When Stacy Perman set out to research In-N-Out Burger, all she knew was that her family would drive six miles to the closest location when she was younger. What the Business Week writer found during her ensuing two-year investigation was a small company that pays its managers six-figure salaries, disrupts town traffic patterns when new stores open, and refuses to franchise despite its wild success. Perman details her findings in In-N-Out Burger: A Behind-the-Counter Look at the Fast-Food Chain That Breaks All the Rules, a Collins Business book that came out earlier this month. We talked to Perman about what has made In-N-Out successful for more than 60 years.
What surprised you during your research?
When I started writing this book, I thought it would be a very interesting story about a counter-intuitive business model that was very successful and developed into a cult phenomenon. What I found was it was sort of this classic American success story in that it represented the type of American that can really resonate today now that the economy has fallen into its niche. It really embodied this post-war American spirit of fair practice and treating people well, and it stands really as a contrast to what's gone on today with all of the corruption and the falling apart of American symbols of the economy.
Why do you think In-N-Out developed such a cult-like following?
They make a great burger, and then on top of that they never advertised very much, especially in the early days. They say the best advertising is word of mouth, and they had that from the very beginning. The fact that they've done very little press over the years has also added to this mystique about them, and they really let the burger speak for them. … You have all of these celebrities talking about how much they love In-N-Out, and not one of them is on In-N-Out's pay roll. They don't do any kind of endorsing. One of the earlier celebrities was Bob Hope. I talked to his daughter, and she told me that he used to call them In-N-Outers. At one time he tried to buy stock in the company, but they politely refused. He ate them, she said, until he died.
What is In-N-Out doing right that other quick-serves are getting wrong?
I think it goes back to [co-founder] Harry Snyder's initial philosophy, which was based on quality and keeping it simple and streamlined. He had a motto: “Do one thing, and do it well.” Even though the chain has grown—it's now about 232 stores in four states—by and large they follow that motto. They focused on quality, they focused on their customers, they focused on their employees, and they focused on making really good products. I think that's stood the test of time.
How has In-N-Out’s decision to avoid franchising played into the brand's success?
It's pretty much key. They have solidified in the mind of their customers the kind of place they are, which is authentic, fresh, quality, real, and that they really care about the customer. The fact that they stay true to their founding philosophy, which is not to franchise, really speaks to that. One of the reasons Harry and Esther Snyder never wanted to franchise or sell to a larger corporation is they thought he would lose focus on quality if he did that.
What do you hope others in the restaurant industry will take away from your book?
A benchmark of success isn't necessarily bigger and better. … From the beginning, [In-N-Out] always listened to its customer. Harry had this notion that if not for them, he wouldn't have a business, and they really focused on what they wanted. The actual products and the quality of the products benefited from that. Also, this grew out of natural demand. Customers were demanding In-N-Out, so they sort of roll out [new locations] following the natural demand. They've never betrayed their customers' trust in them. They've never sacrificed quality for profits. They've developed a really strong relationship with their customers, which, as far as I can tell, has never really wavered.