where the competition is constantly
adding new products. And, from day one, the brand’s operating
mission has remained the same: “Give customers the freshest,
highest quality foods you can buy and provide them with friendly
service in a sparkling clean environment.” The only
thing about In-N-Out that offers a nod to the new millennium is
its building designs.
That’s In-N-Out’s story—straight,
uncut, and undiluted. And the reason they’ve done so well
over the years is because they’re sticking to it, says Adrienne
Weiss, CEO of Adrienne Weiss Corporation, a brand consulting company
in Chicago.
 |
“The perception of how fast the service
is at In-N-Out is not the same as reality.” |
Weiss credits the company’s
careful expansion and vigilant media contact with keeping the In-N-Out
image intact. According to a 2003 Harvard Business School study,
the Snyder family is cautious about growing its chain because of
concerns about, “the additional strain this would place on
the company’s ability to deliver fresh, high-quality products
to consumers.” Today, In-N-Out has 183 restaurants—each
company-owned—in three states, California, Nevada, and Arizona.
Burger King, founded in Miami in 1954—six years after In-N-Out—has
11,285 restaurants in 58 countries. McDonald’s, as we
know it, was founded that same year, and boasts more than 30,000
units in 119 countries. Regional newcomer Back Yard Burger, founded
in 1987, operates 120-plus stores in 17 states.
Along with growing at a much faster rate,
In-N-Out’s competition also spends more to tell consumers
about their brands. It’s estimated that Burger King spent
$350 million–plus on advertising in 2003. Reportedly,
In-N-Out’s ad budget is about $1 million. The bulk of those
dollars are spent on radio ads, billboards, t-shirts, and bumper
stickers—nothing nearly as sophisticated as Burger King’s
Subservient Chicken web site or McDonald’s Big Mac summer
music promotion with Sony. But why spend millions when you don’t
have to? Without any effort or expense, In-N-Out has its own cadre
of high-profile spokesmen. On one day alone this past March, rocker
Courtney Love, golfer Phil Mickelson, and Vanity Fair editor
Graydon Carter all were quoted talking about their love for In-N-Out.
This approach to advertising and marketing
is indicative of how everything works behind the doors of In-N-Out,
straightforward and uncomplicated. Which explains why the chain
is known for its efficient business model, says Joan Vieweger, executive
vice president of Perspective/The Consulting Group, Inc. Vieweger
gained her insight into the brand by talking with various industry
professionals. She calls the chain the tortoise—as in the
Aesop fable—of the fast-food industry.
“[Being the tortoise] allows them
to not spend a lot of time and frivolous energy with things that
don’t pan out for them,” Vieweger said. The company,
she says, seems to operate on a philosophy of “fewer things
done well; fewer people, paid well.”
Because of that operating mindset, In-N-Out
doesn’t have to invest in retrofitting its restaurants or
installing new kitchen equipment to adapt to new products. The company
can then pour more money into things like salaries, which are typically
higher than other chains.
In July 2000, The Los Angeles Times
reported the company’s starting wage was $8 an hour. A call
to corporate headquarters reveals it’s now $8.25 per hour,
or at least at the Hollywood store. Part-time workers have access
to a 401(k) savings plans. Store managers earn a minimum of $80,000,
plus perks like vacations.
And the company’s focus on quality
is just as intense as its focus on its employees. In-N-Out units
do not hold freezers, heat lamps, or microwaves. Ingredients like
potatoes, lettuce, and tomatoes are delivered every other day and
prepared by hand. Buns are delivered daily, baked at a company-owned
facility. And, company-employed butchers watch over the beef supply.
Inspectors make monthly surprise visits to each store, keeping an
eye on quality, cleanliness, and customer service.
| In-N-Out in The Times
On March 7, 2004, The
New York Times’s Saturday Style Desk included
Patrick McGeehan’s story, “The Red Carpet
Leads To a Drive-Through.” The short piece explored
the link between the phenomenon that is In-N-Out and
its celebrity supporters.
A few of our favorite illustrations:
| • |
“Alias star Jennifer Garner told Joan
Rivers on the red carpet at the Oscars that she
was heading straight to In-N-Out after the four-hour
show.” |
| • |
“They cut to the heart of the perfect
hamburger—great bun, great patties, great
extras. And they’re called In-N-Out Burger.
I happen to love the name.”—Graydon
Carter, Vanity Fair editor (who served
In-N-Out at the magazine’s post-Oscars party). |
| • |
“Yankees slugger Jason Giambi showed up
for spring training a bit slimmer, attributing
his newfound thinness to fewer trips to In-N-Out.”
|
| • |
“ If you’re from Los Angeles, you
go to In-N-Out.”—Ruth Reichl, editor
of Gourmet and a former restaurant critic
for The New York Times. |
|
|
This focus on quality and simplicity
appears to cast a spell over customers. Though your food might take
longer to get to you, than say at Back Yard Burger, somehow it seems
faster. “The perception of how fast the service is at In-N-Out
is not the same as reality,” Vieweger says. The wait at an
In-N-Out drive-thru can be as long as 18 minutes. The national average
was 3.16 minutes in 2003.
Estimates on annual revenues per store vary
widely, from $1 million to $2 million. Nobody really knows because
as Guzman explained, In-N-Out has “chosen not to publicly
discuss aspects…like operating strategies, sales figures,
etc.” Still, if those figures are even close to correct, In-N-Out’s
per unit annual sales are above the industry average of $934,700,
and would place company revenues between $178 million and $356 million
per year.
In a March Quick Track survey released by
Sandelman and Associates, In-N-Out tied with Panera at the top of
a list of 112 chains, scoring 21 percent above the all-chain average.
The results were divined from 62,205 fast-food users across 61 markets.
Quick Track found that 56 percent of In-N-Out customers who had
visited a store in the past three months rated the brand as “excellent.”
In-N-Out scored higher than all other chains on several other attributes,
including taste, quality of ingredients, temperature of food, and
friendliness/courtesy. In-N-Out also ended up in the top three for
accuracy.
Sounds like everything is perfect at In-N-Out,
right? Well, for the most part, it is—except for one thing.
A simple operating model and a focus on quality can’t stop
the march of time. The chain’s leadership might soon find
itself tested; Esther Snyder, the brand’s matriarch and president,
is now in her 80s.
Snyder’s advancing age and the death
of her two sons in the 1990s has caused those that follow the brand
to raise questions about In-N-Out’s long-term health. Snyder
has publicly said she has a plan of succession, but won’t
elaborate beyond saying that she wants to ensure the In-N-Out way
of doing business lives on. Outsiders speculate that she might sell
the company back to its employees or pass it to her granddaughter.
Either way, employees at In-N-Out seem to feel assured that the
Snyder leadership legacy will not pass with Snyder.
“Rich passed away; Guy passed away,
but what they stood for and what their father stood for and what
Esther stands for really hasn’t changed,” Carl Van Fleet,
the company’s vice president of operations, told The Los
Angeles Times in 2000. “We have a team of people out in
our stores that are all similarly committed, and I think that goes
a real, real long way and speaks to how we have gotten through the
tragedies.”
Still, expect the rest of the fast-food
world to continue to knock on In-N-Out’s Irvine door beseeching
Esther and her people. It’s not hard to imagine why. Outsiders
would love to double, even triple, the size of the chain and spread
its message of simplicity and quality everywhere, says Joan Vieweger.
“You’d like to think that an icon, a classic like that,
will never change, but it remains to be seen.”
Chris George has worked as a reporter
in Pennsylvania, Alabama, Wyoming, and now, California. He is a
bachelor, so fast food is a very important part of his life. Contact
him at
chris_george@earthlink.net.
