🍟 7/11/2022 – Lessons From In-N-Out Burger
The Cult of In-N-Out Burger
In-N-Out Burger is one of the most interesting case studies in multi-unit business operations.
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 isn’t a franchise, it’s reported the typical In-N-Out generates roughly $4.5 million per year.
For comparison’s sake, here’s a few popular burger brands and what they make:
So what gives?
For one, people go CRAZY for this brand.
When In-N-Out expanded to Colorado for the first time in 2020, people lined up in what was an estimated FOURTEEN HOUR long line, which required cops to be brought in to manage the traffic.
Beyond the mad rush for a new location, even Gordon Ramsay has praised In-N-Out as his favorite burger – clearly, they’re doing something right.
Although In-N-Out is not a franchise, there’s still a ton we can learn from them whether you’re a franchisor, franchisee, or are in the midst of buying your first brand.
Let’s take a look:
1. “If it ain’t broke, don’t fix it”
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 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. Malleable Supply Chain
If you recall my newsletter a few weeks back discussing the 5 aspects of an emerging franchise, you may remember the 2nd criteria was to have a “malleable supply chain”.
Not only does a franchise’s supply chain have to scale, but it also has to adjust to maintain quality as the system expands. In-N-Out is a prime example of what this looks like in real life.
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 1 of 6 meat processing facilities they own and operate.
From there, the meat is delivered daily to every store, where it’s then grinded on site.
In-N-Out refuses to compromise on quality (which is why they don’t have freezers, heat lamps, or microwaves at any locations), but it’s also why they don’t open a store that’s more than a day’s drive from a meat processing facility!
Their team clearly understands what makes their product special, and they aren’t willing to disrupt that in the name of unit expansion.
A good franchisor should do the same, and a smart franchisee will evaluate a franchisors growth strategy during due diligence!
3. Take Care Of Your 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!
The In-N-Out formula may not be the quickest path to world domination, but it ensures they will be around for a long time.
Quality X Relentless Consistency X Time is an incredible foundation to build a multi-unit business on. And In-N-Out’s adherence to principles (not just profits) is something that should be emulated.
Hopefully you learned a little something about In-N-Out that you can apply in your franchise journey!
If you want to read more about the origin story behind In-N-Out, check out my twitter thread!
Panera Brands SPAC with Danny Meyer is Done-zo
Panera Brands, aka Panera Bread, Caribou Coffee, & Einstein Bros. Bagels was supposed to merge with Danny Meyer’s USHG Acquisition corp and go public later this year, but due to market conditions has been called off.
For those who don’t know, Danny Meyer is the mastermind behind Shake Shack, and several New York City eateries like Union Square Cafe, Daily Provisions, Blue Smoke, and more. This merger would’ve been exciting to watch and see what Danny would’ve done to supercharge Panera’s restaurant portfolio.
Burger King Employee Go-Fund-Me Goes Wild
I’m a little late to this, but if you missed this story here’s the recap: a veteran burger king employee Kevin Ford recently had his 27th work anniversary. The guy hasn’t missed a single day of work in 27 years, and all Burger King gave him was a goody bag with a movie ticket and some candy!
Someone recorded him opening the goody bag on TikTok, and it went viral. Kevin couldn’t have been more genuinely thankful that he received a gift at all – but everyone watching the video knew he deserved more.
So Kevin’s daughter set up a go-fund-me, and low and behold over $375,000 has been raised! When asked if he’d now retire, Kevin said this:
“You never know, it’s day to day, but I haven’t thought of anything to do with that money except to visit my grandkids for a while and maybe put some up for their college, but I’m not even thinking about that,” he said. “I’m just working.”
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