Harry Snyder had a motto: “do one thing, and do it well.” The co-founder of In-N-Out Burger, Snyder opened In-N-Out’s first location in Baldwin Park, CA, in 1948 with three items on the menu: burgers, fries and shakes. Almost 70 years later, In-N-Out’s business model remains almost as simple, with its operations aligned to match.
Snyder’s focus at In-N-Out was on quality, cleanliness and service. By providing fresh, high quality food in a clean and friendly environment, In-N-Out is able to drive sales and sustain customer loyalty with very minimal marketing spend. In turn, this allows them to spend money on upholding their three core values.
Today, In-N-Out still has very simple menus: burgers (with some variants – one or two patties, cheese or no cheese, grilled or raw onion), fries and drinks (shakes, soda, lemonade, iced tea, coffee). It requires very few ingredients: buns, beef patties, American cheese slices, lettuce, tomato, proprietary “spread” (condiment blend), onion, potatoes, vegetable oil (for frying) and various beverages.
While In-N-Out offers a large “secret menu” with twists on its traditional items (extra patties, cheese on the fries, etc.), the “secret menu” only requires three additional ingredients (mustard, pickles, chopped chilies). In fact, while the “secret menu” only offers simple modifications to the core menu, knowledge of the menu offers a sort of “insider status” for those in the know, driving customer loyalty.
Because it requires so little variety in its ingredients, In-N-Out is able to maintain substantial control over its supply chain and to ensure that it is receiving the highest quality items. Most of its produce is sourced from farms in California, where two of its distribution centers are located. In-N-Out sources all of its own beef, individually inspecting every chuck that it receives. In-N-Out employs in-house butchers to break down and grind its meat, and forms patties in-house, maintaining absolute control over the patty-making process. While this process initially took place in-store, in 1963 In-N-Out opened its first patty-making facility, and today operates three such facilities alongside its distribution centers in Northern California, Southern California and Texas.
All ingredients are delivered fresh to In-N-Out stores, and each order is cooked fresh to order – even the potatoes are cut in-store and fried fresh. In fact, In-N-Out stores don’t even feature freezers, microwaves or heat lamps – a fact that distinguishes In-N-Out from its fast food competitors, and is attractive to customers.
In-N-Out’s commitment to fresh food serves as a marketing tool, but also perfectly aligns with its operating model. Using only fresh food minimizes the amount of kitchen equipment necessary, reducing capital expenditures. Further, having a limited menu allows In-N-Out to rely entirely on fresh ingredients, but also allows for extremely high inventory turnover, reducing the risk of spoilage that restaurants otherwise face.
In contrast to its fast food competitors, who have achieved massive scale by relying on frozen products, In-N-Out has sustained this control and quality by ensuring that each new store is within a 500-mile radius of a patty-making facility and distribution center (though several of its Utah locations are closer to 700 miles from a distribution center, the company maintains that they employ a 500-mile rule). In-N-Out has expanded at an average of 6% per year, and still only has locations in six states, all close to their three patty-making facilities and distribution centers: California, Nevada (opened in 1992), Arizona (2000), Utah (2008), Texas (2011) and Oregon (2015).
By maintaining a very limited menu and only expanding as its distribution channel allows, In-N-Out is able to offer fresh, high-quality food that in turn drives sales and customer loyalty.
Cleanliness and Service
In-N-Out further drives sales by maintaining extremely clean stores, and providing excellent customer service. It does this primarily by training its employees thoroughly, keeping them happy and retaining them far longer than the average fast-food employer.
In-N-Out is able to attract, and retain, talent by paying much higher wages than competitors, and providing better benefits. In-N-Out associates have always made at least $2-3 above minimum wage, and in 2012 store managers made more than $120,000 on average, compared to a median food service manager salary of $48,000 per year. In-N-Out also offers substantial benefits for employees, including retirement savings plans, paid vacation (even for part-time employees), and full health and dental benefits for full-time workers. Managers who meet sales goals are sent on luxurious vacations with their spouse. The company also throws companywide picnics and an annual gala dinner.
In addition, In-N-Out provides ample opportunities for advancement, promoting most of its managers from store associates. Around 80% of In-N-Out’s managers started as entry-level associates and rose to the manager level. When employees are promoted to manager, they receive training at In-N-Out University, a centralized training facility in Baldwin Park that reinforces the company’s core values and ensures consistent manager training across all locations. In-N-Out University enables the company to maintain a pipeline of qualified managers who will uphold the company’s core values. This further plays into In-N-Out’s growth strategy; the company only expands to new locations when it has a trained management roster that allows for expansion.
As a result of these initiatives, In-N-Out turnover is extremely low for the fast-food industry; part-time associates at In-N-Out stay for an average of two years (in the industry as a whole, only 25% of workers stay for two years), and In-N-Out managers stay for an average of 14 years. Thus, its employees are much more likely to be happy in their jobs, and to fulfill In-N-Out’s objectives of proving a clean and friendly environment for customers.
In the rare event of substandard customer service, however, In-N-Out also maintains a centralized customer service line that customers can call toll-free, that is fully staffed by In-N-Out associates who have experience working in-store. These associates are empowered by the company to take care of customers, ensuring that each customer has a positive impression of the company, even in the event of a bad in-store experience.
Despite its growth and success, In-N-Out is still entirely privately owned by the Snyder family. In-N-Out owns all of its locations entirely, with no franchising. This allows the company to maintain complete control over its supply chain and employee hiring and training, further reinforcing its core values. By aligning its business model with its operating model, and maintaining control over operations by refusing to franchise, In-N-Out has built a brand with intensely loyal customers that is, by all accounts, extremely successful.