I recently was going through some of my folders on my computer from when I was in college and I found a paper that I thought was pretty cool. The paper was from 2011, for “BUS 600: Strategies for a Competitive Advantage,” which was a three-day, 1 unit introductory course for Chapman University’s Masters in Business Administration program. The course was to get students acclimated to the business world before jumping straight into serious classes.
Overall, the course sought to teach what made a successful business by applying the four “D”s: Desirable, Distinct, Dependable and Deliverable. Following, the three-day class we had to write a paper on a company we admired and talk about how the four “D”s make that company successful. I wrote my paper on the burger chain In-N-Out as I am a huge fan and had recently read the book, In-N-Out Burger: A Behind-The-Counter Look At The Fast-Food Chain That Breaks All The Rules by Stacy Perman. Below is my essay on In-N-Out, which is kind of a summary of Perman’s book. If you have some free time I highly recommend you check out Perman’s book as it is quite an interesting read.
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In 1948, a married couple, Harry and Ester Snyder, opened a little burger restaurant called In-N-Out. In-N-Out was distinctive at the time because it was not the typical sit-down restaurant the world had known. Instead, their restaurant was a small building that consisted of a stove, a few associates and two traffic lanes were guests ordered their food from a two-way speaker box. This new style of eatery became known as the drive thru hence the name In-N-Out.
Before Harry and Ester Snyder opened In-N-Out all restaurants required their customers to get out of their cars and sit down at tables located inside. The sit-down restaurant experience was expensive to run because in order to feed their customers it required a chef, a large space for tables so people could sit, waiters to take the order/deliver the food and busboys to clean up after the customers left. The Snyder’s model was revolutionary because it eliminated tables, waiters, and busboys; the only thing they needed was a chef and a few associates to help out.
In-N-Out officially had become a desirable place for individuals to eat because it was quick and easy allowing guests to eat in their cars or take it home. The reason the Snyder’s decided to open this type of burger place was that Harry realized Americans were relying on the use of their cars more and more. The drive thru was not the only thing that made In-N-Out successful, it also had to do with the simple menu and Harry’s philosophy. Harry was a man who believed in two things, “If you treated people fairly and awarded them accordingly, they would do likewise…and do one thing and do it the best you can.” (47, 55) Those two ideologies ultimately are what make In-N-Out so successful.
With the success of In-N-Out, other drive-thru restaurants began to pop up creating competition. These other drive-thru eateries were Carl’s Jr., McDonald’s and Kentucky Fried Chicken. But the thing that was different about In-N-Out was that their menu consisted of only quality burgers and fries, which used fresh ingredients. Other fast-food restaurants were constantly tweaking their menus in order to appeal to the customer’s desires. Sixty-three years later In-N-Out has only added one item to their menu, Sprite.
Another important factor in In-N-Out’s success was the Snyder’s decision to refuse to expand at the pace of the competition. As the fast-food industry began to take off, McDonald’s, Carls Jr. and others began expanding at a mind-boggling rate through franchising. McDonald’s and Carls Jr. saw expansion as a way to make more money. This rapid expansion put pressure on these companies to figure out how to ship their food efficiently and cheaply. Fast-food giants began centralizing their preparation facilities, freezing their food and shipping it cross-country in freezer trucks.
As a result of this, the fast-food giants began adding fillers to their food to help reduce the cost. Within a few years, these fast-food giants could be seen across the United States and around the world. In-N-Out on the other hand, refused to expand nationally because they did not want to diminish the quality of the food they served their guests, and they refused to franchise their stores in fear of losing control.
On top of that, for In-N-Out to even open up a new location, they had to be comfortable with the financial viability of the restaurant by gathering data on potential guests, and they had to have enough money to build the new restaurant without taking out a loan. Today, In-N-Out has been around for 63 years, but they can only be found in three states: California, Arizona, and Nevada (with the exception of one location in Utah) because that is as far as their trucks can get daily.
Although In-N-Out is only in three states they have become a powerhouse in the fast-food market. The reason for this goes back to Harry’s philosophy of, “If you treated people fairly and awarded them accordingly, they would do likewise…and do one thing and do it the best you can.” (47, 55) With this philosophy, In-N-Out has seldom changed in how their company runs.
Since the beginning, Harry always viewed his employees as if they were equals, he paid them more than the minimum wage and called them associates instead of employees. In fact, as you might have noticed in this paper, I have not referred to In-N-Out’s employees and customers this way, instead, I have been calling them associates and guests. Harry believed that individuals buying their food should be considered guests, not customers because they were like guests in his own home and no matter what the guest was always right.
The distinction between In-N-Out’s style and philosophy to its competition is drastically different. In-N-Out’s slogan is “quality you can taste” which focuses on good quality food and guest service. Where its competition focuses on selling the most food possible at the cheapest price. In-N-Out is able to focus and control these two characteristics of their restaurants because they are not as diversified throughout the world like McDonald’s and Carls Jr. In fact, In-N-Out has its own dairy farm and requires employees to be at least 18 years of age. Because of this, it does cost In-N-Out more money to run their business, but they choose to protect the core image of the brand, which provides significant benefits in the long run.
As In-N-Out has expanded over the years, their reputation reaches far beyond the three states they occupy. Many people have analyzed this behavior, and the loyalty behind the brand is almost “cult” like. To me what makes In-N-Out so successful is their associates to guest relationship, and the fact that they refuse to change their “quality you can taste” mentality, even though there is enormous potential to expand.
Although In-N-Out is a fast-food restaurant their philosophy of good and simple is defensible because it has been successful. Like I stated above the only item In-N-Out has ever added to their menu was Sprite. However, what In-N-Out has that makes them unique is although it is not written on the menu they have other items guests can order creating the “Secret Menu.”
The idea of a restaurant opening with items that are not advertised or on the menu would probably be considered a poor business decision, but that’s what In-N-Out does. The secret menu at In-N-Out does not necessarily have different food but guests can get their food prepared in different ways. Items on the secret menu include grilled cheese, animal style burgers and fries, protein wraps and the flying Dutchman. What is so ingenious about the secret menu is the only way for guests to find out about it is either through word of mouth or on their website. This uniqueness creates a mystery around the menu, the company and allows the guests to do the advertising for the company.
Advertising and marketing is a crucial part of every company because it gets the word out what you are producing. In-N-Out’s advertising budget is microscopic compared to McDonald’s and other large chains. Not only is their budget for advertising small, but their advertising style is different as well. In-N-Out advertises only on local television and radio programs, and their commercials are very subtle compared to all the others.
In-N-Out’s commercials consist of a single image of a double-double cheese burger, and there’s a simple tune that goes along with it saying, “In-N-Out, In-N-Out that’s what a hamburger’s all about.” This simple commercial is more of a subliminal message than that of say McDonald’s or Carls Jr. McDonald’s and Carls Jr’s advertising is based more on the corporate image they are trying to create; it is as if the food is a second thought.
The final D, deliverable, causes all of the above mentioned to come full circle and brings repeat guests from all over the globe. If In-N-Out was not deliverable, none of the above would work, but since In-N-Out is deliverable, guests continue to come over and over again. For example, on April 24, 2007, In-N-Out opened their first restaurant in Tucson, Arizona, and the opening literally caused chaos in the city. People began lining up at 2 a.m. on the day of the opening hoping to be the first to try it. As the line began to build during the day, guests had to wait two and three hours just to order their food. Not only was the guest line packed, but the drive thru at times had more than 100 cars waiting.
Over the 63 years, In-N-Out has built a loyal and strong business that guests truly enjoy. Today, In-N-Out is still going just as strong as the day it had opened in 1948. However, the future of In-N-Out to me looks as if there are storm clouds on the horizon. In 2006, the last original founder Ester Snyder died at the age of 86, leaving the company to the only remaining blood relative, Lynsi Snyder. Lynsi, who was 24, at the time, was scheduled to receive full ownership of In-N-Out when she turned 35, but that did not happen.
The CEO at the time of Ester Snyder’s death was Richard Boyd, who was not an original founder or blood-related, ended up getting pushed out. After Ester’s death an in-law to the Snyders, Mark Taylor, convinced Lynsi that Richard Boyd did not have the best interests of In-N-Out. In reality, it was Mark Taylor who was never on the good side of Harry or Ester Snyder because they believed his ambitions were too big. Shortly after Mark and Lynsi pushed Richard out, Mark named himself CEO of In-N-Out and Lynsi became his ally pushing for the expansion of the brand. This was, of course, something none of the original owners wanted.
This past summer In-N-Out opened its first restaurant in Frisco, Texas marking it the farthest In-N-Out has ever expanded. The way In-N-Out is accomplishing this expansion was by opening another dairy farm in northern Texas. At least the northern Texas farm will be able to provide fresh meat and dairy products, which is still consistent with the “quality you can taste” slogan, but the problem I see with the expansion is In-N-Out is planning on expanding all the way to the east coast causing it to possibly start losing its nostalgia. There is something to say about In-N-Out that it is the number two best selling fast-food restaurant in the world and it is only in three states. In my opinion, if In-N-Out is not careful they could become just another fast-food eatery.
Trent McGee 