Case Study of Innout Burger
The Snyder family founded In N Out Burger in the pursuit of the “American Dream”; work hard and prosperity will follow. The American Dream is what this Country was founded on. Had the pioneers feared failure, we would not be here today, “Fear: In business, as In life, we all get afraid, but what do we do about It? Successful entrepreneurs learn how to push through fear and embrace their failures. When the fear of failure Is looming at the door, these men did not look for an escape route.
They pushed on. ” (The Daily Record).
At some point, it seems, everyone dreams of being their own ass and leaving the politics of corporate America behind, many succeed, but many more fail. “The SABA reports that as many as 60% to 80% of new businesses fail in their first five years of operation” (peg. 436).
Failure has several definitions, but ultimately it means the end off business. What makes one business flourish and another fail? There is no one answer to this question. What makes the ultimate difference in the success off business, is people. In N Out Burger is an example of a company that continues to thrive because It has great people.
The leadership of the many maintains the values that help found the business and invests In Its people so It can continue to be a profitable business. In N Out Burger started as a roadside hamburger stand In 1948 by entrepreneurs, Harry and Esther Snyder.
Their Intent was to provide high quality food at a reasonable price. When they started the company they had no idea how wildly successful their company would become over the next 60 years. The Snyder family did not set out to rival other fast food giants, but today, they exceed per store sales for both McDonald’s and Burger King (Business
Week). To compare and contrast In N Out with McDonald’s I created the table below: In N Out Burger Started in 1948 By 1988 had grown to 50 locations Started with 4 menu items, still have 4 menu items Focused in the west, southwest US $500 million in revenue In 2011 McDonald’s Started In 1955 By 1963 had 700 locations Started with 4 menu Items, “International Trot Don companies wheedles I nee tattled Is representative AT two similar companies that took very different approaches to their business and have remained very successful in their own rights.
The fact that In N Out can be nominative in store sales with a gigantic corporation like McDonald’s is impressive. When 24 year old Rich Snyder took over In N Out Burger after his father’s death in 1976, there were only 18 locations throughout California.
He continued the business maintaining his father’s mission but also pursued a more aggressive growth strategy. Most people not familiar with In N Touts quality and unique marketing approach, of a four item menu, would compare them to McDonald’s. When you dive below the surface of the “fast food” stereotypes, you will quickly see the enormous differences between the two companies.
Both had very similar starts, but McDonald’s pursued a growth model that seemed to include “world domination”. McDonald’s growth has come at a price, one which In N Out would not dream of compromising; quality.
When was the last time you smelled a burger frying inside a McDonald’s? Within the last 5 years the chain has converted to a system where the burgers are fried somewhere in the “back of the house” and put in warming trays for the mass production of sandwiches. McDonald’s will stay a giant because of price, recognition, and convenience but I have never heard anyone say they want to go there because he burgers are so fabulous tasting.
On the other hand, the only thing I have ever heard about In N Out is what awesome burgers they have. Quality is something In N Out has vowed never to compromise and have implemented unique ways of insuring it isn’t. In order to manage the quality of food being sent to each store, Rich built a commissary where all food was delivered and inspected, then driven out to each store location.
This has its down sides, like only being able to supply locations within a days drive, but according to Rich that will help maintain quality (Peg. C-37). It remunerates the freshness of the food and ultimately customer satisfaction.
In N Out has achieved success by maintaining a simple motto, “Give customers the freshest, highest quality foods you can buy and provide them with friendly service in a sparkling clean environment” (Peg. C-36).
Even after growing to over 250 locations, In N Out has not compromised quality. In addition to providing high quality food, In N Out believes in taking care of its employees by training and paying them well. “Store managers at In-N-Out make at least $100,000 a year and are eligible for monthly bonuses tied to store sales” (Business Week).
Rich Snyder believed in the inverted management triangle that is more representative of the Japanese business culture than our own American business culture. The company’s continued success is largely attributed to his management style. He instilled a sense of pride and ownership in his managers and employees hoping they would be productive and ultimately lead to personal success and financial gain for them.
Rich developed the In N Out University to draw from the talents and expertise of his best managers and to train the associates that showed the most potential to excel in management. Why let DOD people move on when you can use them to help your company grow? ” (Peg. C-37) As discussed in Chapter 10 of our textbook, human resources are a company’s most valuable assets. Recruiting, developing and keeping talented employees are huge costs to organizations, so when a talented workforce can be maintained long term, not only does teen company Dental, out so 00 teen employees. No tout management style Rich most closely demonstrated would align well with Elton Maps, Hawthorne Effect; “treat your employees well and they will live up to your expectations” (peg.
40).
It is pretty hard to argue with over sixty years of success when analyzing the business decisions the Snyder family has made throughout the history of In N Out Burger. Some might think that Riches young age at the time he took over as CEO would have been a detriment to the company, but he proved the complete opposite. He was raised by his parents who were obviously very successful business people. He inherited the entrepreneurial spirit and with that comes the ability and desire to take risks. I don’t think in his case it would have mattered if he was 24 or 44, he understood the company and what it was going to take to keep it successful.
The tragedy the family employed around a very simple menu and concept of quality service might not have gotten a business off the ground today, but in 1948, when life was much simpler, it was the perfect strategy! People were recovering from years of financial hardships and for the first time had expendable income, so a simple meal at the local drive-in was the cure for a struggling society. Our lives today are all about choices, hundreds of them, every day, and sometimes it is nice to take a step back and have our choices simplified. Maybe that’s why In N Out still works in our crazy, sat paced culture.
It’s a place we can go and if we want simple, there it is, in one of four choices, but if we want customized, no problem. However, I am not sure In N Out could walk into a bank today with their same simple business plan and receive start- up financing.
Our society tends to complicate things and many financiers would not take the time to realize the genius in “simple” ideas. The rules, policies and laws that are all in place because of the actions of others before us, have caused our financial world to become so overly complicated it is next to impossible to get a loan today.
Family values and the promise of hard work will not get you a loan, but sixty years ago it did and thank goodness, because we have In N Out Burger. Does a company need to have a complicated business plan or an organizational chart with lines zigzagging all over the place in order to be successful? In N Out Burger does an excellent Job of demonstrating that neither of those things are required in order for a business to last across several generations and be financially successful. In N Out values its people, its products and its customers and demonstrates that through its every day actions.
