In-N-Out Burger (19 page)

For Rich, America was the greatest country on earth in which to live and work, and he felt obligated to do everything he could to support it. In 1980, he backed Republican David Dreier of the San Gabriel Valley during his inaugural congressional campaign with a $1,000 contribution. A staunch conservative, Dreier established his Republican bona fides as a supporter of tax cuts and President Reagan's anti-Communist foreign policy. Soon Rich began contributing tens of thousands of dollars to Republican candidates and causes. In time, he became a member of the exclusive “Team 100.” The group of Republican donors—also known as “T–100”—all agreed to make an initial $100,000 contribution to the Republican Party in order to join. (A minimum donation of $25,000 for three years was needed to retain membership.)

Around 1985, Rich became acquainted with Bruce Herschensohn, a Republican commentator in Los Angeles. Herschensohn had been a speechwriter in the Nixon White House, and the two men came together over their unstinting support for the Reagan administration. “He heard one of my speeches and I loved In-N-Out Burgers and we became friends,” recalled Herschensohn. “When it came to politics, we agreed on everything.”

In 1986, Rich encouraged Herschensohn to run for the U.S. Senate against Democratic senator Alan Cranston of California. Cranston, who had been an unsuccessful presidential candidate in 1984, was seeking his fourth term in Congress. Rich contributed $10,000 to Herschensohn's exploratory committee and served as its chairman. According to Herschensohn, Rich was extremely influential in helping him network with the powerfully connected, especially at big
functions. “I didn't like to interrupt people, and he'd walk with me and say ‘Hello, I want to introduce you to Bruce,'” he recalled.

Herschensohn called Rich “a vital force for my running for the Senate,” especially when it came to the act of fund-raising, an activity with which Herschensohn was particularly uncomfortable. After a few awkward incidents, Herschensohn finally told Rich that he had a problem asking people for money. It stemmed from the time his mother had chided him for asking his grandmother to buy him a chocolate Santa Claus at Christmas. As he recounted, “My mom told me that she didn't have that much money and it hit me hard. When I told Rich, he stopped asking me to ask people for money during the campaign.” And on each of Herschensohn's subsequent birthdays, Rich sent him a chocolate Santa Claus. “Where he got them, I have no idea, since it was September,” he laughed. “I still keep one in my freezer.”

 

Esther was often found alongside her son Rich; she accompanied him to numerous political events and various In-N-Out–related functions. They frequently traveled together. She appeared to hold Rich in the same esteem as she had held her husband, Harry. He became her rock after Harry's death, and the two shared an incredibly warm and loving relationship. Rich was particularly devoted to and protective of his mother, calling her every day. Concerned that his frugal mother continued to drive an aging car, Rich surprised her by buying a new Lexus that she discovered when she opened her garage door. Esther always called him “Richie,” and he liked to gently kid her. When he was a child, she told him to always smile, and in his adulthood, he taught her how to shake hands with people. In 1993, Rich delighted Esther by having a plaque commemorating her wartime service displayed at the U.S. Navy Memorial in Washington, D.C.

About ten years after Harry died, Esther moved from the San Dimas home that she had shared with her husband to the suburb of Glendora six miles away. Although she loved her house, Esther moved out, largely at Rich's insistence, who preferred that she live in a one-story house rather than aggravate her bad knees climbing stairs.
In a sentimental gesture, he had the door from her childhood home installed in her new house. An affluent residential suburb of shady oak trees at the foothills of the San Gabriel Mountains, Glendora was located on historic Route 66. The Snyders' San Dimas house and the rambling property where Harry once conducted business meetings and where Esther had for a time run the accounting operations for all of their enterprises were later sold to Christ's Church of the Valley. As part of the deal, Rich insisted that the Snyder house be left intact on the property. And there, tucked behind the boxy modern church complex, the family's two-story stucco home remains to this day.

Officially, Esther was In-N-Out's secretary-treasurer. Unofficially, she was the chain's undisputed emotional center. Quiet and always smiling, soft and full-hipped, Esther favored house dresses and plain, comfortable shoes, and rarely adorned herself with jewelry and accessories or makeup. Esther saw the management team that Rich had put in place as family, calling them “my boys.” Respectfully, they called her Mrs. Snyder, and felt a genuine warmth and affection for her as well.

While the death of her husband was devastating, those that knew Esther described her as unrelentingly positive. Rather than turn sullen, she turned to her faith in God and focused on the company that she had co-founded with Harry. Each morning, Esther drove the nine miles to In-N-Out's Baldwin Park offices, arriving faithfully by 7:30 a.m., her brown leather briefcase always by her side. There she handled the chain's payroll and accounting, personally signing every check by hand, a practice that didn't end until around 1988, when the chain had grown to nearly fifteen hundred associates. At heart she was a bookkeeper; she knew every invoice and price point, and she monitored financial developments like a hawk. Even as the company grew—and the mail with it—she still opened and read each letter. Her sweet, grandmotherly demeanor notwithstanding, Esther remained razor sharp. She sat quietly in meetings, listening intently. She spoke up rarely, and when she did, everyone listened. Although she would have preferred to leave the chain largely as it was when Harry was alive, Esther unequivocally supported Rich.

With Rich running the day-to-day operations, Esther began to focus more time on her charitable work. Her dedication was rewarded when, in 1990, Baldwin Park named its new community center after her. On weekends, she regularly drove to Costa Mesa to attend services at the Calvary Chapel. Her life was a full one. Active in the Rotary Club and the California Restaurant Association as well as the company's Child Abuse Fund, Esther never remarried. When asked why, her nephew Joe Stannard, the son of Esther's sister Virginia, and a financial adviser living in Springfield, Illinois, replied, “There was only one Harry.”

Her friendship with Margaret and Carl Karcher was an enduring source of support for Esther. After Harry died, the three remained in close touch. “We went to dinner twice a year,” Karcher proudly explained. While the Snyders and the Karchers had earned more money than they could have ever imagined and could easily have dined at any of Los Angeles's finest eateries, they chose instead to alternate their dinner meetings between In-N-Out and Carl's Jr. Philanthropically minded, the two families supported each other's charities. One of the Karcher daughters, Barbara Wall, recalled that her parents “could always rely on [Esther]. She always came through with any personal request of dad's.”

After Harry's death, Esther often sought out Carl Karcher's counsel. In fact, as In-N-Out Burger continued to grow and began to open up new stores in Carl's Jr. territory, Karcher and his wife remained uncommonly generous. “I always called the Snyders colleagues, not competitors,” explained Karcher. “I joke that that was a mistake with the success they became.”

In the fall of 1988, following the opening of the Thousand Palms store in Riverside County (the chain's fiftieth outlet), Rich came up with big plans to mark another milestone: In-N-Out Burger's fortieth anniversary. Without a doubt, it was a significant event, and Rich intended to celebrate it in high style. He hired a specially outfitted passenger train just for the occasion. The Snyders invited a number of associates and guests to the private onboard fete. The anniversary party took off from Anaheim Station on October 22 and then traveled down to San Diego by rail. It was forty years ago to the day that Harry and Esther Snyder had opened their first drive-through in Baldwin Park.

As the train pulled out of the station with a jerky hiss, Esther and Rich came out and stood under a red and white In-N-Out awning at the edge of the caboose. An audience of spectators and reporters gathered on the platform below to see the party off; Esther and Rich smiled broadly and waved to the crowd below. The pair looked to be in great spirits. For Esther, it was an especially nostalgic day. San Diego was a city filled with memories—it was there that some forty-five years earlier Esther, a navy WAVES, had been stationed at the Naval Hospital.

The trip to San Diego wasn't purely a celebration for Rich. As In-N-Out's revelers made the return trip north, he got off the train to take care of some business. He had set San Diego in his sights for
the chain's expansion plans. At the time, In-N-Out Burger was negotiating over a couple of sites and he decided to use the trip to survey the area. His goal was to open the first San Diego–area In-N-Out by mid-1989.

Just north of California's border with Mexico and south of Orange Country, San Diego, 122 miles from Baldwin Park, was the farthest point outside of In-N-Out's core radius. It marked Rich's most ambitious geographical push to date. “San Diego is a totally new market area for us,” he acknowledged excitedly on the chain's anniversary. “So it's a big move.” The second-largest city in California (after Los Angeles), San Diego had a growing population with a diverse economy and considerable affluence. It was home to miles of beaches, sixteen military facilities, fifteen colleges and universities, and a flourishing tourist industry. Perhaps more important, scores of residents had more than a passing familiarity with In-N-Out, and they had long bemoaned the absence of the beloved chain from their own backyard. For years, many drove for an hour or two up to Orange and Los Angeles counties for a Double-Double fix. As far as San Diego was concerned, a new In-N-Out couldn't open up fast enough.

It took another year and half following In-N-Out's fortieth anniversary before a San Diego drive-through became a reality. Store number fifty-seven was located in the neighborhood of Lemon Grove (just off of Highway 94). Besides being the first In-N-Out in the San Diego-area, Lemon Grove was reportedly the first store in the chain's fold to sell 1 million hamburgers in a single year. Before the year was up, Rich launched a second unit in the northern San Diego suburb of Vista, store number sixty-one.

Certainly, nobody could accuse the chain of oversaturation; the Vista outlet was located about forty-three miles from Lemon Grove. It proved equally popular, reportedly setting an opening day record by selling over five thousand burgers. Lemon Grove's tally wouldn't be broken for another nine years, until store number 137 in Redding, California, sold an estimated seven thousand–plus burgers during its own opening.

It was during this time, as Rich pushed deeper and further into new markets, that a debate erupted inside the chain's Baldwin Park headquarters about the direction of the company's future growth. By 1990, In-N-Out had grown to sixty-four stores, becoming a chain about three and half times the size it had been when Harry had died. And the chain's revenue, an estimated $73 million, continued on an upward trajectory, growing at an average rate of about 15 percent annually. Still, industry-wise, In-N-Out remained a small player. By contrast, at least in terms of size, McDonald's had about 8,576 domestic restaurants while Burger King had opened 5,468. Wendy's had reached 3,436 stores, and even Sonic Drive-Ins had passed the 1,000-unit mark. The argument in Baldwin Park centered on the nature of its continued growth; should it be slow and narrowly focused, or slow and widely spread?

While most fast-food chains deployed a deep penetration policy, opening up in every conceivable high-traffic spot—blanketing intersection corners as well as malls, locations near schools, urban centers, and airports with multiple stores in a single location—In-N-Out had remained incredibly selective about where it placed its units. Originally its drive-throughs were established in suburban and outlying neighborhoods, where the land was cheaper and could be purchased outright. As real estate prices in California continued to soar, Rich continued to follow this strategy. For instance, Lemon Grove was chosen over the more expensive tourist corridor along the Interstate 5. As Rich had told
Forbes
, “Why pay $2 million for a property if I'm going to sell the same amount of burgers as I would on the property I pay $500,000 for?”

Unlike nearly every one of its competitors, In-N-Out rarely if ever put more than one drive-through in the same market. The fact that there were so few locations, spaced so far apart, only added to In-N-Out's allure. It made eating a Double-Double a conscious act, an experience. As big burger chains employed a host of consultants and even commercial satellite photography to capture the best potential locations, In-N-Out's consumers proved time and again that they would go to extraordinary lengths to eat at In-N-Out.

A key part of In-N-Out's location strategy was to find spots that would generate high volume and large turnover. For the most part, In-N-Out still catered to the car-reliant consumer. In 1989, following the San Diego push, the chain opened its fifty-sixth store in Barstow, California. An important silver mining town and busy railroad point in the Mojave Desert during the 1860s, more than a century later, Barstow was known for little more than standing at the entry point to California on the old Route 66. A small, hot, and dusty afterthought of a town, Barstow had lost much of the luster of its glory days, when it was called Calico Junction. However, it did sit on an important crossroad: the intersection between Interstate 15, Interstate 40, and State Highway 58. In the late twentieth century, Barstow had become a popular rest stop for those on their way to or from Las Vegas.

Store number fifty-six opened up on Lenwood Road, not far from the Mojave National Preserve and the U.S. Army National Training Center; its large customer base was not found among those who were staying, but among those who were just passing through. It was a smart move, and business took off. The Barstow drive-through was the first In-N-Out to be built with three grills and it had the largest indoor seating capacity of any In-N-Out to date (almost three hundred people). The line approaching the counter in Barstow was divided by metal bars to keep customers orderly and moving forward.

As Rich pushed the chain's geographical boundaries, each store was still within a radius that allowed the company to deliver its fresh beef patties and produce from the Baldwin Park commissary on a daily basis. It was obvious that the slow, controlled rollout strategy had contributed greatly to In-N-Out's mystique and popularity. Rich and his crew of relatively new professional managers were pressing for a broader expansion. At the same time, some of the top managers, including many of the old-timers who had started under Harry, believed that In-N-Out's mystique was one of the chain's most important assets. Many of those longtime managers spearheaded the argument against further growth at the expense of its mystique. Would In-N-Out be able to retain its intimate, local feeling as it expanded?
Would In-N-Out's enigmatic appeal and personal touch be sacrificed by a further rollout? Could In-N-Out remain In-N-Out? It was a question that even the largely absent Guy Snyder had considered.

Although the paucity of stores had helped to drive demand, it also led to traffic jams and idling cars that blocked parking lot exits and entrances, obstructed parked cars, and irritated the owners of nearby businesses. The long lines had become the chain's unofficial trademark. For the most part, In-N-Out's customers appeared not to mind waiting twelve to fifteen minutes (or more) for their orders.

However, Rich had some practical issues to consider. Given the limited number of stores, even if no new stores were opened, the chain needed to find some way to relieve the congestion. For a time, the company tried to alleviate the bottleneck by adding extra grills and fryers to help speed up each store's ability to cook orders. (The chain would later deploy associates with PDAs to help move the drive-through lane along.) But those measures only helped so much.

Rich had learned from a series of focus groups that the mystique of his chain only went so far. After talking about how special In-N-Out was, the groups complained about the long lines and distance between stores that left their fries cold by the time they arrived home. What customers wanted were more In-N-Outs—and fast. In the end, Rich went with his gut and decided to proceed with his rollout. In executing his desire to open some ten new stores per year, Rich had to reconsider certain factors of the chain's longtime growth strategy. Cautiously, he had begun moving out of the sites in peripheral suburbs to more central locations. In 1989, In-N-Out opened store number fifty-five in West Los Angeles on Venice Boulevard, near the 10 Freeway. Gradually, the chain opened stores in other, bigger cities and urban locales such as Hollywood (on Sunset Boulevard) and eventually San Diego proper (near the I-5 corridor).

In another break with the Harry Snyder tradition, Rich also began to open new stores in markets where an In-N-Out was already located—slowly, sparingly, and, for many years, not within a six-mile radius of one another. In doing so, the company had to be ever more vigilant in monitoring its locations. It wasn't just a highly trafficked
intersection or freeway off-ramp that made an In-N-Out a success; although In-N-Out's prices remained modest, the company found that the highest volume stores were located in higher income areas. As In-N-Out began to put more than one store in a single territory, income was a criteria that the company could not ignore.

At first, some of the managers (whose bonuses were tied to their stores' profits) were concerned that the new strategy would eat away at their business—but the company had conducted impact studies that showed the opposite to be the case. In fact, after an initial drop-off, the original store's volume not only rebounded but increased.

When Harry and Esther turned the reins over to their youngest son, Rich, In-N-Out owned its warehouse, offices, and meat department on East Virginia Avenue, in addition to all eighteen of its stores. Harry was strictly old school; if he couldn't afford to own a property outright, he didn't need it. Rich did not operate under the same conservative rubric. He wasn't afraid to go outside of the company for financing and sought a line of bank credit in order to facilitate his expansion plans.

At the start of the 1990s, there were fewer than one hundred In-N-Out stores—not enough units to generate the kind of income needed in order to open ten new stores a year. The next best option was to lease. For one, it helped ease up the cash flow. Secondly, Rich was also finding that increasingly he was up against large property developers. If he wanted to continue to operate in key locations, he had no choice but to lease from them. One of In-N-Out's first leased stores was in Norco, a rural equestrian community in northwest Riverside County where hitching posts remained a common sight. Around 1990, In-N-Out owned all but a handful of its sixty-four stores. That changed over time; eventually, the chain owned roughly 60 percent of its stores and leased the rest.

Around this time, Rich established a separate business entity called Snyder Leasing that received income based upon a percentage of the gross income generated by a number of In-N-Out stores as well as a number of commercial properties. While the company purchased the land and built the properties, the stores listed in Snyder
Leasing were deeded over to Rich, who was its primary beneficiary. Between 1991 and 1992, perhaps ten In-N-Out units were listed in Snyder Leasing's portfolio of properties; not surprisingly, they were some of the highest-performing shops in the In-N-Out fleet.

It was a potentially lucrative move. In-N-Out was classified as an S-Corporation, largely for tax purposes. S-Corporations are not taxed on profits; rather, its owners are taxed on their proportional shares of the company's profits. As In-N-Out's president, Rich's salary had a ceiling for tax reasons, and Snyder Leasing gave him another stream of revenue.

 

In his official capacity as executive vice president, Guy Snyder oversaw the meat department and warehouse. In actuality, he could be found at the Baldwin Park complex on average not more than two or three times a week. He was not involved in the chain's day-to-day operations. Marriage and fatherhood notwithstanding, he had yet to shake his reputation as a rebel. It was an assessment usually colored by Guy's own cycle of behavior. Impulsive, Guy might decide to fly to Cancun one week, taking a group of friends with him—or he might spend the day riding dune buggies. Once, a friend recalled, Guy went to another fast-food restaurant and ordered one of everything on the menu just to see the reaction of the young cashier.

Increasingly, Guy and Rich were not on the same page. In the years that followed their father's death, Guy distanced himself further from In-N-Out's daily workings and from the Baldwin Park corporate offices. More than anything, Guy seemed to follow his own interests. Around 1988, he opened the Flying Dutchman Tobacco Hold in Glendora, a store that sold exotic blends of tobacco and pipes from all over the world. More of a hobby than a serious business venture, the Hold closed for good after only about two years. He spent a great deal of time on his 170-acre ranch up in Shasta County, and soon the family made the Flying Dutchman their main residence.