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On December 14, 2015, JRC commented on In-N-Out isn’t your ordinary Fast Food Burger Chain :

Interesting read! In full disclosure, this post is coming from someone who has never actually been to an In N Out so I apologize in advance if it’s offensive to some 🙂
I find the craze of fast casual restaurants and in particular, fast casual burger restaurants to be quite interesting. To be honest, i am not one who can tell the difference (at least not as passionately as others can!) between a Shake Shack burger, a Five Guys burger, a Smashburger burger or a Tasty Burger burger, for example. They’re all delicious to me, and far superior to something like a McDonald’s burger, but still hard to differentiate among that higher quality fast casual burger. As such, I am wondering if part of the reason (although i realize they would never admit this) In N Out hasn’t opted to open a new distribution center on the east coast and expand here is because of the intense competition they would face and the need to convince east coast lifers that In N Out is superior to Five Guys, for example? Furthermore, with chains like Shake Shack expanding extremely rapidly (seemingly taking the exact opposite approach to In N Out), do you think In N Out is missing out on a huge growth opportunity given their promise to remain private and not open franchised units? Based on your post, my sense is they are probably content with missing out on the land grab going on right now in return for staying true to their customer promise, but as a former consumer investor myself I can’t help but wonder…curious to hear your thoughts! I’ll be sure to try In N Out the next time i’m headed West!

Very interesting post! There’s a lot to like about this alignment of business model and operating model. I’d be curious to hear your thoughts re the fact that a lot of the hottest direct-to-consumer eCommerce companies have at some point decided to open brick-and-mortar stores (i.e. Bonobos, Warby, BirchBox, Indochino, etc.)? Do you have any sense for the scale Everlane has reached today and do you expect they too will consider opening some sort of brick-and-mortar or pop-up shop at some point? My sense is these other companies have basically gotten to a point where they feel they have tapped out profitable customer acquisition on a purely online basis, to the point where a retail store is actually more efficient for marketing, new customer acquisition and/or upselling existing customers, and a company like Everlane might run into similar constraints as they scale. Do you agree (and if so, how does this change the operating model summarized above?) or do you think Everlane’s products are simple enough that they can avoid the need to go omnichannel?

On December 14, 2015, JRC commented on Blue Apron and the Race to Innovate Dinner :

Very interesting post. I’ve been intrigued by this business/operating model for a while now given the impressive growth the Company has experienced and, as Kari mentioned, the premium at-home dining experience does feel ripe for disruption. To Shivani’s question, I have to imagine these guys make a pretty nice gross margin on each meal sold. Part of the beauty here, in my opinion, is that they charge a fixed price to consumers in advance and yet have the control over what meals/ingredients they actually deliver. This creates a situation where they are basically immune to any major commodity shocks / raw ingredient price increases as they can largely switch from one offering to another (for example, if beef prices rise dramatically they are not tied to offering beef that month, in the same way a steak restaurant is or a butcher department at a grocery store is). This somewhat fixed gross margin is key to the company’s success and suggests they might have room to lower prices at some point, BUT it seems they have been forced to spend so much on marketing and customer acquisition that my sense is they’re barely turning a profit today? I will be very curious to see how the premium in-home dining market develops in the near future and who the winners and losers end up being. With the latest venture round valuing this business at $2BN, there are certainly big believers of Blue Apron out there!