Is In-N-Out a Franchise?
In-N-Out Burger is one of the most interesting burger brands in the world.
It has about 380 locations in America, which is far less than competitors like Five Guys (1,675 locations), Whataburger (830+ locations), McDonald’s (40,000+), etc.
Despite this, they still have a far higher average revenue per store and a cult-like following.
While I can’t 100% confirm this number since they’re a private company that is not a franchise, it’s reported the typical In-N-Out generates roughly $4.5 million per year.
For comparison’s sake, here are a few popular burger brands and what they make:
- Culvers: $3.06M
- Wendy’s: $2.01M
- Five Guys: $1.2M
- McDonald’s: $2.9M
- Whataburger: $3.1M
So what gives?
For one, people go CRAZY for this brand. New restaurant openings create 14+ hour lines that require cops to manage the overflowing traffic. To understand how it came to this, let’s go back to the start.
- In-N-Out was founded in 1948 by Harry and Esther Snyder in Baldwin, California.
- The couple’s approach to growth was simple — maintain quality at all costs.
- In-N-Out is now run by the third generation, Lynsi Snyder, who’s been at the helm since 2010.
- In-N-Out has barely changed since Lynsi’s grandparents founded it in 1948. This is evident in three key areas: menu simplicity, commitment to quality, and commitment to employees.
- For franchisors (especially emerging ones), the lesson here is to know your strengths and stick to them.
The first In-N-Out opened in just a ~10 ft space in 1948 in Baldwin, California. Founded by Harry and Esther Snyder, the couple hand-picked fresh ingredients each morning.
Their approach to growth was simple – maintain quality at ALL costs.
Today In-N-Out is run by the 3rd generation, Lynsi Snyder, who’s been at the helm since 2010. Their path to success is a story of consistency – In-N-Out has *barely* changed since Lynsi’s grandparents founded it in 1948.
This is evident in 3 key areas – and many franchisors (and franchisees) can learn from their model:
1. MENU SIMPLICITY
So many businesses rush to add product lines in hopes of increasing their revenue. Big brands like McDonald’s and Burger King have 50+ menu items including chicken sandwiches, burgers, coffee, salads, you name it.
In-N-Out meanwhile has a total of 15 menu items today, and has only added FIVE new menu items since they were founded way back in 1948!
The new items that were added over the
years decades are:
- Dr. Pepper
- Hot chocolate
- The famous “Double-Double”
For franchisors (especially emerging ones), know your strengths and stick to them!
The goal at the beginning for your brand is to be f*cking incredible at 1 product or service. Just one! It takes time and patience to build that reputation, so resist the urge to add a bunch of other product lines or services before you’ve yet to dominate your core offering.
I’m sure there are exceptions to this, but 9 out of 10 times, going deep instead of wide is the best way to grow!
For franchisees looking at new brands, take this into consideration if the franchises you’re evaluating are all over their place with product offerings, or if they’re laser-focused on a single area.
2. COMMITMENT TO QUALITY
To ensure freshness, In-N-Out will never open a location more than a day’s drive from 1 of their 6 meat processing facilities.
The brand has a vertically integrated supply chain that began back in 1948 with the original founders, Harry and Esther Snyder, who butchered their own meat to cut down on costs.
Today with ~380 locations, it looks a little different. In-N-Out will hand select their cattle, which will eventually end up in one of their meat processing facilities. From there, the meat is delivered daily to every store, none of which has a SINGLE heat lamp, microwave, or freezer on site.
Their team clearly understands what makes their product special.
A former employee was quoted saying:
“I can say without a doubt that it’s the cleanest, freshest, fast food you can ever have”
And In-N-Out isn’t willing to disrupt that in the name of unit expansion.
Smart franchisors should do the same, and a smart franchisee will evaluate a franchisor‘s growth strategy during due diligence!
3. COMMITMENT TO EMPLOYEES
In-N-Out provides far better benefits than your typical QSR. All full-time and part-time employees receive 401k’s, dental + vision coverage, and paid time off.
Entry-level workers make above minimum wage, while managers can earn over $250,000 for overseeing just 1 location!
This is a win-win
- Employees can build a real career at In-N-Out
- In-N-Out is rewarded with incredible loyalty
No seriously…the average tenure for a manager is ~17 years!
Additionally, current CEO Lynsi Snyder had a 96% approval rating on Glassdoor in 2021 from her 26,000 employees. That made her the highest employee-rated female CEO in the country.
If you’re a franchisor looking to build a strong franchise system, invest in your people.
If you’re a franchisee looking to build a large multi-unit portfolio, invest in your people.
The cost of keeping someone great is far less than recruiting and training new employees!
Many businesses focus on adding more revenue streams, expanding aggressively, etc. But In-N-Out is the ultimate example of “if it ain’t broke, don’t fix it”.
The formula isn’t sexy: it’s quality X relentless consistency, and it values principles over profits. To put their growth into perspective:
On average, In-N-Out has opened just 5 restaurants per year since 1948.
Meanwhile, Subway at its peak was opening 7 locations PER DAY! The family receives buyout or IPO offers on a monthly basis, but their answer has always been ‘no’. Rich Snyder, son of Harry & Esther, said in 1989:
“There’s money to be made by doing those things, but I don’t want to lose what I was raised with all my life.”
CEO Lynsi won’t need extra funds anyway. Her net worth is ~$4.2B, as she owns almost all of In-N-Out after receiving equity on her 25th, 30th & 35th birthday.
Perhaps the Snyders are onto something when they say “doing things the old-fashioned way is the freshest idea of all”.