In-N-Out Burger (11 page)

The story at In-N-Out remained static; the message was hamburgers and fries, and it was broadcast by its customers. The chain's simplicity and old-fashioned values certainly endeared In-N-Out to its longtime regulars, establishing an uncommon customer loyalty—one that its competitors spent hundreds of millions of dollars trying to create.

 

In fact, In-N-Out's bond with the public took on a life of its own, and the chain's desire to please its guests remained its primary goal.
If a customer wanted her meat bloody and raw, that's what she got—bloody and raw. If he wanted extra pickles, or his meat well-done, or his fries extra salty, no problem. Soon, variations on the standard bill of fare turned into what regulars began calling the “secret menu.” Customers ordered these variations with such frequency that a number of them were given names. Favorites included: the 4x4 (four beef patties and four slices of cheese); the Flying Dutchman (two beef patties and two slices of melted cheese—no bun, produce, or condiments); Animal Style (mustard-cooked beef patty served on a bun with pickles, lettuce, extra spread, and grilled onions); Protein Style (burger or cheeseburger wrapped in lettuce without a bun); and Grilled Cheese (no beef patty).

Before long, the secret menu became something like a secret handshake that was traded among regulars and their friends—but In-N-Out was in on it as well. It became common knowledge among the chain's associates, who understood immediately when a customer asked for, say, a cheeseburger Animal Style.

The secret menu added greatly to the chain's growing mystique. Since its origins are untraceable, the secret menu developed its own peculiar folklore. Before long, various narratives became associated with the different styles that developed. In one version, Animal Style was created when surfers and hippies started ordering their burgers with mustard cooked into the beef—and the clean-cut associates started calling it Animal Style as a joke. Others decided that customers had given it the name Animal Style because it was messy to eat. In one telling, Protein Style emerged because Harry Snyder (while on a diet) ate the burger with lettuce instead of a bun. And the Flying Dutchman was reportedly Guy Snyder's favorite. Its name, of course, was also a nod to the family's Dutch roots.

 

Just as In-N-Out Burger was the antithesis of McDonald's, Harry Snyder was in many ways the opposite of Ray Kroc. The flamboyant Kroc had encouraged publicity at every turn. Very early in the game, he hired publicity teams who succeeded in getting stories on both
Kroc and McDonald's published in newspapers across the country. And long before Sir Richard Branson injected himself into stunts dreamed up to advance Virgin's visibility (like traveling across the Atlantic Ocean in a hot air balloon), Kroc had been known to pull a few tricks from his own leisure suit pocket. In the mid-1960s, McDonald's traced the origins of the hamburger to a Russian sailor in the German port city of Hamburg and journeyed there to present the mayor of Hamburg with a McDonald's hamburger.

McDonald's was not the first to deploy gimmickry, however. In 1930, White Castle founders Billy Ingram and Walter Anderson came up with a scheme to counter the public's squeamishness about eating ground beef that endured long after the publication of Upton Sinclair's 1906 meatpacking industry exposé,
The Jungle
. Ingram paid a group of young men to dress up as doctors while they ate White Castle hamburgers to promote the idea that hamburgers were healthy.

Harry had little interest in such attention-grabbing tricks or publicity stunts. Esther's modesty and her husband's salt-of-the-earth soul recoiled from the kind of promotional splashes going all around them. Their own promotions were small-scale, such as producing wooden nickels redeemable for soft drinks. Their philosophy was simple; the product—if it's a good one—should sell itself, and everything else is smoke and mirrors.

Harry and Esther believed in serving the communities in which In-N-Out operated. The Snyders made any number of charitable donations, and their efforts at promotion were often connected to grassroots community and philanthropic endeavors. The Snyders served their burgers at schools and little league games for free or at a significant discount, and they offered their own expertise and help whenever Baldwin Park's Adult School asked. Esther was particularly interested in helping children. The Snyders offered In-N-Out door prizes at community-sponsored events. The result was that In-N-Out generated a kind of homespun feeling; there was a consistency and authenticity about the chain.

While the couple had long since moved to the more prosperous suburb of San Dimas, they remained very much a part of Baldwin
Park. Allen Teagle, who returned to Baldwin Park with his wife, Bonnie, following his stint in the navy, put it this way: “Everyone knew who Harry and Esther were. Whenever we had a Lion's Club event, Harry always donated the food. That's how we raised money.”

Harry was active in the Baldwin Park Rotary Club, the service organization established in 1905 by Chicago lawyer Paul P. Harris that brought together business and professional leaders to provide humanitarian service, encourage high ethical standards, and build global good will. The organization's motto, “Service Above Self and They Profit Most Who Serve Best,” was an apt description of Harry and Esther's own beliefs.

At Rotary Club functions, the Snyders often provided In-N-Out burgers. Joe McCaron, whose father, Joe Sr., was Baldwin Park mayor from 1968 to 1970, remembered one Rotary-sponsored occasion during his father's term, when families gathered for a barbecue and the kids were given fancy saddles and rode horses along the San Gabriel River. “The Snyders brought coolers of In-N-Out meat and fixings and we had a barbecue,” recalled McCaron, who remained close to the family and worked with In-N-Out years later servicing their cookout trailers. “Nobody ever had barbecue In-N-Out burgers, they didn't do that, and I'm not sure they've done it since.”

When asked to account for the chain's success, Esther Snyder once said that it had been “accomplished only with the dedicated enthusiasm and wholehearted cooperation of the In-N-Out Burgers employees and our pleased customers.”

In these years, it was easy to see what made In-N-Out Burger a beloved, cult phenomenon; it was its unyielding simplicity and dedication to quality and fair practices, the principles that Harry and Esther had put into play from the start. The Snyders built In-N-Out by continuously producing quality hamburgers and fries, reinvesting in their employees, and keeping the chain's growing legion of customers happy: nothing more, nothing less. In-N-Out's enduring success stemmed from Harry's capacity to understand what he did best and focus exclusively on it. In part, it was what a couple of Bain & Company consultants would years later term “the innovation fulcrum”—that is to say, identifying the point at which introducing new products or services actually destroys more value than it creates.

Harry's business acumen had nothing to do with fancy management consultants or popular buzzwords and everything to do with his own core belief: “Keep it real simple,” he said repeatedly. “Do one thing and do it the best you can.” And he stuck to his word.

As the years wore on, in the minds of In-N-Out's longtime regulars, there was something reassuring about the little red and white drive-through restaurant that continued to make their hamburgers from fresh ground beef and served its fresh, hand-cut fries in a paper boat. As a result, a deep attachment developed between customers and the chain that they could always count on. As In-N-Out grew, that
relationship grew along with it. “In-N-Out always tasted the same,” explained Elaine Setterland, a high school classmate of Guy and Rich Snyder's. But it was more than that, she said. “In-N-Out was local, it was ours.” Even as the chain grew and moved beyond Baldwin Park, it retained that sense of local intimacy. “In-N-Out was a way of life,” proclaimed Steve Gibbs. “We just kind of took it as part of us. We grew up with it. It's funny, when our friends get together for high school reunions, In-N-Out invariably comes up, even after fifty years.”

Harry resisted opportunities to franchise or to cash out. Despite the enormous pressures and the options surrounding him, Harry rejected the conventional wisdom of the industry. Inside the company, franchising was a dirty word. In building In-N-Out Burger, Harry followed no compass but his own. There was no hierarchical management structure, no bureaucracy, and there were no shareholders to answer to. There were just Harry, making decisions from his gut, and Esther, standing by his side, looking after the books. At the start of the 1970s, a time of extraordinary growth and change within the fast-food industry, Harry could spread out a map of his small burger kingdom and smile. In 1973, after twenty-five years, there were only about a dozen In-N-Out Burger outlets. He owned each store and the land underneath them. The company's debt was negligible—and that was exactly how Harry liked it.

What had started as a kaleidoscopic assembly of little family-run roadside stands in the 1930s and 1940s had, by the early 1970s, been transformed into a booming nationwide industry increasingly run by corporate titans. In 1973, more than 245 franchise companies had launched more than 32,000 fast-food establishments that sold $9.68 billion worth of hamburgers, hot dogs, pizzas, chicken, tacos, seafood, donuts, pancakes, and sandwiches. The all-American meal had become the American way. Fast food was part of the great free enterprise system, and its corporate masters were spreading their message one french fry at a time. As the folksy host of CBS's
On the Road
Charles Kuralt once remarked, “You can find your way across this country using burger joints the way a navigator uses stars.”

During this period, the fast-food industry was growing at an average rate of about 15.5 percent annually. It was hardly a coincidence
then that the big three—McDonald's, Burger King, and Kentucky Fried Chicken—were each transforming into veritable empires. Between 1965 and 1971, Kentucky Fried Chicken went from one thousand to four thousand units. Burger King grew from one hundred to eight hundred stores during the same period. Not a decade earlier, Ray Kroc had boasted that McDonald's would open one hundred new restaurants a year; now the chain was opening one new store each day. Between 1965 and 1973, the number of McDonald's outlets in the United States alone rose from 738 to 2,500. A host of imitators proliferated in their wake—many succeeded, and many more failed.

With its promise of a quick, self-contained meal to go served by well-scrubbed teenagers in paper hats, fast food was not just the all-American meal; it had become emblematic of American life. The now telltale squat structure with a mansard roof and a bright neon sign had become as common a sight as churches, schools, or supermarkets. Broadening their scope, the chains moved from downtown city centers and highways to suburban areas situated near both commercial districts and residential neighborhoods. That way fast-food restaurants could capture the working lunchtime crowds during the day as well as the traffic made up of families going out for an affordable dinner in the evenings. For a time, the opening of a new fast-food restaurant, particularly in small towns, was a cause for celebration.

In 1971, Harry opened up a new In-N-Out Burger drive-through on Lankershim Boulevard in North Hollywood. It was his first move beyond the San Gabriel Valley, and he chose wisely, pushing into the growing San Fernando Valley. Following World War II, the 345-square-mile Valley, located in the northwestern section of Los Angeles, had mushroomed into a major bedroom community. Between 1945 and 1960, the Valley's population nearly quintupled from 176,000 to 840,000, growing into a large quilt of middle-class homeowners with swimming pools and two-car garages that earned it the nickname (coined by a
Los Angeles Times
reporter) “America's Suburb.”

Despite countervailing trends in the industry, Harry still positioned In-N-Out for the car-reliant customer, and the new North Hollywood drive-through was close to the Hollywood Freeway, an
important shortcut through the Cahuenga Pass that transported thousands between the Los Angeles Basin and the San Fernando Valley every day. Eminently visible and highly trafficked, the new In-N-Out store was also primed to take advantage of its proximity to Hollywood proper and its movie studios, continuing the early association between the burger chain and celebrities. According to Linda Hope, her father, Bob, was particularly thrilled when In-N-Out Burger opened in North Hollywood; the new store was close to the comedian's Toluca Lake estate, and he used to regularly surprise the associates working there. “He'd go through the drive-through and talk to the kids about golf,” his daughter explained. “He just loved talking to the kids who worked there. The kids would say ‘Do you know who was just here? Bob Hope!'”

The new store quickly became a magnet for Valley residents, who had heard about the chain from expatriate Baldwin Park residents or experienced In-N-Out on trips through the San Gabriel Valley. By the mid-1970s, there was already a first generation of In-N-Out fans who had grown up eating the chain's burgers and fries. As they achieved their majority and moved outside of Baldwin Park, they took their devotion to In-N-Out with them. They became the cornerstone of what had become a strong word-of-mouth campaign that helped to fuel desire for In-N-Out, establishing a grassroots marketing drive. The growing freeway system had abruptly merged the isolated pockets of communities that jutted out from downtown Los Angeles. It made it possible for a small chain like In-N-Out to broaden its appeal simply by watching its customers travel up and down California's network of freeways, spreading the good word.

 

Perhaps nothing exemplified the industry's pervasiveness in American culture better than its most dominant player, McDonald's. For years, the company had proudly proclaimed the millions of burgers it sold. And in August of 1973, the company raised a neon banner on its now ubiquitous golden arches that read: “Over 12 Billion Sold.” With more than $1 billion in sales annually, McDonald's surpassed the U.S. Army as
the country's largest distributor of meals. When the chain launched its $50 million “You Deserve a Break Today” campaign in 1971, the catchy theme fast became one of the most identifiable jingles of all time.

Fast food, like IBM or General Motors, was big business—and Wall Street eagerly invested. In 1965, McDonald's went public with the company's first stock offering at $22.50 per share. Over the next thirty-five years, the stock split twelve times. In 1969, the year of Taco Bell's IPO, Kentucky Fried Chicken also went public. KFC (as it later became known) was listed on the New York Stock Exchange. When Carl Karcher took his company public in 1981, he raised $13.8 million.
^*
It wasn't long before corporate America came calling. A handful of acquisitive food conglomerates and packaged food corporations, intent on taking advantage of the growing fast-food business, went on a buying spree. In 1967, the Pillsbury Company—originally one of the largest producers of grain in the country—acquired Burger King for $19 million. Ralston-Purina, best known as a maker of breakfast cereals and pet foods, bought Jack in the Box in 1968 in a stock swap. That same year, the food conglomerate General Foods Corporation purchased Burger Chef for $16.5 million. A successful Indianapolis-based chain founded in 1957, Burger Chef was known for its low-priced, flame-broiled burgers and value combos.

By 1970, Kentucky Fried Chicken had made 130 of its franchisees millionaires. The power that the fast-food industry wielded was enormous. When, in 1967, McDonald's announced it was going to increase the price of its hamburgers from fifteen to eighteen cents, it forced numerous hamburger shops to slash their own prices or risk losing business.

It wasn't just Wall Street that stood up and took notice; economists, business schools, and the press followed the fast-food industry and its major players closely. In September 1973,
Time
magazine put McDonald's on its cover with the headline: “The Burger That Conquered the Country.” In the pantheon of celebrated American businessmen, Ray
Kroc was hailed as one of the country's greats. Like Kroc, a number of fast-food titans had not only become icons of American entrepreneurialism but had also captured the public imagination as larger-than-life characters. They played an increasingly public role in their chains. The image of Colonel Sanders in his southern gentleman's white suit, goatee, and black bolo tie became internationally recognized as the symbol of Kentucky Fried Chicken.

Harry Snyder had little interest in media adulation. From his perspective, In-N-Out was simply a different creature than its competitors. With its fresh ingredients and custom orders (that took an average of twelve minutes from grill to delivery), In-N-Out barely fit the description of what was considered a fast-food restaurant. Quietly, as the 1970s unfolded, Harry continued to set In-N-Out on a course that would put it in direct opposition to the industry that was mushrooming all around him.

Around 1973, some ten years after Harry installed the chain's first on-site butcher, he opened the chain's warehouse and purchased its first semitrailer. The new commissary allowed the Snyders to ensure strict quality control even as the chain continued to grow. With the meat patties prepared there, the buns baked at the facility, and the lettuce, tomatoes, onions, and potatoes delivered and inspected there, In-N-Out could distribute (by refrigerated semi) its fresh ingredients to each store daily even as the chain moved to extend its geographic reach. It proved to be a winning strategy that worked in tandem with Harry's slow-growth model.

Also around 1973, Harry purchased In-N-Out's first mobile cookout trailer. Gleaming and portable, the trailers were small In-N-Out Burgers on wheels. They contained refrigerators and grills and could be rented for parties and events. When a store lost power or needed a supplemental grill, the trailers could be dispatched to just about anywhere. The net effect of the trailers was that they also helped to broaden the geographically limited chain's footprint while providing a moving billboard as they traveled the Southland. In the years to come, hiring an In-N-Out trailer for a private event would come to be seen as sign of cool all over Southern California.

On the surface, Harry's moves were all deceptively simple. They weren't meant to radically alter In-N-Out's operations or hasten its ability to grow fast and far. Rather, Harry put into play a series of initiatives that could efficiently maintain the chain's traditional standards of “Quality, Cleanliness, and Service” in a rocket-fueled fast-food world.

 

The rampant expansion that marked the beginning of the previous decade had, by the early 1970s, begun to reach its saturation point. The big companies figured out that they could apply capital (theirs and that of their franchises), corporate management, and distribution systems and thereby blanket markets. That in turn would allow them to advertise nationally and efficiently. Soon, chains were locked in competition to secure prime locations and penetrate market share on the local, regional, and national levels. Two years after General Foods purchased Burger Chef, the chain swelled rapidly to twenty-four hundred locations in forty-three states and overseas before its operations began to sputter. In 1972, General Foods took a $75 million loss on Burger Chef, and a decade later sold the chain to Imasco for $44 million, which converted many of the restaurants into the Hardee's chain.

Many of the assets that made fast food attractive to consumers and investors alike began to implode. The recession tied to the 1973 oil crisis battered the industry. Stock prices plummeted and many concepts failed. McDonald's actually picked up the pace of its rollout during the economic downturn to ensure its primacy following the shakeout. Since In-N-Out never followed the strategies or trends of its competitors, it was barely affected by the cyclical turn of events that first catapulted fast food to success and then savaged the industry. The Snyders' choices had positioned In-N-Out as a brand that could withstand the numerous industry hits and downturns to come—that is, as long as it stuck to its winning formula.