In-N-Out Burger

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In-N-Out Burger

4199 Campus Drive, 9th Floor
Irvine, California 92715
(714) 5096200
Fax: (714) 8543675

Private Company
Sales: $120 million (1994)
SICs: 5812 Eating Places

In-N-Out Burger, a California Corporation, is a leading fast-food retail chain with more than 120 locations in California and Nevada. Known for its made-to-order hamburgers, fresh ingredients, and efficient service, it has maintained the same basic menu and a simple, customer-friendly philosophy since its founding in 1948. In-N-Out Burger is a private, family-run, nonfranchised company.

Dawn of the Drive-Thru: The Early Years

In-N-Out Burger started in the Los Angeles suburb of Baldwin Park, California, in 1948. Harry Snyder developed the idea of a drive-thru hamburger restaurant where customers would be able to order their food via a two-way speaker unit. This was a rather novel idea, as most hamburger stands of the post-World War II era employed carhops to serve food to customers seated in their cars. And so Harry Snyder and his wife, Esther, opened what is said to be Californias first drive-thru restaurant. The menu was limited to burgers, french fries, soft drinks, and milk shakes. The Snyders priorities were simple: serve customers high-quality, fresh food with efficient, friendly service in a clean and tidy environment. This business philosophy and the original menu have remained largely unchanged throughout the years.

It was very important to the Snyders to maintain control of each location in order to continue achieving the high standards they had set as In-N-Out Burgers norm. Thus, Harry and Esther Snyder did not rush to open further outlets. In fact, three years passed before they added a second In-N-Out Burger location. This new outlet was in the San Gabriel Valley east of Los Angeles in the town of Covina. As Californians became progressively car dependent and fast-food drive-thrus grew in popularity, the Snyders gradually added more outlets, some with double-lane drive-thrus to accommodate more customers. The Snyders two sons, Rich and Guy, began working at In-N-Out Burger at an early age. They were expected to work in the restaurants and learn the business from the ground up.

Harry Snyder oversaw In-N-Out Burger until 1976, when he passed away from cancer. By then In-N-Out Burger had grown to 18 drive-thrus, all in Los Angeles County. Though only 24 years old, Rich Snyder assumed the role of president. His older brother, Guy, became vice-president, and Esther continued to work in the accounting department.

Corporate Strategy

Though Rich Snyder had plans for In-N-Out Burgers expansion and growth, one thing he would not change after taking over as president was the menu, which included the following items: Double-Double (a double cheeseburger); cheeseburger; hamburger; french fries; milk shakes in vanilla, chocolate, or strawberry; milk; coffee; pink lemonade; iced tea; and various sodas. The only addition to the original menu was a lemon-lime soda. A nonmenu item that eventually gained word-of-mouth popularity in southern California was the Animala Double-Double with grilled onions and extra sauce (all In-N-Out burgers came with a special sauce somewhat similar to Thousand Island dressing)voted Best Off-the-Menu Special in the 1996 Buzz Magazine restaurant awards.

Refusing to change the menu was unusual for a fast-food chain, but adding other items, the Snyders feared, would affect the quality of the food and the service. By keeping the menu short, In-N-Out Burger could maintain control and guarantee high-caliber food. In the July 24, 1989, issue of Forbes, Rich Snyder stated, Its hard enough to sell burgers, fries and drinks right. And when you start adding things, it gets worse.

Rich Snyder remained true to his parents goal of serving only the freshest foods available. None of the ingredients were frozen, and no microwaves were used. All orders were made to order, contributing to what some in the food industry considered a long wait for a fast-food hamburger. The milk shakes were made with real ice cream, and the burgers were 100 percent beef. The beef was ground and formed into patties by In-N-Out workers at the Baldwin Park facility. The lettuce was broken into leaves by hand, and the buns were baked fresh using an old-fashioned sponge dough that took six to eight hours to rise. The potatoes for the french fries were shipped in burlap sacks to the outlets, where associates cut them by hand. In-N-Out has used southern California-grown Kennebec potatoes, which are said to be ideal for frying. The french fries have always been fried in cholesterol-free vegetable oil.

Rich Snyder also maintained his familys opposition to franchising. While McDonalds, which began the same year as In-N-Out, decided to franchise in 1954, the Snyders, though inundated with franchise inquiries, remained firm. They thought franchising would cause them to lose control of In-N-Out Burger and the business philosophy they had worked so hard to achieve and maintain. As Rich Snyder commented about franchising in Forbes: My feeling is I would be prostituting my parents by doing that. There is money to be made by doing those things, but you lose something, and I dont want to lose what I was raised with all my life. Fast growth was not one of the Snyders goals, but they did have plans for In-N-Out Burgers expansion.

The Snyders were also committed to viewing employees as if they were family members. Employees, called associates, were treated with respect. Pay was a step above that at other fast-food restaurants. In 1989 part-time associates earned $6 per hour, well above the minimum wage of $4.25. Managers made an average of $63,000 annually. The combination of intensive training and good wages parlayed the associates into capable and friendly workers. At In-N-Out the customer did not receive a pile of change but had the change counted back out loud. Because the Snyders demonstrated their appreciation of the associates, employee loyalty has been high at In-N-Out Burger. Some associates have been with the company for more than 20 years, and many have worked their way up from entry-level to managerial positions.

Growth in the 1980s

Soon after taking the reins at In-N-Out Burger, Rich Snyder founded a commissary at the In-N-Out Burger headquarters in Baldwin Park. The establishment of this commissary, where In-N-Out Burger could receive, store, and ship equipment and food supplies to its outlets, gave In-N-Out Burger quality control over all In-N-Out ingredients. The commissary was a busy location: hamburger patties were formed, potatoes were checked for blemishes and quality, equipment was maintained, and supplies were received and distributed to In-N-Out locations. Rich Snyder also established the In-N-Out University in 1983. The university, a training school for new managers, reinforced In-N-Out Burgers business tenets and standards and ensured uniformity of management techniques and methods.

The number of outlets continued to grow steadily under Rich Snyders guidance. Expansion, however, was still a slow process, which can be partly attributed to the difficulties involved in securing building permits. Because In-N-Out Burgers food was cooked to order, the average wait at a drive-thru was approximately 12 minutes, significantly longer than at other fast-food drive-thrus. This long wait occasionally resulted in traffic jams along busy urban streets, which caused city officials to delay building permits for In-N-Out Burger.

In-N-Out Burger changed tactics in the late 1980s and chose to open fewer double-lane drive-thrus and more restaurants with one drive-thru lane plus indoor and outdoor seating for patrons. The Snyders felt this change would accommodate larger crowds and better serve the customer, which was still one of their top priorities. Another change was their decision to lease property rather than to purchase it. Until 1989 In-N-Out Burger purchased most of their property. This meant seeking lower-priced locations, which were usually in outlying, suburban areas. Leasing property allowed In-N-Out to venture into more metropolitan areas with high property values, such as Santa Monica and West Los Angeles.

During Harry Snyders leadership, expansion was limited to the Los Angeles County area. Rich Snyder decided to take In-N-Out Burger south of Los Angeles County to the growing counties of Orange, Riverside, and San Bernardino. Most of the outlets were strategically located near freeway or highway off-ramps in highly visible locations to cater to the car-reliant customer.

Rich Snyder also expanded the companys nonfood items. At In-N-Out customers could purchase not only a juicy burger but also t-shirts, bumper stickers, and caps. Because of the success of the t-shirts, Rich Snyder in 1989 began a mail-order catalog, which eventually also included pins, key chains, mugs, and golf balls. Most of the t-shirts were emblazoned with artists renderings of vintage cars parked outside In-N-Out Burger drive-thrus, arousing the nostalgic spirit that pervaded In-N-Out.

Company Perspectives:

In-N-Out Burger exists for the purpose of: 1. providing the freshest, highest-quality foods and services for a profit and a spotless, sparkling environment whereby the customer is our most important asset; 2. providing a team-oriented atmosphere whereby goal-setting and communications exist and providing excellent training and development for all of our associates; 3. assisting all communities in our marketplace to become stronger, safer, and better places to live.

In-N-Out Burger became active in donating funds to the prevention of child abuse in 1986. The In-N-Out Burger Foundation was established, and every April In-N-Out sponsored a company-wide fund-raising campaign. Canisters were placed in all In-N-Out outlets. In-N-Out matched three dollars for every dollar given up to $100,000. In-N-Out Burger also hosted a Childrens Benefit Golf Tournament every spring. The money raised from this event was added to funds collected from the stores. All funds were then donated to various organizations throughout California with the intent to help abused and neglected children.

Corporate Changes in the Early 1990s

By the time Rich Snyder readied In-N-Out Burger to venture out of the Los Angeles area and into San Diego County in 1990, he had brought the number of locations up to 55. The first San Diego location was in Lemon Grove, south of the city of San Diego. The second unit, planned for northern San Diego County, was in Vista.

As In-N-Out Burger outlets were spreading outside Los Angeles County, Rich Snyder decided to relocate the corporate headquarters and the In-N-Out University from Baldwin Park to Irvine, California, a city 45 miles south in Orange County. The move, which took place in 1994, affected most of In-N-Out Burgers 200 corporate employees. The commissary, including the maintenance, meat plant, and warehouse employees, would remain in Baldwin Park. Irvine was home to the corporate offices of many other food-service giants, including Taco Bell, Red Robin, and El Torito. Another factor that might have been involved in selecting Irvine was that Rich Snyder resided in Newport Beach, located less than ten miles from Irvine.

On December 14, 1993, just months away from moving the corporate headquarters to Irvine, Rich Snyder was killed in a commuter plane crash. Snyder was on board an executive jet when it crash-landed at Irvines John Wayne Airport. Snyder, Philip R. West (a childhood friend of Snyders who was In-N-Out Burgers chief operating officer and executive vice-president), Jack Sims (another friend), and two pilots were killed. They were returning from a one-day trip to scout possible In-N-Out locations in southern California and also to attend the opening of a Fresno store. Snyder and West had a personal agreement not to fly on the same plane together but apparently had broken the policy for this flight. It is believed that Richs mother, Esther, had also been aboard the plane, but she chose to deplane at an earlier stop.

Rich Snyder was 41 years old at the time of his death. He had been married for the first time just a year before and had a daughter. During his tenure as president, he had increased the number of In-N-Out Burger units from 18 to 93. A born-again Christian, philanthropist, and conservative Republican supporter, he began each company meeting with the Pledge of Allegiance. Rich Snyder led In-N-Out Burger to tremendous growth while maintaining the simple philosophy his parents adopted in 1948.

Growth from the Mid-1990s

As a result of Rich Snyders untimely death, Esther Snyder assumed the role of president and continued to work in the corporate offices. Richs brother, Guy Snyder, who had been an executive vice-president but had not been actively participating in daily management duties at the time of Richs death, was named chairman of the board. Rich Snyders widow was appointed to the board of directors.

In April 1994 the corporate headquarters relocated to Irvine, California, as planned. Expansion continued under Guy Snyders direction, with new In-N-Out Burger outlets opening in northern California and Las Vegas, Nevada, as well as in towns with existing In-N-Out outlets. In-N-Out offered rentable cookout trailers for special occasions or corporate functions. Despite this growth, Guy Snyder did not stray from his familys business outlook and continued to promote simplicity, efficiency, and fresh, cooked-to-order food.

By the late 1990s, with more than 120 outlets in California and Nevada, In-N-Out Burger showed no signs of slowing down, and as the number of their restaurants grew, so did their popularity. In-N-Out Burger was the winner, for example, in the quick-service burger division in the 1997 Restaurants & Institutions annual poll. In-N-Out beat Wendys, which had won the category for the previous eight years. According to the February 1, 1997, issue of Restaurants & Institutions, the criteria upon which the restaurants were judged included quality of food, menu variety, service, atmosphere, value, cleanliness, and convenience. In-N-Out Burger ranked first in four (quality of food, service, value, and cleanliness) of the seven categories. It was quite a coup for the family-owned chain, as this was the first year In-N-Out Burger was eligible to compete in the survey. In-N-Out Burger scored highly in the customer-loyalty category as well, with many respondents ranking it highest in overall satisfaction.

Within its base of southern California, In-N-Out was also maintaining a popular, almost cultlike following. In Pasadena Weekly s Best of 1996 readers poll, In-N-Out Burger won the categories Best Fast Food and Best Burger. And according to the July 24, 1989, issue of Forbes, In-N-Out Burgers following included movie stars and corporate executives. Bob Hope, David Letterman, Farrah Fawcett, and Ryan ONeal were among some of In-N-Outs more famous patrons.

Further Reading

Martin, Richard, In-N-Out Burger Pulls Away from Drive-thru-Only Focus, Nations Restaurant News, June 19, 1989, pp. 34.

, Top In-N-Out Burger Execs Killed in Calif. Plane Crash, Nations Restaurant News, January 3, 1994, pp. 12.

Paris, Ellen, Where Bob Hope Buys His Burgers, Forbes, July 24, 1989, pp. 4648.

Puzo, Daniel P., Americas Favorite Chains, Restaurants & Institutions, February 1, 1997, pp. 2634.

Wright, Nils J., In-N-Out Burger Wants into Sacramento Area, The Business Journal Serving Greater Sacramento, July 18, 1994, p. 1.

Mariko Fujinaka