3 management cases

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Business Finance

IN-N-OUT BURGER

Building Them Better

In-N-Out Burger seems like a modest enterprise—only four food items on the menu and little to no advertising. So, how has this West Coast chain achieved near-cult status among regular Joes and foodies alike? For more than 60 years, In-N-Out has wooed customers by providing them just the basics—fresh, well-cooked food served quickly in a sparkling clean environment. Its hallmarks are consistency and quality. E.J. Baumeister Jr./Alamy Gordon Ramsay is not an easy man to satisfy. The celebrity chef and star of Hell’s Kitchen is well known for his culinary prowess, perfectionism, and earth-shaking, profanity-strewn tantrums. He is infamous for finding fault with simple and extravagant dishes alike. So it came as a shock to many when Ramsay revealed his affinity for a darling of West Coast fast food. “In-N-Out Burgers [are] extraordinary,” Ramsay says, recounting a recent visit. “I was so bad: I sat in the restaurant, had my double cheeseburger, then minutes later I drove back round and got the same thing again.”

Simple Formula for Success

Walk into any In-N-Out Burger location and you’ll only find four food items on the menu: Hamburger, Cheeseburger, Double- Double, and French Fries. You can wash those down with a Coke or a milk shake. In addition, there’s . . . nothing else. That’s the entire menu. Or so In-N-Out would have you think. Stand next to the ordering counter long enough, and you’ll hear customers recite a litany of curious requests. None are on the menu, but sure enough, the cashier rings each one up with a smile: Animal Style (a mustard-cooked patty with extra pickles, extra spread, and grilled onions), Flying Dutchman (two patties, two slices of cheese, no bun or garnish), Protein Style (heavy on the fixings, wrapped in lettuce instead of a bun), or any permutation of patties and cheese slices up to a 4 3 4 (four patties and four slices of cheese barely contained in one bun). It’s as if you’ve gone through the looking glass, and the menu is not what it seems. But the open secret of the secret menu is only part of what keeps customers coming back for more. In-N-Out’s motto is clear: “Give customers the freshest, highest quality foods you can buy and provide them with friendly service in a sparkling clean environment.” So is the chain’s formula for success: Make only a few food items, consistently make them well, and earn the trust of customers by not deviating from this premise.

All in the Family

Harry Snyder and his wife Esther opened the first In-N-Out Burger in Baldwin Park, California, in 1948. Unlike other carhop- oriented fast-food restaurants of the era, Harry installed a two- way speaker through which drivers could order without leaving their car, creating California’s first drive-thru hamburger stand. He brought sons Rich and Guy to work at an early age, where the boys learned their father’s insistence on complementing fresh, promptly cooked food with great customer service. The Snyders’ second restaurant opened three years later, and franchising continued slowly until 1976, when Rich took over after his father’s death. Although he was only 24 when he became CEO, Rich Snyder expanded In-N-Out into new cities but still retained stringent control. Unlike his dad, who hoped employees would transfer skills learned at In-N-Out to a “better” job, Rich thought: “Why let good people move on when you can use them to help your company grow?” Knowing that his expansion plans would require a pool of talented and loyal store managers, he opened In-N-Out University. Store associates had to please hungry diners, show initiative, and exhibit strong decision-making skills for at least one year before being invited to attend the management training program. Reasoning that the same high- tech tools for performance analysis employed by pro sports teams could also improve his team, Rich videotaped trainees to analyze their performance and produced training films.

Entrepreneurship Under Control

The chain’s founding family is fiercely entrepreneurial, and they maintain strict control over the franchisees. Their influence shows everywhere from the sock-hop décor to the secret menu to its treatment of employees as long-term partners rather than as low-cost, disposable resources. They followed their own formula for success instead of chasing, or copying, the competition. They’ve also avoided the temptations of selling the firm through an IPO. A posting on the firm’s website states: “In-N-Out remains privately owned and the Snyder family has no plans to take the company public or franchise any units.”

Quality Drives Future Plans

In-N-Out Burger is now led by Guy’s daughter Linzi Snyder Torres who is committed to following the Snyder family’s strategy by not changing what already works so well. The firm continues to get rave reviews for making only a handful of items with great attention to quality. Vice President of Planning and Development Carl Van Fleet says: “At In-N-Out Burger, we make all of our hamburger patties ourselves and deliver them fresh to all of our restaurants with our own delivery vehicles. Nothing is ever frozen. Our new restaurant locations are limited by the distance we can travel from our patty making facilities and distribution centers.” How did this family-owned burger chain with roadside diner roots inspire such a passionate following?

Case Analysis Questions

  1. Rich Snyder was 24 years old when his father passed away and he assumed leadership of In-N-Out. Was his young age an asset or a liability for leadership of the company? After answering, take a position on this question: Does age really matter in entrepreneurship?
  2. In an era of fusion cuisine and extreme fajitas, is In-N-Out’s strategy of offering only four simple food items still on track? How about the firm’s approach to employees? Does it give them an edge over the fast-food competition?