In-N-Out Burger (7 page)

In many ways, In-N-Out Burger was an employee-driven company. The Snyders displayed an uncommon respect for their workers. The couple never viewed their business as just some little burger joint—in much the same way, they never looked at their workers as just employees but saw them as part of their own growing, extended family. The Snyders made sure to know each individual by name. In fact, they banished the words “employees” and “workers” altogether and instead referred to them strictly as “associates.” The result was that from the outset, In-N-Out had the feel not of a workplace but of a joint enterprise in which everyone shared.

As exacting a fellow as Harry was, his diligence was balanced by an equal sense of affectionate generosity. From the very beginning, Harry and Esther believed that their associates were integral to the success of their business, and they also believed in sharing that success with them. During In-N-Out's early days, the Snyders doled out ten-dollar bonuses to their associates. “My husband always believed that employees should share in the profits,” Esther later explained. “He believed that if you performed well on the job, you were worth the extra money.”

As In-N-Out grew, so did the Snyders' largesse. Every Christmas, Harry walked into the Baldwin Park branch of the Bank of America carrying a list of savings bonds for the teller to type up: one-hundred-dollar bonds for managers; twenty-five dollars for their spouses and children; and twenty-five-dollar bonds for all other associates. Harry was unusually generous in extending a hand to numerous employees; he helped many of them get loans for houses and cars, sometimes lending them the money himself. “It just depended on how long he knew you or how long you had been there,” explained Bob Meserve. “He helped everybody.”

Throughout the year, the Snyders threw numerous gatherings, picnics, barbecues, and Christmas parties in their own home for their associates and their families. The events were always warm and inviting, and as the years wore, the gatherings became bigger and more elaborate—but they managed to retain the feel of a large family gathering. The Snyders always treated their associates with respect, giving them a sense of ownership. In return, In-N-Out's associates felt incredibly loyal to the Snyders. It is likely that the most important decision that Harry and Esther Snyder made was the loyalty that they built between In-N-Out and its associates.

It wasn't the Snyders' desire to build an empire, to increase their revenues, or even to show up their competitors that propelled the couple to expand—rather, it was their associates. The Snyders had created a web of dedicated (and well-paid) employees trapped inside a one-store wonder with nowhere to go. Part-time workers became full-time workers and the full-time workers started to become managers. Initially, the Snyders assumed that most of their associates would gain experience at In-N-Out and then move on to something else or even to another fast-food restaurant. Instead, a bottleneck of talented, qualified people emerged who—instead of moving on—wanted to move up within In-N-Out. It became clear that the person standing on the third rung of the ladder could not reach the second and the person holding onto the number two spot was never going to climb to the top unless somebody above either quit, which seemed ever more unlikely a scenario as time went on—or the Snyders got rid of someone.

Those who were close to Harry and Esther explained that it was never the Snyders' intention to build a large chain of In-N-Out Burgers. According to Bob Meserve, his uncle was a fairly straightforward and conservative man. “Harry's thinking was that he was just trying to make a living for his family. He wasn't interested in being a rich man. The only reason he built the stores was because he paid his
people well and they didn't want to leave. He wanted them to save their money and go into business for themselves.”

A stickler for quality, Harry had implemented a system in which everything was fresh and made daily. He knew everyone who worked for him—and each and every one of his suppliers—on a first name basis. The system that he laid down was militarily focused. If In-N-Out expanded, it was vulnerable to dilution of the quality standards he so vigilantly held. Despite the obvious financial advantage inherent in expanding into a chain, there was also the very real possibility that in doing so Harry might have to give up some measure of control. This was the dilemma set before the couple: stay the course as a one-shot mom-and-pop shop or grow into a larger network of In-N-Out Burgers.

In the end, it was the Snyders' commitment to looking after their people that prompted In-N-Out Burger's growth into a chain. In those early years, the couple opened new stores as a way to reward the hard-earned dedication of their longtime associates who wanted to remain within the In-N-Out fold. A significant number of those early associates who began in In-N-Out's tiny kitchen as potato peelers ended up staying on for decades. Looking back more than fifty years after he turned in his In-N-Out apron to join the navy, Allen Teagle said wistfully, “If I hadn't joined up, I would have stayed there a lot longer.”

 

The In-N-Out expansion began slowly in 1951, three years after the Snyders opened for business in Baldwin Park, and through the years the rollout of new stores continued at a glacial pace. The second In-N-Out Burger opened in Covina, a small town about four and a half miles northwest of Baldwin Park that bordered Irwindale to the west, Azusa and Glendora to the north, and San Dimas to the east. By 1952, the Snyders had opened an additional three shops in La Verne, West Covina, and Pasadena. The expansion resembled an outstretched hand across the San Gabriel Valley, with Baldwin Park resting in the middle of the palm.

As the chain grew, the business relationship between Harry and his partner Charles Noddin soured. As is typical among business partners, the two men had very different ideas about the future direction of In-N-Out as it expanded. Harry insisted on maintaining a quality product at a reasonable price, while Noddin reportedly wanted to increase prices and cut costs. At the time, Noddin's strategy was becoming common practice among fast-food chains—but Harry was determined not to go the way of every other burger and hot dog stand. He believed that his way was the right way. A stubbornly independent sort, Harry had a real aversion to ceding to the opinion of others, especially when he thought he was right.

By 1952, Harry and Charles Noddin dissolved their partnership for good and split up the existing stores. Harry kept the In-N-Out Burger name and three of the stores including Number One in Baldwin Park. Noddin went on to open another burger chain in Pasadena. But the experience taught Harry a lesson; he insisted that In-N-Out remain forever independent. After that, as one friend said, “Harry swore he'd never sell out or take in a partner.” Harry's nephew Bob Meserve put it this way: “He was happy with the golden goose.”

 

Harry Snyder was extraordinarily discerning when it came to deciding on when and how to open a new store. Essentially, it came down to three decisive factors: his associates, a location, and the balance sheet. Regarding the first, the associates who were tapped to manage had initially gained sufficient experience working under Harry to carry out and follow to the letter his very specific operating procedures. Each had worked his way up. Everyone was trained in the little room in the back, where they were taught everything from the correct way to put on an apron to the best method of cutting onions with the hand slicer. And Harry didn't open a new shop until he had a manager who was ready to run it properly.

Secondly, with respect to locations, initially the stores were spaced out close to Baldwin Park so that Harry could maintain his standard of delivering fresh meat and produce on a daily or near-daily basis. It
also allowed him to preserve his oversight of the operations. Mornings, afternoons, and evenings, Harry was known to drop by his In-N-Outs unannounced. He kept a close watch on his growing chain. Harry and Esther liked to check on the shops often; it gave them the opportunity to stay in close contact with all of their associates. The couple liked to know each of them on a first name basis. Visiting the stores, chatting with the associates, and checking to be sure that procedures were followed delighted Esther in particular.

In catering to the car-reliant customer, Harry focused on putting his drive-throughs in highly visible, heavily trafficked areas such as major intersections and thoroughfares. As time wore on, new stores were placed right next to off-ramps of the fast-expanding freeway system. In choosing the new sites, as in most things, Harry relied on his intuition—but luck played a part, too. The growing Southern California freeway network became a significant factor in In-N-Out's own rising popularity and reputation.

At one time, Los Angeles had an enviable large-scale trolley network. The Pacific Electric train, with fifteen hundred miles of track, stretched seventy-five miles from San Bernardino to San Fernando and south to Santa Ana. Before it was dismantled and relegated to history, during the late 1930s, the system was carrying some 80 million passengers a year. But following the war, the rail lines soon ground to a halt. Indeed, on October 14, 1950, at 11:23 p.m., the Pacific Electric, once the pride of Baldwin Park, pulled into the town's depot for the last time.

The demise of the fabled Red Line in Southern California is generally connected to a complex corporate plot hatched by a consortium that included General Motors, Standard Oil, Phillips Petroleum, and Firestone Tires, all of whom allegedly conspired to wipe out the rail networks and create a transportation system heavily dependent upon the automobile. The scheme as it was later uncovered began in the 1920s. GM and its associates created a front company, National City Lines, with the specific goal of purchasing streetcar lines in a number of large American cities including Detroit, New York, and Los Angeles—whereupon the lines were dismantled, shut down, and re
placed with a bus system (the buses being manufactured by GM). It wasn't long before the population was left with essentially one choice: to drive themselves.

The scheme—rehashed over the years and labeled one of the great scandals of the postwar years (although others labeled the conspiracy myth)—also served as the plot of the movie
Who Framed Roger Rabbit
. The scandal shot straight to the Supreme Court, and GM and several of its cohorts were later indicted on federal antitrust charges. The presiding judge in the case fined GM and the other companies involved $5,000 each and the executives who hatched the plot were forced to pay a one-dollar fine.

In any event, the car ruled and transformed California. As the Great American Streetcar Scandal and its aftermath unfolded, a number of other dynamics contributed to the primacy of the automobile and the end of the trolley lines. For one, many of the lines began operating buses themselves, and just as many of them failed to modernize their maturing, atrophying equipment. Moreover, car ownership was steadily increasing. As the noted man of letters William Faulkner observed in 1948, in his novel
Intruder in the Dust
, “The American really loves nothing but his automobile—not his wife, his child, nor his country, nor even his bank account first.” At the same time, tens of thousands of miles of new highways were being built across the country.

By the time President Dwight D. Eisenhower signed the Interstate Highway Act in 1956, the automobile had become a huge presence in American lives. The commander in chief concluded that “newer, multi-lane highways were essential to a strong national defense.” Eisenhower had first become convinced of this as a young lieutenant colonel during the 1919 Transcontinental Convoy (in which eighty-one motorized army vehicles traveled across the country from Washington, D.C., to San Francisco in sixty-two days). His opinion was further galvanized during World II when he saw firsthand how fast Allied troops could travel across Germany's four-lane Autobahn.

The interstate act became the largest public works project in American history. The initial cost estimate was set at $25 billion to
build over forty-six thousand miles of road in some twelve years; in actuality, it ended up costing $114 billion and took thirty-five years to complete. In In-N-Out territory, the San Gabriel Valley, a thirty-mile span of the Interstate Route 605 freeway, estimated at $60 million and to be completed by 1966, was planned to provide an unbroken artery that would run from the San Diego Freeway (405) in Orange County to the San Bernardino Freeway (10) in Baldwin Park. The new stretch of the I–605 would serve “territories as varied and fascinating as any in the State. Beach playground, poultry and dairy farm, oil field, bedroom suburb, college campus, country club, historical landmark.” This was how the official journal of the California's Department of Public Works assessed the new eastern loop of metropolitan L.A.'s interstate.

Heralded as an economic miracle for the country, the highway system was expected to flatten the rural/urban divide. In reality, it accelerated the suburbanization of America. For businesses, the freeways dissecting the land literally transformed the landscape. The American chain stores already on their way to redefining the country were certainly aided by the new interstates. The asphalt tributaries developing all over the San Gabriel Valley were a boon for the fledgling In-N-Out chain.

When in 1954 the I–10 freeway cut through Baldwin Park, forcing the Snyders to tear down their stand and rebuild a new one a short distance from the original (it also left Baldy View with only forty-seven trailer home slots), Harry came up with another innovation that rivaled as well as complemented the two-way speakerphone; the new shop was designed with a double drive-through. The rebuilt In-N-Out sported two driveways flanking the open kitchen and four two-way speakerphones. The new format helped to speed the long lines that had been creeping along at a snail's pace as a result of the constant volume. As it turned out, a number of fast-food operators ended up adopting the double drive-through layout as well. For one, it was cheaper than the standard fast-food format to build, providing higher profits with lower overhead and requiring considerably less square footage than the average fast-food restaurant.

Actually, the suburban network of In-N-Outs that followed alongside the new highways also happened to dovetail nicely with Harry Snyder's third criterion for placing his stores; he abhorred debt. The new shops (in addition to their general proximity to Baldwin Park) were all situated in peripheral, suburban areas. They were not (as many other early fast-food places began) located in downtown centers next to factories or offices. In-N-Outs sprung up in the growing rural, postwar bedroom communities of the San Gabriel Valley. The suburban sites were cheaper than urban ones, especially as Southern California real estate values soared. Harry insisted on using cash, not credit, to open each new restaurant. Harry followed the old rules. He built one store, saved money; he built a second store and saved more money. He didn't open another until he could afford to and had the trained managers to run it—that was the Harry Snyder way. He didn't take out a loan. He didn't take on debt. He was beholden to no one.

While Harry's desire to own the land underneath his restaurants certainly limited the pace of In-N-Out's rollout, it also proved a remarkably shrewd financial move. In the 1960s, when Harry had expanded the successful chain to seven units, a former colleague congratulated him on his achievement and Harry responded by saying, “By God, they're all bought and paid for, too.”

 

In-N-Out's growth strategy—actually its entire strategic approach to business—offered an interesting counterpoint to the industry that was evolving around it. Over in San Bernardino, the McDonald brothers' streamlined and automated drive-in at Fourteenth and E streets was generating a huge volume of customers and word spread quickly. After
American Restaurant Magazine
ran a cover story on McDonald's phenomenal success in its July 1952 issue, the brothers were inundated with inquiries from restaurant owners asking to visit and eyeball the operation themselves. Almost immediately, offers poured in to copy or buy the McDonalds' methods outright. Soon enough, the brothers began licensing their Speedee Service System.
They took out a full-page ad in a trade magazine that declared: “This may be the most important 60 seconds of your life.”