In-N-Out Burger Case Study

Valery Barreto

Midterm Case Study

Due: 03/22/15

Situation Analysis:

        In-N-Out Burger is a well-known burger joint located on the west coast of California and also in the states of Nevada and Arizona where they had 171 locations in the year 2003. The locations of In-N-Out burger are apart from each other where customers need to travel farther to get their usual “fix”. Since customers love this place so much they are demanding more convenient locations closer to them. The revenue growth was strong, averaging almost 8% per year from 1998 to 2002 and many industry observers believed that In-N-Out burger could raise a good amount of money with a public offering. There were many questions about who should run the company in the year 2003, since the family matriarch Esther Snyder’s health was becoming a concern. She wanted her granddaughter to run the company and certain key employees to help out as well.

 The Snyder family did not want to franchise its operations because they believed it would be impossible to maintain the freshness of their ingredients when control was renounced. The family resisted to open up other locations beyond the three states because of the added stress this would place on the company’s ability to deliver fresh high quality food to its consumers. This became a problem to some devoted customers because they had to drive farther away to the nearest location. To ensure In-N-Out’s high quality standards, inspectors would make monthly surprises to check the store’s quality, cleanliness, and customer service. The menu never changed where it only included six items consisting of hamburgers, cheeseburgers, Double-Doubles, french fries, milk shakes, and soft drinks along with three combination meals. Their was also a secret menu where customers typically heard about through word of mouth. The average wait time for an order was about 12 minutes and customers did not mind waiting because if they wanted their food to be fresh they needed to wait a little longer, but some complained since it is considered a “fast food” restaurant. In-N-Out burger was consistently ranked the highest among the hamburger chains in terms of food taste and the quality of the ingredients and also came to be at the top for its taste tests.

Fast casual restaurants combined the speed and ordering style of the traditional fast food chain with a sit down casual restaurant. There were places that offered food-to-order in a more upscale setting, and offered menu choices like salads, sandwiches with Brie cheese, and stirred vegetables like McDonalds. Other restaurants like Panera Bread and Subway focused more on nutritional content of their menu items which are now experiencing unit sales volume growth of up to 40%. In-N-Out has many competitors like Fatburger and Johnny Rockets where they both provide freshness in their ingredients.  When In-N-Out’s revenue had averaged 8% to 10% growth they were looking to expand their campaign and that is why many customers wanted new locations outside of the west coast.