The Tragic Map Of The Only Places You Can Get In-N-Out Burger [1]
In-N-Out quality tied to the west coast…for now.
Background
For native Californians who move eastward in the US (myself included) and perhaps for those across the country that have enjoyed a hot, fresh In-N-Out burger on the west coast, this question frequently arises – why doesn’t In-N-Out expand to the east? In an April 2015 Business Insider article, Carl Van Fleet, In-N-Out’s VP of planning and development gave four compelling criteria [2].
But in my mind, the answer should be one simple sentence: We don’t expand east because our business model and operating model are perfectly aligned. For a little more background first, In-N-Out Burger is a company built upon providing fresh, quality burgers and fries quickly, and affordably. Objectively speaking, In-N-Out was named by Consumer Reports in 2011, its first such publication, as the top ranked fast food burger restaurant and has remained there or very close each year since [3]. Subjectively speaking, In-N-Out is simply amazing. Period. Its pull is so strong that it becomes the first meal of choice for many returning to the west.
The In-N-Out Business Model
But in the spirit of taking personal opinion out, let’s focus on In-N-Out’s business model:
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.” [4]
The above was Stacy Perman’s response to the question “What is In-N-Out doing right that other quick serves are doing wrong?” during her interview with QSR magazine (Quick Service Restaurant for those that may not be avid QSR readers). In 2009, Perman published a book about the immense success and uniqueness of In-N-Out Burger.
At the heart of it, In-n-Out does focus on quality, partially defined by itself on serving its food fresh (never using freezers or microwaves). In addition to the quality of the food, a made-to-order meal with whatever toppings you want (or don’t) comes out minutes after your order despite often long lines. On top of it all, the meal is quite affordable as fast food restaurants go:
So In-N-Out’s promise is to provide you a quality, customizable, quick, affordable meal; that’s all well and good but you must ask, how do they do that?
The Operating Model
In addition to the location of the restaurants relative to the distribution centers, the menu is incredibly simple – hamburger, fries, shakes, soda. The shakes only come in vanilla, chocolate, or strawberry. The simple menu seems incredibly limiting; however, patrons can make nearly any combination request based on the following burger ingredients: bun, patty, sauce, lettuce, tomatoes, and onion. Each item is nearly uniform, allowing for an easy switch amongst the staff (even a burger with no bun uses virtually the same shaped lettuce as for the regular burgers). The most varied offering – soft drinks – is a do-it-yourself service that simply requires the server to hand you an empty cup. This operating model allows for incredible economies of scale while still affording customizable options.
Looking forward
I think we’ve discussed how operating decisions work perfectly in tandem with the customer promise to deliver a fresh, quick, affordable, and customizable meal. What may not be as apparent is whether this provides In-N-Out a competitive advantage. Competitors can attempt to replicate the model which I agree is a potential threat; some can even leverage their larger size and willingness to expand quickly to try to directly compete with In-N-Out. But In-N-Out’s continued focus and delivery on its promise has resulted in a staunch following in its home regions over so many years that now transcends In-N-Out’s operational dominance. It does not appear In-N-Out will ever compromise on its quality or refusal for rapid expansion [3]. However, this does not eliminate the hope some eastern consumers may still hold on to and fear some competitors may harbor that In-N-Out can one day further expand east and north [6].
Works Cited
[1] http://www.businessinsider.com/in-n-out-burger-location-map-2014-4
[2] http://www.businessinsider.com/why-in-n-out-burger-wont-expand-east-2015-4
[4] http://www2.qsrmagazine.com/articles/exclusives/0409/innout-1.phtml
[5] http://www.cbsnews.com/news/in-n-out-president-lynsi-snyder-keeping-burger-chain-a-family-business/
Interesting submission! I understand the arguments for lack of expansion east but even in markets they’ve identified as attractive they seem to be moving slow. For example, Houston is much less than 600 miles from the DFW area. They’ve been in Texas for several years but still no Houston location. There’s cows everywhere. I don’t get it.
Kevin – this is a question I ask myself and wonder what is taking them so long to come east! I guess I see the argument that they want to stay local and be exclusive, but I believe that a move east will be necessary as the chain continues to grow and saturates the west coast market. In addition, I also think that the decision to not franchise and let others take on the capital risk of opening up a new store will slow growth and allow competitors in the northeast, such as Shake Shack, to gain market share and crowd out others from entering in the future. I would think that they should follow in the footsteps of Chick-fil-A when they finally moved to New York, which caused huge excitement and publicity for the company.
Great post, Kevin! As I thought about why In-N-Out has avoided expansion, it got me thinking “what are the actual goals of the organization and its main shareholders?” From article [2] it’s clear that In-N-Out has good reasons to stay on the West Coast (quality control/distribution, exclusivity, competition and no franchising), but surely all of these problems could be solved or mitigated to achieve a presence on the East Coast. I imagine setting up the infrastructure to open a few stores would be an enormously profitable enterprise due to the cult-like following. What I guess I don’t usually think about is whether or not “scale” is actually important to a company like In-N-Out. It’s an incredibly successful, family controlled business, that’s generated enough ROI that it’s founders are billionaires. Expansion of any kind outside its comfort zone makes the brand vulnerable, and for no really compelling reason. I read that Lynsi Snyder, the 33 year old heiress of the company, receives all of the company’s stock and retains sole ownership on her 35th birthday…we’ll see if she has any different plans once she takes the reigns!