In-N-Out Burger’s Go-to-Market Strategy as a Startup

In-N-Out Burger Logo via www.in-n-out.com

Synopsis — Opened in the late 1940s, In-N-Out Burger capitalized on the surge in car transportation to provide convenient, high-quality food to motorists on the go. Its founders, Harry and Esther Snyder, were arguably the first drive-through operation to leverage radio technology for its order processing. And in its earliest days, In-N-Out was able to gain a foothold through early customers consisting of teenagers with hotrods (cars), surfers, and Hollywood celebrities. The following excerpts from Stacy Perman’s book, In-N-Out Burger: A Behind-the-Counter Look at the Fast-Food Chain That Breaks All the Rules, detail how the fledgling company was able to gain traction.

Market — What was happening in the world that created the business opportunity?

Harry had anticipated the significant role that the car would continue to play in California. Baldwin Park was one of many small towns linked by streetcars that were fast transforming themselves into tract houses connected by a network of high-speed highways. The highways soon replaced the streetcars altogether. American life was becoming increasingly mobile. The exodus from the cities in favor of the suburbs meant that people had longer commutes. More women were working and less and less time was devoted to food preparation in the home. One of the first casualties of the new on-the-go lifestyle was the sit-down meal.

The surge in motorists and motoring meant that there was a captive audience of potential customers. And to attract them, the drive-ins used architecture, the kitschier and louder the better. Square and rectangular buildings became circular neon palaces; fanciful colored lights swirled and flickered, inviting passersby. Nothing was too whimsical or outlandish. There were drive-ins in the shape of outsized hot dogs, bowls of chili, donuts, and even gigantic root beer bottles. On the California border with Tijuana, the Gorro Drive Inn was built in the shape of a giant sombrero. And Seattle’s well-known Igloo Drive-In had two domed igloos that could seat seventy inside while carhops dressed in ski-togs and white boots in the winter and short skirts in the summer served “Husky Burgers” and “Boeing Bombers” in the parking lot. Then In-N-Out arrived.

Product/Service — What was their unique value proposition?

Yes, In-N-Out’s Baldwin Park location was great, right along the freeway, and the business delivered on its goal of offering fresh ingredients and high quality. But, other establishments had comparable value propositions at the time, so its key differentiator was arguably its use of technology.

The Snyders’ burger shack was tiny, it had no indoor seating, and there was little room for a full-fledged drive-in with carhops. Harry, an amateur electronics enthusiast, came up with an idea that would compensate for these deficits. He dispensed with the carhops altogether and replaced them with an invention of his own: a simple two-way speaker box made out of a few off-the-shelf electrical components that was connected to the eatery’s kitchen. That way, motorists could order at one end of a driveway into a small white box attached to a pole dug into the road and then proceed over the gravel drive-through lane to pick up their food at the other end.

That’s how Harry ended up with the name In-N-Out Hamburgers. The simple, to-the-point name reflected the uncomplicated view of the Snyders. Later abbreviated to In-N-Out Burgers, it was lucid shorthand for this new model burger joint: customers driving in to order their food and then driving out without leaving their cars. Harry’s two-way speaker box was an invention that was as innovative as it was practical; it perfectly reflected America’s growing interest in technological gadgetry and its growing obsession with rapid consumption and carryout food. In-N-Out Burger was just the right kind of eatery for a new kind of America, an America that was constantly on the go.

Despite their proliferation, they did not come into play until several years after Snyder pioneered In-N-Out Burger’s own two-way speakerphone. As Esther Snyder once proudly told the Los Angeles Times, In-N-Out was known as “the granddaddy of the drive-throughs.”

Niche — What small market segment provided the first customers?

Teenage Dragsters/Hotrodders

Open until 1:00 a.m., In-N-Out Burger became ground zero for Baldwin Park’s restive teens. There the kids parked, played their radios, sang, and danced.

As it happened, In-N-Out Burger came of age just as the new youth and car culture emerged. In Baldwin Park, the two met at the little stand on Garvey Avenue. During those prosperous postwar years, Detroit had produced a whole new generation of vehicles. With a glut of new model automobiles traveling down America’s roads, there was a huge surplus of the older cars just lying around. These abandoned autos offered the perfect occupation for the legions of Southern California’s car-obsessed youths who enthusiastically took their parents’ beat-up and outmoded Model T Fords, Chevrolets, Hudsons, and other vintage-tin bodies and recycled them. Inventive and daring, they removed flathead engines, stripped door handles, eliminated transmission casings, appropriated spare fenders, and repainted the vehicles in bold colors and designs, giving birth to the American hot rod. Once built, the only thing left for the kids to do was to show off their four-wheeled metal peacocks.

Surfers

Around the same time that dragsters were meeting up at In-N-Out Burger and spreading the word, the Baldwin Park burger joint began catering to another quintessentially Southern California phenomenon: surfers. Growing rapidly in popularity during the 1950s, surfing had by the 1960s exploded into a full-blown cult with a language, clothing, music, and a lifestyle all its own. In an almost religious ritual, surfers woke before dawn, strapped their waxed boards onto their cars and vans, and headed toward such fabled haunts as Malibu, Redondo, and Huntington beaches where they rode the swells of the Pacific Ocean. Many lived inland in the Valleys, and so commuting an hour to catch a wave before the sun was up was fairly common. Afterward, a group of hungry surfers packed up their cars and headed for In-N-Out. Soon enough, word spread among the hang-ten crowd, and ending up at an In-N-Out Burger stand became part of the surfing experience.

Celebrities

In those early days, In-N-Out Burger also earned a following among Hollywood glitterati who happened to discover the stand with the red and white awning while traveling between Los Angeles and Palm Springs. During the 1950s, well-heeled and big-name celebrities like Frank Sinatra, Kirk Douglas, Lucille Ball, and Liberace liked to frolic at the desert resort that became known as the “Playground of the Stars.” Many had second homes in Palm Springs. On their way to the desert or back to the city, stopping at In-N-Out to grab a burger became part of the routine.

Founders — What was special about this team?

Short on experience but long on common sense, Harry sought advice from Carl N. Karcher, one of fast food’s pioneers, who had built a small, growing chain of hot dog stands in Los Angeles called Carl’s Jr. A sharecropper’s son from Upper Sandusky, Ohio, Karcher was an ebullient, salt-of-the-earth character who would go on to build a fortune transforming his handful of hot dog stands into the $1.5 billion, 3,000-unit, multinational Carl Karcher Enterprises. Looking back, Karcher said that he wasn’t surprised that the Snyders decided to seek his counsel. “They came to see me because Harry saw a successful business,” he explained self-assuredly. “A successful fast-food business. He didn’t go to see someone in medical sales.”

When Karcher met the Snyders, Carl told them to focus on a great product and to maintain the personal touch. “It’s so important to make people feel special,” he explained. Karcher also shared his core value. “My whole philosophy is never give up.” However, during that first meeting, Karcher found that the aspiring entrepreneurs already had very specific ideas about how they planned to run their business and treat their employees. Many decades later, when he was “ninety-years young,” Karcher still appeared struck by it. “They were very particular about their people smiling,” he said. “They wanted their employees to feel like they were part of the company, like they were owners themselves.”

On In-N-Out’s first day of business, the couple sold a total of forty-seven hamburgers. During their first month, they sold two thousand, bringing in an estimated $1,100. In recalling those early weeks, Esther Snyder once said “Many cold, smoggy nights were spent during the first few months of operation, but it was worthwhile.” During the early years, the Snyders made great personal sacrifices. They rarely spent money on themselves; in fact, it was some time before they bought a television. Instead, the couple funneled every cent they made back into the business.

Perhaps most importantly, the Snyders valued culture and built a strong one. They paid well and promoted from within. It wasn’t uncommon for employees to start with the company as teenagers and stay for decades.